EXHIBIT 2.1
==============================================================================
MASTER AGREEMENT
Dated as of March 18, 2004,
Among
ASHLAND INC.,
ATB HOLDINGS INC.,
EXM LLC,
NEW EXM INC.,
MARATHON OIL CORPORATION,
MARATHON OIL COMPANY,
MARATHON DOMESTIC LLC
And
MARATHON ASHLAND PETROLEUM LLC
==============================================================================
i
TABLE OF CONTENTS
PAGE
ARTICLE I
TRANSACTIONS AND CLOSING
SECTION 1.01. MAP Parital Redemption......................................4
SECTION 1.02. Maleic/VIOC Contribution; MAP/LOOP/LOCAP Contribution;
Reorganization Merger.....................................5
SECTION 1.03. HoldCo Borrowing; Capital Contribution; Conversion
Merger....................................................6
SECTION 1.04. Acquisition Merger; Distribution............................7
SECTION 1.05. Closing.....................................................8
SECTION 1.06. Post-Closing True-Up........................................8
ARTICLE II
THE REORGANIZATION MERGER
SECTION 2.01. Parties to the Reorganization Merger........................9
SECTION 2.02. Reorganization Merger Effective Time........................9
SECTION 2.03. Effects....................................................10
SECTION 2.04. Conversion of Ashland Securities...........................10
SECTION 2.05. Dissenters' Rights.........................................11
SECTION 2.06. Limited Liability..........................................12
SECTION 2.07. Articles of Organization...................................12
SECTION 2.08. Operating Agreement........................................12
SECTION 2.09. Reorganization Plan of Merger..............................12
ARTICLE III
THE CONVERSION MERGER
SECTION 3.01. Parties to the Conversion Merger...........................12
SECTION 3.02. Conversion Merger Effective Time...........................13
SECTION 3.03. Effects....................................................13
SECTION 3.04. Conversion of New Ashland Securities.......................13
SECTION 3.05. Limited Liability..........................................14
SECTION 3.06. Articles of Incorporation and By-laws......................14
SECTION 3.07. Directors..................................................14
SECTION 3.08. Officers...................................................14
SECTION 3.09. Conversion Plan of Merger..................................14
ii
ARTICLE IV
THE ACQUISITION MERGER
SECTION 4.01. Acquisition Merger; Acquisition Merger Effective Time......15
SECTION 4.02. Effects....................................................15
SECTION 4.03. Effect on Capital Stock....................................16
SECTION 4.04. Limited Liability Company Agreement........................18
SECTION 4.05. Tax Treatment..............................................18
ARTICLE V
EXCHANGE OF HOLDCO CERTIFICATES
SECTION 5.01. Exchange of Certificates...................................18
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE ASHLAND PARTIES
SECTION 6.01. Organization, Standing and Power...........................26
SECTION 6.02. Ashland Subsidiaries; Equity Interests.....................27
SECTION 6.03. Capital Structure..........................................27
SECTION 6.04. Authority; Execution and Delivery; Enforceability..........30
SECTION 6.05. No Conflicts; Consents.....................................32
SECTION 6.06. SEC Documents; Undisclosed Liabilities.....................34
SECTION 6.07. Absence of Certain Changes or Events.......................35
SECTION 6.08. Information Supplied.......................................36
SECTION 6.09. Brokers....................................................36
SECTION 6.10. Opinion of Financial Advisor...............................37
SECTION 6.11. Solvency Matters...........................................37
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF THE MARATHON PARTIES
SECTION 7.01. Organization, Standing and Power...........................40
SECTION 7.02. Marathon Subsidiaries; Equity Interests....................41
SECTION 7.03. Capital Structure..........................................41
SECTION 7.04. Authority; Execution and Delivery; Enforceability..........42
SECTION 7.05. No Conflicts; Consents.....................................43
SECTION 7.06. SEC Documents; Undisclosed Liabilities.....................45
SECTION 7.07. Absence of Certain Changes or Events.......................46
iii
SECTION 7.08. Information Supplied.......................................47
SECTION 7.09. Brokers....................................................47
SECTION 7.10. Opinion of Financial Advisor...............................47
SECTION 7.11. Solvency Opinions..........................................48
SECTION 7.12. MAP Accounts Receivable....................................48
SECTION 7.13. Employee Benefits..........................................48
ARTICLE VIII
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 8.01. Conduct of Business........................................48
SECTION 8.02. No Solicitation............................................52
SECTION 8.03. Post-Closing Dividends, Distributions and Share
Repurchases..............................................55
SECTION 8.04. Offerings of Marathon Common Stock.........................55
ARTICLE IX
ADDITIONAL AGREEMENTS
SECTION 9.01. Preparation of the Forms S-4 and the Proxy Statement;
Shareholders Meeting; Form 8-A or Form 10................56
SECTION 9.02. Access to Information; Confidentiality.....................59
SECTION 9.03. Reasonable Best Efforts; Notification......................60
SECTION 9.04. Fees and Expenses..........................................67
SECTION 9.05. Public Announcements.......................................70
SECTION 9.06. Affiliates.................................................70
SECTION 9.07. Stock Exchange Listings....................................70
SECTION 9.08. Rights Agreements; Consequences if Rights Triggered........71
SECTION 9.09. St. ▇▇▇▇ Park Judgment and Plea Agreement; Plains
Settlement...............................................72
SECTION 9.10. Consequences of Inability To Transfer the Ashland
LOOP/LOCAP Interest on the Closing Date..................73
SECTION 9.11. Consents Under Assigned Contracts..........................73
SECTION 9.12. Administrative Proceedings.................................74
SECTION 9.13. Replacement of Distributed Receivables.....................74
SECTION 9.14. Transition Services........................................75
SECTION 9.15. MAP Partial Redemption Amount..............................75
SECTION 9.16. Ashland Debt Obligation Amount.............................77
iv
ARTICLE X
CONDITIONS PRECEDENT
SECTION 10.01. Conditions to the Ashland Parties' and the Marathon
Parties' Obligations to Effect the Transactions..........78
SECTION 10.02. Conditions to Obligations of the Ashland Parties..........80
SECTION 10.03. Conditions to Obligations of the Marathon Parties.........81
ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
SECTION 11.01. Termination...............................................83
SECTION 11.02. Effect of Termination.....................................86
SECTION 11.03. Amendment.................................................86
SECTION 11.04. Extension; Waiver.........................................87
SECTION 11.05. Procedure for Termination, Amendment, Extension or
Waiver...................................................87
ARTICLE XII
AMENDMENT OF EXISTING MAP AGREEMENTS
SECTION 12.01. Asset Transfer and Contribution Agreement.................88
SECTION 12.02. Designated Subleases......................................95
SECTION 12.03. The MAP LLC Agreement....................................100
SECTION 12.04. The Put/Call Agreement...................................100
SECTION 12.05. Ancillary Agreements.....................................101
SECTION 12.06. Other Provisions of the MAP Governing Documents..........101
SECTION 12.07. Post-Closing Access......................................102
ARTICLE XIII
INDEMNIFICATION
SECTION 13.01. Indemnification by New Ashland Inc.......................102
SECTION 13.02. Indemnification by Marathon..............................108
SECTION 13.03. Calculation of Losses....................................113
SECTION 13.04. Procedures...............................................115
v
ARTICLE XIV
GENERAL PROVISIONS
SECTION 14.01. Notices..................................................119
SECTION 14.02. Definitions..............................................120
SECTION 14.03. Interpretation; Disclosure Letters.......................126
SECTION 14.04. Severability.............................................126
SECTION 14.05. Counterparts.............................................126
SECTION 14.06. Entire Agreement; No Third-Party Beneficiaries...........127
SECTION 14.07. Exercise of Rights and Remedies..........................127
SECTION 14.08. Governing Law............................................128
SECTION 14.09. Assignment...............................................128
SECTION 14.10. Enforcement..............................................128
Exhibit A Accounts Receivable Selection Protocol
Exhibit B Form of Amendments to New Ashland Inc. Articles of
Incorporation
Exhibit C Form of Affiliate Letter
Exhibit D Tax Matters
Exhibit E Form of LOCAP T&D Assumption Agreement Exhibit F Form of LOOP T&D
Assumption Agreement Exhibit G Form of MAP Contribution Agreement Exhibit H
Form of LOOP Contribution Agreement Exhibit I Form of LOCAP Contribution
Agreement
vi
INDEX OF DEFINED TERMS
TERM SECTION
---- -------
AAA.....................................................................6.11(a)
Acquisition Certificate of Merger..........................................4.01
Acquisition Merger......................................................1.04(a)
Acquisition Merger Consideration........................................4.03(b)
Acquisition Merger Effective Time..........................................4.01
Administrative Proceeding..................................................9.12
affiliate.................................................................14.02
Ancillary Agreements....................................................6.04(a)
AR Amount..................................................................1.01
AR Fraction...............................................................14.02
Ashland................................................................Preamble
Ashland Board..............................................................2.09
Ashland By-laws............................................................6.01
Ashland Capital Stock...................................................6.03(a)
Ashland Charter............................................................6.01
Ashland Common Stock...................................................Recitals
Ashland Debt Obligation Amount............................................14.02
Ashland Disclosure Letter............................................ARTICLE VI
Ashland Employee Stock Option.............................................14.02
Ashland Form S-4........................................................6.05(b)
Ashland LESOP.....................................................12.01(d)(iii)
Ashland LOOP/LOCAP Interest...............................................14.02
Ashland Material Adverse Effect.........................................6.05(a)
Ashland Parties...........................................................14.02
Ashland Pension Plan..............................................12.01(d)(iii)
Ashland Preferred Stock.................................................6.03(a)
Ashland Public Debt.....................................................9.03(b)
Ashland Rights..........................................................6.03(a)
Ashland Rights Agreement................................................6.03(a)
Ashland SAR...............................................................14.02
Ashland SEC Documents...................................................6.06(a)
Ashland Series A Preferred Stock........................................6.03(a)
Ashland Shareholder Approval............................................6.04(b)
Ashland Shareholders Meeting............................................9.01(e)
Ashland Stock Plan........................................................14.02
Ashland Subsidiary......................................................6.02(a)
ATCA...................................................................12.01(a)
Averaging Period........................................................4.03(b)
Bankruptcy Code.........................................................6.11(d)
Bring-Down AAA Opinions................................................10.01(g)
Bring-Down HLHZ Opinion................................................10.01(g)
Bring-Down Opinions....................................................10.01(g)
Capital Contribution....................................................1.03(b)
Cash Amount................................................................1.01
vii
Certificates............................................................5.01(b)
Closing....................................................................1.05
Closing Date...............................................................1.05
Code....................................................................1.04(b)
Competing Ashland Proposal..............................................8.02(e)
Confidentiality Agreement..................................................9.02
Consent.................................................................6.05(b)
Contract................................................................6.05(a)
Conversion Articles of Merger..............................................3.02
Conversion Merger.......................................................1.03(c)
Conversion Merger Effective Time...........................................3.02
Conversion Plan of Merger..................................................3.09
Cutoff Date.............................................................8.02(a)
Debt Consent Measurement Date...........................................9.03(b)
Designated Sublease....................................................12.02(a)
DGCL....................................................................1.04(a)
Dissenters' Shares.........................................................2.05
Distributed Receivables....................................................1.01
DLLCA...................................................................1.04(a)
DOD....................................................................12.01(c)
DOD Claims.............................................................12.01(c)
D&T........................................................................9.15
Estimated MAP Partial Redemption Amount...................................14.02
Exchange Act............................................................6.05(b)
Exchange Act Registration Statement.....................................9.01(h)
Exchange Agent.......................................................5.01(a)(i)
Exchange Fund.......................................................5.01(a)(ii)
Exchange Ratio..........................................................4.03(b)
Excess Shares.......................................................5.01(e)(ii)
Ex-Date.................................................................4.03(b)
Fair Market Value.......................................................4.03(b)
Forms S-4...............................................................6.05(b)
GAAP....................................................................6.06(b)
Governmental Entity.....................................................6.05(b)
HLHZ.......................................................................6.09
HoldCo.................................................................Preamble
HoldCo Borrowing..........................................................14.02
HoldCo Common Stock..................................................2.04(a)(i)
HoldCo Share Issuance...................................................6.05(b)
HSR Act.................................................................6.05(b)
Indentures..............................................................9.03(b)
Initial AAA Opinions....................................................6.11(a)
Initial HLHZ Opinion....................................................6.11(a)
Initial Opinions........................................................6.11(a)
IRS........................................................................9.16
Judgment................................................................6.05(a)
KBCA....................................................................1.02(c)
viii
KLLCA...................................................................1.02(c)
Law.....................................................................6.05(a)
Leased Property........................................................12.02(a)
Liens...................................................................6.02(a)
LOCAP T&D Agreement.......................................................14.02
LOCAP T&D Assumption Agreement............................................14.02
LOOP T&D Agreement........................................................14.02
LOOP T&D Assumption Agreement.............................................14.02
Losses.................................................................13.01(a)
Maleic Agreement.......................................................Recitals
Maleic Business........................................................Recitals
Maleic/VIOC Contribution................................................1.02(a)
MAP....................................................................Preamble
MAP Adjustment Amount.....................................................14.02
MAP Governing Documents...................................................14.02
MAP LLC Agreement.........................................................14.02
MAP LLC Agreement Amendment............................................Recitals
MAP/LOOP/LOCAP Contribution ............................................1.02(b)
MAP/LOOP/LOCAP Contribution Agreements....................................14.02
MAP Partial Redemption.....................................................1.01
MAP Partial Redemption Amount.............................................14.02
MAP Qualified Pension Plan.............................................12.01(d)
Marathon...............................................................Preamble
Marathon Board..........................................................4.03(b)
Marathon By-laws...........................................................7.01
Marathon Capital Stock..................................................7.03(a)
Marathon Charter...........................................................7.01
Marathon Common Stock..................................................Recitals
Marathon Company.......................................................Preamble
Marathon Company Board..................................................7.04(c)
Marathon Disclosure Letter..........................................ARTICLE VII
Marathon Employee Stock Option............................................14.02
Marathon Form S-4.......................................................6.05(b)
Marathon Material Adverse Effect........................................7.05(a)
Marathon Parties..........................................................14.02
Marathon Preferred Stock................................................7.03(a)
Marathon Rights Agreement...............................................7.05(c)
Marathon SAR..............................................................14.02
Marathon SEC Documents..................................................7.06(a)
Marathon Share Issuance.................................................6.05(b)
Marathon Stock Plan.......................................................14.02
Marathon Subsidiary.....................................................7.02(a)
Market MAC Condition......................................................14.02
Market MAC Event..........................................................14.02
Maximum Annual Permitted Payment.......................................12.01(d)
Membership Interest.......................................................14.02
Merger Sub.............................................................Preamble
ix
NASDAQ..................................................................9.07(b)
New Ashland Board..........................................................3.09
New Ashland Inc. ......................................................Preamble
New Ashland Inc. Common Stock.............................................14.02
New Ashland Inc. Share Issuance.........................................6.05(b)
New Ashland LLC........................................................Preamble
New Ashland LLC Interests...............................................2.04(a)
NYSE....................................................................4.03(b)
Outside Date........................................................11.01(b)(i)
PBGC...................................................................12.01(d)
Pension Funding Relief.................................................12.01(d)
Permitted Payments.....................................................12.01(d)
person....................................................................14.02
Pitney ▇▇▇▇▇ Transaction Documents.....................................12.02(d)
Plains Settlement.........................................................14.02
Prior Payments..........................................................9.09(b)
Private Letter Rulings.................................................10.01(f)
Proxy Statement.........................................................6.05(b)
Put/Call Agreement........................................................12.04
Reimbursement Agreement.................................................1.03(a)
Reorganization Articles of Merger..........................................2.02
Reorganization Merger...................................................1.02(c)
Reorganization Merger Consideration..................................2.04(a)(i)
Reorganization Merger Effective Time.......................................2.02
Reorganization Plan of Merger..............................................2.09
Representatives.........................................................8.02(a)
Rule 145 Affiliate......................................................5.01(d)
SEC.....................................................................6.05(b)
Securities Act..........................................................5.01(d)
Significant Ashland Subsidiary.............................................6.01
Significant Marathon Subsidiary............................................7.01
St. ▇▇▇▇ Park Judgment and Plea Agreement.................................14.02
St. ▇▇▇▇ Park QQQ Project...............................................9.09(a)
St. ▇▇▇▇ Park QQQ Project Payment Amount................................9.09(b)
subsidiary................................................................14.02
Subtitle 13................................................................2.05
SuperAmerica Transaction Documents.....................................12.02(d)
Superior Proposal.......................................................8.02(e)
Tax.......................................................................14.02
Tax Authority.............................................................14.02
Tax Matter................................................................14.02
Tax Matters Agreement..................................................Recitals
Tax Opinions...........................................................10.01(f)
Termination Fee.........................................................9.04(c)
Third Party Claim......................................................13.04(a)
Third Party Lenders.....................................................1.03(a)
Third Party Provisions....................................................14.06
x
Transaction Agreements.................................................Recitals
Transactions...........................................................Recitals
Transferred MAP Employees...........................................12.01(d)(i)
UFCA....................................................................6.11(d)
UFTA....................................................................6.11(d)
Value.....................................................................14.02
VIOC Agreement.........................................................Recitals
VIOC Centers...........................................................Recitals
Voting Ashland Debt.....................................................6.03(a)
Voting Marathon Debt....................................................7.03(a)
Working Papers............................................................14.02
MASTER AGREEMENT dated as of March 18, 2004,
among Ashland Inc., a Kentucky corporation ("Ashland"),
ATB Holdings Inc., a Delaware corporation and wholly
owned subsidiary of Ashland ("HoldCo"), EXM LLC, a
Kentucky limited liability company and wholly owned
subsidiary of HoldCo ("New Ashland LLC"), New EXM Inc.,
a Kentucky corporation and wholly owned subsidiary of
HoldCo ("New Ashland Inc."), Marathon Oil Corporation,
a Delaware corporation ("Marathon"), Marathon Oil
Company, an Ohio corporation and wholly owned
subsidiary of Marathon ("Marathon Company"), Marathon
Domestic LLC, a Delaware limited liability company and
wholly owned subsidiary of Marathon ("Merger Sub"), and
Marathon Ashland Petroleum LLC, a Delaware limited
liability company owned by Marathon Company and Ashland
as set forth below ("MAP").
WHEREAS the Marathon Parties (as defined in Section 14.02) wish
to acquire from Ashland, and Ashland wishes to transfer to the Marathon
Parties, Ashland's maleic anhydride business and associated plant in ▇▇▇▇,
West Virginia (the "Maleic Business") and a number of Valvoline Instant Oil
Change centers owned by Ashland (the "VIOC Centers") located in the states
of Ohio and Michigan;
WHEREAS, on January 1, 1998, Ashland and Marathon Company
contributed certain petroleum supply, refining, marketing and
transportation businesses to MAP and entered into a limited liability
company agreement to set forth their rights and responsibilities with
respect to the governance, financing and operation of MAP;
WHEREAS Ashland owns a 38% interest in MAP and Marathon Company
owns a 62% interest in MAP;
WHEREAS Ashland holds a 4% interest in LOOP LLC and an 8.62%
interest in LOCAP LLC;
2
WHEREAS the parties hereto have structured the transfers
described above as a series of transactions, as a result of which:
(i) Ashland will transfer to HoldCo the Maleic Business, the VIOC
Centers and Ashland's interests in MAP, LOOP LLC and LOCAP LLC, and
HoldCo will assume certain related liabilities of Ashland;
(ii) the Marathon Parties will acquire HoldCo;
(iii) New Ashland Inc. will succeed to all the assets and
liabilities of Ashland (other than those transferred to or assumed by
HoldCo or any Marathon Party under this Agreement or any of the other
Transaction Agreements (as defined below)), including the proceeds of
a partial redemption of Ashland's interest in MAP; and
(iv) the issued and outstanding shares of Ashland common stock,
par value $1.00 per share, including the associated Ashland Rights (as
defined in Section 6.03(a)) (the "Ashland Common Stock"), will be
canceled and Ashland's shareholders will receive, with respect to each
share of Ashland Common Stock, one share of New Ashland Inc. Common
Stock (as defined in Section 14.02), to be issued by New Ashland Inc.
in consideration of the assets acquired by it in the Conversion Merger
and the benefits to be derived therefrom, and a number of shares of
Marathon common stock, par value $1.00 per share (the "Marathon Common
Stock"), to be determined as set forth in this Agreement;
WHEREAS, simultaneously with the execution and delivery of this
Agreement, certain of the parties hereto are entering into:
(i) an Assignment and Assumption Agreement providing for the
transfer of the Maleic Business to HoldCo and the assumption by HoldCo
of certain related liabilities (the "Maleic Agreement");
(ii) an Assignment and Assumption Agreement providing for the
transfer of the VIOC Centers to HoldCo and the assumption by HoldCo of
certain related liabilities (the "VIOC Agreement");
3
(iii) a Tax Matters Agreement (the "Tax Matters Agreement"); and
(iv) Amendment No. 2 to the MAP LLC Agreement (as defined in
Section 14.02) (the "MAP LLC Agreement Amendment" and, together with
this Agreement, the Maleic Agreement, the VIOC Agreement and the Tax
Matters Agreement, the "Transaction Agreements");
WHEREAS the Board of Directors of Ashland has unanimously: (i)
adopted and approved the Transaction Agreements, the Ancillary Agreements
(as defined in Section 6.04(a)) and the transactions contemplated thereby
(the "Transactions") and (ii) recommended that Ashland's shareholders
approve the Transaction Agreements and the Transactions;
WHEREAS the Board of Directors of Marathon has unanimously
adopted and approved the Transaction Agreements and the Ancillary
Agreements and approved the Transactions;
WHEREAS it is intended that the Transactions to be consummated on
the Closing Date will generally be Tax-free to the parties and their
respective shareholders for Federal income Tax purposes (as Tax is defined
in Section 14.02); and
WHEREAS the parties desire to make certain representations,
warranties, covenants and agreements in connection with the Transactions
and also to prescribe various conditions to the Transactions.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
Transactions and Closing
-------------------------
Upon the terms and subject to the conditions set forth herein, at
the Closing (as defined in Section 1.05), the parties shall consummate the
MAP Partial Redemption and each of the other Transactions set forth in
Sections 1.02, 1.03 and 1.04 as follows. Subject to Section 9.10, the
parties hereto intend that none of the Transactions that this Article I
contemplates will be effected on the Closing
4
Date (as defined in Section 1.05) shall be effective unless all of such
Transactions are effected on the Closing Date.
SECTION 1.01. MAP PARTIAL REDEMPTION. As part of the
Transactions, but prior to consummating the other Transactions set forth in
Sections 1.02, 1.03 and 1.04, MAP shall redeem a portion of the 38%
Membership Interest (as defined in Section 14.02) owned by Ashland for a
redemption price payable as follows: (i) accounts receivable of MAP, each
with a Federal income Tax basis no less than its face amount, selected in
accordance with the protocol set forth in Exhibit A, with a total Value (as
defined in Section 14.02) equal to the product of (x) the Estimated MAP
Partial Redemption Amount (as defined in Section 14.02) and (y) the AR
Fraction (as defined in Section 14.02) (such product, the "AR Amount") (the
"Distributed Receivables") and (ii) cash in an amount equal to the
Estimated MAP Partial Redemption Amount minus the AR Amount (such
difference, the "Cash Amount"), by wire transfer of immediately available
funds to an Ashland bank account which shall be designated in writing by
Ashland at least two business days prior to the Closing Date (the "MAP
Partial Redemption"). MAP shall increase the MAP Partial Redemption Amount
(as defined in Section 14.02) payable in the MAP Partial Redemption as
directed by Marathon if Marathon determines, in its sole judgment after
giving due consideration to the requirements of any potentially applicable
fraudulent transfer or conveyance Law, that the aggregate amount of the MAP
Partial Redemption Amount (before giving effect to such increase) and the
Capital Contribution (as defined in Section 1.03(b)) is not reasonably
equivalent to the aggregate value immediately prior to the consummation of
the Transactions, as determined by Marathon in its sole discretion, of (i)
Ashland's Membership Interest, (ii) the Maleic Business and (iii) the VIOC
Centers. In the event that Marathon makes the determination contemplated by
the immediately preceding sentence, any resulting increase in the MAP
Partial Redemption Amount shall be payable in any combination of cash and
accounts receivable of MAP as determined by Marathon. If at any time
Marathon determines that it is reasonably likely to direct MAP to increase
the MAP Partial Redemption Amount pursuant to the second sentence of this
Section 1.01, Marathon shall provide prompt notice of such determination to
Ashland, including a good faith estimate of any such increase.
5
SECTION 1.02. MALEIC/VIOC CONTRIBUTION; MAP/LOOP/LOCAP
CONTRIBUTION; REORGANIZATION MERGER. Promptly following the consummation of
the MAP Partial Redemption pursuant to Section 1.01, and prior to
consummating the Transactions set forth in Sections 1.03 and 1.04, the
parties shall consummate each of the following Transactions:
(a) MALEIC/VIOC CONTRIBUTION. Ashland shall cause the
transactions contemplated by the Maleic Agreement and the VIOC Agreement,
including the contribution by Ashland to HoldCo of the Maleic Business and
the VIOC Centers and the assumption by HoldCo of certain related
liabilities, to be consummated in accordance with the Maleic Agreement and
the VIOC Agreement (the "Maleic/VIOC Contribution").
(b) MAP/LOOP/LOCAP CONTRIBUTION. Promptly following the
consummation of the Maleic/VIOC Contribution pursuant to Section 1.02(a),
(i) Ashland shall cause the MAP/LOOP/LOCAP Contribution Agreements (as
defined in Section 14.02) to be executed and delivered by the parties
specified therein to be parties thereto, and Ashland shall contribute to
HoldCo Ashland's remaining Membership Interest and, subject to Section
9.10, the Ashland LOOP/LOCAP Interest (as defined in Section 14.02), and
HoldCo shall assume certain related liabilities and obligations, in
accordance with the MAP/LOOP/LOCAP Contribution Agreements, (ii) if Ashland
has not been released from all liabilities, obligations and commitments
under the LOCAP T&D Agreement in accordance with Section 9.03(g), Ashland
shall cause the LOCAP T&D Assumption Agreement (as defined in Section
14.02) to be executed and delivered by the parties specified therein to be
parties thereto and (iii) if Ashland has not been released from all
liabilities, obligations and commitments under the LOOP T&D Agreement in
accordance with Section 9.03(g), Ashland shall cause the LOOP T&D
Assumption Agreement (as defined in Section 14.02) to be executed and
delivered by the parties specified therein to be parties thereto
(collectively, the "MAP/LOOP/LOCAP Contribution").
(c) THE REORGANIZATION MERGER. Promptly following the
consummation of the MAP/LOOP/LOCAP Contribution pursuant to Section
1.02(b), Ashland shall, pursuant to Article II and in accordance with the
Kentucky
6
Business Corporation Act (the "KBCA") and the Kentucky Limited Liability
Company Act (the "KLLCA"), be merged with and into New Ashland LLC (the
"Reorganization Merger") at the Reorganization Merger Effective Time (as
defined in Section 2.02), which, if not the time of filing of the
Reorganization Articles of Merger (as defined in Section 2.02) in
accordance with Section 2.02, shall be a time mutually agreed upon by
Ashland and Marathon.
SECTION 1.03. HOLDCO BORROWING; CAPITAL CONTRIBUTION; CONVERSION
MERGER. Promptly following the consummation of the Maleic/VIOC
Contribution, the MAP/LOOP/LOCAP Contribution and the Reorganization Merger
pursuant to Section 1.02, the parties shall consummate each of the
following Transactions:
(a) HOLDCO BORROWING. Promptly following the Reorganization
Merger Effective Time, the Marathon Parties shall cause the HoldCo
Borrowing (as defined in Section 14.02) to be advanced to HoldCo by one or
more lenders that are not affiliates of MAP, any Marathon Party or any
Ashland Party ("Third Party Lenders") and HoldCo shall accept the HoldCo
Borrowing. If Marathon guarantees or otherwise provides credit support for
the HoldCo Borrowing, Marathon and HoldCo shall enter into a reimbursement
agreement (the "Reimbursement Agreement"), pursuant to which HoldCo shall
commit to pay a guarantee fee to Marathon after the Closing and, if
requested by Marathon prior to the Closing Date, shall grant to Marathon on
the Closing Date a security interest in all the property and other assets
(including the Membership Interest) that HoldCo owns to secure its
reimbursement obligations to Marathon, to the fullest extent permitted by
Contracts (as defined in Section 6.05(a)) to which Ashland or any Ashland
Subsidiary is a party or by which any of their respective properties or
assets is bound. Such security interest shall be released (other than with
respect to assets of the surviving entity of the Acquisition Merger (as
defined in Section 1.04(a)) at the Acquisition Merger Effective Time (or,
if earlier, upon the New Ashland Inc. Share Issuance). The Reimbursement
Agreement shall provide that: (i) the guarantee fee shall be payable after
Closing; and (ii) the reimbursement obligations to Marathon shall not
exceed the net amount of the HoldCo Borrowing actually received by HoldCo.
7
(b) CAPITAL CONTRIBUTION. Promptly following the consummation of
the HoldCo Borrowing pursuant to Section 1.03(a), HoldCo shall contribute
to New Ashland LLC cash in the amount equal to the total amount of the
HoldCo Borrowing, by wire transfer of immediately available funds to a New
Ashland LLC bank account designated in writing by Ashland at least two
business days prior to the Closing Date (the "Capital Contribution").
(c) CONVERSION MERGER. Promptly following the consummation of the
Capital Contribution pursuant to Section 1.03(b), pursuant to Article III
and in accordance with the KLLCA and the KBCA, New Ashland LLC shall be
merged with and into New Ashland Inc. (the "Conversion Merger") at the
Conversion Merger Effective Time (as defined in Section 3.02), which, if
not the time of filing of the Conversion Articles of Merger (as defined in
Section 3.02) in accordance with Section 3.02, shall be a time mutually
agreed upon by Ashland and Marathon.
SECTION 1.04. ACQUISITION MERGER; DISTRIBUTION. (a) Promptly
following the Conversion Merger Effective Time, pursuant to Article IV and
in accordance with the Delaware General Corporation Law (the "DGCL") and
the Delaware Limited Liability Company Act (the "DLLCA"), HoldCo shall be
merged with and into Merger Sub (the "Acquisition Merger") at the
Acquisition Merger Effective Time.
(b) In the event that the Private Letter Rulings (as defined in
Section 10.01(f)) do not provide that the Acquisition Merger will be
treated as a distribution by HoldCo of all the stock of New Ashland Inc.
under Section 355 of the Internal Revenue Code of 1986, as amended (the
"Code"), followed by a merger of HoldCo into Merger Sub, then the parties
hereto shall execute an appropriate amendment to this Agreement to provide
that the New Ashland Inc. Share Issuance (as defined in Section 6.05(b))
shall not be effected as part of the Acquisition Merger but instead the
shares of New Ashland Inc. to be issued thereunder shall be issued to
HoldCo as part of the Conversion Merger, followed by the distribution
thereof by HoldCo to the holders of HoldCo Common Stock (as defined in
Section 2.04(a)(i)), on the basis of one share of New Ashland Inc. Common
Stock for each outstanding share of HoldCo Common Stock, immediately prior
to the Acquisition Merger.
8
SECTION 1.05. CLOSING. The closing of the Transactions (the
"Closing") shall take place at the offices of MAP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m. (Eastern time) on the last business day
of the calendar month in which the last to be satisfied (or, to the extent
permitted by Law (as defined in Section 6.05(a)), waived by the parties
entitled to the benefits thereof) of the conditions set forth in Article X
(other than those conditions that by their nature are to be satisfied on
the Closing Date, but subject to the satisfaction or waiver of those
conditions) has been so satisfied or waived, or, if the last such condition
is satisfied or waived on one of the last two business days of a calendar
month, on the last business day of the following calendar month, or at such
other place, time and date as shall be agreed in writing between Ashland
and Marathon. The date on which the Closing occurs is referred to in this
Agreement as the "Closing Date". If Ashland and Marathon agree that the
Closing is expected to occur on December 31, 2004, the parties shall use
their reasonable best efforts to agree on closing mechanics to effect the
Transactions on such date, which may include: (i) the filing of the
Reorganization Articles of Merger, the Conversion Articles of Merger and
the Acquisition Certificate of Merger prior to December 31, 2004, in each
case specifying an effective time on December 31, 2004 and (ii) advancement
of the HoldCo Borrowing to an escrow account for the benefit of HoldCo at a
pre-closing prior to December 31, 2004 to ensure that the proceeds of the
Capital Contribution will be available to New Ashland Inc. on the Closing
Date for consummation of the tender offer and/or consent solicitation
contemplated by Section 9.03(b).
SECTION 1.06. POST-CLOSING TRUE-UP. Within 90 days after the
Closing Date (subject to extension with the prior written consent of New
Ashland Inc., such consent not to be unreasonably withheld), MAP shall
prepare and deliver to Ashland a statement setting forth the MAP Partial
Redemption Amount. If the MAP Partial Redemption Amount exceeds the
Estimated MAP Partial Redemption Amount, MAP shall, and if the Estimated
MAP Partial Redemption Amount exceeds the MAP Partial Redemption Amount,
New Ashland Inc. shall, make payment to the other party of the amount of
such excess, together with interest thereon at a rate equal to the rate of
interest from time to time
9
announced publicly by Citibank, N.A., as its prime rate, calculated on the
basis of the actual number of days elapsed divided by 365, from the Closing
Date to the date of payment. Payment by MAP to New Ashland Inc. under this
Section 1.06 shall be in an amount of cash and accounts receivable of MAP
(such accounts receivable to be selected in accordance with the protocol
set forth in Exhibit A) within 30 days of the determination by MAP of the
MAP Partial Redemption Amount. The total Value of the accounts receivable
payable by MAP under this Section 1.06 shall equal the product of (i) the
total amount of the payment owed by MAP to New Ashland Inc. under this
Section 1.06 and (ii) the AR Fraction. Payment made by New Ashland Inc. to
MAP under this Section 1.06 shall be made in cash within 30 days after
receipt by New Ashland Inc. of the statement setting forth the MAP Partial
Redemption Amount. All cash payments under this Section 1.06 shall be made
by wire transfer in immediately available funds to an Ashland bank account
or a MAP bank account, as applicable, which shall be designated in writing
by Ashland or MAP, as applicable, at least two business days prior to the
date for such payment.
