<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
-----------------------
Date of Report (Date of earliest event reported):
January 1, 1998
USX Corporation
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-5153 25-0996816
--------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
600 Grant Street, Pittsburgh, PA 15219-4776
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(412) 433-1121
------------------------------
(Registrant's telephone number,
including area code)
<PAGE>
Item 5. Other Events
------------
On January 2, 1998, USX Corporation's Marathon Oil Company ("Marathon")
and Ashland Inc. ("Ashland") jointly announced that they had closed the
transaction that officially forms the refining and marketing company, Marathon
Ashland Petroleum LLC (the "Company"). The close of the transaction was
effective January 1, 1998. Marathon has a 62 percent interest in the Company
and Ashland holds a 38 percent interest.
In connection with the formation of the Company, Marathon and Ashland
entered into a Limited Liability Company Agreement dated January 1, 1998, (the
"LLC Agreement"). The LLC Agreement provides that the Company will be managed
by a Board of Managers consisting of three representatives designated by
Marathon, two representatives designated by Ashland and the President of the
Company (a non-voting member of the Board). The LLC Agreement provides for an
initial term of the Company expiring on December 31, 2022 (25 years from its
formation.) The term will automatically be extended for ten year periods,
unless at least two years prior to the end of a term, either Marathon or Ashland
gives notice to the other party that it wants to terminate the term of the
Company.
At any time after December 31, 2002, either Marathon or Ashland may sell
all of its ownership interest in the Company to a third party, subject to a
right of first refusal by the other party retaining ownership interest in the
Company.
The foregoing description of the LLC Agreement is qualified in its
entirety by reference to the provisions of such agreement, which is attached
hereto as Exhibit 10.1.
In connection with the formation of the Company, Marathon, Ashland, the
Company and USX Corporation entered into a Put/Call, Registration Rights and
Standstill Agreement (the "Put/Call Agreement"). The Put/Call Agreement
provides that at any time after December 31, 2004, Ashland will have the right
to sell to Marathon all of Ashland's ownership interests in the Company, for an
amount in cash and/or Marathon or USX debt or equity securities equal to the
product of 85% (90% if equity securities are used) of the fair market value of
the Company at that time, multiplied by Ashland's percentage interest in the
Company. Payment could be made at closing, or at Marathon's option, in three
equal annual installments, the first of which would be payable at closing. At
any time after December 31, 2004, Marathon will have the right to purchase all
of Ashland's ownership interests in the Company, for an amount in cash equal to
the product of 115% of the fair market value of the Company at that time,
multiplied by Ashland's percentage interest in the Company.
Notice by Marathon or Ashland that they wish to terminate the term of
the company would accord the non-terminating party the right to purchase the
terminating party's ownership interests in the Company at fair market value.
The foregoing description of the Put/Call Agreement is qualified in its
entirety by reference to the provisions of such agreement, which is attached
hereto as Exhibit 10.2.
<PAGE>
Item 7. Financial Statements and Exhibits
---------------------------------
(c) Exhibits
10.1 Limited Liability Company Agreement of
Marathon Ashland Petroleum LLC dated January 1, 1998
10.2 Put/Call, Registration Rights and Standstill Agreement
dated January 1, 1998
99.1 Press Release dated January 2, 1998
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
USX CORPORATION
By /s/ Kenneth L. Matheny
-----------------------
Kenneth L. Matheny
Vice President and Comptroller
Dated: January 12, 1998
<PAGE>
Exhibit 10.1
================================================================================
LIMITED LIABILITY COMPANY AGREEMENT
of
MARATHON ASHLAND PETROLEUM LLC
Dated as of January 1, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE I
Certain Definitions; Applicable GAAP
------------------------------------
SECTION 1.01. Definitions.................................................. 2
SECTION 1.02. Applicable GAAP.............................................. 24
ARTICLE II
General Provisions
------------------
SECTION 2.01. Formation; Effectiveness..................................... 24
SECTION 2.02. Name......................................................... 25
SECTION 2.03. Term......................................................... 25
SECTION 2.04. Registered Agent and Office.................................. 26
SECTION 2.05. Purpose...................................................... 26
SECTION 2.06. Powers....................................................... 27
ARTICLE III
Members
-------
SECTION 3.01. Members; Percentage Interests................................ 28
SECTION 3.02. Adjustments in Percentage Interests.......................... 29
ARTICLE IV
Capital Contributions; Assumption of Assumed Liabilities
--------------------------------------------------------
SECTION 4.01. Contributions................................................ 29
SECTION 4.02. Additional Contributions..................................... 32
SECTION 4.03. Negative Balances; Withdrawal of Capital;
Interest................................................... 33
<PAGE>
2
ARTICLE V
Distributions
-------------
SECTION 5.01. Distributions................................................ 33
SECTION 5.02. Certain General Limitations.................................. 36
SECTION 5.03. Distributions in Kind........................................ 36
SECTION 5.04. Distributions in the Event of an Exercise
of the Marathon Call Right, Ashland
Put Right or the Special Termination
Rights..................................................... 37
ARTICLE VI
Allocations and Other Tax Matters
---------------------------------
SECTION 6.01. Maintenance of Capital Accounts.............................. 37
SECTION 6.02. Allocation of Profit and Loss................................ 38
SECTION 6.03. Tax Allocations.............................................. 38
SECTION 6.04. Entity Classification........................................ 39
SECTION 6.05. Fiscal Year.................................................. 39
SECTION 6.06. Tax Returns.................................................. 39
SECTION 6.07. Tax Matters Partner.......................................... 40
SECTION 6.08. Duties of Tax Matters Partner................................ 41
SECTION 6.09. Survival of Provisions....................................... 43
SECTION 6.10. Section 754 Election......................................... 43
SECTION 6.11. Qualified Income Offset, Minimum Gain
Chargeback................................................. 43
SECTION 6.12. Tax Treatment of Designated Sublease
Agreements................................................. 44
SECTION 6.13. Tax Treatment of Reimbursed Liability
Payments................................................... 44
SECTION 6.14. Tax Treatment of Disproportionate
Payments................................................... 45
ARTICLE VII
Books and Records
-----------------
SECTION 7.01. Books and Records; Examination............................... 45
SECTION 7.02. Financial Statements and Reports............................. 46
<PAGE>
3
SECTION 7.03. Notice of Affiliate Transactions; Annual
List...................................................... 48
ARTICLE VIII
Management of the Company
-------------------------
SECTION 8.01. Managing Members............................................. 49
SECTION 8.02. Board of Managers............................................ 49
SECTION 8.03. Responsibility of the Board of Managers...................... 50
SECTION 8.04. Meetings..................................................... 50
SECTION 8.05. Compensation................................................. 52
SECTION 8.06. Quorum....................................................... 52
SECTION 8.07. Voting....................................................... 53
SECTION 8.08. Matters Constituting Super Majority
Decisions.................................................. 54
SECTION 8.09. Annual Capital Budget........................................ 61
SECTION 8.10. Business Plan................................................ 62
SECTION 8.11. Requirements as to Affiliate Transactions.................... 62
SECTION 8.12. Review of Certain Affiliate Transactions
Related to Crude Oil Purchases and Shared
Services................................................... 64
SECTION 8.13. Adjustable Amounts........................................... 67
SECTION 8.14. Company Leverage Policy...................................... 68
SECTION 8.15. Company's Investment Guidelines.............................. 68
SECTION 8.16. Requirements as to Operating Leases.......................... 69