ARTICLE II
THE REORGANIZATION MERGER
-------------------------
SECTION 2.01. PARTIES TO THE REORGANIZATION MERGER. The names of
the constituent business entities that are parties to the Reorganization
Merger are Ashland Inc. (referred to herein as "Ashland") and EXM LLC
(referred to herein as "New Ashland LLC"). Upon the terms and subject to
the conditions set forth herein, at the Reorganization Merger Effective
Time, Ashland shall merge with and into New Ashland LLC, the separate
corporate existence of Ashland shall cease and New Ashland LLC shall be the
surviving business entity of the Reorganization Merger. The name of the
surviving business entity of the Reorganization Merger shall be EXM LLC.
SECTION 2.02 REORGANIZATION MERGER EFFECTIVE TIME. Prior to the
Closing, Ashland shall prepare, and on the Closing Date, New Ashland LLC
shall file with the Secretary of State of the Commonwealth of Kentucky,
articles of merger or other appropriate documents (in any
10
such case, the "Reorganization Articles of Merger") executed in accordance
with the relevant provisions of the KBCA and the KLLCA and shall make all
other filings or recordings required under the KBCA and the KLLCA. The
Reorganization Merger shall become effective at such time as the
Reorganization Articles of Merger are duly filed with such Secretary of
State, or at such later time on the Closing Date as specified in the
Reorganization Articles of Merger (the time the Reorganization Merger
becomes effective being the "Reorganization Merger Effective Time").
SECTION 2.03. EFFECTS. The Reorganization Merger shall have the
effects set forth in KRS 271B.11-060 of the KBCA and KRS 275.365 of the
KLLCA. Without limiting the generality of the foregoing, and subject
thereto, at the Reorganization Merger Effective Time, all the properties,
rights, privileges and powers of Ashland immediately prior to the
Reorganization Merger Effective Time shall rest in New Ashland LLC, and all
debts, liabilities, obligations and duties of Ashland immediately prior to
the Reorganization Merger Effective Time shall become the debts,
liabilities, obligations and duties of New Ashland LLC.
SECTION 2.04. CONVERSION OF ASHLAND SECURITIES. (a) At the
Reorganization Merger Effective Time, by virtue of the Reorganization
Merger and without any action on the part of any holder of any shares of
Ashland Common Stock or any limited liability company interests in New
Ashland LLC ("New Ashland LLC Interests"):
(i) subject to Section 2.05, each share of Ashland Common Stock
issued and outstanding immediately prior to the Reorganization Merger
Effective Time shall be converted into and thereafter represent one
duly issued, fully paid and nonassessable share of common stock, par
value $1.00 per share, of HoldCo (the "HoldCo Common Stock") (the
"Reorganization Merger Consideration"); and
(ii) all New Ashland LLC Interests shall remain outstanding
without change.
(b) As of the Reorganization Merger Effective Time, all shares of
Ashland Common Stock shall no longer be
11
outstanding, shall automatically be canceled and retired and shall cease to
exist, and each holder of a certificate formerly evidencing shares of
Ashland Common Stock shall, subject to Section 2.05, cease to have any
rights with respect thereto except the right to receive the number of
shares of HoldCo Common Stock into which such shares of Ashland Common
Stock were converted pursuant to the provisions of Section 2.04(a) hereof.
(c) The Reorganization Merger Consideration issued (and paid)
upon conversion of any shares of Ashland Common Stock in accordance with
the terms of this Article II shall be deemed to have been issued (and paid)
at the Reorganization Merger Effective Time in full satisfaction of all
rights pertaining to such shares of Ashland Common Stock, and after the
Reorganization Merger Effective Time there shall be no further registration
of transfers on the stock transfer books of the business entity surviving
the Reorganization Merger, New Ashland LLC, of shares of Ashland Common
Stock that were outstanding immediately prior to the Reorganization Merger
Effective Time.
SECTION 2.05. DISSENTERS' RIGHTS. Notwithstanding anything in
this Agreement to the contrary, shares of Ashland Common Stock that are
outstanding immediately prior to the Reorganization Merger Effective Time
and that are held by any person who is entitled to demand and properly
demands payment of the fair value of such shares ("Dissenters' Shares")
pursuant to, and who complies in all respects with, Subtitle 13 of the KBCA
("Subtitle 13") shall not be converted into Reorganization Merger
Consideration as provided in Section 2.04(a), but rather the holders of
Dissenters' Shares shall be entitled to payment of the fair value of such
Dissenters' Shares in accordance with Subtitle 13; provided, however, that
if any such holder shall fail to perfect or otherwise shall waive, withdraw
or lose the right to receive payment of fair value under Subtitle 13, then
the right of such holder to be paid the fair value of such holder's
Dissenters' Shares shall cease and such Dissenters' Shares shall be deemed
to have been converted as of the Reorganization Merger Effective Time into,
and to have become exchangeable solely for, Reorganization Merger
Consideration as provided in Section 2.04(a).
12
SECTION 2.06. LIMITED LIABILITY. Limited liability shall be retained
with respect to the business entity surviving the Reorganization Merger, New
Ashland LLC.
SECTION 2.07. ARTICLES OF ORGANIZATION. No changes to the Articles
of Organization of New Ashland LLC shall be effected by the Reorganization
Merger.
SECTION 2.08. OPERATING AGREEMENT. The operating agreement of New
Ashland LLC as in effect immediately prior to the Reorganization Merger
Effective Time shall be the operating agreement of the business entity
surviving the Reorganization Merger, New Ashland LLC, until thereafter
changed or amended as provided therein or by applicable Law.
SECTION 2.09. REORGANIZATION PLAN OF MERGER. The provisions
contained in Sections 2.01 through 2.08 constitute the "plan of merger", as
that term is used in KRS 271B.11-010 and KRS 271B.11-080 of the KBCA and
KRS 275.355 of the KLLCA, for the Reorganization Merger (the
"Reorganization Plan of Merger"). The adoption of this Agreement by the
Board of Directors of Ashland (the "Ashland Board") constitutes the
adoption, and the approval of this Agreement by the shareholders of Ashland
will constitute the approval, of the Reorganization Plan of Merger by
Ashland as required by KRS 271B.11-030. The approval of this Agreement by
HoldCo, as the sole member of New Ashland LLC, constitutes the approval of
the Reorganization Plan of Merger by New Ashland LLC as required by KRS
275.350.
ARTICLE III
THE CONVERSION MERGER
---------------------
SECTION 3.01. PARTIES TO THE CONVERSION MERGER. The names of the
constituent business entities that are parties to the Conversion Merger are
EXM LLC (referred to herein as "New Ashland LLC") and New EXM Inc.
(referred to herein as "New Ashland Inc."). Upon the terms and subject to
the conditions set forth herein, at the Conversion Merger Effective Time,
New Ashland LLC shall merge with and into New Ashland Inc., the separate
existence of New
13
Ashland LLC shall cease and New Ashland Inc. will be the surviving business
entity of the Conversion Merger. Pursuant to the amendment referred to in
Section 3.06(a), the name of the surviving business entity of the
Conversion Merger shall be changed to Ashland Inc.
SECTION 3.02. CONVERSION MERGER EFFECTIVE TIME. Prior to the
Closing, Ashland shall prepare, and on the Closing Date, New Ashland Inc.
shall file with the Secretary of State of the Commonwealth of Kentucky,
articles of merger or other appropriate documents (in any such case, the
"Conversion Articles of Merger") executed in accordance with the relevant
provisions of the KLLCA and the KBCA and shall make all other filings or
recordings required under the KLLCA and the KBCA. The Conversion Merger
shall become effective at such time as the Conversion Articles of Merger
are duly filed with such Secretary of State, or at such later time on the
Closing Date as specified in the Conversion Articles of Merger (the time
the Conversion Merger becomes effective being the "Conversion Merger
Effective Time").
SECTION 3.03. EFFECTS. The Conversion Merger shall have the
effects set forth in KRS 271B.11-060 of the KBCA and KRS 275.365 of the
KLLCA. Without limiting the generality of the foregoing, and subject
thereto, at the Conversion Merger Effective Time, all the properties,
rights, privileges and powers of New Ashland LLC immediately prior to the
Conversion Merger Effective Time shall rest in New Ashland Inc., and all
debts, liabilities, obligations and duties of New Ashland LLC immediately
prior to the Conversion Merger Effective Time shall become the debts,
liabilities, obligations and duties of New Ashland Inc.
SECTION 3.04. CONVERSION OF NEW ASHLAND SECURITIES. At the
Conversion Merger Effective Time, by virtue of the Conversion Merger and
without any action on the part of HoldCo:
(i) all New Ashland LLC Interests issued and outstanding
immediately prior to the Conversion Merger Effective Time shall no
longer be outstanding and shall automatically be canceled and retired
and shall cease to exist, and no consideration shall be delivered or
deliverable in exchange therefor; and
14
(ii) each share of New Ashland Inc. Common Stock issued and
outstanding immediately prior to the Conversion Merger Effective Time
shall remain outstanding without change.
SECTION 3.05. LIMITED LIABILITY. Limited liability shall be
retained with respect to the business entity surviving the Conversion
Merger, New Ashland Inc.
SECTION 3.06. ARTICLES OF INCORPORATION AND BY-LAWS. (a) At the
Conversion Merger Effective Time, the articles of incorporation of New
Ashland Inc. shall be amended as set out in Exhibit B, and, as so amended,
such articles of incorporation shall be the articles of incorporation of
the business entity surviving the Conversion Merger, New Ashland Inc.,
until thereafter changed or amended as provided therein or by applicable
Law.
(b) The by-laws of New Ashland Inc. as in effect immediately
prior to the Conversion Merger Effective Time shall be the by-laws of
the business entity surviving the Conversion Merger, New Ashland Inc.,
until thereafter changed or amended as provided therein or by
applicable Law.
SECTION 3.07. DIRECTORS. The directors of New Ashland Inc.
immediately prior to the Conversion Merger Effective Time shall be the
directors of the business entity surviving the Conversion Merger, New
Ashland Inc., until the earlier of their resignation or removal or until
their respective successors are duly elected and qualified, as the case may
be.
SECTION 3.08. OFFICERS. The officers of New Ashland Inc.
immediately prior to the Conversion Merger Effective Time shall be the
officers of the business entity surviving the Conversion Merger, New
Ashland Inc., until the earlier of their resignation or removal or until
their respective successors are duly elected or appointed and qualified, as
the case may be.
SECTION 3.09. CONVERSION PLAN OF MERGER. The provisions contained
in Sections 3.01 through 3.08 constitute the "plan of merger", as that term
is used in KRS 271B.11-010 and KRS 271B.11-080 of the KBCA and KRS 275.355
of the KLLCA, for the Conversion Merger (the
15
"Conversion Plan of Merger"). The adoption of this Agreement by the Board
of Directors of New Ashland Inc. (the "New Ashland Board") constitutes the
adoption, and the approval of this Agreement by HoldCo, as the sole
shareholder of New Ashland Inc., constitutes the approval, of the
Conversion Plan of Merger by New Ashland Inc. as required by KRS
271B.11-030 of the KBCA. The approval of this Agreement by HoldCo, as the
sole member of New Ashland LLC, constitutes the approval of the Conversion
Plan of Merger by New Ashland LLC as required by KRS 275.350 of the KLLCA.
ARTICLE IV
THE ACQUISITION MERGER
----------------------
SECTION 4.01. ACQUISITION MERGER; ACQUISITION MERGER EFFECTIVE
TIME. Upon the terms and subject to the conditions set forth herein, at the
Acquisition Merger Effective Time, HoldCo shall be merged with and into
Merger Sub, the separate corporate existence of HoldCo shall cease and
Merger Sub shall be the surviving business entity of the Acquisition
Merger. Prior to the Closing, Ashland and Marathon shall jointly prepare,
and on the Closing Date, Merger Sub shall file with the Secretary of State
of the State of Delaware, a certificate of merger or other appropriate
documents (in any such case, the "Acquisition Certificate of Merger")
executed in accordance with the relevant provisions of the DGCL and the
DLLCA and shall make all other filings or recordings required under the
DGCL and the DLLCA. The Acquisition Merger shall become effective at such
time as the Acquisition Certificate of Merger is duly filed with such
Secretary of State, or at such later time on the Closing Date as Ashland
and Marathon shall agree and specify in the Acquisition Certificate of
Merger (the time the Acquisition Merger becomes effective being the
"Acquisition Merger Effective Time").
SECTION 4.02. EFFECTS. The Acquisition Merger shall have the
effects set forth in Section 18-209(g) of the DLLCA. Without limiting the
generality of the foregoing, and subject thereto, at the Acquisition Merger
Effective Time, all the properties, rights, privileges and powers of HoldCo
immediately prior to the Acquisition Merger Effective Time shall vest in
Merger Sub, and all
16
debts, liabilities, obligations and duties of HoldCo immediately prior to
the Acquisition Merger Effective Time shall become the debts, liabilities,
obligations and duties of Merger Sub.
SECTION 4.03. EFFECT ON CAPITAL STOCK. (a) At the Acquisition
Merger Effective Time, by virtue of the Acquisition Merger and without any
action on the part of the holder of any shares of HoldCo Common Stock or
any membership interests in Merger Sub:
(i) subject to Section 5.01(e), each issued and outstanding share
of HoldCo Common Stock shall be converted into the right to receive
(x) one duly issued, fully paid and nonassessable share of New Ashland
Inc. Common Stock and (y) a number of duly issued, fully paid and
nonassessable shares of Marathon Common Stock equal to the Exchange
Ratio (as defined in Section 4.03(b));
(ii) all of the limited liability company interests in Merger Sub
issued and outstanding immediately prior to the Acquisition Merger
Effective Time shall remain outstanding without change; and
(iii) each share of New Ashland Inc. Common Stock held by HoldCo
immediately prior to the Acquisition Merger Effective Time shall
automatically be canceled and retired and shall cease to exist, and no
consideration shall be delivered or deliverable in exchange therefor.
(b) The shares of New Ashland Inc. Common Stock and Marathon
Common Stock to be issued upon the conversion of shares of HoldCo
Common Stock pursuant to Section 4.03(a)(i) and cash in lieu of
fractional shares of Marathon Common Stock as contemplated by Section
5.01(e) are referred to collectively as "Acquisition Merger
Consideration". As of the Acquisition Merger Effective Time, all such
shares of HoldCo Common Stock shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and
each holder of a certificate formerly representing the right to
receive any such shares of HoldCo Common Stock pursuant to Section
2.04(b) shall cease to have any rights with respect
17
thereto, except the right to receive, upon surrender of such certificate in
accordance with Section 5.01, the Acquisition Merger Consideration, without
interest. "Exchange Ratio" means $315,000,000 divided by the product of (x)
the Fair Market Value and (y) the total number of shares of Ashland Common
Stock issued and outstanding immediately prior to the Reorganization Merger
Effective Time. "Fair Market Value" means an amount equal to the average of
the closing sale prices per share for the Marathon Common Stock on the New
York Stock Exchange (the "NYSE"), as reported in The Wall Street Journal,
Northeastern edition, for each of the twenty consecutive trading days
ending with the third complete trading day prior to the Closing Date (not
counting the Closing Date) (the "Averaging Period"). Notwithstanding the
foregoing, if the Board of Directors of Marathon (the "Marathon Board")
declares a dividend on the outstanding shares of Marathon Common Stock
having a record date before the Closing Date but an ex- dividend date
(based on "regular way" trading on the NYSE of shares of Marathon Common
Stock) (the "Ex-Date") that occurs after the first trading day of the
Averaging Period, then for purposes of computing the Fair Market Value, the
closing price on any trading day before the Ex-Date will be adjusted by
subtracting therefrom the amount of such dividend. For purposes of the
immediately preceding sentence, the amount of any noncash dividend will be
the fair market value thereof on the payment date for such dividend as
determined in good faith by mutual agreement of Ashland and Marathon.
(c) If, prior to the Acquisition Merger Effective Time, the
outstanding shares of Marathon Common Stock shall have been reclassified or
changed into, or exchanged for, securities other than Marathon Common Stock
(including as a result of a merger), then, notwithstanding Section
4.03(a)(i) but subject to Section 5.01(e), each issued and outstanding
share of HoldCo Common Stock shall be converted into the right to receive
such other securities with the exchange ratio determined in accordance with
Section 4.03(b), subject to such appropriate adjustments as shall be
determined in good faith by mutual agreement of Ashland and Marathon.
(d) If, after the first trading day of the Averaging Period and
prior to the Acquisition Merger Effective Time, the outstanding shares of
Marathon Common
18
Stock shall have been increased, decreased, changed into or exchanged for a
different number of shares of Marathon Common Stock in any case as a result
of a reorganization, recapitalization, reclassification, stock dividend,
stock split, reverse stock split, combination or exchange of shares or
other similar change in capitalization, then an appropriate and
proportionate adjustment shall be made to the Exchange Ratio.
SECTION 4.04. LIMITED LIABILITY COMPANY AGREEMENT. The limited
liability company agreement of Merger Sub as in effect immediately prior to
the Acquisition Merger Effective Time shall be the limited liability
company agreement of the business entity surviving the Acquisition Merger,
Merger Sub, until thereafter changed or amended as provided therein or by
applicable Law.
SECTION 4.05. TAX TREATMENT. The parties intend that (a) the
Acquisition Merger will qualify as a "reorganization" within the meaning of
Section 368(a) of the Code and the rules and regulations promulgated
thereunder, (b) HoldCo and Marathon will each be a "party" to such
reorganization within the meaning of Section 368(b) of the Code and (c)
this Agreement is intended to constitute a "plan of reorganization" for
U.S. Federal income Tax purposes.
ARTICLE V
EXCHANGE OF HOLDCO CERTIFICATES
-------------------------------
SECTION 5.01. EXCHANGE OF CERTIFICATES. (a) EXCHANGE AGENT. (i)
Promptly following the Acquisition Merger, New Ashland Inc. shall issue and
deposit with an exchange agent designated by Ashland and reasonably acceptable
to Marathon (the "Exchange Agent"), for the benefit of the holders of shares
of HoldCo Common Stock, for exchange in accordance with this Article V,
through the Exchange Agent, certificates representing the shares of New
Ashland Inc. Common Stock issuable pursuant to Section 4.03 in exchange for
outstanding shares of HoldCo Common Stock. New Ashland Inc. shall provide to
the Exchange Agent following the Acquisition Merger Effective Time all the
cash necessary to pay any dividends or other
19
distributions with respect to New Ashland Inc. Common Stock in accordance with
Section 5.01(c)(i).
(ii) Promptly following the Acquisition Merger Effective Time,
Marathon shall issue and deposit with the Exchange Agent, for the
benefit of the holders of shares of HoldCo Common Stock, for exchange
in accordance with this Article V, through the Exchange Agent,
certificates representing a number of shares of Marathon Common Stock
equal to the product of (x) the total number of shares of Ashland
Common Stock issued and outstanding immediately prior to the
Reorganization Merger Effective Time and (y) the Exchange Ratio,
rounded up to the nearest whole share. Marathon shall provide to the
Exchange Agent (or, following the termination of the Exchange Fund
pursuant to Section 5.01(f), to New Ashland Inc. so long as it is the
record holder on the applicable record date of shares of Marathon
Common Stock delivered to New Ashland Inc. upon such termination)
following the Acquisition Merger Effective Time all the cash necessary
to pay any dividends or other distributions in accordance with Section
5.01(c)(ii) (the shares of New Ashland Inc. Common Stock, together
with the cash provided to pay any dividends or distributions with
respect thereto, and the shares of Marathon Common Stock, together
with the cash provided to pay any dividends or distributions with
respect thereto, deposited with the Exchange Agent being hereinafter
referred to as the "Exchange Fund"). For the purposes of such deposit,
Marathon shall assume that there will not be any fractional shares of
Marathon Common Stock.
(iii) The Exchange Agent shall, pursuant to irrevocable
instructions delivered by New Ashland Inc. and Marathon, deliver the
New Ashland Inc. Common Stock and the Marathon Common Stock
contemplated to be issued pursuant to Section 4.03 and this Article V
out of the Exchange Fund. The Exchange Fund shall not be used for any
other purpose.
20
(b) EXCHANGE PROCEDURES. As promptly as reasonably practicable
after the Acquisition Merger Effective Time, the Exchange Agent shall mail
to each holder of record of a certificate or certificates (each, a
"Certificate") that immediately prior to the Reorganization Merger
Effective Time represented outstanding shares of Ashland Common Stock
(other than holders of Dissenters' Shares), (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and
title to the Certificate or Certificates shall pass, only upon delivery of
the Certificate or Certificates to the Exchange Agent and shall be in such
form and have such other provisions as New Ashland Inc. and Marathon may
reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificate or Certificates in exchange for Acquisition
Merger Consideration. Upon surrender of a Certificate or Certificates for
cancelation to the Exchange Agent or, following termination of the Exchange
Fund pursuant to Section 5.01(f), New Ashland Inc., together with such
letter of transmittal, duly executed and completed in accordance with the
instructions thereto, and such other documents as may reasonably be
required by the Exchange Agent or New Ashland Inc., as applicable, the
holder of such Certificate or Certificates shall be entitled to receive in
exchange therefor (i) a certificate or certificates representing the number
of shares of New Ashland Inc. Common Stock that such holder has the right
to receive pursuant to the provisions of Section 4.03 and this Article V,
(ii) a certificate or certificates representing that number of whole shares
of Marathon Common Stock that such holder has the right to receive pursuant
to the provisions of Section 4.03 and this Article V, (iii) cash in lieu of
fractional shares of Marathon Common Stock that such holder has the right
to receive pursuant to Section 5.01(e) and (iv) any dividends or other
distributions such holder has the right to receive pursuant to Section
5.01(c), and the Certificate or Certificates so surrendered shall forthwith
be canceled. In the event of a transfer of ownership of Ashland Common
Stock or HoldCo Common Stock that is not registered in the transfer records
of Ashland or HoldCo, (i) a certificate or certificates representing the
appropriate number of shares of New Ashland Inc. Common Stock and (ii) a
certificate or certificates representing the appropriate number of shares
of Marathon Common Stock, together with a check for cash to be paid in lieu
of fractional shares, may be issued and
21
paid to a person other than the person in whose name the Certificate or
Certificates so surrendered is registered, if such Certificate or
Certificates shall be properly endorsed or otherwise be in proper form for
transfer and the person requesting such issuance and payment shall pay any
transfer or other Taxes required by reason of the issuance of shares of New
Ashland Inc. Common Stock and Marathon Common Stock to a person other than
the registered holder of such Certificate or Certificates or establish to
the satisfaction of New Ashland Inc. that such Tax has been paid or is not
applicable. Until surrendered as contemplated by this Section 5.01, each
Certificate shall be deemed at any time after the Acquisition Merger
Effective Time to represent only the right to receive upon such surrender
Acquisition Merger Consideration as contemplated by this Section 5.01. No
interest shall be paid or accrue on any cash in lieu of fractional shares
or accrued and unpaid dividends or distributions, if any, payable upon
surrender of any Certificate.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. (i) No
dividends or other distributions with respect to shares of New Ashland
Inc. Common Stock with a record date on or after the Closing Date
shall be paid to the holder of any Certificate with respect to the
shares of New Ashland Inc. Common Stock issuable upon surrender of
such Certificate until the surrender of such Certificate in accordance
with this Article V. Subject to applicable Law, following surrender of
any such Certificate, there shall be paid to the holder of the
certificate representing shares of New Ashland Inc. Common Stock
issued in exchange therefor, without interest, (A) at the time of such
surrender, the amount of dividends or other distributions with a
record date after the Closing Date theretofore paid with respect to
such shares of New Ashland Inc. Common Stock, and (B) at the
appropriate payment date, the amount of dividends or other
distributions with a record date on or after the Closing Date but
prior to such surrender and a payment date subsequent to such
surrender payable with respect to such shares of New Ashland Inc.
Common Stock.
(ii) No dividends or other distributions with respect to shares
of Marathon Common Stock with a record date on or after the Closing
Date shall be paid to the holder of any Certificate with respect to
the shares of Marathon Common
22
Stock issuable upon surrender thereof, and no cash payment in lieu of
fractional shares shall be paid to any such holder pursuant to Section
5.01(e), until the surrender of such Certificate in accordance with this
Article V. Subject to applicable Law, following surrender of any such
Certificate, there shall be paid to the holder of the certificate
representing whole shares of Marathon Common Stock issued in exchange
therefor, without interest, (A) at the time of such surrender, the amount
of any cash payable in lieu of a fractional share of Marathon Common Stock
to which such holder is entitled pursuant to Section 5.01(e) and the amount
of dividends or other distributions with a record date on or after the
Closing Date theretofore paid with respect to such whole shares of Marathon
Common Stock and (B) at the appropriate payment date, the amount of
dividends or other distributions with a record date on or after the Closing
Date but prior to such surrender and a payment date subsequent to such
surrender payable with respect to such whole shares of Marathon Common
Stock.
(d) NO FURTHER OWNERSHIP RIGHTS IN HOLDCO COMMON STOCK. The
Acquisition Merger Consideration issued (and paid) upon conversion of any
shares of HoldCo Common Stock in accordance with the terms of this Article
V shall be deemed to have been issued (and paid) in full satisfaction of
all rights pertaining to such shares of HoldCo Common Stock, and after the
Acquisition Merger Effective Time there shall be no further registration of
transfers on the stock transfer books of the business entity surviving the
Acquisition Merger, Merger Sub, of shares of HoldCo Common Stock that were
outstanding immediately prior to the Acquisition Merger Effective Time. If,
after the Acquisition Merger Effective Time, any Certificates are presented
to New Ashland Inc. or the Exchange Agent for any reason, they shall be
canceled and exchanged as provided in this Article V except as otherwise
provided by applicable Law. Unless Marathon otherwise consents, the
Acquisition Merger Consideration shall not be issued to any person who is
an "affiliate" of Ashland for purposes of Rule 145 under the Securities Act
of 1933, as amended (the "Securities Act"), on the date of the Ashland
Shareholders Meeting, as
23
determined from representations contained in the letters of transmittal to
be delivered by former holders of shares of Ashland Common Stock pursuant
to the provisions of Section 5.01(b) (a "Rule 145 Affiliate"), until
Marathon has received a written agreement from such Rule 145 Affiliate
substantially in the form attached hereto as Exhibit C; provided, however,
that Marathon shall be solely responsible for any Losses (as defined in
Section 13.01(a)) of any of the Ashland Parties and their respective
affiliates and Representatives (in each case other than such Rule 145
Affiliate) to the extent resulting from, arising out of, or relating to,
directly or indirectly, any refusal by Marathon to consent to the issuance
of Acquisition Merger Consideration to any such Rule 145 Affiliate pursuant
to this sentence.
(e) NO FRACTIONAL SHARES. (i) No certificates or scrip
representing fractional shares of Marathon Common Stock shall be
issued upon the conversion of HoldCo Common Stock pursuant to Section
4.03, and such fractional share interests shall not entitle the owner
thereof to vote or to any rights of a holder of Marathon Common Stock.
For purposes of this Section 5.01(e), all fractional shares to which a
single record holder would be entitled shall be aggregated and
calculations shall be rounded to three decimal places. Notwithstanding
any other provision of this Agreement, each holder of Certificates who
otherwise would be entitled to receive a fraction of a share of
Marathon Common Stock (determined after taking into account all
Certificates delivered by such holder) shall receive, in lieu thereof,
cash (without interest) in an amount equal to the product of such
fractional part of a share of Marathon Common Stock multiplied by the
Fair Market Value.
(ii) As promptly as practicable following the Acquisition Merger
Effective Time, the Exchange Agent shall determine the excess of (A)
the number of shares of Marathon Common Stock delivered to the
Exchange Agent by Marathon pursuant to Section 5.01(a) over (B) the
aggregate number of whole shares of Marathon Common Stock to be issued
to holders of HoldCo Common Stock pursuant to Section 5.01(b) (such
excess being herein called the "Excess Shares"). As promptly as
practicable after such determination, Marathon shall deposit an amount
24
into the Exchange Fund equal to the product of the number of Excess Shares
multiplied by the Fair Market Value, and the Exchange Agent shall return
certificates representing such Excess Shares to Marathon.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange
Fund that remains undistributed to the holders of Certificates for six
months after the Acquisition Merger Effective Time shall be delivered to or
in accordance with the instructions of New Ashland Inc., upon demand, and
any holder of a Certificate who has not theretofore complied with this
Article V shall thereafter look only to New Ashland Inc. for payment of its
claim for Acquisition Merger Consideration and any dividends or
distributions with respect to New Ashland Inc. Common Stock or Marathon
Common Stock, as applicable, as contemplated by Section 5.01(c).
(g) LOST CERTIFICATES. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by New Ashland Inc., the execution of an indemnity reasonably
satisfactory to New Ashland Inc. (and, if required by New Ashland Inc., the
posting by such person of a bond in such reasonable amount as New Ashland
Inc. may direct, as indemnity) against any claim that may be made against
it with respect to such Certificate, the Exchange Agent will deliver in
exchange for such lost, stolen or destroyed Certificate the applicable
Acquisition Merger Consideration with respect to the shares of HoldCo
Common Stock formerly represented thereby, and any dividends or other
distributions such holder has the right to receive in respect thereof,
pursuant to this Agreement.
(h) WITHHOLDING RIGHTS. Each of New Ashland Inc. and Marathon
shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of Certificates and any
holder of Dissenters' Shares such amounts as may be required to be deducted
and withheld by New Ashland Inc. or Marathon, as applicable, with respect
to the making of such payment under the Code or under any provision of
state, local or foreign Tax Law. To the extent that amounts are so withheld
and paid over to the appropriate Tax Authority (as defined in Section
14.02), New Ashland Inc. or Marathon, as
25
applicable, will be treated as though it withheld an appropriate amount of
the type of consideration otherwise payable pursuant to this Agreement to
any holder of Certificates or Dissenters' Shares, sold such consideration
for an amount of cash equal to the fair market value of such consideration
at the time of such deemed sale and paid such cash proceeds to the
appropriate Tax Authority. Such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the shares
represented by the Certificates or Dissenters' Shares, as the case may be,
in respect of which such deduction and withholding was made.
(i) NO LIABILITY. None of the Ashland Parties, the Marathon
Parties or the Exchange Agent shall be liable to any person in respect of
any shares of New Ashland Inc. Common Stock (or dividends or distributions
with respect thereto), Marathon Common Stock (or dividends or distributions
with respect thereto) or cash from the Exchange Fund delivered to a public
official pursuant to any applicable abandoned property, escheat or similar
Law. If any Certificate has not been surrendered prior to five years after
the Acquisition Merger Effective Time (or immediately prior to such earlier
date on which Acquisition Merger Consideration or any dividends or
distributions with respect to New Ashland Inc. Common Stock or Marathon
Common Stock as contemplated by Section 5.01(c) in respect of such
Certificate would otherwise escheat to or become the property of any
Governmental Entity (as defined in Section 6.05(b))), any such shares,
cash, dividends or distributions in respect of such Certificate shall, to
the extent permitted by applicable Law, become the property of New Ashland
Inc., free and clear of all claims or interest of any person previously
entitled thereto.
(j) INVESTMENT OF EXCHANGE FUND. The Exchange Agent shall invest
any cash included in the Exchange Fund, as directed by New Ashland Inc., on
a daily basis. Any interest and other income resulting from such
investments shall be paid to New Ashland Inc.
26
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
OF THE ASHLAND PARTIES
------------------------------
Ashland and New Ashland Inc., jointly and severally, represent
and warrant to the Marathon Parties that, as of the date of this Agreement
and as of the Closing Date as if made on the Closing Date (except to the
extent such representations and warranties expressly relate to an earlier
date, in which case as of such earlier date), except as set forth in the
disclosure letter, dated as of the date of this Agreement, from Ashland to
Marathon (the "Ashland Disclosure Letter"); provided, however, that no item
contained in any section of the Ashland Disclosure Letter shall be deemed
to qualify, or disclose any exception to, any representation or warranty
made in the last sentence of Section 6.03(e) or in Sections 6.04 or 6.11:
SECTION 6.01. ORGANIZATION, STANDING AND POWER. Ashland is duly
organized, validly existing and in good standing under the Laws of the
Commonwealth of Kentucky and has full corporate power and authority to own,
lease and otherwise hold its properties and to conduct its businesses as
presently conducted. Each Significant Ashland Subsidiary (as defined in
this Section 6.01) is duly organized, validly existing and, to the extent
such concept or a similar concept exists in the relevant jurisdiction, in
good standing under the Laws of the jurisdiction in which it is organized
and has full corporate or other entity power and authority to own, lease or
otherwise hold its properties and to conduct its businesses as presently
conducted. Each of Ashland and each Significant Ashland Subsidiary is duly
qualified to do business and is in good standing (where applicable) in each
jurisdiction where the nature of its business or its ownership or leasing
of its properties makes such qualification necessary, except in such
jurisdictions where the failure to be so qualified or in good standing has
not had and would not reasonably be expected to have an Ashland Material
Adverse Effect (as defined in Section 6.05(a)). Ashland has provided to
Marathon true and complete copies of the articles of incorporation of
Ashland, as amended to the date of this Agreement (as so amended, the
"Ashland Charter"), and the by-laws of Ashland, as amended to the date of
this
27
Agreement (as so amended, the "Ashland By- laws"), and the comparable
charter and organizational documents of each Significant Ashland
Subsidiary, in each case as amended to the date of this Agreement. For
purposes of this Agreement, a "Significant Ashland Subsidiary" means New
Ashland LLC, New Ashland Inc., any subsidiary of Ashland that constitutes a
significant subsidiary within the meaning of Rule 1-02 of Regulation S-X of
the SEC and, prior to the Acquisition Merger Effective Time, HoldCo.