SECTION 8.17. Limitations on Actions Relating to the
Calculation of Distributable Cash.......................... 69
SECTION 8.18. Reliance by Third Parties.................................... 69
SECTION 8.19. Integration of Retail Operations............................. 70
ARTICLE IX
Officers
--------
SECTION 9.01. (a) Election, Appointment and Term of
Office..................................................... 71
SECTION 9.02. Resignation, Removal and Vacancies........................... 72
SECTION 9.03. Duties and Functions of Executive
Officers................................................... 73
<PAGE>
4
ARTICLE X
Transfers of Membership Interests
---------------------------------
SECTION 10.01. Restrictions on Transfers................................... 74
SECTION 10.02. Conditions for Admission.................................... 78
SECTION 10.03. Allocations and Distributions............................... 79
SECTION 10.04. Right of First Refusal...................................... 79
SECTION 10.05. Restriction on Resignation or Withdrawal.................... 80
ARTICLE XI
Liability, Exculpation and Indemnification
------------------------------------------
SECTION 11.01. Liability................................................... 81
SECTION 11.02. Exculpation................................................. 81
SECTION 11.03. Indemnification............................................. 81
ARTICLE XII
Fiduciary Duties
----------------
SECTION 12.01. Duties and Liabilities of Covered
Persons................................................... 82
SECTION 12.02. Fiduciary Duties of Members of the
Company and Members of the Board
of Managers............................................... 82
ARTICLE XIII
Dispute Resolution Procedures
-----------------------------
SECTION 13.01. General..................................................... 83
SECTION 13.02. Dispute Notice and Response................................. 83
SECTION 13.03. Negotiation Between Senior Managers......................... 84
SECTION 13.04. Negotiation Between Chief Executive
Officer and President..................................... 84
SECTION 13.05. Right to Equitable Relief Preserved......................... 85
<PAGE>
5
ARTICLE XIV
Rights and Remedies with Respect to Monetary Disputes
-----------------------------------------------------
SECTION 14.01. Ability of Company to Borrow
to Fund Disputed Monetary Amounts......................... 86
SECTION 14.02. Interim Payment of Disputed Monetary
Amount.................................................... 87
SECTION 14.03. Liquidated Damages.......................................... 87
SECTION 14.04. Right of Set-Off............................................ 90
SECTION 14.05. Security Interest........................................... 90
ARTICLE XV
Dissolution and Termination
---------------------------
SECTION 15.01. Dissolution................................................. 92
SECTION 15.02. Winding Up of Company....................................... 93
SECTION 15.03. Distribution of Property.................................... 93
SECTION 15.04. Time Limitation............................................. 93
SECTION 15.05. Termination of Company...................................... 93
ARTICLE XVI
Miscellaneous
-------------
SECTION 16.01. Notices..................................................... 94
SECTION 16.02. Merger and Entire Agreement................................. 95
SECTION 16.03. Assignment.................................................. 95
SECTION 16.04. Parties in Interest......................................... 95
SECTION 16.05. Counterparts................................................ 95
SECTION 16.06. Amendment; Waiver........................................... 96
SECTION 16.07. Severability................................................ 96
SECTION 16.08. GOVERNING LAW............................................... 96
SECTION 16.09. Enforcement................................................. 97
SECTION 16.10. Creditors................................................... 97
SECTION 16.11. No Bill for Accounting...................................... 98
SECTION 16.12. Waiver of Partition......................................... 98
SECTION 16.13. Table of Contents, Headings and Titles...................... 98
SECTION 16.14. Use of Certain Terms; Rules of
Construction.............................................. 98
SECTION 16.15. Holidays.................................................... 98
<PAGE>
6
SECTION 16.16. Third Parties............................................... 98
SECTION 16.17. Liability for Affiliates.................................... 99
Appendix A Certain Definitions
Appendix B Procedures for Dispute Resolution
Exhibit A Speedway SuperAmerica LLC Retail Integration Protocol
Schedule 1.01 Financed Properties
Schedule 4.01(c) Subleased Property
Schedule 4.02(a)-1 Marathon Capital Expenditures
Schedule 4.02(a)-2 Ashland Capital Expenditures
Schedule 8.01(k)
(i)(A) Closing Date Affiliate Transactions
Schedule 8.14 Company Leverage Policy
Schedule 8.15 Company Investment Guidelines
Schedule A Calculations re: Normal Annual Capital Budget Amount
Schedule B-1 Adjustments to Historical EBITDA
(Marathon)
Schedule B-2 Adjustments to Historical EBITDA (Ashland)
Schedule C Initial Executive Officers
<PAGE>
LIMITED LIABILITY COMPANY AGREEMENT
dated as of [January 1], 1998, of MARATHON
- -
ASHLAND PETROLEUM LLC (the "Company"), by and
-------
between Marathon Oil Company, an Ohio
corporation ("Marathon"), and Ashland Inc., a
--------
Kentucky corporation ("Ashland"), as Members.