SECTION 6.02. ASHLAND SUBSIDIARIES; EQUITY INTERESTS. (a) All the
outstanding shares of capital stock of, or other equity interests in, each
Significant Ashland Subsidiary have been duly authorized and validly issued
and are fully paid and nonassessable and are as of the date of this
Agreement owned by Ashland, by another subsidiary of Ashland (an "Ashland
Subsidiary") or by Ashland and another Ashland Subsidiary, free and clear
of all pledges, liens, charges, mortgages, security interests, encumbrances
and adverse claims of any kind or nature whatsoever (collectively,
"Liens").
(b) Each of HoldCo, New Ashland LLC and New Ashland Inc., since
the date of its formation, has not carried on any business or conducted any
operations other than the execution of this Agreement, the other
Transaction Agreements and the Ancillary Agreements to which it is a party,
the performance of its obligations hereunder and thereunder and matters
ancillary thereto. Except for any indebtedness for borrowed money and other
liabilities assumed by HoldCo pursuant to the Transaction Agreements or the
Ancillary Agreements, and except as otherwise expressly contemplated by the
Transaction Agreements or the Ancillary Agreements, immediately prior to
the Acquisition Merger, HoldCo will not have any indebtedness for borrowed
money or any other liabilities (whether accrued, absolute, liquidated,
unliquidated, fixed, contingent, disputed, undisputed, legal or equitable).
SECTION 6.03. CAPITAL STRUCTURE. (a) The authorized capital stock
of Ashland consists of 300,000,000 shares of Common Stock and 30,000,000
shares of Cumulative Preferred Stock ("Ashland Preferred Stock" and,
together with the Ashland Common Stock, the "Ashland Capital Stock"). At
the close of business on February 29, 2004, (i) 69,599,791 shares of
Ashland Common Stock were issued and outstanding, (ii) 9,926,276 shares of
28
Ashland Common Stock were reserved for issuance pursuant to Ashland Stock
Plans (as defined in Section 14.02) and (iii) 500,000 shares of Series A
Participating Cumulative Preferred Stock ("Ashland Series A Preferred
Stock") were reserved for issuance in connection with the rights (the
"Ashland Rights") issued pursuant to the Rights Agreement dated as of May
16, 1996 (as amended from time to time, the "Ashland Rights Agreement"),
between Ashland and National City Bank, as Rights Agent. Except as set
forth above, at the close of business on February 29, 2004, no shares of
capital stock or other voting securities of Ashland were issued, reserved
for issuance or outstanding. There are no outstanding Ashland SARs (as
defined in Section 14.02) that were not granted in tandem with a related
Ashland Employee Stock Option. No shares of Ashland Capital Stock are held
by Ashland as treasury stock. All outstanding shares of Ashland Capital
Stock are, and all such shares that may be issued prior to the Closing will
be when issued, duly authorized, validly issued, fully paid and
nonassessable and not subject to or issued in violation of any purchase
option, call option, right of first refusal, preemptive right, subscription
right or any similar right under any provision of the KBCA, the Ashland
Charter, the Ashland By-laws or any Contract (as defined in Section
6.05(a)) to which Ashland is a party or otherwise bound. As of the date of
this Agreement, there are not any bonds, debentures, notes or other
indebtedness of Ashland having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on
which holders of Ashland Common Stock may vote ("Voting Ashland Debt").
None of HoldCo, New Ashland Inc. or New Ashland LLC owns or holds any
shares of Ashland Capital Stock or any Voting Ashland Debt. Except as set
forth above, as of the date of this Agreement, there are not any options,
warrants, rights, convertible or exchangeable securities, "phantom" stock
rights, stock appreciation rights, stock-based performance units,
commitments, Contracts, arrangements or undertakings of any kind to which
Ashland or any Ashland Subsidiary is a party or by which any of them is
bound (i) obligating Ashland or any Ashland Subsidiary to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of
capital stock or other equity interests in, or any security convertible or
exercisable for or exchangeable into any capital stock of or other equity
interest in, Ashland or any Ashland Subsidiary or any Voting Ashland Debt
or
29
(ii) obligating Ashland or any Ashland Subsidiary to issue, grant, extend
or enter into any such option, warrant, call, right, security, commitment,
Contract, arrangement or undertaking. As of the date of this Agreement,
there are not any outstanding contractual obligations or commitments of
Ashland or any Ashland Subsidiary to repurchase, redeem or otherwise
acquire any shares of capital stock of Ashland or any Ashland Subsidiary.
(b) The authorized capital stock of HoldCo consists of
300,000,000 shares of HoldCo Common Stock, 100 shares of which have been
duly authorized and validly issued, are fully paid and nonassessable and
are owned by Ashland free and clear of any Lien. No shares of capital stock
of HoldCo are held by HoldCo as treasury stock.
(c) As of the date of this Agreement, the authorized capital
stock of New Ashland Inc. consists of 1,000 shares of Common Stock, of
which 100 shares of Common Stock have been duly authorized and validly
issued, are fully paid and nonassessable and are owned by HoldCo free and
clear of any Lien. Immediately prior to the Acquisition Merger Effective
Time, the authorized capital stock of New Ashland Inc. will consist of
300,000,000 shares of Common Stock and 30,000,000 shares of preferred
stock, of which 100 shares of Common Stock will have been duly authorized
and validly issued, fully paid and nonassessable and owned by HoldCo free
and clear of any Lien, other than any Lien (i) pursuant to the HoldCo
Borrowing arrangements or (ii) in favor of any Marathon Party or any of
their respective subsidiaries or affiliates.
(d) All of the membership interests in New Ashland LLC are owned
by HoldCo free and clear of any Lien, other than any Lien (i) pursuant to
the HoldCo Borrowing arrangements or (ii) in favor of any Marathon Party or
any of their respective subsidiaries or affiliates.
(e) Immediately prior to the MAP Partial Redemption, all of
Ashland's Membership Interest will be owned by Ashland free and clear of
any Lien. Immediately prior to the Acquisition Merger, all of Ashland's
Membership Interest that has not been redeemed pursuant to the MAP Partial
Redemption will be owned by HoldCo free and clear of any Lien, other than
any Lien (i) pursuant to the HoldCo Borrowing arrangements or (ii) in favor
of any
30
Marathon Party or any of their respective subsidiaries or affiliates. Upon
consummation of the Transactions, all of Ashland's Membership Interest
shall be vested in one or more of the Marathon Parties and shall thereafter
be the property of one or more of the Marathon Parties (assuming such
Marathon Parties have the requisite power and authority to be the lawful
owners of Ashland's Membership Interest), free and clear of any Lien, other
than any Lien (i) pursuant to the HoldCo Borrowing arrangements, (ii) in
favor of any Marathon Party or any of their respective subsidiaries or
affiliates or (iii) arising from actions or inactions of any of the
Marathon Parties or their affiliates (and not of any of the Ashland Parties
or their affiliates).
SECTION 6.04. AUTHORITY; EXECUTION AND DELIVERY; ENFORCEABILITY.
(a) Each Ashland Party has all requisite corporate or limited liability
company power and authority to execute and deliver the Transaction
Agreements, and the other agreements and instruments to be executed and
delivered in connection with the Transaction Agreements (the "Ancillary
Agreements"), to which it is, or is specified to be, a party and to
consummate the Transactions. The execution and delivery by each Ashland
Party of each Transaction Agreement and Ancillary Agreement to which it is,
or is specified to be, a party and the consummation by each Ashland Party
of the Transactions to be consummated by it under the Transaction
Agreements and the Ancillary Agreements have been duly authorized by all
necessary corporate or limited liability company action on the part of each
Ashland Party subject to receipt of the Ashland Shareholder Approval (as
defined in Section 6.04(b)). Each Ashland Party has duly executed and
delivered each Transaction Agreement to which it is a party, and each
Transaction Agreement to which it is a party constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its
terms. As of the Closing Date, each Ashland Party will have duly executed
and delivered each Ancillary Agreement to which it is a party, and each
Ancillary Agreement to which it is a party will constitute its legal, valid
and binding obligation, enforceable against it in accordance with its
terms.
(b) The Ashland Board, at a meeting duly called and held, duly
and unanimously adopted resolutions:
31
(i) adopting and approving the Transaction Agreements, the Ancillary
Agreements and the Transactions; (ii) determining that the terms of the
Transactions are fair to and in the best interests of Ashland and its
shareholders; and (iii) recommending that Ashland's shareholders approve
the Transaction Agreements and the Transactions (including the plan of
merger for the Reorganization Merger and the proposed transfer of Ashland's
interests in MAP, LOOP LLC and LOCAP LLC, as well as the Maleic Business
and the VIOC Centers, provided for in the Transaction Agreements). The only
vote of holders of any class or series of Ashland Capital Stock necessary
to approve and adopt the Transaction Agreements and the Transactions is the
approval of the Transaction Agreements and the Transactions (including the
plan of merger for the Reorganization Merger and the proposed transfer of
Ashland's interests in MAP, LOOP LLC and LOCAP LLC, as well as the Maleic
Business and the VIOC Centers, provided for in the Transaction Agreements)
by the holders of a majority of the outstanding Ashland Common Stock (the
"Ashland Shareholder Approval").
(c) The Board of Directors of HoldCo has duly and unanimously
adopted resolutions: (i) approving and declaring advisable the Transaction
Agreements and the Ancillary Agreements to which HoldCo is a party, and
approving the Transactions; (ii) determining that the terms of the
Transactions to which HoldCo is a party are fair to and in the best
interests of HoldCo and Ashland, its sole shareholder; and (iii)
recommending that Ashland, HoldCo's sole shareholder, adopt the Transaction
Agreements to which HoldCo is a party. Ashland, as the sole shareholder of
HoldCo, has duly approved and adopted the Transaction Agreements to which
HoldCo is a party.
(d) The New Ashland Board has duly and unanimously adopted
resolutions: (i) adopting and approving the Transaction Agreements and the
Ancillary Agreements to which New Ashland Inc. is a party, and adopting and
approving the Transactions; (ii) determining that the terms of the
Transactions to which New Ashland Inc. is a party are fair to and in the
best interests of New Ashland Inc. and HoldCo, its sole shareholder; and
(iii) recommending that HoldCo, New Ashland Inc.'s sole shareholder,
approve the Transaction Agreements to which New Ashland Inc. is a party.
HoldCo, as the sole shareholder of New Ashland Inc., has duly approved the
32
Transaction Agreements to which New Ashland Inc. is a party.
(e) HoldCo, as the sole member of New Ashland LLC, has approved
the Transaction Agreements to which New Ashland LLC is a party.
SECTION 6.05. NO CONFLICTS; CONSENTS. (a) The execution and
delivery by each Ashland Party of each Transaction Agreement to which it is
a party do not, the execution and delivery of each Ancillary Agreement to
which it is specified to be a party will not, and the consummation of the
Transactions to be consummated by it under the Transaction Agreements and
the Ancillary Agreements and compliance with the terms of the Transaction
Agreements and the Ancillary Agreements will not, conflict with, or result
in any breach or violation of or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination,
cancelation or acceleration of any obligation or to loss of a material
benefit under, or result in the creation of any Lien upon any of the
properties or assets of Ashland or any Ashland Subsidiary under, any
provision of (i) the Ashland Charter, the Ashland By-laws or the comparable
charter or organizational documents of any Ashland Subsidiary, (ii) any
contract, lease, license, indenture, note, bond, agreement, permit,
concession, franchise or other instrument (a "Contract") to which Ashland
or any Ashland Subsidiary is a party or by which any of their respective
properties or assets is bound or (iii) subject to the filings and other
matters referred to in Section 6.05(b), any judgment, order or decree
("Judgment") or statute, law, ordinance, rule or regulation ("Law")
applicable to Ashland or any Ashland Subsidiary or their respective
properties or assets, other than, in the case of clauses (ii) and (iii)
above, any such items that, individually or in the aggregate, have not had
and would not reasonably be expected to have a material adverse effect on
the ability of any Ashland Party to perform its obligations under the
Transaction Agreements and the Ancillary Agreements or on the ability of
any Ashland Party to consummate the Transactions (an "Ashland Material
Adverse Effect").
(b) No consent, approval, license, permit, order or authorization
("Consent") of, or registration, declaration or filing with, or permit
from, any Federal, state, local or foreign government or any court of
33
competent jurisdiction, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign (each, a
"Governmental Entity"), is required to be obtained or made by or with
respect to Ashland or any Ashland Subsidiary in connection with the
execution, delivery and performance of any Transaction Agreement or
Ancillary Agreement or the consummation of the Transactions, other than (i)
compliance with and filings under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), (ii) the filing with
the Securities and Exchange Commission (the "SEC") of (A) a joint
registration statement on Form S-4 (the "Ashland Form S- 4") in connection
with the issuance by HoldCo of HoldCo Common Stock in connection with the
Reorganization Merger (the "HoldCo Share Issuance") and the issuance by New
Ashland Inc. of New Ashland Inc. Common Stock in the Acquisition Merger
(the "New Ashland Inc. Share Issuance"), (B) a registration statement on
Form S-4 (the "Marathon Form S-4" and, together with the Ashland Form S-4,
the "Forms S-4") in connection with the issuance by Marathon of Marathon
Common Stock in connection with the Acquisition Merger (the "Marathon Share
Issuance"), (C) a proxy or information statement relating to the approval
of the Transaction Agreements and the Transactions by Ashland's
shareholders (the "Proxy Statement") and (D) such reports under Sections 13
and 16 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as may be required in connection with the Transaction Agreements,
the Ancillary Agreements or the Transactions, (iii) (A) the filing of the
Reorganization Articles of Merger with the Secretary of State of the
Commonwealth of Kentucky, (B) the filing of the Conversion Articles of
Merger with the Secretary of State of the Commonwealth of Kentucky, (C) the
filing of the Acquisition Certificate of Merger with the Secretary of State
of the State of Delaware and (D) appropriate documents with the relevant
authorities of the other jurisdictions in which Ashland is qualified to do
business, (iv) such filings as may be required in connection with Taxes and
(v) such other Consents, registrations, declarations, filings and permits
(A) required solely by reason of the participation of any Marathon Party
(as opposed to any third party) in the Transactions or (B) the failure of
which to obtain or make that, individually or in the aggregate, have not
had and would not reasonably be expected to have an Ashland Material
Adverse Effect.
34
(c) Ashland and the Ashland Board have taken all action necessary
to (i) render the Ashland Rights inapplicable to the Transaction
Agreements, the Ancillary Agreements and the Transactions; and (ii) ensure
that (A) none of the Marathon Parties, nor any of their affiliates or
associates, is or will become an "Acquiring Person" (as defined in the
Ashland Rights Agreement) by reason of the Transaction Agreements, the
Ancillary Agreements or the Transactions and (B) a "Distribution Date" (as
defined in the Ashland Rights Agreement) shall not occur by reason of the
Transaction Agreements, the Ancillary Agreements or the Transactions.
SECTION 6.06. SEC DOCUMENTS; UNDISCLOSED LIABILITIES. (a) Ashland
has filed all reports, schedules, forms, statements and other documents
(including exhibits and amendments thereto) required to be filed by Ashland
with the SEC since October 1, 2003, pursuant to Sections 13(a), 14(a) and
15(d) of the Exchange Act (the "Ashland SEC Documents").
(b) As of its respective date, each Ashland SEC Document complied
in all material respects with the requirements of the Exchange Act and the
rules and regulations of the SEC promulgated thereunder applicable to such
Ashland SEC Document, and did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading. Except to
the extent that information contained in any Ashland SEC Document has been
revised or superseded by a later filed Ashland SEC Document, none of the
Ashland SEC Documents contains any untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The consolidated financial
statements of Ashland included in the Ashland SEC Documents comply as to
form in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto, have
been prepared in accordance with U.S. generally accepted accounting
principles ("GAAP") (except, in the case of unaudited statements, as
permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved
35
(except as may be indicated in the notes thereto) and on that basis fairly
present in all material respects the consolidated financial position of
Ashland and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods
shown (subject, in the case of unaudited interim financial statements, to
normal year-end audit adjustments).
(c) Except as disclosed in the Ashland SEC Documents, as of the
date of this Agreement neither Ashland nor any Ashland Subsidiary has any
liabilities or obligations of any nature (whether accrued, absolute,
liquidated, unliquidated, fixed, contingent, disputed, undisputed, legal or
equitable) required by GAAP to be set forth on a consolidated balance sheet
of Ashland and its consolidated subsidiaries or disclosed in the notes
thereto and that, individually or in the aggregate, would reasonably be
expected to have an Ashland Material Adverse Effect.
(d) Notwithstanding anything to the contrary contained in this
Section 6.06, the Ashland Parties do not make any representation or
warranty as to the financial statements, financial position, results of
operations or cash flows of MAP, as to any other statement, omission or
information relating to MAP included or incorporated by reference in the
Ashland SEC Documents, or as to the business, assets, liabilities,
condition (financial or otherwise), operations or prospects of MAP.
SECTION 6.07. ABSENCE OF CERTAIN CHANGES OR EVENTS. From the date
of the most recent financial statements included in the Ashland SEC
Documents filed and publicly available prior to the date of this Agreement,
to the date of this Agreement, there has not been:
(i) any event, change, effect or development that, individually
or in the aggregate, has had or would reasonably be expected to have
an Ashland Material Adverse Effect;
(ii) any declaration, setting aside or payment of any dividends
on, or any other distributions in respect of, any Ashland Capital
Stock, other than regular quarterly cash dividends with respect to the
Ashland Common Stock, not in excess of 27.5 cents per
36
share, with usual declaration, record and payment dates and in accordance with
Ashland's past dividend policy; or
(iii) any repurchase, redemption or other acquisition for value
by Ashland of any Ashland Capital Stock.
SECTION 6.08. INFORMATION SUPPLIED. None of the information
supplied or to be supplied by or on behalf of any Ashland Party for
inclusion or incorporation by reference in (i) the Forms S-4 will, at the
time the Forms S-4 are filed with the SEC, at any time the Forms S-4 are
amended or supplemented or at the time the same become effective under the
Securities Act, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading, or (ii) the Proxy Statement will, at
the date it is first mailed to Ashland's shareholders or at the time of the
Ashland Shareholders Meeting (as defined in Section 9.01(e), contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading. The Ashland Form S-4 will comply as to form in all material
respects with the requirements of the Securities Act and the rules and
regulations thereunder, and the Proxy Statement will comply as to form in
all material respects with the requirements of the Exchange Act and the
rules and regulations thereunder, in each case except that no
representation is made by any Ashland Party with respect to statements made
or incorporated by reference therein based on information supplied by or on
behalf of any Marathon Party for inclusion or incorporation by reference
therein.
SECTION 6.09. BROKERS. No broker, investment banker, financial
advisor or other person, other than Credit Suisse First Boston LLC and
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ ("HLHZ"), the fees and expenses of which will
be paid by Ashland (except as otherwise contemplated by Section
9.03(d)(i)), and ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co., Inc., the fees and expenses of which
will be paid in accordance with Section 9.04(b), is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission
in connection with the Transactions based upon arrangements made by or on
behalf of any Ashland Party.
37
SECTION 6.10. OPINION OF FINANCIAL ADVISOR. Ashland has received
the opinion of Credit Suisse First Boston LLC, dated the date of this
Agreement, to the effect that, as of such date, the consideration to be
received in the Acquisition Merger by the holders of Ashland Common Stock
(other than Marathon and its affiliates) is fair to such holders from a
financial point of view.
SECTION 6.11. SOLVENCY MATTERS. (a) Ashland has received two
solvency opinions of American Appraisal Associates, Inc. ("AAA"), copies of
which are included in Section 7.11 of the Marathon Disclosure Letter (the
"Initial AAA Opinions"), and the solvency opinion of HLHZ, a copy of which
is included in Section 6.11 of the Ashland Disclosure Letter (the "Initial
HLHZ Opinion" and, together with the Initial AAA Opinions, the "Initial
Opinions").
(b) As of the date of this Agreement, Ashland does not, and as of
the Closing Date New Ashland Inc. will not, have any intention to declare a
dividend or distribution or to complete a share repurchase using, directly
or indirectly, proceeds received from the MAP Partial Redemption or the
Capital Contribution; provided, however, that it is understood that New
Ashland Inc. may pay cash dividends after the Closing consistent with
historical cash dividends paid by Ashland prior to the Closing.
(c) As of the date of this Agreement, Ashland intends, and as of
the Closing Date New Ashland Inc. will intend, to use the cash proceeds of
the Capital Contribution pursuant to Section 1.03(b) only (i) for the uses
described in the definition of Ashland Debt Obligation Amount or (ii) to
pay other obligations owed to any of their respective creditors, and to use
the cash proceeds of the MAP Partial Redemption pursuant to Section 1.01
only for the purposes described in clauses (i) and (ii) of this Section
6.11(c) and for general corporate purposes (including, potentially,
business acquisitions) not inconsistent with Section 6.11(b).
(d) As of the Closing Date, Ashland, before consummation of the
Transactions, and New Ashland Inc., after giving effect to the
Transactions, will not be insolvent, as insolvency is defined under any of
the Uniform Fraudulent Transfer Act, as approved by the National Conference
of Commissioners on Uniform State Laws
38
in 1984, as amended (the "UFTA"), the Uniform Fraudulent Conveyance Act, as
approved by the National Conference of Commissioners on Uniform State Laws
in 1918, as amended (the "UFCA"), and the U.S. Bankruptcy Code, Title 11 of
the U.S.C., as amended (the "Bankruptcy Code"). Without limiting the
generality of the foregoing, as of the Closing Date, with respect to each
of Ashland, before consummation of the Transactions, and New Ashland Inc.,
after giving effect to the Transactions: (i) the sum of such entity's debts
will not be greater than all of such entity's assets at a fair valuation
(as such terms are defined in the UFTA), and the sum of such entity's debts
will not be greater than all of such entity's property, at a fair valuation
(as such terms are defined in the Bankruptcy Code); (ii) the present fair
saleable value of such entity's assets will not be less than the amount
that will be required to pay such entity's probable liability on its
existing debts as they become absolute and matured (as such terms are
defined in the UFCA); (iii) such entity will not intend to incur, or
believe or reasonably should believe that it would incur, debts beyond its
ability to pay as they become due (as such terms are defined in the UFTA),
such entity will not intend or believe that it will incur debts beyond its
ability to pay as they mature (as such terms are defined in the UFCA), and
such entity will not intend to incur, or believe that it would incur, debts
that would be beyond its ability to pay as such debts mature (as such terms
are defined in the Bankruptcy Code); and (iv) such entity will not be
engaged and will not be about to engage in a business or transaction for
which the remaining assets of such entity are unreasonably small in
relation to such business or transaction (as such terms are defined in the
UFTA), such entity will not be engaged and will not be about to engage in a
business or transaction for which the property remaining in such entity's
hands is an unreasonably small capital (as such terms are defined in the
UFCA), and such entity will not be engaged in business or a transaction,
and will not be about to engage in business or a transaction, for which any
property remaining with such entity is an unreasonably small capital (as
such terms are defined in the Bankruptcy Code).
(e) To Ashland's knowledge, the information provided orally or in
writing to AAA by or on behalf of any Ashland Party relating to the Ashland
Parties in connection with the delivery by AAA to Ashland and Marathon of
the
39
Initial AAA Opinions and the Bring-Down AAA Opinions (as defined in Section
10.01(g)) (including the information contained in the data rooms identified
in the Initial AAA Opinions and any similar data rooms made available to
AAA after the date of this Agreement), together with the information in the
Ashland SEC Documents (as such information has been revised or superseded
by a later filed Ashland SEC Document or other information that has been
provided to AAA), taken as a whole, does not and will not contain any
untrue statement of material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, in any case in
which AAA would be led to deliver the Bring-Down AAA Opinions when AAA
would not do so in the absence of such untrue statement or omission.
Notwithstanding the foregoing, while Ashland and New Ashland Inc. represent
and warrant that the projections, forecasts and other forward-looking
materials relating to the Ashland Parties and so provided to AAA have been
prepared and furnished to AAA in good faith and were based on facts and
assumptions believed by Ashland and New Ashland Inc. to be reasonable, the
parties acknowledge that: (i) there may be differences between actual
results and the results indicated in such projections, forecasts and other
forward-looking materials; (ii) those differences may be material; and
(iii) Ashland and New Ashland Inc. do not represent or warrant that there
will be no such differences. Notwithstanding anything to the contrary
contained in this Section 6.11(e), the Ashland Parties do not make any
representation or warranty as to the financial statements, financial
position, results of operations or cash flows of MAP, as to any other
statement, omission or information relating to MAP, or as to the business,
assets, liabilities, condition (financial or otherwise), operations or
prospects of MAP.
(f) All Working Papers (as defined in Section 14.02) of HLHZ,
relating to its engagement by Ashland have been made available to Marathon
and its Representatives.
40
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
OF THE MARATHON PARTIES
------------------------------
Marathon represents and warrants to the Ashland Parties that, as
of the date of this Agreement and as of the Closing Date as if made on the
Closing Date (except to the extent such representations and warranties
expressly relate to an earlier date, in which case as of such earlier
date), except as set forth in the disclosure letter, dated as of the date
of this Agreement, from Marathon to Ashland (the "Marathon Disclosure
Letter"); provided, however, that no item contained in any section of the
Marathon Disclosure Letter shall be deemed to qualify, or disclose any
exception to, any representation or warranty made in Sections 7.04 or 7.11:
SECTION 7.01. ORGANIZATION, STANDING AND POWER. Marathon is duly
organized, validly existing and in good standing under the Laws of the
State of Delaware and has full corporate power and authority to own, lease
and otherwise hold its properties and to conduct its businesses as
presently conducted. Each Significant Marathon Subsidiary (as defined in
this Section 7.01) is duly organized, validly existing and, to the extent
such concept or a similar concept exists in the relevant jurisdiction, in
good standing under the Laws of the jurisdiction in which it is organized
and has full corporate or other entity power and authority to own, lease or
otherwise hold its properties and to conduct its businesses as presently
conducted. Each of Marathon and each Significant Marathon Subsidiary is
duly qualified to do business and is in good standing (where applicable) in
each jurisdiction where the nature of its business or its ownership or
leasing of its properties makes such qualification necessary, except in
such jurisdictions where the failure to be so qualified or in good standing
has not had and would not reasonably be expected to have a Marathon
Material Adverse Effect (as defined in Section 7.05(a)). Marathon has
provided to Ashland true and complete copies of the certificate of
incorporation of Marathon, as amended to the date of this Agreement (as so
amended, the "Marathon Charter"), and the by-laws of Marathon, as amended
to the date of this Agreement (as so amended, the "Marathon By-laws"), and
the comparable charter and organizational documents of each
41
Significant Marathon Subsidiary, in each case as amended to the date of
this Agreement. For purposes of this Agreement, a "Significant Marathon
Subsidiary" means Marathon Company, Merger Sub, MAP and any subsidiary of
Marathon that constitutes a significant subsidiary within the meaning of
Rule 1-02 of Regulation S-X of the SEC.
SECTION 7.02. MARATHON SUBSIDIARIES; EQUITY INTERESTS. (a) All
the outstanding shares of capital stock of, or other equity interests in,
each Significant Marathon Subsidiary have been duly authorized and validly
issued and are fully paid and nonassessable and are as of the date of this
Agreement owned by Marathon, by another subsidiary of Marathon (a "Marathon
Subsidiary") or by Marathon and another Marathon Subsidiary, free and clear
of all Liens.
(b) Merger Sub, since the date of its formation, has not carried
on any business or conducted any operations other than the execution of
this Agreement, the other Transaction Agreements and the Ancillary
Agreements to which it is a party, the performance of its obligations
hereunder and thereunder and matters ancillary thereto.
SECTION 7.03. CAPITAL STRUCTURE. (a) The authorized capital stock
of Marathon consists of 550,000,000 shares of Marathon Common Stock and
26,000,000 shares of preferred stock, without par value ("Marathon
Preferred Stock" and, together with the Marathon Common Stock, the
"Marathon Capital Stock"). At the close of business on February 29, 2004,
(i) 310,740,454 shares of Marathon Common Stock were issued and
outstanding, (ii) 1,425,524 shares of Marathon Common Stock were held by
Marathon in its treasury and (iii) 37,788,193 shares of Marathon Common
Stock were reserved for issuance pursuant to Marathon Stock Plans (as
defined in Section 14.02). Except as set forth above, at the close of
business on February 29, 2004, no shares of capital stock or other voting
securities of Marathon were issued, reserved for issuance or outstanding.
There are no outstanding Marathon SARs (as defined in Section 14.02) that
were not granted in tandem with a related Marathon Employee Stock Option.
All outstanding shares of Marathon Capital Stock are, and all such shares
that may be issued prior to the Acquisition Merger Effective Time will be
when issued, duly authorized, validly issued, fully paid and nonassessable
and not subject to or issued in violation of any purchase option,
42
call option, right of first refusal, preemptive right, subscription right
or any similar right under any provision of the DGCL, the Marathon Charter,
the Marathon By-laws or any Contract to which Marathon is a party or
otherwise bound. As of the date of this Agreement, there are not any bonds,
debentures, notes or other indebtedness of Marathon having the right to
vote (or convertible into, or exchangeable for, securities having the right
to vote) on any matters on which holders of Marathon Common Stock may vote
("Voting Marathon Debt"). Except as set forth above, as of the date of this
Agreement, there are not any options, warrants, rights, convertible or
exchangeable securities, "phantom" stock rights, stock appreciation rights,
stock-based performance units, commitments, Contracts, arrangements or
undertakings of any kind to which Marathon or any Marathon Subsidiary is a
party or by which any of them is bound (i) obligating Marathon or any
Marathon Subsidiary to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other equity
interests in, or any security convertible or exercisable for or
exchangeable into any capital stock of or other equity interest in,
Marathon or any Marathon Subsidiary or any Voting Marathon Debt or (ii)
obligating Marathon or any Marathon Subsidiary to issue, grant, extend or
enter into any such option, warrant, call, right, security, commitment,
Contract, arrangement or undertaking. As of the date of this Agreement,
there are not any outstanding contractual obligations or commitments of
Marathon or any Marathon Subsidiary to repurchase, redeem or otherwise
acquire any shares of capital stock of Marathon or any Marathon Subsidiary.
(b) All of the membership interests in Merger Sub are owned by
Marathon free and clear of any Lien.
SECTION 7.04. AUTHORITY; EXECUTION AND DELIVERY; ENFORCEABILITY.
(a) Each Marathon Party has all requisite corporate or limited liability
company power and authority to execute and deliver the Transaction
Agreements and the Ancillary Agreements to which it is, or is specified to
be, a party and to consummate the Transactions. For all purposes of the
Put/Call Agreement (as defined in Section 12.04) and the Insurance
Indemnity Agreement referred to in Section 12.05, including for purposes of
amending the Put/Call Agreement as provided in Section 12.04 of this
43
Agreement and terminating the Insurance Indemnity Agreement as provided in
Section 12.05, Marathon is a party to the Put/Call Agreement and the
Insurance Indemnity Agreement as the successor and assign of USX (as
defined in the Put/Call Agreement). The execution and delivery by each
Marathon Party of each Transaction Agreement and Ancillary Agreement to
which it is, or is specified to be, a party and the consummation by each
Marathon Party of the Transactions to be consummated by it under the
Transaction Agreements and the Ancillary Agreements have been duly
authorized by all necessary corporate or limited liability company action
on the part of each Marathon Party. Each Marathon Party has duly executed
and delivered each Transaction Agreement to which it is a party, and each
Transaction Agreement to which it is a party constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its
terms. As of the Closing Date, each Marathon Party will have duly executed
and delivered each Ancillary Agreement to which it is a party, and each
Ancillary Agreement to which it is a party will constitute its legal, valid
and binding obligation, enforceable against it in accordance with its
terms.
(b) The Marathon Board duly and unanimously adopted resolutions:
(i) approving the Transaction Agreements, the Ancillary Agreements and the
Transactions; and (ii) determining that the terms of the Transactions are
fair to and in the best interests of Marathon and its shareholders.
(c) The Board of Directors of Marathon Company (the "Marathon
Company Board"), at a meeting duly called and held or by written consent,
duly and unanimously adopted resolutions: (i) approving the Transaction
Agreements, the Ancillary Agreements and the Transactions; and (ii)
determining that the terms of the Transactions are fair to and in the best
interests of Marathon Company and Marathon, its sole shareholder.
(d) Marathon, as the sole member of Merger Sub, has approved the
Transaction Agreements, the Ancillary Agreements and the Transactions to
which Merger Sub is, or is specified to be, a party.