-------
Preliminary Statement
---------------------
WHEREAS, on June 11, 1997, Marathon and Emro Marketing Company ("Emro
Marketing") formed the Company (formerly known as "Emro Supply, LLC") by filing
a Certificate of Formation of the Company with the Secretary of State of the
State of Delaware and executed the Limited Liability Company Agreement of the
Company pursuant to which Marathon received a 60% interest in the Company and
Emro Marketing received a 40% interest in the Company;
WHEREAS, on July 18, 1997, Emro Marketing assigned its interest in the
Company to Marathon and Fuelgas Company, Inc., a wholly owned subsidiary of
Marathon ("Fuelgas"), with Marathon receiving an additional 39% interest in the
Company and Fuelgas receiving a 1% interest in the Company, which interest will
be transferred to Marathon immediately following the Closing (for purposes of
this Agreement and the other Transaction Documents, all references to Marathon's
interest in the Company shall be deemed to include the 1% interest owned by
Fuelgas);
WHEREAS, on July 18, 1997, Marathon and Fuelgas executed the First
Amended and Restated Limited Liability Company Agreement of the Company and
filed an Amended and Restated Certificate of Formation of the Company with the
Secretary of State of the State of Delaware;
WHEREAS, on October 29, 1997, Marathon and Fuelgas filed a Second
Amended and Restated Certificate of Formation of the Company with the Secretary
of State of the State of Delaware to change the name of the Company to Marathon
Ashland Petroleum LLC;
WHEREAS, on December 8, 1997, Marathon and Fuelgas executed the Second
Amended and Restated Limited Liability
<PAGE>
2
Company Agreement of the Company which became effective on December 10, 1997;
WHEREAS the parties hereto desire that the Company (a) be a premier
petroleum supply, refining, marketing and transportation business, (b) create a
highly efficient, cost-effective and competitive petroleum supply, refining,
marketing and transportation system, (c) deliver to the Members the highest
possible economic value added, (d) be customer-focused and market-driven in its
business strategy, (e) be a respected and responsible member of the communities
in which the Company will operate, with a high regard for environmental
responsibility and employee safety, and (f) seek to maximize Distributable Cash
to the Members consistent with the foregoing, including capital spending levels
which over time are expected to be generally equivalent to the level of non-cash
charges; and
WHEREAS the Members desire to enter into this Agreement to set forth
the rights and responsibilities of each of them with respect to the governance,
financing and operation of the Company.
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
Certain Definitions; Applicable GAAP
------------------------------------
SECTION 1.01. Definitions. Defined terms used in this Agreement
------------
shall have the meanings ascribed to them by definition in this Agreement or in
Appendix A. In addition, when used herein the following terms have the
following meanings:
"Accounting Determination" has the meaning set forth in Section 1.02.
------------------------
"Acquisition Expenditures" means, in connection with any acquisition
------------------------
by the Company and its subsidiaries, without duplication (i) the purchase price
paid or to be paid for the net assets or capital stock or other equity
<PAGE>
3
interests in connection with such acquisition, (ii) any Indebtedness assumed by
the Company and its subsidiaries in connection with any such acquisition, (iii)
any contingent liabilities assumed or incurred by the Company and its
subsidiaries in connection with any such acquisition to the extent that such
contingent liabilities are required to be reflected on the balance sheet of the
Company and its subsidiaries in accordance with Financial Accounting Standard
Number 5 (or any successor or superseding provision of Applicable GAAP), and
(iv) all other costs and expenses incurred or to be incurred by the Company or
any of its subsidiaries in connection with any such acquisition to the extent
that such costs and expenses would be capitalized if such acquisition were
consummated.