SECTION 7.05. NO CONFLICTS; CONSENTS. (a) The execution and delivery
by each Marathon Party of each Transaction Agreement to which it is a party do
not,
44
the execution and delivery of each Ancillary Agreement to which it is
specified to be a party will not, and the consummation of the Transactions
to be consummated by it under the Transaction Agreements and the Ancillary
Agreements and compliance with the terms of the Transaction Agreements and
the Ancillary Agreements will not, conflict with, or result in any breach
or violation of or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancelation or
acceleration of any obligation or to loss of a material benefit under, or
result in the creation of any Lien upon any of the properties or assets of
Marathon or any Marathon Subsidiary under, any provision of (i) the
Marathon Charter, the Marathon By-laws or the comparable charter or
organizational documents of any Marathon Subsidiary, (ii) any Contract to
which Marathon or any Marathon Subsidiary is a party or by which any of
their respective properties or assets is bound or (iii) subject to the
filings and other matters referred to in Section 7.05(b), any Judgment or
Law applicable to Marathon or any Marathon Subsidiary or their respective
properties or assets, other than, in the case of clauses (ii) and (iii)
above, any such items that, individually or in the aggregate, have not had
and would not reasonably be expected to have a material adverse effect on
the ability of any Marathon Party to perform its obligations under the
Transaction Agreements and the Ancillary Agreements or on the ability of
any Marathon Party to consummate the Transactions (a "Marathon Material
Adverse Effect").
(b) No Consent of, or registration, declaration or filing with,
or permit from, any Governmental Entity is required to be obtained or made
by or with respect to Marathon or any Marathon Subsidiary in connection
with the execution, delivery and performance of any Transaction Agreement
or Ancillary Agreement or the consummation of the Transactions, other than
(i) compliance with and filings under the HSR Act, (ii) the filing with the
SEC of (A) the Forms S-4 and (B) such reports under Sections 13 and 16 of
the Exchange Act as may be required in connection with the Transaction
Agreements, the Ancillary Agreements or the Transactions, (iii) the filing
of the Acquisition Certificate of Merger with the Secretary of State of the
State of Delaware, (iv) such filings as may be required in connection with
Taxes and (v) such other Consents, registrations, declarations, filings and
permits
45
(A) required solely by reason of the participation of any Ashland Party (as
opposed to any third party) in the Transactions or (B) the failure of which
to obtain or make that, individually or in the aggregate, have not had and
would not reasonably be expected to have a Marathon Material Adverse
Effect.
(c) The Rights Agreement between Marathon and National City Bank,
as Rights Agent, dated as of September 28, 1998, as amended on July 2, 2001
and January 29, 2003 (the "Marathon Rights Agreement"), expired on January
31, 2003, and Marathon has not, as of the date of this Agreement, entered
into or adopted any other rights agreement.
SECTION 7.06. SEC DOCUMENTS; UNDISCLOSED LIABILITIES. (a)
Marathon has filed all reports, schedules, forms, statements and other
documents (including exhibits and amendments thereto) required to be filed
by Marathon with the SEC since January 1, 2004 pursuant to Sections 13(a),
14(a) and 15(d) of the Exchange Act (the "Marathon SEC Documents").
(b) As of its respective date, each Marathon SEC Document
complied in all material respects with the requirements of the Exchange Act
and the rules and regulations of the SEC promulgated thereunder applicable
to such Marathon SEC Document, and did not contain any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading. Except to
the extent that information contained in any Marathon SEC Document has been
revised or superseded by a later filed Marathon SEC Document, none of the
Marathon SEC Documents contains any untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The consolidated financial
statements of Marathon included in the Marathon SEC Documents comply as to
form in all material respects with applicable accounting requirements, and
the published rules and regulations of the SEC, with respect thereto, have
been prepared in accordance with GAAP (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent
basis during the periods involved
46
(except as may be indicated in the notes thereto) and on that basis fairly
present in all material respects the consolidated financial position of
Marathon and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods
shown (subject, in the case of unaudited interim financial statements, to
normal year-end audit adjustments).
(c) Except as disclosed in the Marathon SEC Documents, as of the
date of this Agreement neither Marathon nor any Marathon Subsidiary has any
liabilities or obligations of any nature (whether accrued, absolute,
liquidated, unliquidated, fixed, contingent, disputed, undisputed, legal or
equitable) required by GAAP to be set forth on a consolidated balance sheet
of Marathon and its consolidated subsidiaries or disclosed in the notes
thereto and that, individually or in the aggregate, would reasonably be
expected to have a Marathon Material Adverse Effect.
(d) Notwithstanding anything to the contrary contained in this
Section 7.06, the Marathon Parties do not make any representation or
warranty as to the financial statements, financial position, results of
operations or cash flows of MAP, as to any other statement, omission or
information relating to MAP included or incorporated by reference in the
Marathon SEC Documents, or as to the business, assets, liabilities,
condition (financial or otherwise), operations or prospects of MAP.
SECTION 7.07. ABSENCE OF CERTAIN CHANGES OR EVENTS. From the date
of the most recent financial statements included in the Marathon SEC
Documents filed and publicly available prior to the date of this Agreement,
to the date of this Agreement, there has not been:
(i) any event, change, effect or development that, individually
or in the aggregate, has had or would reasonably be expected to have a
Marathon Material Adverse Effect;
(ii) any declaration, setting aside or payment of any dividends
on, or any other distributions in respect of, any Marathon Capital
Stock, other than regular quarterly cash dividends with respect to the
Marathon Common Stock, not in excess of 25 cents per
47
share, with usual declaration, record and payment dates and in accordance
with Marathon's past dividend policy; or
(iii) any repurchase, redemption or other acquisition for value
by Marathon of any Marathon Capital Stock.
SECTION 7.08. INFORMATION SUPPLIED. None of the information
supplied or to be supplied by or on behalf of any Marathon Party for
inclusion or incorporation by reference in (i) the Forms S-4 will, at the
time the Forms S-4 are filed with the SEC, at any time the Forms S-4 are
amended or supplemented or at the time the same become effective under the
Securities Act, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading, or (ii) the Proxy Statement will, at
the date it is first mailed to Ashland's shareholders or at the time of the
Ashland Shareholders Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading. The Marathon Form
S-4 will comply as to form in all material respects with the requirements
of the Securities Act and the rules and regulations thereunder, except that
no representation is made by any Marathon Party with respect to statements
made or incorporated by reference therein based on information supplied by
or on behalf of any Ashland Party for inclusion or incorporation by
reference therein.
SECTION 7.09. BROKERS. No broker, investment banker, financial
advisor or other person, other than Citigroup Global Markets Inc. and AAA,
the fees and expenses of which will be paid by Marathon (except as
otherwise contemplated by Section 9.03(d)(i)), and ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co.,
Inc., the fees and expenses of which will be paid in accordance with
Section 9.04(b), is entitled to any broker's, finder's, financial advisor's
or other similar fee or commission in connection with the Transactions
based upon arrangements made by or on behalf of any Marathon Party.
SECTION 7.10. OPINION OF FINANCIAL ADVISOR. Marathon has received
the opinion of Citigroup Global
48
Markets Inc., dated the date of this Agreement, to the effect that, as of
such date, the consideration to be provided by the Marathon Parties in
the Transactions is fair to Marathon from a financial point of view.
SECTION 7.11. SOLVENCY OPINIONS. Marathon has received the Initial
Opinions. All Working Papers of AAA relating to the Initial AAA Opinions have
been made available to Ashland.
SECTION 7.12. MAP ACCOUNTS RECEIVABLE. To the knowledge of
Marathon and MAP, the information provided orally or in writing to Ashland
and its Representatives by or on behalf of MAP relating to MAP accounts
receivable in connection with Ashland's evaluation of the Distributed
Receivables, taken as a whole, does not and will not contain any untrue
statement of material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. At the Closing, MAP will
transfer to Ashland all of MAP's rights, title and interests in and to the
Distributed Receivables.
SECTION 7.13. EMPLOYEE BENEFITS. Marathon intends to, or to cause
one or more of its subsidiaries to, provide to the Transferred Maleic
Business Employees (as defined in the Maleic Agreement) compensation and
benefits in accordance with Section 4.03(j) of the Maleic Agreement and to
the Transferred VIOC Centers Employees (as defined in the VIOC Agreement)
retirement benefits in accordance with Section 4.03(g) of the VIOC
Agreement.
ARTICLE VIII
COVENANTS RELATING TO CONDUCT OF BUSINESS
-----------------------------------------
SECTION 8.01. CONDUCT OF BUSINESS. (a) CONDUCT OF BUSINESS BY
ASHLAND. Except for matters set forth in the Ashland Disclosure Letter or
otherwise expressly contemplated or permitted by the Transaction Agreements or
the Ancillary Agreements, from the date of this Agreement to the Acquisition
Merger Effective Time, Ashland shall not, and shall not permit any Ashland
Subsidiary to, without the prior written consent of Marathon, take any action
(including amending its
49
certificate of incorporation, by-laws or other comparable charter or
organizational documents, or authorizing, or committing or agreeing to
make, any such amendment) that would reasonably be expected to have an
Ashland Material Adverse Effect. In addition, and without limiting the
generality of the foregoing, from the date of this Agreement to the Closing
Date, Ashland shall not, and shall not permit any Ashland Subsidiary to, do
any of the following without the prior written consent of Marathon:
(i) declare, set aside or pay any dividends on, or make any
other distributions (whether in cash, stock, property or
otherwise) in respect of, any Ashland Capital Stock, other than
regular quarterly cash dividends with respect to the Ashland
Common Stock, not in excess of 27.5 cents per share, with usual
declaration, record and payment dates and in accordance with
Ashland's past dividend policy, in each case other than pursuant
to the Ashland Rights Agreement;
(ii) repurchase, redeem or otherwise acquire for value any
Ashland Capital Stock;
(iii) reclassify any Ashland Capital Stock or issue or
authorize the issuance of any other securities in respect of, in
lieu of or in substitution for shares of Ashland Capital Stock,
in any such case that would (A) have an Ashland Material Adverse
Effect or (B) require an amendment to this Agreement, other than,
in the case of clause (B), pursuant to the Ashland Rights
Agreement;
(iv) issue, grant, deliver, sell, pledge or dispose of any
Voting Ashland Debt or any securities convertible or exchangeable
into or exercisable for, or any rights, warrants, calls or
options to acquire, any shares of Ashland Common Stock or Voting
Ashland Debt, in any such case that would (A) have an Ashland
Material Adverse Effect or (B) require an amendment to this
Agreement; or
(v) authorize, or commit or agree to take, any of the
foregoing actions.
50
(b) Conduct of Business by Marathon. Except for matters set forth
in the Marathon Disclosure Letter or otherwise expressly contemplated or
permitted by the Transaction Agreements or the Ancillary Agreements, from
the date of this Agreement to the Acquisition Merger Effective Time,
Marathon shall not, and shall not permit any Marathon Subsidiary to,
without the prior written consent of Ashland, take any action (including
amending its certificate of incorporation, by-laws or other comparable
charter or organizational documents, or authorizing, or committing or
agreeing to make, any such amendment) that would reasonably be expected to
have a Marathon Material Adverse Effect.
(c) Conduct of Business by MAP. Except as otherwise expressly
contemplated or permitted by the Transaction Agreements or the Ancillary
Agreements, from the date of this Agreement to the Closing Date, the
Ashland Parties and the Marathon Parties shall cause MAP and its
subsidiaries to, and MAP and its subsidiaries shall, conduct their business
in the ordinary course, in substantially the same manner as previously
conducted (including with respect to cash distributions, capital
expenditures, inventory levels, terms and conditions of receivables and
payables, collection of receivables and payment of payables), and in
accordance with the MAP Governing Documents (as defined in Section 14.02).
In addition, and without limiting the generality of the foregoing, from the
date of this Agreement to the Closing Date, the Ashland Parties and the
Marathon Parties shall cause MAP and its subsidiaries not to, and MAP and
its subsidiaries shall not, do any of the following without the prior
written consent of Ashland:
(i) incur or assume any liabilities, obligations or
indebtedness for borrowed money, or guarantee any such
liabilities, obligations or indebtedness, other than in the
ordinary course of business consistent with past practice;
(ii) buy out any lease, license or similar payment
obligation or change any existing practices with respect to
leasing, licensing or similar arrangements; or
(iii) authorize, or commit or agree to take, any of the
foregoing actions.
51
The parties hereto acknowledge that the approval of Acquisition
Expenditures, Capital Expenditures and such other expenditures of the type
to be included in the Annual Capital Budget for any Fiscal Year that when
taken together with (x) the other expenditures already approved as part of
the Annual Capital Budget for such Fiscal Year and (y) all other
expenditures already made in such Fiscal Year, would reasonably be expected
to exceed the Normal Annual Capital Budget Amount for such Fiscal Year,
constitutes a "Super Majority Decision" which requires the approval of the
Board of Managers (as such terms are defined in the MAP LLC Agreement)
pursuant to Section 8.07(b) of the MAP LLC Agreement (subject to certain
exceptions set forth in the MAP LLC Agreement). Accordingly, from the date
of this Agreement to the Closing Date, the approval of any such
expenditures shall require the approval of the Board of Managers pursuant
to Section 8.07(b) of the MAP LLC Agreement.
(d) POST-CLOSING EXAMINATION AND DISPUTE RESOLUTION. After the
Closing, Ashland shall continue to have all the rights of a Member under
Section 7.01 of the MAP LLC Agreement, as amended through the date of this
Agreement (including pursuant to the MAP LLC Agreement Amendment), for
purposes of auditing compliance with Sections 1.06 (Post-Closing True-Up),
8.01(c) (Conduct of Business by MAP), 9.09 (St. ▇▇▇▇ Park Judgment and Plea
Agreement; Plains Settlement) and 9.15 (MAP Partial Redemption Amount) of
this Agreement and (ii) the provisions of the MAP LLC Agreement relating to
distributions and loans to Ashland and Marathon Company. Any dispute
regarding such compliance shall be resolved in accordance with the
provisions of Article XIII of the MAP LLC Agreement, as in effect on the
date of this Agreement. Any payment required as a result of such resolution
shall not be subject to the limitations set forth in Sections 13.01(b) or
13.02(b) of this Agreement.
(e) OTHER ACTIONS.
(i) Prior to the Closing, Ashland shall not, and shall not
permit any of its subsidiaries to, take any action that would, or
that is reasonably expected to, result in (A) the representations
and warranties of the Ashland Parties set forth in this Agreement
or any other Transaction Agreement becoming untrue or
52
incorrect, other than such failures to be true and correct that,
in the aggregate, have not had and would not reasonably be
expected to have an Ashland Material Adverse Effect or (B) except
as otherwise permitted by Section 8.02, any condition set forth
in Article X not being satisfied.
(ii) Prior to the Closing, Marathon shall not, and shall not
permit any of its subsidiaries to, take any action that would, or
that is reasonably expected to, result in (A) the representations
and warranties of the Marathon Parties set forth in this
Agreement or any other Transaction Agreement becoming untrue or
incorrect, other than such failures to be true and correct that,
in the aggregate, have not had and would not reasonably be
expected to have a Marathon Material Adverse Effect or (B) any
condition set forth in Article X not being satisfied.
(f) ADVICE OF CHANGES. Prior to the Closing, Ashland shall
promptly advise Marathon in writing of any change or event that has had or
would reasonably be expected to have an Ashland Material Adverse Effect and
Marathon shall promptly advise Ashland in writing of any change or event
that has had or would reasonably be expected to have a Marathon Material
Adverse Effect.
SECTION 8.02. NO SOLICITATION. (a) Ashland shall not, nor shall
it authorize or permit any Ashland Subsidiary to, nor shall it authorize or
permit any officer, director or employee of, or any investment banker,
attorney, auditor or other advisor, agent or representative (collectively,
"Representatives") of, Ashland or any Ashland Subsidiary to, and on
becoming aware of it will use its reasonable best efforts to stop such
Ashland Subsidiary or Representative from continuing to, directly or
indirectly, (i) solicit, initiate or encourage the submission of any
Competing Ashland Proposal (as defined in Section 8.02(e)), (ii) enter into
any agreement with respect to any Competing Ashland Proposal or (iii) enter
into, continue or otherwise participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to, or
cooperate with or take any other action knowingly to facilitate any
inquiries or the
53
making of any proposal that constitutes, or would reasonably be expected to
lead to, any Competing Ashland Proposal; provided, however, that, prior to
receipt of the Ashland Shareholder Approval (the "Cutoff Date"), Ashland
and its Representatives may, in response to a bona fide written Competing
Ashland Proposal that the Ashland Board determines, in good faith (after
consultation with its financial advisor, inside counsel and outside
counsel), constitutes or is reasonably likely to result in a Superior
Proposal (as defined in Section 8.02(e)) that was not solicited by Ashland
and that did not otherwise result from a breach or a deemed breach of this
Section 8.02(a), and subject to compliance with Section 8.02(c), (x)
furnish to the person making such Competing Ashland Proposal and its
Representatives information with respect to Ashland, pursuant to a
customary confidentiality agreement that does not contain terms that
prevent Ashland from complying with its obligations under this Section
8.02, and information with respect to MAP in accordance with the MAP
Governing Documents and (y) participate in discussions or negotiations with
such person and its Representatives regarding any Competing Ashland
Proposal.
(b) Neither the Ashland Board nor any committee thereof shall (i)
withdraw or modify in a manner adverse to the Marathon Parties, or propose
publicly to withdraw or modify in a manner adverse to the Marathon Parties,
the adoption, approval or recommendation by the Ashland Board or any such
committee of the Transaction Agreements or the Transactions or (ii) adopt,
approve or recommend, or propose publicly to adopt, approve or recommend,
any Competing Ashland Proposal. Notwithstanding the foregoing, if, prior to
the Cutoff Date, the Ashland Board determines in good faith, after
consultation with inside and outside counsel, that the failure to take such
action would be reasonably likely to result in a breach of its fiduciary
obligations under applicable Law, the Ashland Board may withdraw its
adoption, approval or recommendation of the Transaction Agreements and the
Transactions.
(c) Ashland promptly shall advise Marathon in writing of any
Competing Ashland Proposal or any inquiry with respect to or that would
reasonably be expected to lead to any Competing Ashland Proposal and the
identity of the person making any such Competing Ashland Proposal or
inquiry and, in the case of a Competing Ashland Proposal
54
referred to in clause (i) or (ii) of the definition of "Competing Ashland
Proposal", the material terms and conditions of such Competing Ashland
Proposal or inquiry, if any, that would reasonably be expected to prevent
or materially delay the Transactions or, in the case of a Competing Ashland
Proposal referred to in clause (iii) of the definition of "Competing
Ashland Proposal", all material terms and conditions of such Competing
Ashland Proposal or inquiry, if any. Ashland shall keep Marathon reasonably
informed on a timely basis of the status and, in the case of a Competing
Ashland Proposal referred to in clause (i) or (ii) of the definition of
"Competing Ashland Proposal", the details of such Competing Ashland
Proposal or inquiry, if any, that would reasonably be expected to prevent
or materially delay the Transactions or, in the case of a Competing Ashland
Proposal referred to clause (iii) of the definition of "Competing Ashland
Proposal", all the details of any such Competing Ashland Proposal or
inquiry, if any. After the Cutoff Date, Ashland shall not be required to
comply with this Section 8.02(c) in any instance to the extent that the
Ashland Board determines in good faith, after consultation with inside and
outside counsel, that such compliance would in such instance be reasonably
likely to result in a breach of its fiduciary obligations under applicable
Law.
(d) Nothing contained in this Agreement shall prohibit Ashland
from taking and disclosing to its shareholders a position contemplated by
Rule 14e-2(a) promulgated under the Exchange Act (other than a position
recommending acceptance under Rule 14e-2(a)(1) of a tender offer
constituting a Competing Ashland Proposal) if, in the good faith judgment
of the Ashland Board, after consultation with inside and outside counsel,
failure so to disclose would be inconsistent with its obligations under
applicable Law.
(e) For purposes of this Agreement:
"COMPETING ASHLAND PROPOSAL" means (i) any proposal or offer for
a merger, consolidation, share exchange, dissolution, recapitalization
or other business combination involving Ashland, (ii) any proposal or
offer to acquire in any manner, directly or indirectly, a majority of
the equity securities or consolidated total assets of Ashland or (iii)
any other proposal or offer to acquire any of Ashland's
55
Membership Interest, in any such case other than the Transactions and,
in the case of clause (i) or (ii), that would reasonably be expected
to prevent or materially delay the consummation of the Transactions.
"SUPERIOR PROPOSAL" means any bona fide written Competing Ashland
Proposal (other than a Competing Ashland Proposal referred to in
clause (iii) of the definition thereof) which (i) the Ashland Board
determines in good faith to be superior from a financial point of view
to the holders of Ashland Common Stock than the Transactions (after
consultation with Ashland's financial advisor), taking into account
all the terms and conditions of such Competing Ashland Proposal and
the Transaction Agreements (including any proposal by Marathon to
amend the terms of the Transaction Agreements) and (ii) that is
reasonably capable of being completed, taking into account all legal,
financial, regulatory, timing and other aspects of such Competing
Ashland Proposal.
SECTION 8.03. POST-CLOSING DIVIDENDS, DISTRIBUTIONS AND SHARE
REPURCHASES. From the Closing through the sixth anniversary of the Closing
Date, New Ashland Inc. shall not authorize, pay or make any payment of a
dividend or other distribution to its stockholders or repurchases of shares
using, directly or indirectly, proceeds received from any aspect of the
Transactions without the prior written consent of Marathon if, at the time
of declaration or payment, New Ashland Inc. is or would be (after giving
effect thereto) insolvent under any applicable fraudulent conveyance or
transfer Law, as determined in good faith by the New Ashland Board in
accordance with the fiduciary duties applicable to the New Ashland Board
under any applicable Law, including KRS 271B.8-300 of the KBCA.
SECTION 8.04. OFFERINGS OF MARATHON COMMON STOCK. During the
period beginning five business days prior to the first trading day of the
Averaging Period and ending 30 days after the Closing Date, without the
prior written consent of Ashland: (a) Marathon will not offer or sell any
shares of Marathon Common Stock or securities convertible into or
exchangeable or exercisable for any shares of Marathon Common Stock; (b)
file with the SEC any registration statement under the Securities Act
relating to any such offer or sale (other than a registration statement
56
on Form S-8); or (c) publicly disclose, except as required by applicable
Law, the intention to make any such offer, sale or filing; provided,
however, that the provisions of this Section 8.04 shall not restrict or
limit (i) issuances of Marathon Common Stock pursuant to the conversion or
exchange of convertible or exchangeable securities or the exercise of
warrants or options, in each case outstanding on the fifth business day
prior to the first trading day of the Averaging Period, (ii) grants of
stock options to directors, officers, employees or consultants or (iii)
issuances of Marathon Common Stock pursuant to the exercise of such options
or otherwise pursuant to the Marathon Stock Plans. To the extent
practicable, Marathon shall promptly notify Ashland if Marathon intends to
make a public disclosure required by applicable Law as permitted by clause
(c) of this Section 8.04.
ARTICLE IX
ADDITIONAL AGREEMENTS
---------------------
SECTION 9.01. PREPARATION OF THE FORMS S-4 AND THE PROXY
STATEMENT; SHAREHOLDERS MEETING; FORM 8-A OR FORM 10. (a) As promptly as
practicable following the date of this Agreement, Ashland and Marathon
shall jointly prepare, and Ashland shall file with the SEC, the Proxy
Statement in preliminary form, and New Ashland Inc. and HoldCo shall
prepare and file with the SEC the Ashland Form S-4 and Marathon shall
prepare and file with the SEC the Marathon Form S-4, in each of which the
Proxy Statement will be included as a prospectus. Each of Ashland and
Marathon shall use its reasonable best efforts to respond as promptly as
practicable to any comments of the SEC with respect to the Proxy Statement
and the Forms S-4.
(b) Each of Ashland and Marathon shall use its reasonable best
efforts to have the Forms S-4 declared effective under the Securities Act
as promptly as practicable and on the same date. Ashland shall use its
reasonable best efforts to cause the Proxy Statement to be mailed to
Ashland's shareholders as promptly as practicable
57
after the Forms S-4 are declared effective under the Securities Act. The
parties shall also take any action (other than qualifying to do business in
any jurisdiction in which it is not now so qualified) required to be taken
under any applicable state securities Laws in connection with the Marathon
Share Issuance, the HoldCo Share Issuance and the New Ashland Inc. Share
Issuance, and Ashland shall furnish all information concerning Ashland and
the holders of Ashland Common Stock and rights to acquire Ashland Common
Stock pursuant to the Ashland Stock Plans as may be reasonably requested in
connection with any such action. The parties shall notify each other
promptly of the receipt of any comments from the SEC or its staff and of
any request by the SEC or its staff for amendments or supplements to the
Proxy Statement or the Forms S-4, or for additional information and shall
promptly supply each other with copies of all written correspondence and
written or oral summaries of all material oral comments between such party
or any of its representatives, on the one hand, and the SEC or its staff,
on the other hand, with respect to the Proxy Statement, the Forms S-4 and
the Transactions. Each of Ashland, Marathon, New Ashland Inc. and HoldCo
shall cooperate and provide the other parties with a reasonable opportunity
to review and comment on any amendment or supplement to the Proxy Statement
and the Forms S-4 prior to filing such with the SEC, and each will provide
the other parties with a copy of all such filings made with the SEC.
Notwithstanding any other provision herein to the contrary, no amendment or
supplement (including by incorporation by reference) to the Proxy Statement
or the Forms S-4 shall be made without the approval of both Ashland and
Marathon, which approval shall not be unreasonably withheld or delayed;
provided that, with respect to documents filed by a party hereto that are
incorporated by reference therein, this right of approval shall apply only
with respect to information relating to (i) the other party or its
business, financial condition or results of operations or (ii) the
Transactions. Each of the parties shall promptly provide each other party
with drafts of all written correspondence intended to be sent to the SEC in
connection with the Transactions and, to the extent practicable, allow each
such party the opportunity to comment thereon prior to delivery to the SEC.
(c) If prior to the Closing, any event occurs with respect to
Ashland or any Ashland Subsidiary, or any
58
change occurs with respect to other information supplied by or on behalf of
Ashland for inclusion in the Proxy Statement or the Forms S-4 which is
required to be described in an amendment of, or a supplement to, the Proxy
Statement or the Forms S-4, Ashland shall promptly notify Marathon of such
event, and Ashland and Marathon shall cooperate in the prompt filing with
the SEC of any necessary amendment or supplement to the Proxy Statement or
the Forms S-4 and, as required by Law, in disseminating the information
contained in such amendment or supplement to Ashland's shareholders.
(d) If prior to the Closing, any event occurs with respect to
Marathon or any Marathon Subsidiary, or any change occurs with respect to
other information supplied by or on behalf of Marathon for inclusion in the
Proxy Statement or the Forms S-4 which is required to be described in an
amendment of, or a supplement to, the Proxy Statement or the Forms S-4,
Marathon shall promptly notify Ashland of such event, and Marathon and
Ashland shall cooperate in the prompt filing with the SEC of any necessary
amendment or supplement to the Proxy Statement or the Forms S-4, as
required by Law, in disseminating the information contained in such
amendment or supplement to Ashland's Shareholders.
(e) Ashland shall, as promptly as practicable following the
effectiveness of the Forms S-4, duly call, give notice of, convene and hold
a meeting of its shareholders (the "Ashland Shareholders Meeting") for the
purpose of seeking the Ashland Shareholder Approval. Without limiting the
generality of the foregoing, Ashland agrees that, to the fullest extent
permitted by applicable Law, its obligations pursuant to the first sentence
of this Section 9.01(e) shall not be affected by (i) the commencement,
public proposal, public disclosure or other communication to Ashland of any
Competing Ashland Proposal or (ii) the withdrawal of the Ashland Board's
adoption, approval or recommendation of the Transaction Agreements and the
Transactions.
(f) Ashland shall use its reasonable best efforts to cause to be
delivered to Marathon a letter of Ernst & Young LLP, Ashland's independent
public accountants, dated as of the date on which the Ashland Form S-4
shall become effective and addressed to Marathon, in form and substance
reasonably satisfactory to Marathon
59
and customary in scope and substance for "comfort" letters delivered by
independent public accountants in connection with registration statements
similar to the Ashland Form S-4.
(g) Marathon shall use its reasonable best efforts to cause to be
delivered to Ashland a letter of PricewaterhouseCoopers LLP, Marathon's
independent public accountants, dated as of the date on which the Marathon
Form S-4 shall become effective and addressed to Ashland, in form and
substance reasonably satisfactory to Ashland and customary in scope and
substance for "comfort" letters delivered by independent public accountants
in connection with registration statements similar to the Marathon Form
S-4.
(h) Ashland shall use its reasonable best efforts promptly to
prepare and file with the SEC a registration statement on Form 8-A or Form
10, as applicable, under the Exchange Act in connection with the New
Ashland Inc. Common Stock, including the associated Ashland Rights (the
"Exchange Act Registration Statement").
SECTION 9.02. ACCESS TO INFORMATION; CONFIDENTIALITY. Prior to
the Closing, each of Ashland and Marathon shall furnish promptly to the
other party such information concerning its business, properties, assets,
liabilities and personnel, and shall provide such other party and such
other party's officers, employees, agents and representatives, including
personnel of MAP, access, at all reasonable times upon reasonable notice,
to its and its subsidiaries' facilities, records and personnel, as such
other party may reasonably request; provided, however, that either party
may withhold (i) any document or information that is subject to the terms
of a confidentiality agreement with a third party, (ii) such portions of
documents or information relating to pricing or other matters that are
highly sensitive if the exchange of such documents (or portions thereof) or
information, as determined by such party's counsel, might reasonably result
in antitrust difficulties for such party (or any of its affiliates) and/or
(iii) any document or information that it reasonably believes constitutes
information protected by attorney/client privilege if such privilege would
be adversely affected by reason of being so provided. If any material is
withheld by such party pursuant to the proviso to the preceding sentence,
such party shall inform the
60
other party as to the general nature of what is being withheld and
otherwise make reasonable and appropriate substitute disclosure
arrangements under the circumstances. All information exchanged pursuant to
this Section 9.02 shall be subject to the confidentiality agreement dated
March 28, 2003, between Ashland and Marathon (the "Confidentiality
Agreement").
SECTION 9.03. REASONABLE BEST EFFORTS; NOTIFICATION. (a) Upon the
terms and subject to the conditions set forth in this Agreement, each of
the parties shall use its reasonable best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Transactions, including (i) the obtaining of all necessary
actions or nonactions, waivers, consents, orders, authorizations and
approvals from Governmental Entities and the making of all necessary
registrations, declarations and filings (including filings with
Governmental Entities, if any) and the taking of all reasonable steps as
may be necessary to obtain an approval or waiver from, or to avoid an
action or proceeding by, any Governmental Entity, (ii) the obtaining of all
necessary consents, approvals or waivers from third parties, (iii) the
defending of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or any other Transaction
Agreement or the consummation of the Transactions, including seeking to
have any stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed and (iv) the execution and delivery
of any additional instruments necessary to consummate the Transactions and
to fully carry out the purposes of the Transaction Agreements. In
connection with and without limiting the foregoing, the Ashland Parties and
the Marathon Parties shall (i) take all action necessary to ensure that no
state takeover statute or similar statute or regulation is or becomes
applicable to any Transaction Agreement, any Ancillary Agreement or any
Transaction and (ii) if any state takeover statute or similar statute or
regulation becomes applicable to any Transaction Agreement, any Ancillary
Agreement or any Transaction, take all action necessary to ensure that the
Transactions may be consummated as promptly as practicable on the terms
contemplated by the Transaction Agreements.
61
Notwithstanding the foregoing, Ashland and its Representatives shall not be
prohibited under this Section 9.03(a) from taking any action permitted by
Section 8.02. Nothing in this Section 9.03(a) shall be deemed to require
Marathon to waive any rights or agree to any limitation on the operations
of Marathon or any of its subsidiaries or to dispose of any asset or
collection of assets of any Marathon Party or any of their respective
subsidiaries or affiliates, in each case that would have a material adverse
effect on the business, condition (financial or other) or results of
operations of (i) MAP, the Maleic Business and the VIOC Centers, taken as a
whole, or (ii) Marathon and its subsidiaries, taken as a whole.
(b) Upon the terms and subject to the conditions set forth in
this Agreement, Ashland shall use its reasonable best efforts to cause the
condition set forth in Section 10.02(c) (Specified Consents) to be
satisfied. The parties, together with their financial advisors, shall
consult periodically regarding the scope of "reasonable best efforts,"
which will not require Ashland to incur commercially unreasonable costs to
satisfy such condition. With respect to the Ashland Public Debt (as defined
in this Section 9.03(b)), the parties acknowledge that Ashland may obtain
consents through a tender offer or consent solicitation (or combination
thereof), to be consummated on the Closing Date and to be commenced on a
date mutually agreed by Ashland and Marathon but in any event no later than
five business days after the satisfaction of the last to be satisfied of
the conditions set forth in Sections 10.01(a) (Ashland Shareholder
Approval), 10.01(c) (Antitrust) and 10.01(f) (Receipt of Private Letter
Rulings; Tax Opinions) to expressly permit the Transactions and eliminate
indenture covenants, certain events of default and other relevant
provisions, all as reasonably deemed by Ashland necessary to consummate the
Transactions (or, in the case of a combined tender offer and consent
solicitation, otherwise desirable). "Ashland Public Debt" means securities
outstanding as of the last day of the month immediately preceding the month
in which the tender offer and/or consent solicitation is commenced (the
"Debt Consent Measurement Date"), issued under the Indenture dated as of
August 15, 1989, between Ashland and Citibank, N.A. and the Amendment and
Restatement thereof dated as of August 15, 1990 (the "Indentures"), other
than any such securities issued after the date of this Agreement. For
62
purposes of this Section 9.03(b) and Section 10.02(c), receipt of consents
from the holders of not less than 66-2/3% in principal amount of the
Outstanding Securities (as defined in the Indentures) of any series
constitutes a consent with respect to the entire principal amount as of the
Debt Consent Measurement Date, of such series. For the avoidance of doubt,
receipt of consents from the holders of less than 66-2/3% in principal
amount of the Outstanding Securities of any series shall not constitute a
consent with respect to any portion of such series.