"Adjustable Amount" has the meaning set forth in Section 8.13.
-----------------
"Additional Monetary Amount" has the meaning set forth in Section
--------------------------
14.03(c).
"Additional Required Cash Amount" has the meaning set forth in Section
-------------------------------
14.01(a).
"Adjusted DD&A" means:
-------------
(i) for the twelve-month periods ended December 31, 1995 and 1996,
$348 million and $346 million, respectively;
(ii) for the twelve-month period ended December 31, 1997, the total
combined depreciation, depletion and amortization expense of the Marathon
Business and the Ashland Business during such twelve-month period,
including, without duplication, (a) any gains (deductions from
depreciation, depletion and amortization) or losses (additions to
depreciation, depletion and amortization) on asset retirements during such
period and (b) pro forma depreciation, depletion and amortization expense
related to the Financed Properties during such period (calculated in the
same manner such pro forma depreciation, depletion and amortization expense
was calculated in Schedule A,
<PAGE>
4
which considers the placed-in-service dates of the Financed Properties);
(iii) for the twelve-month period ended September 30, 1998, the sum
of:
(a) the total combined depreciation, depletion and amortization
expense of the Marathon Business and the Ashland Business during the
period commencing on October 1, 1997, and ended on the date
immediately preceding the Closing Date, including, without
---------
duplication, (1) any gains (deductions from depreciation, depletion
and amortization) or losses (additions to depreciation, depletion and
amortization) on asset retirements during such period and (2) pro
forma depreciation, depletion and amortization expense related to the
Financed Properties during such period (calculated in the same manner
such pro forma depreciation, depletion and amortization expense was
calculated in Schedule A, which considers the placed-in-service dates
of the Financed Properties); and
(b) the total depreciation, depletion and amortization expense of
the Company and its subsidiaries for the period commencing on the
Closing Date and ended on September 30, 1998, including (1) any gains
---------
(deductions from depreciation, depletion and amortization) or losses
(additions to depreciation, depletion and amortization) on asset
retirements during such period, (2) depreciation, depletion and
amortization expense related to the Garyville Propylene Upgrade
Project during such period and (3) depreciation, depletion and
amortization expense related to all Company-funded Capital
Expenditures, but excluding (4) depreciation, depletion and
---------
amortization expense related to Member-Funded Capital Expenditures and
(5) the increase or decrease in such depreciation, depletion and
amortization expense related to the Ashland Transferred Assets
(including pro forma depreciation, depletion and amortization expense
<PAGE>
5
related to the Financed Properties) resulting from the application of
purchase accounting treatment to the transactions contemplated by the
Transaction Documents (such purchase accounting treatment causing an
increase or decrease in the estimated useful lives and the net book
value of the Ashland Transferred Assets); and
(iv) for the twelve-month period ended September 30, 1999, and each
twelve-month period ended September 30 thereafter, the total depreciation,
depletion and amortization expense of the Company and its subsidiaries for
such twelve-month period, including, without duplication, (a) any gains
---------
(deductions from depreciation, depletion and amortization) or losses
(additions to depreciation, depletion and amortization) on asset
retirements during such period, (b) depreciation, depletion and
amortization expense related to the Garyville Propylene Upgrade Project
during such period and (c) depreciation, depletion and amortization expense
related to Company-funded Capital Expenditures but excluding (d)
---------
depreciation, depletion and amortization expense related to Member-Funded
Capital Expenditures and (e) the increase or decrease in such depreciation,
depletion and amortization expense related to the Ashland Transferred
Assets (including pro forma depreciation, depletion and amortization
expense related to the Financed Properties) resulting from the application
of purchase accounting treatment to the transactions contemplated by the
Transaction Documents (such purchase accounting treatment causing an
increase or decrease in the estimated useful lives and the net book value
of the Ashland Transferred Assets);
all as determined on a consolidated basis with respect to (x) in the case of any
period ending prior to the Closing Date, Marathon and its subsidiaries or
Ashland and its subsidiaries, as applicable, or (y) in the case of any period
ending on or after the Closing Date, the Company and its subsidiaries, in each
case in accordance with Applicable GAAP.
<PAGE>
6
"Adjusted EBITDA" means:
---------------
(i) for the twelve-month periods ended December 31, 1995 and 1996,
$657 million and $600 million, respectively;
(ii) for the twelve-month period ended December 31, 1997, the sum of:
(a) Historical EBITDA for such twelve-month period, plus
(b) $80 million, minus
(c) 38% of an amount equal to (1) the sum of the amounts calculated
pursuant to clauses (a) and (b) above for such twelve-month period less (2)
the Adjusted DD&A for such twelve-month period.
(iii) for the twelve-month period ended September 30, 1998, the sum
of:
(a) for the period commencing on October 1, 1997, and ended on the
date immediately preceding the Closing Date, the sum of:
(1) Historical EBITDA for such period, plus
(2) $20 million, minus
(3) 38% of an amount equal to (A) the sum of the amounts
calculated pursuant to clauses (1) and (2) above with respect to such
period less (B) the Adjusted DD&A for such period; and
(b) for the period commencing on the Closing Date and ended on
September 30, 1998, the sum of:
(1) EBITDA of the Company and its subsidiaries for such period,
plus
(2) $12.4 million, minus
<PAGE>
7
(3) the Tax Distribution Amounts paid or to be paid in respect of
each of the three Fiscal Quarters (or portion thereof) included in
such period; and
(iv) for the twelve-month period ended September 30, 1999 and each
twelve-month period ended September 30 thereafter, the sum of:
(a) EBITDA of the Company and its subsidiaries for such twelve-month
period, minus
(b) the Tax Distribution Amounts paid or to be paid in respect of each
of the four Fiscal Quarters included in such twelve-month period;
all as determined on a consolidated basis with respect to (x) in the case of any
period ending prior to the Closing Date, Marathon and its subsidiaries or
Ashland and its subsidiaries, as applicable, or (y) in the case of any period
ending on or after the Closing Date, the Company and its subsidiaries, in each
case in accordance with then Current GAAP (other than Ordinary Course Lease
Expenses which shall be calculated in accordance with Applicable GAAP).
"Advanced Amount" has the meaning set forth in Section 14.01(b).
---------------
"Affiliate Transaction" means any agreement or transaction between the
---------------------
Company or any of its subsidiaries and any Member or any Affiliate of any Member
that:
(a) for purposes of Section 7.03(a)(i), will result or is reasonably
anticipated will result in expenditures, contingent or actual liabilities
or benefits to the Company and its subsidiaries in excess of $2 million;
(b) for purposes of Section 7.03(b), is either (i) outside the
ordinary course of the Company and its subsidiaries' business and results
or will result in contingent or actual liabilities or benefits to the
Company and its subsidiaries in excess of $100,000 in
<PAGE>
8
the applicable Fiscal Year or (ii) within the ordinary course of the
Company and its subsidiaries' business and results or will result in
expenditures, contingent or actual liabilities or benefits to the Company
and its subsidiaries (A) in excess of $2 million individually in the
applicable Fiscal Year or (B) when taken together with all other agreements
or transactions entered into the same Fiscal Year as such agreement or
transaction which are either related to such agreement or transaction or
are substantially the same type of agreement or transaction as such
agreement or transaction, in excess of $2 million in the aggregate in the
applicable Fiscal Year; and
(c) for purposes of Section 8.08(k)(i), is either (i) outside the
ordinary course of the Company and its subsidiaries' business and will
result or is reasonably anticipated will result in expenditures, contingent
or actual liabilities or benefits to the Company and its subsidiaries in
excess of $2 million or (ii) within the ordinary course of the Company and
its subsidiaries' business and will result or is reasonably anticipated
will result in expenditures, contingent or actual liabilities or benefits
to the Company and its subsidiaries in excess of $25 million.