(c) The Marathon Parties shall use their reasonable best efforts
(not including the payment of any consideration) to obtain, prior to
the Closing, the written consent of Pilot Corporation, as contemplated
by the Global Obligations Agreement among MAP, Speedway SuperAmerica
LLC, USX Corporation, Pilot Corporation, Ashland, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and Pilot Travel Centers LLC,
dated as of September 1, 2001, to the release of Ashland from its
obligations contained in Article XIV of the Put/Call Agreement in
accordance with Section 12.04 or, if such consent has not been
obtained prior to the Closing, as promptly as possible thereafter.
(d) (i) The Ashland Parties and the Marathon Parties shall use
their reasonable best efforts to cause AAA to deliver to Ashland and
Marathon the Bring-Down AAA Opinions (as defined in Section 10.01(g))
and to cause HLHZ to deliver to Ashland and Marathon the Bring-Down
HLHZ Opinion (as defined in Section 10.01(g)). It is understood that
(A) the Ashland Board may rely upon the Initial AAA Opinions and the
Bring-Down AAA Opinions if the Ashland Board determines that such
reliance is appropriate (subject to the indemnification and expense
reimbursement arrangements previously agreed between Ashland and AAA)
and (B) the Marathon Board may rely upon the Initial HLHZ Opinion and
the Bring-Down HLHZ Opinion if the Marathon Board determines that such
reliance is appropriate (subject to indemnification and expense
reimbursement arrangements agreed between Marathon and HLHZ).
(ii) The Ashland Parties and the Marathon Parties acknowledge
that the sole purpose of the Bring-Down Opinions is to update the
Initial Opinions based on events occurring or facts being disclosed to
AAA or HLHZ, as applicable, after the date of this Agreement and prior
to the
63
Closing. Therefore, the parties intend that (A) each Bring-Down
Opinion shall be based on the same valuation methodologies as the
corresponding Initial Opinion, except for changes in methodology
required as a result of events occurring or facts being disclosed to
AAA or HLHZ, as applicable, after the date of this Agreement and prior
to the Closing, and (B) events that are contemplated by AAA or HLHZ,
as applicable, in the assumptions identified in its Initial Opinion
should not be considered to have occurred after the date of this
Agreement in determining whether to deliver the corresponding
Bring-Down Opinion.
(iii) Prior to the Closing, the Ashland Parties and MAP shall
meet periodically with personnel of AAA and HLHZ and shall provide AAA
and HLHZ access at all reasonable times upon reasonable prior request
to their respective personnel, properties, books and records to the
extent reasonably required for the purpose of delivering the
Bring-Down Opinions.
(iv) At any time prior to the Closing, either Ashland or Marathon
may request that AAA or HLHZ (A) update its Working Papers and
analysis based on events occurring or facts disclosed to it after the
date of this Agreement and prior to the date of such request and (B)
based on such update, advise Ashland and Marathon of any facts or
circumstances that are expected to result in it being unable to
deliver its Bring-Down Opinion as of such date. The Ashland Parties
and the Marathon Parties shall be deemed to have jointly requested AAA
or HLHZ to comply with any such request as promptly as practicable.
(v) In the event that AAA or HLHZ shall notify Ashland and
Marathon of any facts or circumstances that are expected to result in
it being unable to deliver its Bring-Down Opinion, Ashland or MAP, as
applicable, shall have the right for a period of three months, or such
shorter period as Ashland or MAP, as applicable, may elect, to meet
and confer with, and provide
64
additional information to, AAA or HLHZ, as applicable, for purposes of
resolving any concerns relating to such facts and circumstances. The
Ashland Parties and the Marathon Parties shall use their reasonable
best efforts to cause AAA or HLHZ, as applicable (based on such
information and any efforts by Ashland or MAP, as applicable, to cure
or otherwise address such facts and circumstances), to advise Ashland
and Marathon as promptly as practicable after the expiration of such
period whether it would be able to deliver its Bring-Down Opinion as
of such date.
(vi) The Working Papers of AAA and HLHZ relating to the
Bring-Down Opinions, and any other Working Papers of AAA and HLHZ
prepared pursuant to this Section 9.03(d) or otherwise relating to the
Transactions, shall be made available to the Ashland Parties and the
Marathon Parties upon request at any time prior to or after the
Closing. The Ashland Parties and the Marathon Parties shall use their
reasonable best efforts to cause AAA and HLHZ to provide the Ashland
Parties and the Marathon Parties reasonable access to the personnel of
AAA and HLHZ involved in the Bring-Down Opinions, during normal
business hours upon reasonable prior request, at any time prior to the
Closing to discuss matters relating to such Working Papers.
(vii) At any time after August 1, 2004, or such earlier date as
Ashland and Marathon may agree, and prior to the Closing, either
Ashland or Marathon may request that AAA prepare a draft of the
Bring-Down AAA Opinions or that HLHZ prepare a draft of the Bring-Down
HLHZ Opinion, in each case marked to show any proposed changes from
the applicable form included in Section 10.01(g) of the Marathon
Disclosure Letter or in Section 10.01(g) of the Ashland Disclosure
Letter, respectively, based on events occurring or facts disclosed to
AAA or HLHZ after the date of this Agreement. The Ashland Parties and
the Marathon Parties shall be deemed to have jointly requested AAA or
HLHZ to comply with any such
65
request as promptly as practicable. Ashland and Marathon may review
and comment on any such proposed changes and may meet and confer with
AAA and HLHZ for purposes of resolving any such comments prior to the
Closing.
(e) Prior to the Closing, Ashland shall give prompt notice to
Marathon of: (i) any representation or warranty made by the Ashland Parties
contained in the Transaction Agreements becoming untrue or incorrect, other
than such failures to be true and correct that, in the aggregate, have not
had and would not reasonably be expected to have an Ashland Material
Adverse Effect; provided that, for purposes of determining whether notice
is required under this clause (i), the representations and warranties of
the Ashland Parties shall be deemed not qualified by any references therein
to (A) materiality generally or (B) whether or not any breach, circumstance
or other item has resulted or would reasonably be expected to result in an
Ashland Material Adverse Effect; (ii) the failure by any of the Ashland
Parties to perform in all material respects their respective obligations
under the Transaction Agreements; (iii) any notice or other communication
any Ashland Party receives from any Governmental Entity or other person
alleging, to the knowledge of Ashland, with reasonable specificity, that a
Consent of, or registration, declaration or filing with, or permit from,
such Governmental Entity or other person is or may be required in
connection with the execution and delivery of or performance under any
Transaction Agreement or the consummation of the Transactions, or that any
such action would violate any applicable Law or breach or otherwise
conflict with any material agreement to which any of the Ashland Parties
are parties or are otherwise bound; or (iv) any action, suit, claim,
investigation or proceeding commenced or, to its knowledge, threatened, in
each case seeking to restrain or prohibit or otherwise materially affecting
the Transactions; provided, however, that no such notification shall affect
the representations, warranties or obligations of the Ashland Parties or
the conditions to the obligations of the Ashland Parties or the Marathon
Parties under the Transaction Agreements.
(f) Prior to the Closing, Marathon shall give prompt notice to
Ashland of: (i) any representation or warranty made by the Marathon Parties
contained in
66
the Transaction Agreements becoming untrue or incorrect, other than such
failures to be true and correct that, in the aggregate, have not had and
would not reasonably be expected to have a Marathon Material Adverse
Effect; provided that, for purposes of determining whether notice is
required under this clause (i), the representations and warranties of the
Marathon Parties shall be deemed not qualified by any references therein to
(A) materiality generally or (B) whether or not any breach, circumstance or
other item has resulted or would reasonably be expected to result in a
Marathon Material Adverse Effect; (ii) the failure by any of the Marathon
Parties to perform in all material respects their respective obligations
under the Transaction Agreements; (iii) any notice or other communication
any Marathon Party receives from any Governmental Entity or other person
alleging, to the knowledge of Marathon, with reasonable specificity, that a
Consent of, or registration, declaration or filing with, or permit from,
such Governmental Entity or other person is or may be required in
connection with the execution and delivery of or performance under any
Transaction Agreement or the consummation of the Transactions, or that any
such action would violate any applicable Law or breach or otherwise
conflict with any material agreement to which any of the Marathon Parties
are parties or are otherwise bound; or (iv) any action, suit, claim,
investigation or proceeding commenced or, to its knowledge, threatened, in
each case seeking to restrain or prohibit or otherwise materially affecting
the Transactions; provided, however, that no such notification shall affect
the representations, warranties or obligations of the Marathon Parties or
the conditions to the obligations of the Ashland Parties or the Marathon
Parties under the Transaction Agreements. Marathon shall give prompt notice
to Ashland of: (i) any commitment referred to in the definition of Market
MAC Event contained in Section 14.02 ceasing to be in full force and effect
or (ii) any assertion by one or more Third Party Lenders who have provided
such commitment with respect to the HoldCo Borrowing that a market
disruption or other similar event has occurred that would result in the
non-satisfaction of the Market MAC Condition to the HoldCo Borrowing.
(g) The Ashland Parties and the Marathon Parties shall comply
with the obligations set forth in Sections 11.03(a) and 11.03(b) of the
Put/Call Agreement
67
with respect to the transfer of the Ashland LOOP/LOCAP Interest as if
Marathon Company had exercised the Marathon Call Right (as defined in the
Put/Call Agreement) thereunder on the date of this Agreement. The Ashland
Parties and the Marathon Parties shall use their reasonable best efforts
(not including the payment of any consideration) to obtain (i) any consents
or approvals (in addition to those contemplated by Sections 11.03(a) and
11.03(b) of the Put/Call Agreement) required for the transfer of the
Ashland LOOP/LOCAP Interest to HoldCo and the acquisition of the Ashland
LOOP/LOCAP Interest by Merger Sub in the Acquisition Merger as contemplated
by this Agreement and (ii) express releases of Ashland, executed and
delivered by all parties to the LOOP T&D Agreement or the LOCAP T&D
Agreement, as applicable, effective as of the Closing, from all
liabilities, obligations and commitments under the LOOP T&D Agreement and
the LOCAP T&D Agreement, regardless of whether such liabilities,
obligations or commitments arose before or after the Closing. Merger Sub
shall execute such further instruments of assumption as may be required as
a result of the acquisition of the Ashland LOOP/LOCAP Interest by Merger
Sub in the Acquisition Merger as contemplated by this Agreement. If Ashland
is not released from all liabilities, obligations and commitments under the
LOCAP T&D Agreement in accordance with clause (ii) of the second
immediately preceding sentence, Ashland shall cause the LOCAP T&D
Assumption Agreement (as defined in Section 14.02) to be executed and
delivered by the parties specified therein to be parties thereto, and if
Ashland has not been released from all liabilities, obligations and
commitments under the LOOP T&D Agreement in accordance with this Section
9.03(g), Ashland shall cause the LOOP T&D Assumption Agreement (as defined
in Section 14.02) to be executed and delivered by the parties specified
therein to be parties thereto, in each case as contemplated by Section
1.02(b).
SECTION 9.04. FEES AND EXPENSES. (a) Except as provided below,
all fees and expenses (including any broker's or finder's fees and the
expenses of representatives and counsel) incurred in connection with the
Transactions shall be paid by the party incurring such fees or expenses,
whether or not the Transactions are consummated.
68
(b) Ashland and Marathon shall share equally (i) fees and
expenses of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co., Inc. in connection with its appraisal of
the Maleic Business and the VIOC Centers, (ii) fees and expenses of D&T for
purposes of allocating the value of MAP to its assets in anticipation of
the MAP Partial Redemption and for use by Marathon for GAAP reporting
purposes, (iii) fees and expenses of ▇▇▇▇▇▇ ▇▇▇▇▇ LLP in connection with
obtaining the consent from the Department of Transportation with respect to
the transfer of Ashland's interest in LOOP LLC, as required by the permit
issued by the Department of Transportation relating to LOOP LLC, (iv) fees
and expenses incurred in connection with filing, printing and mailing of
the Proxy Statement and the Forms S-4, including the SEC filing fees
associated with the Proxy Statement, the Marathon Form S-4 and the Ashland
Form S-4; provided, however, that each of Ashland and Marathon shall pay
the fees and expenses of their respective counsel and independent auditors
in connection with the preparation and filing of such documents and (v)
fees and expenses of one firm engaged by Ashland, and reasonably acceptable
to Marathon, with respect to the solicitation of proxies in connection with
the Ashland Shareholders Meeting. Except as set forth in Section
9.03(d)(i), Marathon shall pay the fees and expenses of AAA in connection
with the Initial AAA Opinions and the Bring-Down AAA Opinions and Ashland
shall pay the fees and expenses of HLHZ in connection with the Initial HLHZ
Opinion and the Bring-Down HLHZ Opinion. Marathon shall pay the fees (other
than any guarantee fee payable after Closing pursuant to the Reimbursement
Agreement) and expenses relating to the HoldCo Borrowing. Merger Sub shall
pay any guarantee fee payable after Closing pursuant to the Reimbursement
Agreement. Ashland shall pay the fees and expenses relating to obtaining
the consents referred to in Section 10.02(c) (Specified Consents). Costs
and expenses incurred in connection with the arrangements described in
Section 9.02(e) of the Put/Call Agreement, if applicable, shall be
allocated in accordance with such section.
(c) Ashland shall pay to Marathon a fee of $30,000,000 (the
"Termination Fee") if: (i) Marathon terminates this Agreement pursuant to
Section 11.01(d); (ii) Ashland terminates this Agreement pursuant to
Section 11.01(f); or (iii) any person makes a Competing Ashland Proposal
that was publicly disclosed prior to the
69
Ashland Shareholders Meeting and not withdrawn by the date of the Ashland
Shareholders Meeting and thereafter this Agreement is terminated pursuant
to Section 11.01(b)(iii) and within 15 months of such termination Ashland
enters into a definitive agreement to consummate, or consummates, any
transaction (other than a transaction involving Marathon or any of its
affiliates, or any successor thereto under the Put/Call Agreement, as a
party thereto) of a kind described in clause (i), (ii) or (iii) of the
definition of "Competing Ashland Proposal" (solely for purposes of this
Section 9.04(c), the term "Competing Ashland Proposal" shall have the
meaning set forth in the definition of Competing Ashland Proposal contained
in Section 8.02(e) except that the reference to "any of Ashland's
Membership Interest" in clause (iii) thereof shall be deemed a reference to
"a majority of Ashland's Membership Interest"). Any fee due under this
Section 9.04(c) shall be paid by wire transfer of same-day funds (A) in the
case of clause (i) or (ii) of the preceding sentence, on the date of
termination of this Agreement, and (B) in the case of clause (iii) of the
preceding sentence, on the date of execution of such definitive agreement
or, if earlier, consummation of such transactions.
(d) Ashland shall pay to Marathon $10,000,000 (which shall be in
addition to any Termination Fee payable pursuant to Section 9.04(c)), which
Ashland and Marathon agree is a reasonable estimate of Marathon's expenses
incurred in connection with this Agreement, if (i) this Agreement is
terminated pursuant to Section 11.01(c) or (ii) Ashland is obligated to pay
the Termination Fee under Section 9.04(c). Any fee due under Section
9.04(d)(i) shall be payable upon demand following such termination. Any fee
due under Section 9.04(d)(ii) shall be paid by wire transfer of same-day
funds on the date of payment of the Termination Fee. The payment by Ashland
to Marathon under this Section 9.04(d) following termination of this
Agreement pursuant to Section 11.01(c) shall not impair any claim for
damages or any other right or remedy available to Marathon (other than for
expenses incurred in connection with this Agreement), at law or in equity,
arising out of or resulting from any breach or failure to perform which
gave rise to Marathon's right to terminate this Agreement pursuant to
Section 11.01(c).
70
(e) Marathon shall pay to Ashland $10,000,000, which Ashland and
Marathon agree is a reasonable estimate of Ashland's expenses incurred in
connection with this Agreement, if this Agreement is terminated pursuant to
Section 11.01(e), payable upon demand following such termination. The
payment by Marathon to Ashland under this Section 9.04(e) following
termination of this Agreement pursuant to Section 11.01(e) shall not impair
any claim for damages or any other right or remedy available to Ashland
(other than for expenses incurred in connection with this Agreement), at
law or in equity, arising out of or resulting from any breach or failure to
perform which gave rise to Ashland's right to terminate this Agreement
pursuant to Section 11.01(e).
SECTION 9.05. PUBLIC ANNOUNCEMENTS. The Ashland Parties, on the
one hand, and the Marathon Parties, on the other hand, shall consult with
each other before issuing, and provide each other the opportunity to review
and comment upon, any press release or other similar written or scripted
public statements (including communications to employees generally of MAP,
the Maleic Business or the VIOC Centers) with respect to the Transactions
and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by
applicable Law, court process or by obligations pursuant to any listing
agreement with or rules of any national securities exchange.
SECTION 9.06. AFFILIATES. Prior to the date of the Ashland
Shareholders Meeting, Ashland shall deliver to Marathon a letter
identifying all persons who are expected by Ashland to be, at the date of
the Ashland Shareholders Meeting, "affiliates" of Ashland for purposes of
Rule 145 under the Securities Act, and Ashland shall update such list if
necessary prior to the Closing to identify all persons Ashland reasonably
believes may have been "affiliates" of Ashland for purposes of Rule 145
under the Securities Act on the date of the Ashland Shareholders Meeting.
Ashland shall use its reasonable best efforts (not including the payment of
any consideration) to cause each such person to deliver to Marathon on or
prior to the Closing Date a written agreement substantially in the form
attached hereto as Exhibit C.
SECTION 9.07. STOCK EXCHANGE LISTINGS. (a) Marathon shall prepare
and submit to the NYSE an
71
application (or amendment thereto) for listing on the NYSE of the Marathon
Common Stock to be issued in the Acquisition Merger, and shall use its
reasonable best efforts to obtain, prior to the Ashland Shareholders
Meeting, approval for the listing of such shares, subject to official
notice of issuance.
(b) Ashland and New Ashland Inc. shall prepare and submit to the
NYSE or The Nasdaq Stock Market ("NASDAQ") an application (or amendment
thereto) for listing on the NYSE or NASDAQ of the New Ashland Inc. Common
Stock to be issued to holders of Ashland Common Stock in the Acquisition
Merger, and shall use their reasonable best efforts to obtain, prior to the
Ashland Shareholders Meeting, approval for the listing of such shares,
subject to official notice of issuance.
SECTION 9.08. RIGHTS AGREEMENTS; CONSEQUENCES IF RIGHTS
TRIGGERED. (a) If any Distribution Date occurs under the Ashland Rights
Agreement at any time during the period from the date of this Agreement to
the Acquisition Merger Effective Time, Ashland and Marathon shall make such
adjustment to Articles II, III and IV as Ashland and Marathon shall
mutually agree so as to preserve the economic benefits that Ashland and
Marathon each reasonably expected on the date of this Agreement to receive
as a result of the consummation of the Transactions.
(b) In the event that Marathon enters into or adopts a rights
agreement and, at any time from the date of this Agreement to the Closing
Date, a "distribution date", "share acquisition date", "triggering event"
or similar event occurs thereunder, the Marathon Board shall take such
actions as are necessary under such rights agreement to provide that rights
certificates representing an appropriate number of Marathon rights are
issued to former Ashland shareholders who receive Marathon Common Stock
pursuant to the Acquisition Merger. If Marathon is not permitted under such
rights agreement to provide rights certificates to such former Ashland
shareholders, Ashland and Marathon shall make such adjustment to Article IV
as Ashland and Marathon shall mutually agree so as to preserve the economic
benefits that Ashland and Marathon each reasonably expected on the date of
this Agreement to receive as a result of the consummation of the
Transactions.
72
SECTION 9.09. ST. ▇▇▇▇ PARK JUDGMENT AND PLEA AGREEMENT; PLAINS
SETTLEMENT. (a) After the Closing, (i) MAP shall complete the St. ▇▇▇▇ Park
QQQ Project (as defined in this Section 9.09(a))(if it has not been completed
prior to the Closing) and (ii) the Marathon Parties shall allow New Ashland
Inc., the United States Probation Office and their respective consultants and
advisors appropriate access to the St. ▇▇▇▇ Park refinery to allow them to
monitor and ascertain completion of the St. ▇▇▇▇ Park QQQ Project and assure
compliance of the "systems" (as defined in the St. ▇▇▇▇ Park Judgment and Plea
Agreement (as defined in Section 14.02)) with the St. ▇▇▇▇ Park Judgment and
Plea Agreement. The "St. ▇▇▇▇ Park QQQ Project" means the upgrade of all
process sewers, junction boxes and drains at the St. ▇▇▇▇ Park refinery to
comply with Subpart QQQ of the New Source Performance Standards of the Clean
Air Act, 42 U.S.C. {section} 7413(c)(1), in accordance with the St. ▇▇▇▇ Park
Judgment and Plea Agreement.
(b) Ashland or New Ashland Inc. shall bear the cost of the St.
▇▇▇▇ Park QQQ Project incurred after January 1, 2003 not to exceed
$9,670,000 (if the Closing occurs on or before December 31, 2004) or the
amount of the Price Reduction (as defined in Amendment No. 1 to the
Put/Call Agreement) (if the Closing occurs after December 31, 2004) (the
"St. ▇▇▇▇ Park QQQ Project Payment Amount"). The following amounts shall be
credited against the St. ▇▇▇▇ Park QQQ Project Payment Amount: (i) 38% of
(A) all out-of-pocket costs incurred after January 1, 2003 by MAP and (B)
internal engineering costs of MAP incurred after January 1, 2003, in each
case for which MAP has not been reimbursed by Ashland, prior to the
Closing, in each case arising out of or relating to the St. ▇▇▇▇ Park QQQ
Project, (ii) all out-of-pocket costs incurred after January 1, 2003 by MAP
and internal engineering costs of MAP incurred after January 1, 2003, for
which MAP has been reimbursed by Ashland, prior to the Closing, in each
case arising out of or relating to the St. ▇▇▇▇ Park QQQ Project, and (iii)
$1,569,400, which amount represents 38% of the $4,130,000 paid by MAP as
part of the Plains Settlement (the sum of the amount referred to in clauses
(i), (ii) and (iii) being the "Prior Payments"). MAP shall provide to
Ashland, at least two business days prior to the Closing Date, a written
statement setting forth in reasonable detail its calculation of the amounts
referred
73
to in clauses (i) and (ii) of the preceding sentence. Promptly following
the Closing, if the St. ▇▇▇▇ Park QQQ Project Payment Amount exceeds the
Prior Payments, New Ashland Inc. shall, and if the Prior Payments exceed
the St. ▇▇▇▇ Park QQQ Project Payment Amount, MAP shall, make payment to
the other party of the amount of such excess, by wire transfer of
immediately available funds to a bank account designated in writing by MAP
or New Ashland Inc., as applicable, at least two business days prior to the
Closing Date.
SECTION 9.10. CONSEQUENCES OF INABILITY TO TRANSFER THE ASHLAND
LOOP/LOCAP INTEREST ON THE CLOSING DATE. The parties acknowledge that,
pursuant to the MAP Governing Documents, Ashland is obligated to pay to MAP
an amount equal to any dividends or distributions that Ashland receives in
respect of the Ashland LOOP/LOCAP Interest net of certain Taxes imposed on
Ashland or withheld from such dividends or distributions, and accordingly,
the economic benefits of the foregoing have already been effectively
transferred to MAP. Accordingly, notwithstanding anything to the contrary
contained herein, it shall not be a condition to the Closing or the
effectiveness of any of the Transactions that Ashland shall have
contributed the Ashland LOOP/LOCAP Interest to HoldCo in accordance with
Section 1.02(b) and the MAP/LOOP/LOCAP Contribution Agreements. In the
event that any consents or approvals required for the transfer of the
Ashland LOOP/LOCAP Interest are not obtained prior to the Closing, and as a
consequence Ashland is not able to contribute the Ashland LOOP/LOCAP
Interest to HoldCo on the Closing Date, the provisions set forth in
Sections 9.02(e), 13.03 and 13.04 of the Put/Call Agreement shall apply;
provided, however, that, from and after the Closing, any payments described
in the first sentence of this Section 9.10 shall be made by New Ashland
Inc. to Merger Sub for the benefit of MAP.
SECTION 9.11. CONSENTS UNDER ASSIGNED CONTRACTS. Ashland and
Marathon shall use their reasonable best efforts (not including the payment
of any consideration) to obtain any Consents of third parties necessary to
effect the assignment to and assumption by HoldCo of, and the release of
Ashland from, the Assigned Contracts (as defined in each of the Maleic
Agreement and the VIOC Agreement), including in the case of the Marathon
Parties by providing such assurances regarding performance by Merger Sub
(as
74
successor to HoldCo) after the Closing as may be reasonably required to obtain
such Consents.
SECTION 9.12. ADMINISTRATIVE PROCEEDINGS. After the Closing, if
the Marathon Parties receive notice or become aware of any consent decree
or order, notice of violation, administrative enforcement action or similar
administrative action (each, an "Administrative Proceeding") relating to
MAP and naming Ashland as a responsible party, the Marathon Parties shall
promptly notify Ashland of such Administrative Proceeding. Ashland may
take, and MAP shall provide Ashland with such cooperation as Ashland may
reasonably request in connection with, any reasonable action to remove
Ashland's name from such Administrative Proceeding, so long as such removal
is appropriate under the circumstances (taking into consideration the
applicable provisions of the Transaction Agreements, the Ancillary
Agreements, the MAP Governing Documents and applicable Law). Nothing in
this Section 9.12 is intended to affect MAP's right to control its defense
of such Administrative Proceedings.
SECTION 9.13. REPLACEMENT OF DISTRIBUTED RECEIVABLES. To the
extent any Distributed Receivable is reduced or canceled (other than as a
result of a breach by the obligor thereof of its payment obligation), or to
the extent Ashland makes any payment in respect of proceeds of any
Distributed Receivable to the holder of any Lien referred to in clause (iv)
below after the collection of such Distributed Receivable in order to
satisfy such Lien, including as a result of (i) defective or rejected goods
or services, any cash discount or governmental or regulatory action, (ii) a
setoff in respect of any claim by the obligor thereof, (iii) an obligation
of MAP to pay the obligor thereof any rebate or refund or (iv) any Lien
with respect to such Distributed Receivable, other than any Lien arising
from actions or inactions of any of the Ashland Parties or their affiliates
(and not any of the Marathon Parties or their affiliates), then MAP shall
promptly assign to Ashland accounts receivable of MAP, selected in
accordance with the protocol set forth in Exhibit A, with a total Value
equal to, in the case of a reduction, the Value of such reduction, in the
case of a payment, the amount of such payment, or, in the case of a
cancelation, the Value of such Distributed Receivable. Ashland shall assign
back
75
to MAP any Distributed Receivables that have been replaced pursuant to this
Section 9.13.
SECTION 9.14. TRANSITION SERVICES. Within 120 days after the date
of this Agreement, Marathon shall provide written notice to Ashland
specifying which of the services currently being performed by Ashland for
the Maleic Business that Marathon requests New Ashland Inc. to continue to
perform during the transition period after the Closing specified in, and in
accordance with the terms of, the Transition Services Agreement (as defined
in the Maleic Agreement). Prior to the Closing, Ashland and Marathon shall
agree on the scope of such transition services and shall prepare
appropriate schedules to the Transition Services Agreement to reflect such
transition services. Unless otherwise agreed by Ashland and Marathon, the
fees for such transition services shall be as specified in Section 2.1
(without regard to clause (i) of the first sentence thereof) of the form of
Transition Services Agreement attached as an exhibit to the Maleic
Agreement. Such transition services shall be provided during the term
specified in Section 2.2 of such form of Transition Services Agreement,
subject to the termination and notice provisions specified therein.
SECTION 9.15. MAP PARTIAL REDEMPTION AMOUNT. (a) Ashland shall
use its reasonable best efforts to cause Deloitte & Touche LLP ("D&T") to
provide Ashland and Marathon, on or prior to August 15, 2004, (i) a
preliminary report prepared by D&T setting forth D&T's good faith estimate
as to the respective amounts of accounts receivable and cash to be
distributed by MAP in the MAP Partial Redemption and (ii) any supporting
schedules and other information prepared by D&T in connection with such
report as Marathon may reasonably request. Ashland shall use its reasonable
best efforts to cause D&T to provide Ashland and Marathon any updates to
such report, schedules and other information from time to time as Marathon
may reasonably request.
(b) The Marathon Parties shall cause MAP to have available for
distribution at Closing in the MAP Partial Redemption cash in an amount,
and accounts receivable with a Value, which in the aggregate equal the
Estimated MAP Partial Redemption Amount. The Ashland Parties and the
Marathon Parties shall use their reasonable best efforts to cause MAP to
have available for distribution at Closing in
76
the MAP Partial Redemption cash in an amount equal to the Cash Amount and
accounts receivable with a total Value equal to the AR Amount.
Notwithstanding the provisions of Section 8.01(c) or any provision of the
MAP LLC Agreement (as amended by the MAP LLC Agreement Amendment or
otherwise amended hereafter), and without requiring a vote pursuant to
Section 8.07(b) of the MAP LLC Agreement (as amended by the MAP LLC
Agreement Amendment or otherwise amended hereafter), in the event Marathon
reasonably expects that MAP will not have sufficient cash and accounts
receivable available for distribution to Ashland to fund the payment of the
Estimated MAP Partial Redemption Amount (after taking into account MAP's
reasonably anticipated working capital requirements) on the expected
Closing Date, MAP shall be permitted to sell or otherwise dispose of
assets, or enter into sale/leaseback arrangements, in each case in
arm's-length transactions with unaffiliated third parties, that are treated
for Federal income Tax purposes as dispositions, not borrowings, in order
to raise funds to satisfy such funding requirement.
(c) If the Closing occurs, all Tax Items (as defined in the Tax
Matters Agreement) from any sale, disposition or sale/leaseback arrangement
effected pursuant to Section 9.15(b) that is not effected in the ordinary
course of MAP's business and is not reflected in MAP's "Business/Tactical
Plan & Budget 2004-2006" dated December 16, 2003 shall be allocated to
Marathon Company. The Marathon Parties shall (i) promptly notify Ashland of
any written proposal made or received by any of the Marathon Parties
relating to such a sale, disposition or sale/leaseback arrangement, and in
any event shall notify Ashland of any such proposed sale, disposition or
sale/leaseback arrangement not less than five days prior to entering into
an agreement to effect any such sale, disposition or sale/leaseback
arrangement; (ii) in connection with any such proposal, advise Ashland in
writing of the assets to be transferred, the identity of the proposed
transferee and the material terms and conditions of the proposed sale,
disposition or sale/leaseback arrangement; (iii) keep Ashland reasonably
informed on a timely basis of the status and details of such proposed sale,
disposition or sale/leaseback arrangement, prior to and after entering into
an agreement to effect any such sale, disposition or sale/leaseback
arrangement, including any details that may affect the
77
timing of the Transactions, and provide Ashland with copies of all material
documents related to such proposed sale, disposition or sale/leaseback
arrangement; and (iv) use its reasonable best efforts to effect the closing
of any such sale, disposition or sale/leaseback arrangement substantially
concurrently with the Closing.
(d) Ashland shall provide Marathon not less than 90 days notice
if Ashland intends to waive the condition set forth in Section 10.02(f), in
which case the Marathon Parties shall cause MAP to have available for
distribution at Closing in the MAP Partial Redemption such additional cash
as may be required to comply with the first sentence of Section 9.15(b).
SECTION 9.16. ASHLAND DEBT OBLIGATION AMOUNT. No later than
August 1, 2004, Ashland shall provide to Marathon a schedule setting forth
estimates, prepared in good faith by Ashland in light of any communications
with the Internal Revenue Service (the "IRS"), written or otherwise, of the
Ashland Debt Obligation Amounts based on assumed Closing Dates occurring on
the last day of each month from August of 2004 through June of 2005.
Ashland shall update such schedule promptly following any communication
with the IRS, written or otherwise, that would materially affect the
Ashland Debt Obligation Amount for any assumed Closing Date. Within five
business days of Ashland's receipt of the Private Letter Rulings, Ashland
shall provide to Marathon a schedule setting forth the Ashland Debt
Obligation Amount for each such assumed Closing Date after the date of such
schedule. Ashland shall not, without the prior written consent of Marathon,
effect any repurchase, repayment or defeasance prior to the Closing Date of
any debt outstanding as of the date of this Agreement (and any refinancings
of such debt by Ashland or any of its affiliates) that would reduce the
Ashland Debt Obligation Amount (taking into consideration any refinancing
of such debt by Ashland or any of its affiliates), except to the extent
required by the terms of such debt (including, with respect to obligations
other than (i) the Ashland Public Debt, (ii) any other debt issued after
the date of this Agreement to refinance any portion of the Ashland Debt
Obligation Amount and (iii) Ashland's industrial revenue bonds, as a result
of any notice of Ashland's intent to repurchase, repay or
78
defease such obligations on an expected Closing Date; provided, that such
notice is delivered by Ashland after the satisfaction of the last to be
satisfied of the conditions set forth in Sections 10.01(a) (Ashland
Shareholder Approval), 10.01(c) (Antitrust) and 10.01(f) (Receipt of
Private Letter Rulings; Tax Opinions)).
ARTICLE X
CONDITIONS PRECEDENT
SECTION 10.01. CONDITIONS TO THE ASHLAND PARTIES' AND THE
MARATHON PARTIES' OBLIGATIONS TO EFFECT THE TRANSACTIONS. The respective
obligation of the Ashland Parties and the Marathon Parties to effect the
Transactions is subject to the satisfaction or waiver on or prior to the
Closing Date of the following conditions:
(a) ASHLAND SHAREHOLDER APPROVAL. Ashland shall have obtained the
Ashland Shareholder Approval.
(b) LISTING. The shares of Marathon Common Stock issuable in the
Marathon Share Issuance shall have been approved for listing on the NYSE,
subject to official notice of issuance, and the shares of New Ashland Inc.
Common Stock issuable in the New Ashland Inc. Share Issuance shall have
been approved for listing on the NYSE or NASDAQ, subject to official notice
of issuance.
(c) ANTITRUST. Any waiting period (and any extension thereof)
applicable to the Transactions under the HSR Act shall have been terminated
or shall have expired. Any consents, approvals and filings under any
foreign antitrust Law, the absence of which would prohibit the consummation
of the Transactions, shall have been obtained or made.
(d) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other Governmental Entity or other legal
restraint or prohibition preventing or making unlawful the consummation of
the Transactions shall be in effect; provided, however, that prior to
asserting this condition, subject to Section 9.03, each of the parties
shall have used its reasonable best efforts to prevent the entry of any
such
79
injunction or other order and to appeal as promptly as possible any such
injunction or other order that may be entered or otherwise have any such
injunction or other order lifted or vacated.
(e) FORMS S-4 AND EXCHANGE ACT REGISTRATION STATEMENT. The Forms
S-4 shall have become effective under the Securities Act and shall not be
the subject of any stop order or proceedings seeking a stop order, and
Marathon shall have received any state securities or "blue sky"
authorizations necessary to effect the Marathon Share Issuance. Ashland
shall have received any state securities or "blue sky" authorizations
necessary to effect the HoldCo Share Issuance and the New Ashland Inc.
Share Issuance. The Exchange Act Registration Statement shall have become
effective under the Exchange Act and shall not be the subject of any stop
order or proceedings seeking a stop order.
(f) RECEIPT OF PRIVATE LETTER RULINGS; TAX OPINIONS. Ashland and
Marathon shall have received the private letter rulings from the Internal
Revenue Service, in form and substance reasonably satisfactory to the
Ashland Board and the Marathon Board, and the Tax opinions, dated as of the
Closing Date, set forth in Exhibit D (such private letter rulings, the
"Private Letter Rulings", and such Tax opinions, the "Tax Opinions") with
respect to the Transactions, and the Private Letter Rulings shall be in
effect as of the Closing Date.
(g) SOLVENCY OPINIONS. Ashland and Marathon shall have received
two "bring-down" solvency opinions of AAA dated as of the Closing Date and
in substantially the form included in Section 10.01(g) of the Marathon
Disclosure Letter (the "Bring-Down AAA Opinions") and a "bring-down"
solvency opinion of HLHZ dated as of the Closing Date and in substantially
the form included in Section 10.01(g) of the Ashland Disclosure Letter (the
"Bring-Down HLHZ Opinion" and, together with the Bring-Down AAA Opinion,
the "Bring-Down Opinions").
80
SECTION 10.02. CONDITIONS TO OBLIGATIONS OF THE ASHLAND PARTIES. The
obligations of the Ashland Parties to effect the Transactions are further
subject to the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Marathon Parties in the Transaction Agreements shall be
true and correct as of the Closing Date as though made on the Closing Date,
except to the extent such representations and warranties expressly relate
to an earlier date (in which case such representations and warranties shall
be true and correct as of such earlier date), other than such failures to
be true and correct that, individually and in the aggregate, have not had
and would not reasonably be expected to have a Marathon Material Adverse
Effect. Ashland shall have received a certificate signed on behalf of
Marathon by the chief executive officer or the chief financial officer of
Marathon to such effect. For purposes of determining the satisfaction of
this condition only, the representations and warranties of the Marathon
Parties shall be deemed not qualified by any references therein to (A)
materiality generally or (B) whether or not any breach, circumstance or
other item has resulted or would reasonably be expected to result in a
Marathon Material Adverse Effect.
(b) PERFORMANCE OF OBLIGATIONS OF THE MARATHON PARTIES. The
Marathon Parties shall have performed in all material respects the
obligations required to be performed by them under the Transaction
Agreements at or prior to the Closing Date, and Ashland shall have received
a certificate signed on behalf of Marathon by the chief executive officer
or the chief financial officer of Marathon to such effect.
(c) SPECIFIED CONSENTS. Ashland shall have received irrevocable
consents (which shall be in full force and effect) to the Transactions with
respect to series of Ashland Public Debt with an aggregate principal amount
as of the Debt Consent Measurement Date representing at least 90% of the
aggregate principal amount of all series of Ashland Public Debt as of such
date.
(d) DISTRIBUTIONS TO FORMER ASHLAND SHAREHOLDERS. If the New
Ashland Inc. Share Issuance is to be effected through a distribution in
accordance with Section 1.04(b), the Ashland Board and the Board of
Directors of HoldCo shall have determined in good faith
81
that such distribution will be in compliance with all applicable Law
relating to such distribution.
(e) ABSENCE OF UNDISCLOSED MATERIAL ADVERSE EFFECT. Except as
disclosed in documents filed by Marathon with the SEC and publicly
available on or before the date that is five business days prior to the
first trading day of the Averaging Period, and except for such events,
changes, effects or developments relating to the economy of the United
States or foreign economies in general or generally affecting any industry
in which Marathon or any of its subsidiaries operate, from the date of this
Agreement to the Closing Date, there shall not have been any event, change,
effect or development that, individually or in the aggregate, has had or
would reasonably be expected to have a material adverse effect on the
business, properties, assets, condition (financial or otherwise),
operations or results of operation of Marathon and its subsidiaries, taken
as a whole, and Ashland shall have received a certificate signed on behalf
of Marathon by the chief executive officer or the chief financial officer
of Marathon to such effect. Failure to deliver such certificate, or the
occurrence of any such event, change, effect or development, shall not give
rise to a right to terminate this Agreement under Section 11.01(e).
(f) MAP ACCOUNTS RECEIVABLE. In order to effect the MAP Partial
Redemption, MAP shall have available for distribution at Closing accounts
receivable, each with a Federal income Tax basis no less than its face
amount, of MAP with a total Value equal to the AR Amount (calculated
without giving effect to any increase in the MAP Partial Redemption Amount
pursuant to the second sentence of Section 1.01).
(g) RECEIVABLES SALES FACILITY. Ashland shall have received a
certificate dated the Closing Date and signed on behalf of Marathon by the
chief executive officer or the chief financial officer of Marathon to the
effect (A) that Marathon has not delivered the notice referred to in
Section 7.03(b)(vi) of the Tax Matters Agreement or (B) that MAP will not
make any sales of receivables during the two-year period beginning on the
Closing Date.
SECTION 10.03. CONDITIONS TO OBLIGATIONS OF THE MARATHON PARTIES.
The obligations of the Marathon Parties
82
to effect the Transactions are further subject to the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Ashland Parties in the Transaction Agreements shall be
true and correct as of the Closing Date as though made on the Closing Date,
except to the extent such representations and warranties expressly relate
to an earlier date (in which case such representations and warranties shall
be true and correct as of such earlier date), other than such failures to
be true and correct that, individually and in the aggregate, have not had
and would not reasonably be expected to have an Ashland Material Adverse
Effect. Marathon shall have received a certificate signed on behalf of
Ashland by the chief executive officer or the chief financial officer of
Ashland to such effect. For purposes of determining the satisfaction of
this condition only: (i) the representations and warranties of the Ashland
Parties shall be deemed not qualified by any references therein to (A)
materiality generally or (B) whether or not any breach, circumstance or
other item has resulted or would reasonably be expected to result in an
Ashland Material Adverse Effect; and (ii) the representations and
warranties set forth in Section 6.11(d) shall be deemed to be true and
correct if the condition set forth in Section 10.01(g) is satisfied.
(b) PERFORMANCE OF OBLIGATIONS OF THE ASHLAND PARTIES. The
Ashland Parties shall have performed in all material respects the
obligations required to be performed by them under the Transaction
Agreements at or prior to the Closing Date, and Marathon shall have
received a certificate signed on behalf of Ashland by the chief executive
officer or the chief financial officer of Ashland to such effect.
83
ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
SECTION 11.01. TERMINATION. This Agreement may be terminated at any
time prior to the Closing, whether before or after receipt of the Ashland
Shareholder Approval:
(a) by mutual written consent of Ashland and Marathon;
(b) by either Ashland or Marathon:
(i) if the Transactions are not consummated during the
period ending on June 30, 2005 (such date, as extended in
accordance with this Section 11.01(b)(i), the "Outside Date"),
unless the failure to consummate the Transactions is the result
of a material breach of the Transaction Agreements by the party
seeking to terminate this Agreement; provided, however, that the
passage of such period shall be tolled for any period (not to
exceed three months):
(A) during which any party shall be subject to a
nonfinal order, decree, ruling or action of any court of
competent jurisdiction or other Governmental Entity
restraining, enjoining or otherwise prohibiting the
consummation of the Transactions;
(B) referred to in Section 9.03(d)(v); and
(C) referred to in the final proviso to Section
11.01(e); and
(D) beginning on June 30, 2005 if, on such date, all
conditions set forth in Article X have been satisfied (or,
to the extent permitted by Law, waived by the parties
entitled to the benefit thereof) other than the condition
set forth in Section 10.02(f) (and other than those
84
conditions that by their nature are to be satisfied on the
Closing Date) unless, at any time during the three month
period from June 30, 2005 through September 30, 2005,
Ashland determines, after consultation with Marathon, that
the condition set forth in Section 10.02(f) is not
reasonably expected to be satisfied during such three month
period;
provided further however, that in no event will the Outside Date be
extended beyond September 30, 2005;
(ii) if any Governmental Entity issues an order, decree,
ruling or judgment or takes any other action permanently
enjoining, restraining or otherwise prohibiting any of the
Transactions and such order, decree, ruling, judgment or other
action becomes final and nonappealable;
(iii) if, upon a vote at the Ashland Shareholder Meeting (or
any adjournment or postponement thereof), the Ashland Shareholder
Approval is not obtained; or
(iv) if the party seeking to terminate this Agreement
reasonably determines that the condition set forth in Section
10.01(f) has become incapable of satisfaction based on either:
(A) amendments or modifications to Federal income Tax Law
effective after the date of this Agreement, (B) a private letter
ruling received by Ashland and Marathon from the IRS or (C) an
official, written communication from the IRS regarding the
matters set forth in Exhibit D;
(c) by Marathon, if any one or more of the Ashland Parties breach
or fail to perform their representations, warranties or covenants contained
in the Transaction Agreements, which breach or breaches or failure or
failures to perform (i) would, individually or in the aggregate, give rise
to the failure of a condition set forth in Section 10.03(a) or 10.03(b) and
(ii) cannot be cured or, if curable, is not or are not cured within 60 days
after written notice from Marathon (provided that the Marathon Parties are
not then in breach of their
85
representations, warranties or covenants contained in the Transaction
Agreements, which breaches would give rise to the failure of a condition
set forth in Section 10.02(a) or 10.02(b));
(d) by Marathon, prior to the Cutoff Date, if:
(i) the Ashland Board withdraws or modifies, in a manner
adverse to Marathon, or proposes publicly to withdraw or modify,
in a manner adverse to Marathon, its approval or recommendation
of the Transaction Agreements or the Transactions, fails to
recommend to Ashland's shareholders that they give the Ashland
Shareholder Approval or adopts, approves or recommends, or
proposes publicly to adopt, approve or recommend, any Competing
Ashland Proposal; or
(ii) the Ashland Board fails to reaffirm its recommendation
to Ashland's shareholders that they give the Ashland Shareholder
Approval within 10 business days of Marathon's written request to
do so (which request may be made at any time prior to the Ashland
Shareholders Meeting if a Competing Ashland Proposal has been
publicly disclosed and not withdrawn);
(e) by Ashland, if any one or more of the Marathon Parties breach
or fail to perform their representations, warranties or covenants contained
in the Transaction Agreements which breach or breaches or failure or
failures to perform (i) would, individually or in the aggregate, give rise
to the failure of a condition set forth in Section 10.02(a) or 10.02(b) and
(ii) cannot be cured or, if curable, is not or are not cured within 60 days
after written notice from Ashland (provided that the Ashland Parties are
not then in breach of their representations, warranties or covenants
contained in the Transaction Agreements, which breaches would give rise to
the failure of a condition set forth in Section 10.03(a) or 10.03(b));
provided, however, for purposes of this Section 11.01(e), the Marathon
Parties shall be deemed not to have breached or failed to perform their
covenant to cause the HoldCo Borrowing to be advanced to HoldCo in
accordance with Section 1.03(a) for up to three months following the day on
which the Closing Date would otherwise
86
occur but for the failure of the Marathon Parties to cause the HoldCo
Borrowing to be advanced to HoldCo if (A) such failure results from a
Market MAC Event and (B) the Marathon Parties use their reasonable best
efforts to cause the HoldCo Borrowing to be advanced to HoldCo as soon as
practicable thereafter, including, to the extent necessary, by providing
guarantees or other credit support from the Marathon Parties (to the extent
they have not otherwise agreed to do so), agreeing to modifications in the
pricing, terms or structure of the HoldCo Borrowing (reasonably acceptable
to Ashland) or arranging alternative Third Party Lenders; or
(f) by Ashland in accordance with Section 11.05(b); provided,
however, that Ashland shall have complied with all provisions thereof,
including the notice provisions therein.
SECTION 11.02. EFFECT OF TERMINATION. In the event of termination
of this Agreement by either Ashland or Marathon as provided in Section
11.01, this Agreement shall forthwith become void and have no effect,
without any liability or obligation on the part of any party hereto, other
than Section 6.09 (Brokers), Section 7.09 (Brokers), the last sentence of
Section 9.02 (Access to Information; Confidentiality), Section 9.04 (Fees
and Expenses), this Section 11.02 and Article XIV (General Provisions),
which provisions shall survive such termination, and except to the extent
that such termination results from the material breach by a party of its
representations, warranties or covenants set forth in the Transaction
Agreements. Without limiting the generality of the foregoing, in the event
of termination of this Agreement by either Ashland or Marathon as provided
in Section 11.01, none of the MAP Governing Documents shall be terminated,
amended or modified as specified in the Transaction Agreements.
SECTION 11.03. AMENDMENT. This Agreement may be amended by the
parties at any time before or after receipt of the Ashland Shareholder
Approval; provided, however, that after receipt of the Ashland Shareholder
Approval, there shall be made no amendment that by Law requires further
approval by the shareholders of Ashland without the further approval of
such shareholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
87
SECTION 11.04. EXTENSION; WAIVER. At any time prior to the
Closing, Ashland or Marathon may, to the extent permitted by Law, (a)
extend the time for the performance of any of the obligations or other acts
of the Marathon Parties (in the case of an extension granted by Ashland) or
the Ashland Parties (in the case of an extension granted by Marathon), (b)
waive any inaccuracies in the representations and warranties contained in
the Transaction Agreements or in any document delivered pursuant to the
Transaction Agreements, (c) waive compliance with any of the agreements of
the Marathon Parties (in the case of a waiver granted by Ashland) or the
Ashland Parties (in the case of a waiver granted by Marathon) or (d) waive
any condition to the obligations of the Ashland Parties (in the case of a
waiver granted by Ashland) or the Marathon Parties (in the case of a waiver
granted by Marathon); provided, however, that after receipt of the Ashland
Shareholder Approval, there shall be made no extension or waiver that by
Law requires further approval by the shareholders of Ashland without the
further approval of such shareholders. Any agreement on the part of a party
to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
SECTION 11.05. PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR
WAIVER. (a) A termination of this Agreement pursuant to Section 11.01, an
amendment pursuant to Section 11.03 or an extension or waiver pursuant to
Section 11.04 shall, in order to be effective, require action by the
Ashland Board or the Marathon Board, as applicable, or the duly authorized
designee of the Ashland Board or the Marathon Board, as applicable.
(b) Ashland may terminate this Agreement pursuant to Section
11.01(f) only if, prior to the Cutoff Date, (i) the Ashland Board (or, if
applicable, a majority of the disinterested members thereof) has received a
Superior Proposal, (ii) in light of such Superior Proposal the Ashland
Board shall have determined in good faith, after consultation with inside
and outside counsel, that the failure to take such action would be
reasonably likely to result in a breach of its fiduciary obligations under
applicable Law, (iii) Ashland has notified Marathon in writing of the
determination described in clause (ii) above, (iv) at least five business
days have elapsed
88
following receipt by Marathon of the notice referred to in clause (iii)
above, (v) Ashland is in compliance in all material respects with Section
8.02 (No Solicitation) and (vi) Marathon is not at such time entitled to
terminate this Agreement pursuant to Section 11.01(c). Written confirmation
by an executive officer of Marathon that expressly states that Marathon
accepts the fees due and paid by Ashland under Section 9.04 shall
constitute acceptance by Marathon of the validity of any termination of
this Agreement under Section 11.01(f) and this Section 11.05(b); provided
that, if such written confirmation is not provided within five business
days after Marathon's receipt of payment of such fees, Marathon shall
promptly refund such payment to Ashland without setoff. It is understood
and agreed that a valid termination of this Agreement in compliance with
the provisions of this Section 11.05(b) shall not constitute a breach of
any provision of this Agreement.
ARTICLE XII
AMENDMENT OF EXISTING MAP AGREEMENTS
SECTION 12.01. ASSET TRANSFER AND CONTRIBUTION AGREEMENT. (a)
ENVIRONMENTAL INDEMNITY. After the Closing, subject to and in accordance
with all terms, conditions, restrictions and limitations contained in
Section 9.8 of the Asset Transfer and Contribution Agreement among Marathon
Company, Ashland and MAP dated as of December 12, 1997, as amended (the
"ATCA"), MAP shall direct and control all Remediation Activities (as
defined in the ATCA) undertaken in connection with any Ashland
Environmental Loss associated with the Ashland Transferred Assets (as such
terms are defined in the ATCA). The Ashland Parties and the Marathon
Parties shall cooperate in transferring the direction and control of such
Remediation Activities to MAP. In addition, notwithstanding anything to the
contrary contained in the ATCA, if the Closing occurs, New Ashland Inc.
shall not have any liabilities or obligations:
(i) in excess of $50,000,000 in the aggregate for Ashland
Environmental Losses under Section 9.2(c) of the ATCA incurred on
or after January 1, 2004, except as otherwise provided in
89
the last sentence of this Section 12.01(a);
(ii) arising out of the St. ▇▇▇▇ Park QQQ Project to the
extent incurred on or after January 1, 2003 other than the
amounts to be paid pursuant to Section 9.09(b);
(iii) arising out of the Plains Settlement (as defined in
Section 14.02) regardless of when incurred; or
(iv) under Section 9.8(f) of the ATCA.
From and after the Closing, MAP shall continue to treat and process any and
all impacted groundwater associated with Remediation Activities undertaken
in connection with any Ashland Environmental Loss (as defined in the ATCA)
relating to the Catlettsburg, Canton and St. ▇▇▇▇ Park refineries.
Notwithstanding anything to the contrary contained in this Section
12.01(a), such treatment and processing shall be at MAP's sole cost and
expense. MAP shall have title to any and all hydrocarbons recovered during
the treatment and processing of such impacted groundwater. Ashland shall
retain all Ashland Excluded Liabilities (as defined in the ATCA) as well as
all liabilities and obligations associated with the Scharbauer and ▇▇▇▇
Ranch S-P project and the S-P projects described on Schedule 9.2(c) to the
Ashland Asset Transfer and Contribution Agreement Disclosure Letter (as
defined in the ATCA).
(b) OTHER INDEMNIFICATION. After the Closing, the Ashland Parties
shall not have any liabilities or obligations for breaches of
representations or warranties under Section 9.2(a) of the ATCA, including
the Claims (as defined in the ATCA) identified in Section 12.01(b) of the
Ashland Disclosure Letter, regardless of whether any Claim thereunder has
been asserted on or prior to the Closing Date.
(c) DEPARTMENT OF DEFENSE CLAIM. Notwithstanding anything to the
contrary contained in the ATCA or the other MAP Governing Documents, (i)
MAP shall pursue the claims that MAP has asserted against the U.S.
Department of Defense (the "DOD") relating to alleged illegal price
adjustments for jet fuel and other aviation fuel sold to the DOD by Ashland
Petroleum Company from 1980
90
through 1990 (the "DOD Claims") and (ii) New Ashland Inc. shall have the
right to participate in the pursuit of the DOD Claims and to employ
counsel, at its own expense, separate from the counsel employed by MAP, it
being understood that MAP shall control, in consultation with New Ashland
Inc., the pursuit of the DOD Claims. MAP shall use its reasonable best
efforts to prosecute the DOD Claims in accordance with this Section
12.01(c) until the DOD Claims are finally determined pursuant to one or
more final and nonappealable orders, decrees or judgments by a court of
competent jurisdiction or by one or more settlement agreements approved by
New Ashland Inc. (such approval not to be unreasonably withheld or
delayed). If MAP shall receive any recovery under the DOD Claims, whether
by judgment, settlement or otherwise, Marathon or Merger Sub shall promptly
pay to New Ashland Inc. an amount equal to (A) 38% of such recovery minus
(B) 38% of MAP's reasonable out-of-pocket costs and expenses in pursuing
the DOD Claims. If and to the extent MAP's reasonable out-of-pocket costs
and expenses incurred in the pursuit of the DOD Claims exceeds the ultimate
recovery under the DOD Claims, New Ashland Inc. shall pay to Marathon an
amount equal to 38% of such excess.
(d) EMPLOYEE BENEFIT MATTERS. (i) As of the Closing, except as
expressly modified herein, the terms and conditions of Article X of the
ATCA shall continue to apply with respect to all employees and former
employees of MAP and its subsidiaries who were Ashland Transferred
Employees (as defined in the ATCA) (the "Transferred MAP Employees").
(ii) Without limiting the generality of Section 12.01(d)(i),
from and after the Closing, MAP and its successors shall be
solely responsible for all liabilities, obligations and
commitments (including any costs and expenses) in connection with
the provision of retiree medical and retiree life insurance
benefits to the Transferred MAP Employees. Such benefits shall be
determined taking into account the combined service of each
Transferred MAP Employee with Ashland and its subsidiaries and
MAP and its subsidiaries. For the avoidance of doubt, Ashland
shall not have any liability, obligation or commitment in respect
of retiree medical or retiree life insurance benefits for MAP
91
employees, including Transferred MAP Employees, from and after the
Closing.
(iii) Ashland shall remain solely responsible for any
benefits under the Ashland & Affiliates Pension Plan (the
"Ashland Pension Plan") and for any benefits under the Ashland
Leveraged Employee Stock Ownership Plan (the "Ashland LESOP")
accrued by each Transferred MAP Employee as of immediately prior
to such employee's Employment Transfer Date (as defined in the
ATCA). Solely for purposes of qualifying for distributions and
early retirement benefits pursuant to the Ashland Pension Plan
and the Ashland LESOP, Ashland will continue to treat the
Transferred MAP Employees as employed by an affiliated employer
for so long as they remain actively employed by MAP or its
successors or their affiliates.
(iv) In accordance with the terms of the Ashland Employee
Savings Plan, as of the Closing, Ashland agrees to facilitate the
ability of each Transferred MAP Employee who is currently
employed by MAP and its subsidiaries immediately prior to the
Closing to effect a "direct rollover" (within the meaning of
Section 401(a)(31) of the Code) of his or her account balances
under the Ashland Employee Savings Plan if such rollover is
elected in accordance with applicable Law by such Transferred MAP
Employee. Marathon agrees to cause the Marathon Thrift Plan to
accept a "direct rollover" to the Marathon Thrift Plan of such
Transferred MAP Employees' account balances (including promissory
notes evidencing all outstanding loans) under the Ashland
Employee Savings Plan.
(v) Except as provided in this Section 12.01(d), Ashland
shall remain solely responsible for any individual contractual
obligations with any Transferred MAP Employees (including any
obligations to such employees pursuant to the Ashland Stock
Plans, the Ashland Salary Continuation Plan and any other
severance, change in control or incentive compensation plan or
arrangement) to the extent that Ashland was
92
liable for such obligations immediately prior to the Closing.
(vi) Subject to applicable Law, Ashland shall reasonably
cooperate in providing MAP with complete data for any Transferred
MAP Employees.
(vii) The parties agree that, in the event that MAP and its
subsidiaries make any contributions to, or payments in respect
of, any pension plans, post-retirement health and life insurance
plans or any other post-employment benefit arrangements, other
than the Permitted Payments (as defined below), then MAP shall
make a special non-pro rata distribution to Ashland in an amount
equal to 38% of the amount by which any such contributions or
payments exceed the Permitted Payments. Any such distribution to
Ashland pursuant to this Section 12.01(d)(vii) shall be effected
through an increase in the MAP Partial Redemption Amount or
through such other means as Ashland and MAP may mutually agree.
For purposes of this Section 12.01(d)(vii), "Permitted Payments"
means:
(A) any benefit payments made in the ordinary course of
business consistent with past practice to beneficiaries of
such pension plans, post-retirement health and life
insurance plans or post-employment benefit arrangements;
(B) contributions to the MAP Retirement Plan (the "MAP
Qualified Pension Plan") in an amount not in excess of the
minimum amount necessary to avoid the required filing of
information with the Pension Benefit Guaranty Corporation
("PBGC") pursuant to Section 4010 of ERISA with respect to
the 2003 information year, which filing would otherwise be
due on April 15, 2004 (which amounts shall be contributed at
the latest possible time to avoid such required filing);
(C) in the case of the MAP Qualified Pension Plan (1)
if the pension funding
93
relief (including relief related to the determination of the
PBGC variable-rate premium (within the meaning of 29 C.F.R.
4006.3)) contemplated by H.R. 3108 (or any substantially
similar legislation) (the "Pension Funding Relief") is
enacted into law on or prior to September 15, 2004,
contributions in calendar year 2004 in an amount not in
excess of the minimum amount necessary to avoid payment of
the variable-rate premium for such plan for the 2004 plan
year (taking into account any amounts previously contributed
to the MAP Qualified Pension Plan, including pursuant to the
immediately preceding clause (B) and clause (C)(3) below),
provided that such contributions shall not be made before
the latest possible time that such contributions may be made
and still be taken into account in determining whether any
variable-rate premium is due for the 2004 plan year, using
the method that produces the lowest variable-rate premium
and reflects any exemptions and special rules under 29
C.F.R. 4006.5 and the highest discount rate permitted for
the calculation of such variable-rate premium and such other
actuarial assumptions as set forth in 29 C.F.R. 4006 or
otherwise required under PBGC regulations and (2) if the
Pension Funding Relief is enacted into law on or prior to
September 15, 2005, contributions in calendar year 2005 in
an amount not in excess of the minimum amount necessary to
avoid payment of the variable-rate premium for such plan for
the 2005 plan year (taking into account any amounts
previously contributed to the MAP Qualified Pension Plan,
including pursuant to the immediately preceding clauses (B)
and (C)(1) and clause (C)(3) below), provided that such
contributions shall not be made before the latest possible
time that such contributions may be made and still be taken
into account in determining whether any variable-rate
premium is due for the 2005 plan year, using
94
the method that produces the lowest variable-rate premium
and reflects any exemptions and special rules under 29
C.F.R. 4006.5 and the highest discount rate permitted for
the calculation of such variable-rate premium and such other
actuarial assumptions as set forth in 29 C.F.R. 4006 or
otherwise required under PBGC regulations and (3) until the
Pension Funding Relief is enacted into law, contributions
(made in amounts and at such times consistent with past
practice) not in excess of $120,000,000 in each of calendar
year 2004 and 2005; and
(D) in the case of the MAP Qualified Pension Plan,
contributions not in excess of the minimum additional
amounts required (which amounts shall be contributed at the
latest possible time) for such plan to satisfy the minimum
funding requirements of Section 412 of the Code;
it being understood that any amounts previously contributed to
the MAP Qualified Pension Plan (including under the immediately
preceding clause (B), (C) (1)-(3) or (D)) shall be taken into
account in determining any subsequent amounts permitted to be
contributed under the immediately preceding clause (B),
(C)(1)-(3) or (D) so as to avoid duplication of contributions.
Notwithstanding the foregoing, in no event may Permitted Payments
under the immediately preceding clauses (B), (C)(1)-(3) and (D)
in the aggregate exceed, for each of calendar years 2004 and
2005, an amount (the "Maximum Annual Permitted Payment") equal to
the greater of (x) the minimum contributions required to be paid
in such year to satisfy the minimum funding requirements of
Section 412 of the Code (based on the required due dates for such
contributions) and (y) $120,000,000. With respect to the 2005
calendar year, the Maximum Annual Permitted Payment shall be
pro-rated by multiplying the Maximum Annual Permitted Payment by
a fraction, the numerator of which is the number of months
95
elapsed in such year through and including the Closing Date, and
the denominator of which is 12. At least 30 days in advance of
any Permitted Payment described under clauses (B), (C)(1)-(3) or
(D) of the definition thereof to be contributed by MAP or its
subsidiaries to the MAP Qualified Pension Plan, MAP and/or its
actuary shall provide Ashland with a good-faith estimate of such
Permitted Payment, and with all information reasonably requested
by Ashland (and any actuary designated by Ashland) to review and
independently verify such Permitted Payment.
(e) OTHER PROVISIONS. After the Closing, the Ashland Parties and
their affiliates shall not have any liabilities or obligations under
Section 7.2(h) (Guarantees) or 7.2(l) (Marine Preservation Association) of
the ATCA. For the avoidance of doubt, the other liabilities and obligations
of the Ashland Parties and their affiliates, and the liabilities and
obligations of Marathon Company, MAP and MAP's subsidiaries, under the
ATCA, including those under Article IX thereof, shall continue in full
force and effect after the Closing, except as provided in the Transaction
Agreements. After the Closing, Ashland shall not have any liabilities or
obligations under the Parent Company Guarantee dated May 28, 2003 relating
to a Crude Oil Sales Agreement with Saudi Arabian Oil Company effective
June 1, 2003, as amended; provided, however, that nothing in the
Transaction Agreements or the Ancillary Agreements shall prohibit Marathon
from continuing to be a guarantor thereunder.
SECTION 12.02. DESIGNATED SUBLEASES. (a) With respect to the
▇▇▇▇▇▇▇ ▇▇▇▇▇ Master Sublease Agreement dated as of January 1, 1998,
between Ashland Oil, Inc. and Speedway SuperAmerica LLC and the Pitney
▇▇▇▇▇ Credit Corporation Master Subcharter Agreement, dated as of January
1, 1998, between Ashland and MAP (each, a "Designated Sublease"), Ashland
shall use its reasonable best efforts to (i) purchase or otherwise acquire
the property then leased under the Original Lease (as defined in the MAP
LLC Agreement) and subleased to MAP pursuant to each Designated Sublease
(the "Leased Property") on or prior to the Closing and (ii) upon such
purchase or other acquisition, contribute its interest in such Leased
Property to MAP or one of its subsidiaries at no cost to
96
MAP or such subsidiary on or prior to the Closing; provided, however, that
(A) with respect to any such Original Lease, Ashland shall not be obligated
to pay more than a reasonable amount as consideration to, or make more than
a reasonable financial accommodation in favor of, or commence litigation
against, any person (including in order to obtain any agreement, consent or
cooperation of or from such person) in order to purchase or otherwise
acquire the related Leased Property as contemplated by, and in accordance
with, this Section 12.02(a) and (B) any additional cost associated with
exercising an option under any such Original Lease to purchase the related
Leased Property as described above shall be deemed not to constitute an
obligation to pay more than a reasonable amount.
(b) In the event that Ashland is unable to purchase or otherwise
acquire the Leased Property related to a Designated Sublease in accordance
with Section 12.02(a), then the Ashland Parties and the Marathon Parties
shall use their reasonable best efforts (including entering into customary
documentation reasonably acceptable in form and substance to the Ashland
Parties and the Marathon Parties) to cause (i) all Ashland's existing
rights under such Original Lease and, as applicable, either the
SuperAmerica Transaction Documents (as defined below) or Pitney ▇▇▇▇▇
Transaction Documents (as defined below), to be assigned to MAP, effective
as of the Closing Date, (ii) MAP to assume, effective as of the Closing
Date, all liabilities and obligations required to be performed or
discharged after the Closing under such Original Lease (including the
obligation to pay rent and any additional cost associated with exercising
an option under such Original Lease to purchase the related Leased
Property) and, as applicable, either the SuperAmerica Transaction Documents
or Pitney ▇▇▇▇▇ Transaction Documents and (iii) the Ashland Parties and
their affiliates to be released, effective as of the Closing Date, from all
liabilities and obligations required to be performed or discharged after
the Closing under such Original Lease and, as applicable, either the
SuperAmerica Transaction Documents or Pitney ▇▇▇▇▇ Transaction Documents.