For purposes of this definition of Affiliate Transaction, any
guarantee by a Member or any Affiliate of any Member of any obligations of the
Company or any of its subsidiaries that is provided by such Member or such
Affiliate without cost to the Company and its subsidiaries shall not be deemed
to be an Affiliate Transaction. Notwithstanding the foregoing, the term
"Affiliate Transaction" shall not include any distributions of cash or other
property to the Members pursuant to Article V.
"Affiliate Transaction Dispute Notice" has the meaning set forth in
------------------------------------
Section 8.11(b).
"Aggregate Tax Rate" has the meaning set forth in Section 5.01(a)(i).
------------------
"Agreed Additional Capital Contributions" has the meaning set forth in
---------------------------------------
Section 4.02(c).
<PAGE>
9
"Agreement" means this Limited Liability Company Agreement of the
---------
Company, as the same may be amended, restated, supplemented or otherwise
modified from time to time.
"Annual Capital Budget" has the meaning set forth in Section 8.09(a).
---------------------
"Applicable GAAP" has the meaning set forth in Section 1.02.
---------------
"Approved Marathon Crude Oil Purchase Program" has the meaning set
--------------------------------------------
forth in Section 8.12.
"Arbitratable Dispute" has the meaning set forth in Section 13.04(a).
--------------------
"Arbitration Payment Due Date" has the meaning set forth in Section
----------------------------
14.03(a).
"Arbitration Proceeding" has the meaning set forth in Section
----------------------
14.01(a).
"Arbitration Tribunal" has the meaning set forth in Appendix B.
--------------------
"Arm's-Length Transaction" has the meaning set forth in Section
------------------------
8.11(a).
"Ashland Designated Sublease Agreements" shall mean the Ashland
---------------------------------------
Sublease Agreements attached as Exhibits L-1, L-2, L-3 and L-4 to the Asset
Transfer and Contribution Agreement.
"Ashland-Funded Capital Expenditures" has the meaning set forth in
-----------------------------------
Section 4.02(a).
"Audited Financial Statements" has the meaning set forth in Section
----------------------------
7.02(c).
<PAGE>
10
"Average Annual DD&A" means:
-------------------
(a) for Fiscal Year 1998, the average of the Adjusted DD&A for the
three twelve-month periods ended December 31, 1995, 1996 and 1997;
(b) for Fiscal Year 1999, the average of the Adjusted DD&A (i) for the
two twelve-month periods ended December 31, 1996 and 1997 and (ii) for the
one twelve-month period ended September 30, 1998;
(c) for Fiscal Year 2000, the average of the Adjusted DD&A (i) for the
twelve-month period ended December 31, 1997 and (ii) for the two twelve-
month periods ending on September 30, 1998 and 1999; and
(d) for Fiscal Year 2001 and each Fiscal Year thereafter, the average
of the Adjusted DD&A for the three twelve-month periods ending on September
30 in each of the three Fiscal Years immediately preceding such Fiscal
Year.
"Average Adjusted EBITDA" means:
-----------------------
(a) for Fiscal Year 1998, the average of the Adjusted EBITDA for the
three twelve-month periods ended December 31, 1995, 1996 and 1997;
(b) for Fiscal Year 1999, the average of the Adjusted EBITDA (i) for
the two twelve-month periods ended December 31, 1996 and 1997 and (ii) for
the one twelve-month period ended September 30, 1998;
(c) for Fiscal Year 2000, the average of the Adjusted EBITDA (i) for
the twelve-month period ended December 31, 1997 and (ii) for the two
twelve-month periods ending on September 30, 1998 and 1999; and
(d) for Fiscal Year 2001 and each Fiscal Year thereafter, the average
of the Adjusted EBITDA for the three twelve-month periods ending on
September 30 in each of the three Fiscal Years immediately preceding such
Fiscal Year.
<PAGE>
11
"Average Annual Level" means for any twelve-month period ending on
--------------------
September 30 of any calendar year, the average of the level of the Price Index
ascertained by adding the twelve monthly levels of the Price Index during such
twelve-month period and dividing the total by twelve.
"Bareboat Charters" has the meaning set forth in Section 9.3(k) of the
-----------------
Asset Transfer and Contribution Agreement.
"Base Level" means 161.2.