If the Ashland Parties and the Marathon Parties are able to effect the
assignment, assumption and release in accordance with this Section 12.02(b)
in connection with an Original Lease related to a Designated Sublease, on
the Closing Date, New
97
Ashland Inc. shall pay to MAP cash, by wire transfer of immediately
available funds to a MAP bank account designated in writing by MAP at least
two business days prior to the Closing Date, in an amount equal to the
present value, discounted at a rate equal to the yield to average life of
Marathon public debt having an average life similar to the remaining
average life of such Original Lease, and based on such other assumptions as
the parties shall reasonably agree upon, of the lowest cost alternative of
(x) the payment of all rent required to be paid thereafter under such
Original Lease (including for all renewal periods available under the terms
of such Original Lease) or (y) the payment of all rent required to be paid
thereafter under such Original Lease until the date of any available option
under such Original Lease to purchase the related Leased Property and the
cost associated with exercising any such option. Ashland shall reimburse
Marathon for any reasonable out-of-pocket expenses incurred by Marathon
relating to such assignment, assumption and release; provided, however,
that, with respect to any Original Lease, Ashland shall not be obligated to
pay more than a reasonable amount as consideration to, or make more than a
reasonable financial accommodation in favor of, or commence litigation
against, any person (including in order to obtain any agreement, consent or
cooperation of or from such person) in order to effect the assignment,
assumption, and release contemplated by, and in accordance with, this
Section 12.02(b) with respect to such Original Lease and, as applicable,
either the SuperAmerica Transaction Documents or Pitney ▇▇▇▇▇ Transaction
Documents. If the Ashland Parties and the Marathon Parties are able to
effect the assignment, assumption and release in accordance with this
Section 12.02(b) with respect to any Original Lease related to a Designated
Sublease, such Designated Sublease shall thereupon terminate and none of
the Ashland Parties or the Marathon Parties shall have any liabilities or
obligations thereunder other than liabilities and obligations required to
be performed or discharged before the Closing.
(c) In the event that, on or prior to the Closing, (x) Ashland is
unable to purchase and contribute the Leased Property related to a
Designated Sublease as contemplated by, and in accordance with, Section
12.02(a), and (y) the Ashland Parties and the Marathon Parties are unable
to effect the assignment, assumption and release as
98
contemplated by, and in accordance with, Section 12.02(b) with respect to
such Original Lease and, as applicable, either the SuperAmerica Transaction
Documents or Pitney ▇▇▇▇▇ Transaction Documents, then (i) MAP shall be
entitled to continue to sublease the Leased Property pursuant to such
Designated Sublease until the term of such Original Lease expires, (ii)
Ashland shall use its reasonable best efforts to purchase or otherwise
acquire the related Leased Property under such Original Lease and convey
title to such Leased Property to MAP or one of its subsidiaries; provided,
however, that (A) with respect to any such Original Lease, Ashland shall
not be obligated to pay more than a reasonable amount as consideration
therefor to, or make more than a reasonable financial accommodation in
favor of, or commence litigation against, any person (including in order to
obtain any agreement, consent or cooperation of or from such person) in
order to purchase or otherwise acquire the related Leased Property and (B)
any additional cost associated with exercising an option under any Original
Lease to purchase related Leased Property shall be deemed not to constitute
an obligation to pay more than a reasonable amount and (iii) if Ashland
subsequently acquires such Leased Property, Ashland shall convey title to
such Leased Property to MAP or one of its subsidiaries at no cost
(including transfer Tax expense) to MAP or such subsidiary at such time.
(d) For purposes of this Agreement:
"SUPERAMERICA TRANSACTION DOCUMENTS" means the following
documents: (i) Participation Agreement, dated as of December 31, 1990,
among Ford Motor Credit Company, as owner participant; State Street Bank
and Trust Company of Connecticut, National Association, as trust company
and as owner trustee; Ashland Oil, Inc. (now known as "Ashland Inc."), as
lessee; SuperAmerica Group, Inc., as seller; First Colony Life Insurance
Company, as initial lender; and SuperAsh Remainderman Limited Partnership,
as remainderman; (ii) Three Party Agreement, dated as of December 31, 1990,
among SuperAsh Remainderman Limited Partnership, as remainderman; Ashland
Oil, Inc., as lessee; and State Street Bank and Trust Company of
Connecticut, National Association, as lessor; (iii) Tax Indemnification
Agreement, dated December 31, 1990, among Ford Motor Credit Company, State
Street Bank and Trust Company of Connecticut, National Association and
Ashland Oil, Inc.;
99
(iv) Guarantee, dated as of December 31, 1990, by State Street Bank and
Trust Company to Ford Motor Credit Company, Ashland Oil, Inc., SuperAmerica
Group, Inc., First Colony Life Insurance Company and SuperAsh Remainderman
Limited Partnership; (v) Guaranty of Ford Motor Credit Company, dated as of
September 21, 1996, given by Ford Motor Credit Company to State Street Bank
and Trust Company of Connecticut, National Association, Ashland Oil, Inc.,
SuperAmerica Group, Inc., First Colony Life Insurance Company, and SuperAsh
Remainderman Limited Partnership; and (vi) Consent to the First Amendment
of SuperAsh Remainderman Limited Partnership Agreement of Limited
Partnership.
"PITNEY ▇▇▇▇▇ TRANSACTION DOCUMENTS" means the following
documents: (i) Financing Agreement, among Pitney ▇▇▇▇▇ Credit Corporation,
PNC Leasing Corp., Ashland, and PNC Bank, Kentucky, Inc., dated as of
January 19, 1996; (ii) Assignment of Builder Contracts between Ashland,
Pitney ▇▇▇▇▇ Credit Corporation and PNC Leasing Corp., Kentucky, dated
January 19, 1996; (iii) Letter Agreement, dated December 31, 1996, among
Pitney ▇▇▇▇▇ Credit Corporation, Ashland, First Security Bank, National
Association, and Prudential Securities Incorporated acknowledging the
Assignment of Builder Contracts; (iv) Letter Agreement, dated January 16,
1997, between Pitney ▇▇▇▇▇ Credit Corporation and Ashland acknowledging the
understanding of certain definitions in connection with Schedule A attached
thereto; (v) Letter Agreement, dated January 21, 1997, among Pitney ▇▇▇▇▇
Credit Corporation, Ashland, First Security Bank, National Association, and
Prudential Securities Incorporated acknowledging the Charter Assignment;
(vi) Letter Agreement, dated June 19, 1997, among Pitney ▇▇▇▇▇ Credit
Corporation, Ashland, First Security Bank, National Association, and
Prudential Securities Incorporated acknowledging the Assignment of Builder
Contracts; (vii) Letter Agreement, dated June 19, 1997, between Pitney
▇▇▇▇▇ Credit Corporation and Ashland acknowledging the understanding of
certain definitions in connection with Schedule A attached thereto; (viii)
Letter Agreement, dated June 19, 1997, among Pitney ▇▇▇▇▇ Credit
Corporation, Ashland, First Security Bank, National Association, and
Prudential Securities Incorporated acknowledging the Charter Assignment;
(ix) Amendment to Charter Supplement, dated as of June 19, 1997, between
Pitney ▇▇▇▇▇ Credit Corporation and Ashland; (x) First
100
Amendment to Charter Agreement dated as of October 28, 1997, between Pitney
▇▇▇▇▇ Credit Corporation and Ashland; (xi) First Amendment to Charter
Supplements Nos. 1-16, dated as of October 28, 1997, between Pitney ▇▇▇▇▇
Credit Corporation and Ashland; (xii) Letter Agreement, dated November 24,
1997, between Pitney ▇▇▇▇▇ Credit Corporation and Ashland, regarding
ownership of specified barges; (xiii) Termination of Charter Supplements
Nos. 16-21, dated as of December 2, 1997, between Pitney ▇▇▇▇▇ Credit
Corporation and Ashland; (xiv) Letter, dated December 2, 1997, from Ashland
to Pitney ▇▇▇▇▇ Credit Corporation acknowledging the sale of specified
vessels from Pitney ▇▇▇▇▇ Credit Corporation to Ashland; (xv) Letter, dated
December 9, 1997, from Ashland to Pitney ▇▇▇▇▇ Credit Corporation notifying
Pitney ▇▇▇▇▇ of the intention to form a joint venture and subcharter barges
and requesting Pitney Bowes's consent to the subcharter; (xvi) Consent
Letter, dated December 31, 1997, among Pitney ▇▇▇▇▇ Credit Corporation,
Ashland, and MAP, regarding Pitney ▇▇▇▇▇ Credit Corporation's consent to
the Master Subcharter Agreement.
SECTION 12.03. THE MAP LLC AGREEMENT. After the Closing, (i)
except as contemplated by the Tax Matters Agreement, New Ashland Inc. shall
not have any liabilities or obligations to any of the Marathon Parties or
any of their affiliates under the MAP LLC Agreement other than with respect
to any breach or default under the MAP LLC Agreement by Ashland that
occurred prior to the Closing and (ii) except as contemplated by Section
12.06(b) or the Tax Matters Agreement, neither Marathon Company nor MAP
shall have any liabilities or obligations to any of the Ashland Parties or
any of their affiliates under the MAP LLC Agreement other than with respect
to any breach or default thereunder by Marathon Company or any of its
affiliates that occurred prior to the Closing.
SECTION 12.04. THE PUT/CALL AGREEMENT. Unless and until this
Agreement is terminated in accordance with the provisions of Article XI,
notwithstanding anything to the contrary contained in the Put/Call,
Registration Rights and Standstill Agreement dated as of January 1, 1998
among Marathon Company, Marathon (as successor and assign of USX
Corporation), Ashland and MAP, as amended (the "Put/Call Agreement"),
Ashland shall not have
101
the right to exercise the Ashland Put Right and Marathon Company shall not
have the right to exercise the Marathon Call Right (as such terms are
defined in the Put/Call Agreement). After the Closing, except as expressly
contemplated by this Agreement or any of the other Transaction Agreements,
(i) New Ashland Inc. shall not have any liabilities or obligations under
the Put/Call Agreement other than (A) with respect to any breach or default
thereunder by Ashland that occurred prior to the Closing and (B) Ashland's
obligations under Section 12.02 thereof (which shall survive for six months
after the Closing Date); and (ii) none of the Marathon Parties shall have
any liabilities or obligations under the Put/Call Agreement other than (A)
with respect to any breach or default thereunder by Marathon, Marathon
Company or MAP that occurred prior to the Closing, (B) the obligations of
Marathon and Marathon Company under Section 12.01 thereof (which shall
survive for six months after the Closing Date) and (iii) the obligations of
Marathon, Marathon Company and MAP under Section 13.03 thereof (which shall
survive pursuant to the terms of the Put/Call Agreement). For the avoidance
of doubt, the Ashland Parties and the Marathon Parties shall not have any
obligations under Article XIV of the Put/Call Agreement after the Closing
Date. The parties hereto agree that the Price Reduction (as defined in
Amendment No. 1 to the Put/Call Agreement) shall not apply to the
Transactions.
SECTION 12.05. ANCILLARY AGREEMENTS. After the Closing, the
Insurance Indemnity Agreement among Marathon Company, Ashland, Marathon (as
successor and assign of USX Corporation) and MAP, dated as of January 1,
1998, shall terminate and no party to any such agreement shall have any
rights or obligations thereunder, other than those rights or obligations
arising prior to the Closing.
SECTION 12.06. OTHER PROVISIONS OF THE MAP GOVERNING DOCUMENTS.
(a) Except as the same may have been amended prior to the date of this
Agreement and except as expressly amended or assigned pursuant to the
Transaction Agreements or the Ancillary Agreements, the MAP Governing
Documents, to the extent the same are in existence as of the date of this
Agreement, shall continue in full force and effect. For the avoidance of
doubt, after the Closing, New Ashland Inc. shall be deemed to be a
successor of Ashland for purposes of the ATCA and the Transaction Documents
(as defined in the ATCA).
102
(b) The obligations of MAP under Article XI (Liability,
Exculpation and Indemnification) of the MAP LLC Agreement as in effect on
the date of this Agreement shall continue in effect and shall not be
amended, repealed or otherwise modified after the Closing in any manner
that would adversely affect the rights thereunder of any Covered Person (as
defined in the MAP LLC Agreement) in respect of acts or omissions occurring
at or prior to the Closing and, in the case of such obligations to all
Representatives (as defined in the MAP LLC Agreement) who have been
designated from time to time prior to the Closing Date by Ashland to the
Board of Managers (as defined in the MAP LLC Agreement) of MAP, shall be
guaranteed by Marathon. This Section 12.06(b) shall survive the Closing, is
intended to benefit each Covered Person and shall be enforceable by the
Covered Persons and their successors.
SECTION 12.07. POST-CLOSING ACCESS. After the Closing, upon
reasonable written notice, the Marathon Parties shall furnish or cause to
be furnished to the Ashland Parties and their Representatives, during
normal business hours, reasonable access to the personnel, properties,
books, contracts, commitments, records and other information and assistance
relating to MAP for the purpose of auditing compliance by MAP with Section
12.01(a) and for such other purposes as the Ashland Parties may reasonably
request.
ARTICLE XIII
INDEMNIFICATION
SECTION 13.01. INDEMNIFICATION BY NEW ASHLAND INC. (a) Subject to
the limitations set forth in this Article XIII, from and after the Closing,
New Ashland Inc. shall defend and indemnify each of the Marathon Parties
and their respective affiliates and each of their respective
Representatives against, and hold them harmless from, any and all claims,
demands, suits, actions, causes of action, investigations, losses, damages,
liabilities, obligations, penalties, fines, costs and expenses (including
costs of litigation and reasonable attorneys' and experts' fees and
expenses, but excluding a party's indirect corporate and administrative
overhead costs) ("Losses") to the extent
103
resulting from, arising out of or relating to, directly or indirectly:
(i) any breach of any representation or warranty of any of
the Ashland Parties contained in this Agreement, the Maleic
Agreement, the VIOC Agreement or any Ancillary Agreement (other
than the representations and warranties contained in: the first
sentence of Section 6.01 of this Agreement; Sections 6.03, 6.04,
6.05, 6.08 and 6.11 of this Agreement; Sections 3.03(b), 3.09,
3.11(b) and 3.12 of the Maleic Agreement; and Sections 3.03(b),
3.09, 3.11(b) and 3.12 of the VIOC Agreement);
(ii) any breach or nonfulfillment of any covenant of any of
the Ashland Parties contained in this Agreement, the Maleic
Agreement, the VIOC Agreement or any Ancillary Agreement, in each
case to the extent it relates to performance prior to the
Closing;
(iii) any breach of any representation or warranty of any of
the Ashland Parties contained in (A) Section 6.08 of this
Agreement or (B) Section 3.11(b) of the Maleic Agreement or
Section 3.11(b) of the VIOC Agreement;
(iv) any breach of any representation or warranty of any of
the Ashland Parties contained in (A) Section 6.03 (except the
last sentence of 6.03(e)) of this Agreement, (B) Section 3.09 or
3.12 of the Maleic Agreement or Section 3.09 or 3.12 of the VIOC
Agreement or (C) Section 6.05 of this Agreement;
(v) any breach of any representation or warranty of any of
the Ashland Parties contained in (A) the first sentence of
Section 6.01 of this Agreement, Section 3.03(b) of the Maleic
Agreement or Section 3.03(b) of the VIOC Agreement or (B) Section
6.04 or 6.11 of this Agreement;
(vi) (A) any breach of any representation or warranty of any
of the Ashland Parties contained in the last sentence of Section
6.03(e) of this
104
Agreement, (B) any breach or nonfulfillment of any covenant of
any of the Ashland Parties (other than HoldCo) contained in this
Agreement (other than Section 8.03 of this Agreement), the Maleic
Agreement, the VIOC Agreement or any Ancillary Agreement, in each
case to the extent it relates to performance after the Closing
(including New Ashland's obligations to pay Reorganization Merger
Consideration or amounts in respect of Dissenters' Shares) or (C)
any breach or nonfulfillment of any covenant of any of the
Ashland Parties contained in Section 8.03 of this Agreement;
(vii) any liabilities or obligations (contingent or
otherwise) of any of the Ashland Parties (or any of their
respective subsidiaries) that are not expressly assumed by one or
more of the Marathon Parties pursuant to this Agreement, the
Maleic Agreement, the VIOC Agreement or any Ancillary Agreement
(including any asbestos-related liabilities or obligations of the
Ashland Parties, or any of their respective subsidiaries,
associated with the operations of ▇▇▇▇▇ ▇▇▇▇▇▇ Corporation);
(viii) any liabilities or obligations of any of the Ashland
Parties to Transferred MAP Employees, Transferred Maleic Business
Employees (as defined in the Maleic Agreement) or Transferred
VIOC Centers Employees (as defined in the VIOC Agreement) under
any pension, retirement or other employee benefit plan or
arrangement established or participated in by any Ashland Party
or any of its subsidiaries that is not expressly assumed by one
or more Marathon Parties pursuant to this Agreement, the Maleic
Agreement, the VIOC Agreement or any Ancillary Agreement;
(ix) any failure by any of the Ashland Parties to comply
with the St. ▇▇▇▇ Park Judgment and Plea Agreement, other than
the obligations expressly assumed by the Marathon Parties in
Section 9.09 of this Agreement; or
(x) any liabilities and obligations (contingent or
otherwise) of any of the Marathon
105
Parties (or any of their respective subsidiaries) that are
expressly assumed by one or more Ashland Parties pursuant to this
Agreement, the Maleic Agreement, the VIOC Agreement or any
Ancillary Agreement.
(b) New Ashland Inc. shall not be required to indemnify any
person, and shall not have any liability:
(i) under clauses (i) and (ii) of Section 13.01(a), unless a
claim therefor is asserted in writing within three years after
the Closing Date, failing which such claim shall be waived and
extinguished;
(ii) under clause (iii) of Section 13.01(a), unless a claim
therefor is asserted in writing within five years after the
Closing Date, failing which such claim shall be waived and
extinguished;
(iii) under clause (iv) of Section 13.01(a), unless a claim
therefor is asserted in writing within six years after the
Closing Date, failing which such claim shall be waived and
extinguished;
(iv) under clause (v) of Section 13.01(a), unless a claim
therefor is asserted in writing within ten years after the
Closing Date, failing which such claim shall be waived and
extinguished;
(v) under clause (i), (ii), (iii), (iv), (v) or (vi) of
Section 13.01(a) for any punitive or exemplary damages (other
than punitive or exemplary damages asserted by any person who is
not a Marathon Party, or an affiliate or a Representative of a
Marathon Party, in a Third Party Claim (as defined in Section
13.04));
(vi) under clause (i), (ii), (iii), (iv), (v)(A) or (vi)(B)
of Section 13.01(a) for any indirect consequential or special
damages (other than indirect consequential or special damages
asserted by any person who is not a Marathon
106
Party, or an affiliate or a Representative of a Marathon Party, in a
Third Party Claim);
(vii) under clauses (i), (ii), (iii), (iv) and (v) of
Section 13.01(a) unless the aggregate of all Losses for which the
Ashland Parties would, but for this clause (vii), be liable
exceeds on a cumulative basis an amount equal to $2,000,000, and
then only to the extent of any such excess;
(viii) under clauses (i), (ii), (iii), (iv), (v) and (vi)(A)
of Section 13.01(a) for any individual items where the Loss or
alleged Loss relating thereto is less than $100,000 and such
items shall not be aggregated for purposes of clause (vii) of
this Section 13.01(b);
(ix) under clauses (i), (ii), (iii), (iv) and (v) of Section
13.01(a) with respect to breaches of representations, warranties
or covenants referred to therein that are contained in (A) the
Maleic Agreement to the extent they result in indemnification
payments hereunder in excess of $59,785,000 in the aggregate or
(B) the VIOC Agreement to the extent they result in
indemnification payments hereunder in excess of $39,385,000 in
the aggregate;
(x) under clauses (i), (ii), (iii), (iv), (v) and (vi)(A) of
Section 13.01(a) in the aggregate in excess of the amount equal
to the sum of (A) the MAP Partial Redemption Amount, (B) the
Capital Contribution, (C) $315,000,000 and (D) all post- Closing
recoveries by Ashland of distributions or profits from MAP with
respect to any period after the Closing Date; and
(xi) under clauses (i), (ii), (iii) and (iv)(A) of Section
13.01(a) for breaches of representations, warranties or covenants
referred to therein that are contained in this Agreement to the
extent they result in indemnification payments hereunder in
excess of $400,000,000 in the aggregate;
107
provided, however, that in determining the scope of New Ashland Inc.'s
indemnification obligations under this Section 13.01(a), any qualification
as to materiality or references to Ashland Material Adverse Effect, Maleic
Business Material Adverse Effect (as defined in the Maleic Agreement) or
VIOC Centers Material Adverse Effect (as defined in the VIOC Agreement) in
any of the representations or warranties referred to in Section 13.01(a)
shall be disregarded (it being understood that such qualifications as to
materiality or Ashland Material Adverse Effect, Maleic Business Material
Adverse Effect or VIOC Centers Material Adverse Effect shall apply for
purposes of determining whether there has been a breach in the first
place). Solely for purposes of this Article XIII, any Loss to the extent
arising out of any event or occurrence on or prior to, or circumstance
existing on or prior to, the Closing Date (and not to the extent arising
out of any event, occurrence or circumstance existing after the Closing
Date, other than the discovery of a pre-closing condition or the making or
commencement of any claim, demand, suit, action, proceeding or
investigation after the Closing Date to the extent relating to any event,
occurrence or circumstance existing on or prior to the Closing Date) shall
be considered in determining whether there shall have occurred (or there
was reasonably expected to occur) an Ashland Material Adverse Effect, a
Maleic Business Material Adverse Effect or a VIOC Centers Material Adverse
Effect, as applicable, as of the Closing Date. The parties acknowledge that
(x) the indemnification obligations referred to in clauses (vi) through (x)
of Section 13.01(a) shall not be subject to any time limitations and (y)
none of the indemnification obligations referred to in clauses (vi)(B),
(vi)(C), or any of clauses (vii) through (x) of Section 13.01(a) shall be
subject to any dollar limitations. The preceding sentence is not intended
to eliminate or amend any limitations on the indemnification obligations of
any Ashland Party under the ATCA or any other agreement that is not a
Transaction Agreement or an Ancillary Agreement.
(c) Except as otherwise expressly contemplated or provided in the
Transaction Agreements and the Ancillary Agreements, the Ashland Parties
make no representations or warranties of any kind, either express or
implied. Except as otherwise contemplated or provided in the Tax Matters
Agreement, any of the other Transaction Agreements or any
108
of the Ancillary Agreements, the Marathon Parties acknowledge that their
sole and exclusive remedy after the Closing with respect to any and all
claims (other than (i) claims arising from covenants to the extent such
covenants are to be performed after the Closing and (ii) claims of fraud)
relating to the Transaction Agreements, the Ancillary Agreements and the
Transactions shall be pursuant to the indemnification provisions set forth
in this Article XIII. In furtherance of the foregoing, except as otherwise
contemplated or provided in the Tax Matters Agreement, any of the other
Transaction Agreements or any of the Ancillary Agreements, the Marathon
Parties hereby waive, from and after the Closing, any and all rights,
claims and causes of action under any applicable Law (other than claims of,
or causes of action arising from, (i) covenants to the extent such
covenants are to be performed after the Closing and (ii) fraud) they may
have against the Ashland Parties arising under or based upon the
Transaction Agreements, the Ancillary Agreements and the Transactions
(except pursuant to the indemnification provisions set forth in this
Section 13.01). The Marathon Parties shall take reasonable actions to
mitigate Losses for which indemnification may be sought under this Section
13.01, as and to the extent a party is required to mitigate damages for
breach of contract under the Laws of the State of New York.
SECTION 13.02. INDEMNIFICATION BY MARATHON. (a) Subject to the
limitations set forth in this Article XIII, from and after the Closing,
Marathon shall defend and indemnify each of the Ashland Parties and their
respective affiliates and each of their respective Representatives against,
and hold them harmless from, any Losses to the extent resulting from,
arising out of or relating to, directly or indirectly:
(i) any breach of any representation or warranty of any of
the Marathon Parties contained in this Agreement, the Maleic
Agreement, the VIOC Agreement or any Ancillary Agreement (other
than the representations and warranties contained in the first
sentence of Section 7.01 of this Agreement and in Sections 7.03,
7.04, 7.05, 7.08 and 7.11 of this Agreement);
(ii) any breach or nonfulfillment of any covenant of any of
the Marathon Parties contained
109
in this Agreement or any Ancillary Agreement, in each case to the
extent it relates to performance prior to the Closing;
(iii) any breach of any representation or warranty of any of
the Marathon Parties contained in Section 7.08 of this Agreement;
(iv) any breach of any representation or warranty of any of
the Marathon Parties contained in (A) Section 7.03 of this
Agreement or (B) Section 7.05 of this Agreement;
(v) any breach of any representation or warranty of any of
the Marathon Parties contained in (A) the first sentence of
Section 7.01 of this Agreement or (B) Section 7.04 or 7.11 of
this Agreement;
(vi) any breach or nonfulfillment of any covenant of any of
the Marathon Parties contained in this Agreement, the Maleic
Agreement, the VIOC Agreement or any Ancillary Agreement, in each
case to the extent it relates to performance after the Closing
(including Marathon's obligations to issue and deposit with the
Exchange Agent the number of shares of Marathon Common Stock
specified in Section 5.01(a)(ii) and to provide the cash
necessary to pay any dividends or distributions in accordance
with Section 5.01(c)(ii));
(vii) any liabilities or obligations (contingent or
otherwise) of any of the Ashland Parties (or any of their
respective subsidiaries) that are expressly assumed by one or
more of the Marathon Parties pursuant to this Agreement, the
Maleic Agreement, the VIOC Agreement or any Ancillary Agreement,
including any such liabilities and obligations for which Ashland
would otherwise have been liable under the ATCA but for the
application of Section 12.01 (Asset Transfer and Contribution
Agreement);
(viii) any liabilities or obligations of any of the Ashland
Parties to Transferred MAP Employees, Transferred Maleic Business
Employees
110
or Transferred VIOC Centers Employees under any pension,
retirement or other employee benefit plan or arrangement
established or participated in by any Ashland Party or any of its
subsidiaries that is expressly assumed by one or more Marathon
Parties pursuant to this Agreement, the Maleic Agreement, the
VIOC Agreement or any Ancillary Agreement, including any such
liabilities and obligations for which Ashland would otherwise
have been liable under the ATCA but for the application of
Section 12.01 (Asset Transfer and Contribution Agreement);
(ix) any failure by any of the Marathon Parties to comply
with Section 9.09 of this Agreement; or
(x) any liabilities and obligations (contingent or
otherwise) of any of the Marathon Parties (or any of their
respective subsidiaries) that are not expressly assumed by one or
more Ashland Parties pursuant to this Agreement, the Maleic
Agreement, the VIOC Agreement or any Ancillary Agreement.
(b) Marathon shall not be required to indemnify any person, and
shall not have any liability:
(i) under clauses (i) and (ii) of Section 13.02(a), unless a
claim therefor is asserted in writing within three years after
the Closing Date, failing which such claim shall be waived and
extinguished;
(ii) under clause (iii) of Section 13.02(a), unless a claim
therefor is asserted in writing within five years after the
Closing Date, failing which such claim shall be waived and
extinguished;
(iii) under clause (iv) of Section 13.02(a), unless a claim
therefor is asserted in writing within six years after the
Closing Date, failing which such claim shall be waived and
extinguished;
111
(iv) under clause (v) of Section 13.02(a), unless a claim
therefor is asserted in writing within ten years after the
Closing Date, failing which such claim shall be waived and
extinguished;
(v) under clause (i), (ii), (iii), (iv), (v) or (vi) of
Section 13.02(a) for any punitive or exemplary damages (other
than punitive or exemplary damages asserted by any person who is
not an Ashland Party, or an affiliate or a Representative of an
Ashland Party, in a Third Party Claim);
(vi) under clause (i), (ii), (iii), (iv), (v)(A) or (vi) of
Section 13.02(a) for any indirect consequential or special
damages (other than indirect consequential or special damages
asserted by any person who is not an Ashland Party, or an
affiliate or a Representative of an Ashland Party, in a Third
Party Claim);
(vii) under clauses (i), (ii), (iii), (iv) or (v) of Section
13.02(a) unless the aggregate of all Losses for which the
Marathon Parties would, but for this clause (vi), be liable
exceeds on a cumulative basis an amount equal to $2,000,000, and
then only to the extent of any such excess;
(viii) under clauses (i), (ii), (iii), (iv) and (v) of
Section 13.02(a) for any individual items where the Loss or
alleged Loss relating thereto is less than $100,000 and such
items shall not be aggregated for purposes of clause (vii) of
this Section 13.02(b);
(ix) under clauses (i), (ii), (iii), (iv) and (v) of Section
13.02(a) in the aggregate in excess of the amount equal to the
sum of (A) the MAP Partial Redemption Amount, (B) the Capital
Contribution and (C) $315,000,000; and
(x) under clauses (i), (ii), (iii) and (iv)(A) of Section
13.02(a) for breaches of representations, warranties or covenants
referred to therein that are contained in this Agreement to the
extent they result in indemnification
112
payments hereunder in excess of $400,000,000 in the aggregate;
provided, however, that in determining the scope of Marathon's
indemnification obligations under this Section 13.02(a), any qualification
as to materiality or references to Marathon Material Adverse Effect in any
of the representations or warranties referred to in Section 13.02(a) shall
be disregarded (it being understood that such qualifications as to
materiality or Marathon Material Adverse Effect shall apply for purposes of
determining whether there has been a breach in the first place). Solely for
purposes of this Article XIII, any Loss to the extent arising out of any
event or occurrence on or prior to, or circumstance existing on or prior
to, the Closing Date (and not to the extent arising out of any event,
occurrence or circumstance existing after the Closing Date, other than the
discovery of a pre-closing condition or the making or commencement of any
claim, demand, suit, action, proceeding or investigation after the Closing
Date to the extent relating to any event, occurrence or circumstance
existing on or prior to the Closing Date) shall be considered in
determining whether there shall have occurred (or there was reasonably
expected to occur) a Marathon Material Adverse Effect as of the Closing
Date. The parties acknowledge that (x) the indemnification obligations
referred to in clauses (vi) through (x) of Section 13.02(a) shall not be
subject to any time limitations and (y) none of the indemnification
obligations referred to in clauses (vi) through (x) of Section 13.02(a)
shall be subject to any dollar limitations. The preceding sentence is not
intended to eliminate or amend any limitations on the indemnification
obligations of any Marathon Party under the ATCA or any other agreement
that is not a Transaction Agreement or an Ancillary Agreement.
(c) Except as otherwise expressly contemplated or provided in the
Transaction Agreements and the Ancillary Agreements, the Marathon Parties
make no representations or warranties of any kind, either express or
implied. Except as otherwise contemplated or provided in the Tax Matters
Agreement, any of the other Transaction Agreements or any of the Ancillary
Agreements, the Ashland Parties acknowledge that their sole and exclusive
remedy after the Closing with respect to any and all claims (other than
113
(i) claims arising from covenants to the extent such covenants are to be
performed after the Closing and (ii) claims of fraud) relating to the
Transaction Agreements, the Ancillary Agreements and the Transactions shall
be pursuant to the indemnification provisions set forth in this Article
XIII. In furtherance of the foregoing, except as otherwise contemplated or
provided in the Tax Matters Agreement, any of the other Transaction
Agreements or any of the Ancillary Agreements, the Ashland Parties hereby
waive, from and after the Closing, any and all rights, claims and causes of
action under any applicable Law (other than claims of, or causes of action
arising from, (i) covenants to the extent such covenants are to be
performed after the Closing and (ii) fraud) they may have against the
Marathon Parties arising under or based upon the Transaction Agreements,
the Ancillary Agreements and the Transactions (except pursuant to the
indemnification provisions set forth in this Section 13.02). The Ashland
Parties shall take reasonable actions to mitigate Losses for which
indemnification may be sought under this Section 13.02, as and to the
extent a party is required to mitigate damages for breach of contract under
the Laws of the State of New York.
SECTION 13.03. CALCULATION OF LOSSES. (a) The amount of any Loss
for which indemnification is provided in clause (i), (ii), (iii), (iv) or
(v)(A) of Section 13.01(a) of this Agreement or clause (i), (ii), (iii),
(iv) or (v)(A) of Section 13.02(a) of this Agreement shall be net of any
amounts actually recovered by the indemnified party under the True
Insurance Policies (as such term is defined in the ATCA) with respect to
such Loss; provided, however, that the indemnified party shall not have any
obligation to seek any such recovery under any True Insurance Policy. The
amount of any Loss for which indemnification is provided pursuant to
Section 13.01(a) or Section 13.02(a) of this Agreement shall be (i)
increased to take account of any net Tax cost incurred by the indemnified
party arising from the receipt or accrual of indemnity payments hereunder
(grossed up for such increase) and (ii) reduced to take account of any net
Tax Benefit (as defined in the ATCA) realized by the indemnified party
arising from the deductibility of any such Loss. In computing the amount of
any such Tax cost or Tax Benefit, the indemnified party shall be deemed to
recognize all other items of income, gain, loss, deduction or credit
114
before recognizing any item arising from the receipt or accrual of any
indemnity payment hereunder or the deductibility of any indemnified Loss.
Any indemnification payment hereunder shall initially be made without
regard to clauses (i) and (ii) in the second sentence of this Section
13.03, and shall be increased or reduced to reflect any such net Tax cost
(including gross-up) or net Tax Benefit only after the indemnified party
has actually realized such cost or benefit. For purposes of this Agreement,
an indemnified party shall be deemed to have "actually realized" a net Tax
cost or a net Tax Benefit to the extent that, and at such time as, the
amount of Taxes payable by such indemnified party is increased above or
reduced below, as the case may be, the amount of Taxes, that such
indemnified party would be required to pay but for the receipt or accrual
of the indemnity payment or the deductibility of such Loss, as the case may
be. The amount of any increase or reduction hereunder shall be adjusted to
reflect any final determination (which shall include the execution of Form
870 AD or successor form) with respect to the indemnified party's liability
for Taxes, and payments between the indemnified party and the indemnifying
party to reflect such adjustment shall be made if necessary.
(b) No indemnified party shall be entitled to indemnification
pursuant to Section 13.01(a) with respect to any Loss that has been taken
account of in any adjustment pursuant to Section 1.05 of the Maleic
Agreement. If the amount of any Loss, at any time subsequent to the making
of any payment for indemnification pursuant to Section 13.01(a) or
13.02(a), is reduced by recovery, settlement or otherwise under or pursuant
to any claim, recovery, settlement or payment by or against any other
person that is not an affiliate of the indemnified party, the amount of
such reduction, less any costs, expenses, premiums or other offsets
incurred in connection therewith, shall promptly be repaid by the
indemnified party to the indemnifying party. Upon making any payment for
indemnification pursuant to Section 13.01(a) or 13.02(a), the indemnifying
party shall, to the extent of such payment, be subrogated to all rights of
the indemnified party (other than any rights of such indemnified party
under any insurance policies) against any third party that is not an
affiliate of the indemnified party in respect of the indemnifiable Loss to
which such payment relates. Each such indemnified party shall duly
115
execute upon request all instruments reasonably necessary to evidence and
perfect the above described subrogation rights.
SECTION 13.04. PROCEDURES. (a) NOTICE OF THIRD PARTY CLAIMS. If
any claim is asserted by any person not a party, or an affiliate or a
Representative of a party, to this Agreement against an indemnified party
under this Agreement (any such claim being a "Third Party Claim") and such
indemnified party intends to seek indemnification hereunder from a party to
this Agreement, then, such indemnified party shall give notice of the Third
Party Claim to the indemnifying party as soon as practicable after the
indemnified party has reason to believe that the indemnifying party will
have an indemnification obligation with respect to such Third Party Claim,
accompanied by copies of all papers that have been served on the
indemnified party with respect to such Third Party Claim. Such notice shall
describe in reasonable detail the nature of the Third Party Claim, an
estimate of the amount of damages attributable to the Third Party Claim (if
reasonably attainable) and the basis of the indemnified party's request for
indemnification under this Agreement. The failure of the indemnified party
to so notify the indemnifying party of the Third Party Claim shall not
relieve the indemnifying party from any duty to indemnify hereunder unless
and only to the extent that the indemnifying party demonstrates that the
failure of the indemnified party to promptly notify it of such Third Party
Claim prejudiced its ability to defend such Third Party Claim; provided,
that the failure of the indemnified party to notify the indemnifying party
shall not relieve the indemnifying party from any liability which it may
have to the indemnified party otherwise than under this Agreement.
Thereafter, the indemnified party shall deliver to the indemnifying party,
within five business days after the indemnified party's receipt thereof,
copies of all written notices and documents (including court papers but
excluding any materials that are subject to any applicable privilege or
that constitute attorney work product) received by the indemnified party
relating to the Third Party Claim.
(b) RIGHT OF INDEMNIFYING PARTY TO CONTROL DEFENSE OF THIRD PARTY
CLAIMS. The indemnifying party shall have the right to participate in, or
assume control of, the defense of the Third Party Claim at its own expense
116
using counsel of its choice reasonably acceptable to the indemnified party,
by giving prompt written notice to the indemnified party. If it elects to
assume control of the defense of such Third Party Claim, the indemnifying
party shall defend such Third Party Claim by promptly and vigorously
prosecuting all appropriate proceedings to a final conclusion or
settlement. After notice from the indemnifying party to the indemnified
party of its election to assume the defense of such Third Party Claim, the
indemnified party shall have the right to participate in the defense of the
Third Party Claim using counsel of its choice, but the indemnifying party
shall not be liable to the indemnified party hereunder for any legal or
other expenses subsequently incurred by the indemnified party in connection
with its participation in the defense thereof unless (i) the employment
thereof has been specifically authorized in writing by the indemnifying
party, (ii) the indemnifying party fails to assume the defense in
accordance with the first sentence of this Section 13.04(b) or diligently
prosecute the defense of the Third Party Claim or (iii) there shall exist
or develop a conflict that would ethically prohibit counsel to the
indemnifying party from representing the indemnified party. The indemnified
party agrees to provide such reasonable cooperation to the indemnifying
party and its counsel as the indemnifying party may reasonably request in
contesting any Third Party Claim that the indemnifying party elects to
contest, including the making of any related counterclaim against the Third
Party asserting the Third Party Claim or any cross-complaint against any
person who is not an affiliate or Representative of the indemnified party,
in each case only if and to the extent that any such counterclaim or
cross-complaint arises from the same actions or facts giving rise to the
Third Party Claim. The indemnifying party shall have the right, acting in
good faith and with due regard to the interests of the indemnified party,
to control all decisions regarding the handling of the defense without the
consent of the indemnified party, but shall not have the right to admit
liability with respect to, or compromise, settle or discharge any Third
Party Claim or consent to the entry of any judgment with respect to such
Third Party Claim without the consent of the indemnified party, which
consent shall not be unreasonably withheld, unless such settlement,
compromise or consent includes an unconditional release of the indemnified
party from all liability and obligations arising out of such Third Party
117
Claim and would not otherwise adversely affect the indemnified party.
(c) CONTROL OF THIRD PARTY CLAIM BY THE INDEMNIFIED PARTY. If the
indemnifying party fails to assume the defense of a Third Party Claim
within thirty (30) days after receipt of written notice of the Third Party
Claim in accordance with the provisions of Section 13.04(b), then the
indemnified party shall have the right to defend the Third Party Claim by
promptly and vigorously prosecuting all appropriate proceedings to a final
conclusion or settlement. The indemnifying party shall have the right to
participate in the defense of the Third Party Claim using counsel of its
choice, but the indemnified party shall not be liable to the indemnifying
party hereunder for any legal or other expenses incurred by the
indemnifying party in connection with its participation in the defense
thereof. If requested by the indemnified party, the indemnifying party
agrees to provide such reasonable cooperation to the indemnified party and
its counsel as the indemnified party may reasonably request in contesting
any Third Party Claim that the indemnified party elects to contest,
including the making of any related counterclaim against the third party
asserting the Third Party Claim or any cross-complaint against any person
who is not an affiliate or Representative of the indemnifying party, in
each case only if and to the extent that any such counterclaim or
cross-complaint arises from the same actions or facts giving rise to the
Third Party Claim. The indemnified party shall have the right, acting in
good faith and with due regard to the interests of the indemnifying party,
to control all decisions regarding the handling of the defense without the
consent of the indemnifying party, but shall not have the right to
compromise or settle any Third Party Claim or consent to the entry of any
judgment with respect to such Third Party Claim without the consent of the
indemnifying party, which consent shall not be unreasonably withheld,
unless such settlement, compromise or consent includes an unconditional
release of the indemnifying party from all liability and obligations
arising out of such Third Party Claim.
(d) OTHER CLAIMS. In the event any indemnified party should have
a claim against any indemnifying party under Section 13.01 or 13.02 that
does not involve a Third Party Claim being asserted against or sought to be
118
collected from such indemnified party, the indemnified party shall deliver
notice of such claim with reasonable promptness to the indemnifying party.
Subject to Sections 13.01(b) and 13.02(b), the failure by any indemnified
party so to notify the indemnifying party shall not relieve the
indemnifying party from any liability that it may have to such indemnified
party under Section 13.01 or 13.02, except to the extent that the
indemnifying party demonstrates that it has been prejudiced by such
failure. The indemnifying party shall have 60 calendar days following its
receipt of such notice to dispute its liability to the indemnified party
under Section 13.01 or 13.02. The indemnified party shall reasonably
cooperate with and assist the indemnifying party in determining the
validity of any claim for indemnity by the indemnified party and in
otherwise resolving such matters. Such cooperation and assistance shall
include retention and (upon the indemnifying party's request) the provision
to the indemnifying party of records that are reasonably relevant to such
matters, making employees available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder, and providing such reasonable cooperation and assistance in the
investigation and resolution of such matters as the indemnifying party may
reasonably request. If the indemnifying party does not notify the
indemnified party within 60 days from its receipt of a notice pursuant to
the first sentence of this Section 13.04(d) that the indemnifying party
disputes the claim specified by the indemnified party in such notice, that
claim shall be deemed a liability of the indemnifying party hereunder. If
the indemnifying party has timely disputed that claim, as provided above,
that dispute may be resolved by proceedings in an appropriate court of
competent jurisdiction in accordance with Section 14.10 if the parties do
not reach a settlement of that dispute within 30 days after notice of that
dispute is given. Payment of the amount set forth in a notice of a claim
pursuant to the first sentence of this Section 13.04(d) that has not been
disputed shall be made within 30 days after the expiration of the
applicable 60 day notice period. If the payment obligation has been
disputed, payment shall be made 30 days after the expiration of the period
for appeal of a final adjudication of the indemnifying party's liability
under this Agreement to the indemnified party with respect to such payment
obligation.
119
(e) The foregoing provisions of this Article XIII shall not be
applicable to any Tax Matters, it being understood that the indemnification
obligations of New Ashland Inc. and Marathon with respect to all Tax
Matters are set forth in the Tax Matters Agreement.
(f) The foregoing provisions of this Article XIII shall not be
applicable to any Losses to the extent indemnification for such Losses is
provided under the Franchise Agreements (as defined in the VIOC Agreement).
ARTICLE XIV
GENERAL PROVISIONS
SECTION 14.01. NOTICES. All notices, requests, claims, demands
and other communications under the Transaction Agreements shall be in
writing and shall be deemed to be delivered and received if personally
delivered or if delivered by facsimile or courier service, when actually
received by the party to whom notice is sent at the address of such party
or parties set forth below (or at such other address as such party may
designate by written notice to all other parties in accordance herewith):
(a) if to the Ashland Parties, to
Ashland Inc.
▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: J. ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which will not constitute notice for purposes of
this Agreement) to:
Cravath, Swaine & ▇▇▇▇▇ LLP
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
120
(b) if to the Marathon Parties, to
Marathon Oil Corporation
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which will not constitute notice for purposes of
this Agreement) to:
▇▇▇▇▇ ▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇. Paris, Esq.
▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 14.02. DEFINITIONS. For purposes of this Agreement:
An "affiliate" of any person means another person that directly
or indirectly, through one or more intermediaries, controls, is controlled
by, or is under common control with, such first person. As used in this
definition, "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
person (whether through ownership of capital stock of that person, by
contract or otherwise). For the avoidance of doubt, MAP shall be deemed to
be an affiliate of Marathon Company and not Ashland at all times, whether
prior to or after the Closing.
"AR Fraction" means the fraction of the MAP Partial Redemption
Amount to be distributed in the form of accounts receivable of MAP such
that, in the opinions of Cravath, Swaine & ▇▇▇▇▇ LLP and ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
Chartered, the MAP Partial Redemption will not result in any gain
recognition under Section 751(b) of the Code. Such fraction shall be
determined based upon the final allocation report prepared by D&T and
delivered to Ashland and Marathon on or within 10 days prior to the Closing
Date.
121
"Ashland Debt Obligation Amount" means an amount, determined in
good faith by Ashland, in light of the Private Letter Rulings and any
communications with the IRS, written or otherwise, that is sufficient to
(i) pay the outstanding principal amount of debt that is shown on Ashland's
balance sheet; (ii) pay repurchase premium and other costs to repay,
repurchase or defease debt that is shown on Ashland's balance sheet or
obligations referred to in clause (iii) below; (iii) repay and terminate
obligations that are treated as debt for tax purposes but not for financial
statement purposes; and (iv) terminate or renegotiate Ashland's obligations
as lessee under real estate leases that are treated as true leases for tax
purposes, in each case to the extent that such amounts, if paid by New
Ashland Inc. with the proceeds of the HoldCo Borrowing, would result in no
gain recognition to HoldCo under Section 357 of the Code.
"Ashland Employee Stock Option" means any option to purchase
Ashland Common Stock granted under any Ashland Stock Plan.
"Ashland LOOP/LOCAP Interest" shall have the meaning assigned
thereto in the Put/Call Agreement.
"Ashland Parties" means Ashland, New Ashland LLC, New Ashland
Inc. and, prior to the Acquisition Merger Effective Time, HoldCo.
"Ashland SAR" means any stock appreciation right linked to the
price of Ashland Common Stock and granted under any Ashland Stock Plan.
"Ashland Stock Plan" means the Amended Stock Incentive Plan for
Key Employees of Ashland and its subsidiaries, Ashland 1993 Stock Incentive
Plan, Ashland Deferred Compensation Plan for Non-Employee Directors,
Ashland 1997 Stock Incentive Plan, Ashland Deferred Compensation Plan,
Ashland Stock Option Plan for Employees of Joint Ventures, Ashland Employee
Savings Plan, Amended and Restated Ashland Incentive Plan, and any other
stock option, stock purchase or other plan or agreement pursuant to which
shares of Ashland Common Stock may be acquired as compensation by
employees, consultants or any other person.
"Estimated MAP Partial Redemption Amount" means a good faith
estimate, prepared jointly by MAP, Marathon and
122
Ashland at least two business days prior to the Closing Date, of the MAP
Partial Redemption Amount, which estimate shall include Marathon's good
faith estimate of any increase pursuant to the second sentence of Section
1.01.
"Holdco Borrowing" means a new unsecured borrowing or borrowings
by HoldCo with total proceeds in an amount equal to the Ashland Debt
Obligation Amount. The HoldCo Borrowing shall be expressly non-recourse to
Ashland and its affiliates (other than HoldCo) and shall otherwise be made
on terms and conditions reasonably acceptable to Ashland.
"LOCAP T&D Agreement" means the Initial Facility Throughput and
Deficiency Agreement among Ashland, Marathon, Shell Oil Company, Texaco
Inc. and LOCAP LLC (as successor to LOCAP Inc.), dated March 1, 1979, as
amended.
"LOCAP T&D Assumption Agreement" means an assumption agreement,
substantially in the form attached hereto as Exhibit E, pursuant to Section
7.2 of the LOCAP T&D Agreement.
"LOOP T&D Agreement" means the First Stage Throughput and
Deficiency Agreement among Ashland, Marathon, ▇▇▇▇▇▇ Oil Corporation, Shell
Oil Company, Texaco Inc. and LOOP LLC (as successor to LOOP Inc.), dated as
of December 1, 1977, as amended.
"LOOP T&D Assumption Agreement" means an assumption agreement,
substantially in the form attached hereto as Exhibit F, pursuant to Section
7.2 of the LOOP T&D Agreement.
"MAP Adjustment Amount" means 38% of the Distributable Cash of
MAP (as such term is defined in the MAP LLC Agreement) as of the close of
business on the Closing Date.
"MAP Governing Documents" means the Transaction Documents, as
amended, as defined in the ATCA.
"MAP LLC Agreement" means the Amended and Restated Limited
Liability Company Agreement of MAP dated as of December 31, 1998, as
amended.
123
"MAP/LOOP/LOCAP Contribution Agreements" means assignment and
assumption agreements in the form of Exhibits G, H and I hereto.
"MAP Partial Redemption Amount" means $2,699,170,000 minus the
Ashland Debt Obligation Amount plus the MAP Adjustment Amount, plus any
increases effected pursuant to the second sentence of Section 1.01 or
clause (vii) of Section 12.01(d).
"Marathon Employee Stock Option" means any option to purchase
Marathon Common Stock granted under any Marathon Stock Plan.
"Marathon Parties" means Marathon, Marathon Company, Merger Sub
and, after the Acquisition Merger Effective Time, MAP.
"Marathon SAR" means any stock appreciation right linked to the
price of Marathon Common Stock and granted under any Marathon Stock Plan.
"Marathon Stock Plan" means the Marathon Oil Corporation 2003
Incentive Compensation Plan, 1990 Marathon Oil Company Stock Plan, The
Marathon Oil Company Thrift Plan, the Marathon Oil Company Deferred
Compensation Plan, the Marathon Oil Corporation Non-Officer Restricted
Stock Plan, the Marathon Ashland Petroleum LLC Deferred Compensation Plan
and any other stock option, stock purchase or other plan or agreement
pursuant to which shares of Marathon Common Stock may be acquired as
compensation by employees, consultants or any other person.
"Market MAC Condition" means a condition for the benefit of Third
Party Lenders to the effect that their obligation to lend shall not be
enforceable due to market disruption or other similar event.
"Market MAC Event" means (i) Marathon shall have obtained a firm
commitment (subject to customary conditions) to provide the HoldCo
Borrowing from Third Party Lenders that are nationally recognized
commercial banks, (ii) such commitment shall be in full force and effect
prior to the date on which the Closing would otherwise occur pursuant to
Section 1.05 but for the failure of the Marathon Parties to cause the
HoldCo Borrowing to be advanced to HoldCo and (iii) as of such
124
date such Third Party Lenders shall have declined to make the HoldCo
Borrowing available to HoldCo solely based upon the non- satisfaction of a
Market MAC Condition.
"Membership Interest" shall have the meaning assigned thereto in
Appendix A to the MAP LLC Agreement.
"New Ashland Inc. Common Stock" means New Ashland Inc. common
stock, par value $0.01 per share, and, with respect to such shares issued
at and after the Acquisition Merger Effective Time, includes the associated
Ashland Rights.
A "person" means any individual, firm, corporation, partnership,
company, limited liability company, trust, joint venture, association,
Governmental Entity or other entity.
"Plains Settlement" means the Mutual Release and Settlement
Agreement between MAP and Plains Marketing, L.P. dated as of May 16, 2003.
"St. ▇▇▇▇ Park Judgment and Plea Agreement" means (i) the amended
judgment in the matter of United States of America v. Ashland Inc., No.
02-CR- 152(01)(JMR) (D. Minn. Dec. 23, 2002), as such judgment may be
further amended, supplemented, modified or replaced, and (ii) the plea
agreement and sentencing stipulations in the matter of United States of
America v. Ashland Inc., No. 02- CR-152(JEL) (D. Minn. May 13, 2002).
A "subsidiary" of any person means another person, an amount of
the voting securities, other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of its Board
of Directors or other governing body (or, if there are no such voting
interests, 50% or more of the equity interests of which) is owned directly
or indirectly by such first person.
"Tax" or "Taxes" means all forms of taxation imposed by any
federal, state, local or foreign jurisdiction (including any subdivision
and any revenue agency of such a jurisdiction), including net income, gross
income, alternative minimum, sales, use, ad valorem, gross receipts, value
added, franchise, license, transfer, withholding, payroll, employment,
excise, severance, stamp,
125
property, custom duty, Taxes or governmental charges, together with any
related interest, penalties or other additional amounts imposed by a
Governmental Entity, and including all liability for or in respect of any
of the foregoing as a result of being a member of a consolidated or similar
group or a partner in an entity treated as a partnership or other pass-
through entity for Tax purposes or as a result of any Tax sharing or
similar contractual agreement.
"Tax Authority" means any federal, state, local or foreign
jurisdiction (including any subdivision and any revenue agency of such a
jurisdiction) imposing Taxes.
"Tax Matter" means any matter relating to Taxes.
"Value" means, with respect to any account receivable of MAP, the
product of (A) the outstanding balance of such account receivable on the
Closing Date, multiplied by (B) one minus the applicable discount factor
set forth in Exhibit A.
"Working Papers" means, with respect to AAA or HLHZ: (i)
documents prepared or assembled by such firm setting forth the valuation
assumptions used in connection with the Transactions to determine the fair
value or present fair saleable value of the subject assets or businesses,
including, as applicable, (A) representative financial statement data, (B)
any adjustments made or considered by such firm to historical and projected
financial data of Ashland or New Ashland Inc., (C) lists of comparable
companies selected by such firm for valuation purposes and their relevant
operating statistics and trading multiples, (D) lists of comparable
transactions considered by such firm and (E) valuation multiples, discount
rates and capitalization rates selected by such firm; (ii) lists of stated
and contingent liabilities utilized by such firm, including any adjustments
made or considered by such firm to information provided by Ashland or its
Representatives; (iii) projected income statement, balance sheet and cash
flow statements used or considered by such firm to assess the projected
cash flows, debt capacity levels, summary of covenants tests and other
factors impacting liquidity and (iv) analyses performed to determine if the
subject company has or would have adequate capital remaining after giving
effect to the Transaction,
126
including similar calculations done for the selected comparable companies.
SECTION 14.03. INTERPRETATION; DISCLOSURE LETTERS. When a
reference is made in this Agreement to a Section or Article, such reference
shall be to a Section or Article of this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning
or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed
to be followed by the words "without limitation". No item contained in any
section of either the Ashland Disclosure Letter or the Marathon Disclosure
Letter shall be deemed adequate to disclose an exception to a
representation or warranty made in this Agreement, unless (i) such item is
included (or expressly incorporated by reference) in a section of the
applicable disclosure letter that is numbered to correspond to the section
number assigned to such representation or warranty in this Agreement or
(ii) it is readily apparent from a reading of such item that it discloses
an exception to such representation or warranty.
SECTION 14.04. SEVERABILITY. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any
rule or Law, or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party hereto. Upon such
determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
parties hereto as closely as possible to the end that the transactions
contemplated hereby are fulfilled to the greatest extent possible.
SECTION 14.05. COUNTERPARTS. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have
been signed by each of the parties and delivered to the other parties.
127
SECTION 14.06. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES.
The Transaction Agreements, taken together with the exhibits hereto and
thereto, the Ashland Disclosure Letter and the Marathon Disclosure Letter,
the Confidentiality Agreement, and the other agreements and instruments of
the parties hereto delivered in connection herewith, (a) constitute the
entire agreement, and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to the Transactions
and (b) except for the provisions of Section 2.05, Article V, Section
12.06(b) and Article XIII (the "Third Party Provisions"), are not intended
to confer upon any person other than the parties hereto any rights or
remedies. The Third Party Provisions may be enforced by the beneficiaries
thereof; provided, however, that the shareholders of Ashland in their
capacities as such shall not have any rights or remedies under this
Agreement, and shall not be entitled to enforce the Third Party Provisions
or make any Claims with respect thereto, unless and until the Closing shall
have occurred. For avoidance of doubt, (i) the shareholders of Marathon in
their capacities as such shall not have any rights or remedies under this
Agreement, (ii) after the Closing, holders of Dissenters' Shares shall have
the rights and remedies specified in Section 2.05 only and (iii) after the
Closing, the holders entitled to receive HoldCo Common Stock in the
Reorganization Merger shall have the rights and remedies specified in
Article V only. Notwithstanding the foregoing, the Confidentiality
Agreement shall remain in effect in accordance with its terms and, except
as expressly amended hereby, the MAP Governing Documents are ratified and
affirmed and shall remain in full force and effect.
SECTION 14.07. EXERCISE OF RIGHTS AND REMEDIES. Except as this
Agreement otherwise provides, no delay or omission in the exercise of, or
failure to assert, any right, power or remedy accruing to any party hereto as
a result of any breach or default hereunder by any other party hereto will
impair any such right, power or remedy, nor will it be construed, deemed or
interpreted as a waiver of or acquiescence in any such breach or default, or
of any similar breach or default occurring later; nor will any waiver of any
single breach or default be construed, deemed or interpreted as a waiver of
any other breach or default hereunder occurring before or after that waiver.
The
128
failure of any party to this Agreement to assert any of its rights under
the Transaction Agreements or otherwise shall not constitute a waiver of
such rights.
SECTION 14.08. GOVERNING LAW. This Agreement shall be governed
by, and construed in accordance with, the Laws of the State of New York,
regardless of the Laws that might otherwise govern under applicable
principles of conflicts of Laws thereof, except to the extent the Laws of
Kentucky are mandatorily applicable to the Reorganization Merger and the
Conversion Merger and to the extent the Laws of Delaware are mandatorily
applicable to the Acquisition Merger.
SECTION 14.09. ASSIGNMENT. Neither the Transaction Agreements nor
any of the rights, interests or obligations under the Transaction
Agreements shall be assigned, in whole or in part, by any of the parties
without the prior written consent of the other parties, except that the
rights, interests and obligations of any party under this Agreement or any
of the other Transaction Agreements may be assigned by operation of law
pursuant to a merger, consolidation or other business combination involving
such party that would not reasonably expected to prevent or materially
delay the consummation of the Transactions; provided, however, that any
assignment pursuant to the exception set forth in this sentence shall not
operate to release any party from its obligations under this Agreement or
any of the other Transaction Agreements. Subject to the preceding
sentences, the Transaction Agreements will be binding upon, inure to the
benefit of, and be enforceable by, the parties and their respective
successors and assigns.
SECTION 14.10. ENFORCEMENT. The parties agree that irreparable
damage would occur in the event that any of the provisions of the
Transaction Agreements were not performed in accordance with their specific
terms or were otherwise breached. It is accordingly agreed that, subject to
Sections 13.01(c) and 13.02(c), the parties shall be entitled to an
injunction or injunctions to prevent breaches of the Transaction Agreements
and to enforce specifically the terms and provisions of the Transaction
Agreements in any New York state court or any Federal court located in the
Borough of Manhattan, The City of New York in the State of New York, this
being in addition to any other remedy to which they are entitled at law or
in
129
equity. In addition, each of the parties hereto (a) consents to submit
itself to the personal jurisdiction of any New York state court or any
Federal court located in the Borough of Manhattan, The City of New York in
the State of New York in the event any dispute arises out of the
Transaction Agreements or any Transaction, (b) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court, (c) agrees that it will not bring
any action relating to any Transaction Agreement or any Transaction in any
court other than any New York state court or any Federal court sitting in
the Borough of Manhattan, The City of New York in the State of New York
(provided, however, that this clause (c) shall not limit the ability of any
party hereto to (i) file a proof of claim or bring any action in any court
in which a bankruptcy or reorganization proceeding involving another party
hereto is pending, (ii) file a counter-claim or cross-claim against another
party hereto in any court in which a proceeding involving both such parties
is pending or (iii) implead another party hereto in respect of a Third
Party Claim in any court in which a proceeding relating to such Third Party
Claim is then pending) and (d) waives any right to trial by jury with
respect to any action related to or arising out of any Transaction
Agreement or any Transaction.
130
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, all as of the date first written above.
ASHLAND INC.,
by /s/ ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
--------------------------------
Name:
Title: Chief Executive
Officer
ATB HOLDINGS INC.,
by /s/ ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
Title: President
EXM LLC,
by
ATB HOLDINGS INC.,
by /s/ ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
Title: President
NEW EXM INC.,
by /s/ ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
Title: President
131
MARATHON OIL CORPORATION,
by /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
--------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: President & Chief
Executive Officer
MARATHON OIL COMPANY,
by /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
--------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: President
MARATHON DOMESTIC LLC,
by
MARATHON OIL CORPORATION,
by /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
--------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: President & Chief
Executive Officer
MARATHON ASHLAND PETROLEUM LLC,
by /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
EXHIBIT D
TAX RULING/OPINION CLOSING CONDITIONS
Structure
1. The IRS issues a private letter ruling (a "Ruling") holding that
the Maleic/VIOC Contribution described in Section 1.02(a), the
MAP/LOOP/LOCAP Contribution described in Section 1.02(b) and the
Reorganization Merger described in Section 1.02(c), taken together, qualify
as a reorganization under Section 368(a)(1)(F) of the Code.
2. The IRS issues a Ruling holding that the Capital Contribution
described in Section 1.03(b) and the Conversion Merger described in Section
1.03(c), taken together with the Acquisition Merger described in Section
1.04(a) or the distribution by HoldCo of shares of New Ashland Inc. Common
Stock described in Section 1.04(b), as the case may be, qualify as a
reorganization under Section 368(a)(1)(D) of the Code.
3. The IRS issues a Ruling holding that the Acquisition Merger
described in Section 1.04(a) or the distribution by HoldCo of shares of New
Ashland Inc. Common Stock described in Section 1.04(b), as the case may be,
qualifies as a distribution described in Section 355(a) of the Code and,
accordingly, no gain or loss will be recognized by (and no amount will
otherwise be included in the income of) the shareholders of HoldCo upon the
receipt of such New Ashland Inc. Common Stock.
4. Either:
(a) The IRS issues a Ruling holding that the Acquisition Merger
described in Section 1.04(a) will qualify as a reorganization under Section
368(a)(1)(A) of the Code; or
(b) If the IRS refuses to issue the Ruling described in paragraph
4(a) above, Cravath, Swaine & ▇▇▇▇▇ LLP delivers a written opinion to
Ashland, in form and substance reasonably satisfactory to the Ashland
Board, concluding that the Acquisition Merger described in Section 1.04(a)
will qualify as a reorganization under Section 368(a)(1)(A) of the Code;
and ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ Chartered delivers a written opinion to Marathon, in
form and substance reasonably satisfactory to the Marathon Board,
2
that such Acquisition Merger qualifies as a reorganization under Section
368(a)(1)(A) of the Code.
5. The IRS issues a Ruling holding that the shares of New Ashland Inc.
Common Stock distributed to shareholders of HoldCo in the Acquisition
Merger described in Section 1.04(a) or the distribution described in
Section 1.04(b), as the case may be, will not be treated as "other
property", within the meaning of Section 356(a) of the Code, received in
exchange for HoldCo stock in the Acquisition Merger.
Section 357
6. The IRS issues a Ruling holding that the assumption by Marathon
and/or Merger Sub of liabilities of HoldCo in the Acquisition Merger will
not be treated as money or other property under Section 357 of the Code.
Contingent Liabilities
7. Either:
(a) The IRS issues a Ruling holding that New Ashland Inc. is
entitled to deduct the Specified Liability Deductions (as defined in the
Tax Matters Agreement); or
(b) The IRS issues a Ruling holding that (i) HoldCo, and Marathon
or an affiliate of Marathon that is the "acquiring corporation" of HoldCo
in the Acquisition Merger within the meaning of Section 381(a) of the Code,
is entitled to deduct the Specified Liability Deductions, (ii) such
deduction will not be limited under Section 382 or Section 384 of the Code
or Treasury Regulation section 1.1502-15; (iii) such deduction is
determined on the Net Deduction Method (as defined in the Tax Matters
Agreement); (iv) the accrual or receipt of insurance reimbursements in
respect of Specified Liability Deductions will not result in recognition of
income or gain to any member of the New Ashland Group (as defined in the
Tax Matters Agreement) (other than recognition of such income or gain by a
member of the New Ashland Group in respect of Specified Liability
Deductions claimed before the Closing Date by a member of the Ashland Group
(as defined in the Tax Matters Agreement) or the New Ashland Group); and
(v) any payment of Specified Liability Deductions by any member of the New
Ashland Group
3
will not result in recognition of income or gain to any member of the
Marathon Group (as defined in the Tax Matters Agreement).
8. Either:
(a) The IRS issues a Ruling holding that the effect of the
assumption by New Ashland, Inc. of the Ashland Residual Operations
Liabilities (as defined in the Tax Matters Agreement) on the basis of the
New Ashland Inc. Common Stock in the hands of HoldCo will be determined
under Section 358(h)(1) of the Code, or will be excluded from such
application solely by reason of Section 358(h)(2) of the Code; or
(b) (i) The IRS issues a Ruling holding that the effect of such
assumption on such basis will be determined under Section 358(d)(1) of the
Code; (ii) such Ruling sets forth with specificity a method of determining
the amount of the resulting reduction to basis under Section 358(d)(1) of
the Code; and (iii) based on such method, on representations as to the
basis of the New Ashland Inc. Common Stock before such reduction, and on
representations as to the value of the New Ashland Inc. Common Stock to be
distributed by HoldCo as of the date of such distribution (and on any other
date that might be relevant), Cravath, Swaine & ▇▇▇▇▇ LLP delivers a
written opinion to Ashland, in form and substance reasonably satisfactory
to the Ashland Board, that the distribution of the New Ashland Inc. Common
Stock by HoldCo will not result in the recognition of gain by HoldCo under
Section 355(e) of the Code in an amount greater than would be so recognized
if the effect on such basis had been determined under Section 358(h)(1) of
the Code rather than Section 358(d)(1) of the Code; and ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
Chartered delivers a written opinion to Marathon, in form and substance
reasonably satisfactory to the Marathon Board, concluding that the
distribution of the New Ashland Inc. Common Stock by HoldCo does not result
in the recognition of gain by HoldCo under Section 355(e) of the Code in an
amount greater than would be so recognized if the effect on such basis had
been determined under Section 358(h)(1) of the Code rather than Section
358(d)(1) of the Code.
4
Partnership
9. Either:
(a) The IRS issues a Ruling that the MAP Partial Redemption does
not constitute a disguised sale of a partnership interest under Section
707(a)(2)(B) of the Code; or
(b) If the IRS refuses to issue the Ruling described in paragraph
9(a) above, Cravath, Swaine & ▇▇▇▇▇ LLP delivers a written opinion to
Ashland, in form and substance reasonably satisfactory to the Ashland
Board, concluding that the MAP Partial Redemption will not constitute a
disguised sale of a partnership interest under Section 707(a)(2)(B) of the
Code; and ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ Chartered delivers a written opinion to
Marathon, in form and substance reasonably satisfactory to the Marathon
Board, concluding that the MAP Partial Redemption does not constitute a
disguised sale of a partnership interest under Section 707(a)(2)(B) of the
Code.
10. Either:
(a) The IRS issues a Ruling that the MAP Partial Redemption will
not be treated as a sale or exchange of property between Ashland and MAP
under Section 751(b) of the Code; or
(b) If the IRS refuses to issue the Ruling described in paragraph
10(a) above, Cravath, Swaine & ▇▇▇▇▇ LLP delivers a written opinion to
Ashland, in form and substance reasonably satisfactory to the Ashland
Board, concluding that the MAP Partial Redemption will not constitute a
sale or exchange of property between Ashland and MAP under Section 751(b)
of the Code; and ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ Chartered delivers a written opinion to
Marathon, in form and substance reasonably satisfactory to the Marathon
Board, concluding that the MAP Partial Redemption does not constitute a
sale or exchange of property between Ashland and MAP under Section 751(b)
of the Code.