----------
"Base Rate" has the meaning set forth in Section 1.01 of the Put/Call,
---------
Registration Rights and Standstill Agreement.
"Board of Managers" has the meaning set forth in Section 8.02(a).
-----------------
"Bulk Motor Oil Business" has the meaning set forth in Section
-----------------------
14.03(h) of the Put/Call, Registration Rights and Standstill Agreement.
"Business Plan" has the meaning set forth in Section 8.10.
-------------
"Capital Account" has the meaning set forth in Section 6.01.
---------------
"Capital Expenditures" means, for any period, the aggregate of all
--------------------
expenditures incurred by the Company and its subsidiaries during such period
that, in accordance with Applicable GAAP, are or should be included in
"additions to property, plant or equipment" or similar items reflected in the
consolidated statement of cash flows of the Company and its subsidiaries;
provided, however, that Capital Expenditures shall not include (a) exchanges of
- -------- -------
such items for other items, (b) expenditures of proceeds of insurance
settlements by the Company or any of its subsidiaries in respect of lost,
destroyed or damaged assets, equipment or other property to the extent such
expenditures are made to replace or repair such lost, destroyed or damaged
assets, equipment or other property within 18 months of such loss, destruction
or damage, (c) funds expended by a Member or an
<PAGE>
12
Affiliate of a Member to purchase any Subleased Property that is contributed to
the Company or a subsidiary of the Company pursuant to Section 4.01(c)(i)(A) or
(d) Member-Funded Capital Expenditures; all as determined on a consolidated
basis with respect to the Company and its subsidiaries in accordance with
Applicable GAAP.
"Capital Lease" means any lease of (or other arrangement conveying the
-------------
right to use) real or personal property, or a combination thereof, which
obligations are required to be classified and accounted for as capital leases on
a consolidated balance sheet of the Company and its subsidiaries in accordance
with Applicable GAAP.
"Closing Date Affiliate Transactions" has the meaning set forth in
-----------------------------------
Section 8.08(k)(i)(A).
"Company Independent Auditors" has the meaning set forth in Section
----------------------------
7.01.
"Company Investment Guidelines" has the meaning set forth in Section
-----------------------------
8.15.
"Company Leverage Policy" has the meaning set forth in Section 8.14.
-----------------------
"Competitive Business" has the meaning set forth in Section 14.01(a)
--------------------
of the Put/Call, Registration Rights and Standstill Agreement.
"Competitive Third Party" has the meaning set forth in Section
-----------------------
14.01(d) of the Put/Call, Registration Rights and Standstill Agreement.
"Contracting Member" has the meaning set forth in Section 8.11(b).
------------------
"Covered Person" means any Member, any Affiliate of a Member or any
--------------
officers, directors, shareholders, partners, employees, representatives or
agents of a Member or their respective Affiliates, or any Representative, or any
employee, officer or agent of the Company or its Affiliates.
<PAGE>
13
"Critical Decision" means each Primary Critical Decision and each
-----------------
Other Critical Decision.
"Critical Decision Termination Date" means (a) in the case of any
----------------------------------
Other Critical Decision, the first anniversary of the Closing Date or (b) in the
case of any Primary Critical Decision, the first anniversary of the Closing Date
or, if the Critical Decision Termination Date shall be extended with respect to
such Primary Critical Decision as provided in Section 8.19(c), the fifteen-month
anniversary of the Closing Date.
"Crude Oil Purchases" means any purchase of crude oil by the Company
-------------------
or any of its subsidiaries from Marathon or any Affiliate of Marathon.
"Current GAAP" means, at any time, GAAP as in effect at such time.
------------
"Delinquent Member" has the meaning set forth in Section 14.01(a).
-----------------
"Designated Sublease Agreements" means the Ashland Designated Sublease
--------------------------------
Agreements and the Marathon Designated Sublease Agreements.
"Designated Sublease Amount" means any obligation of a Member to the
--------------------------
Company or a subsidiary of the Company under Section 4.01(c) with respect to a
Subleased Property or a Designated Sublease Agreement.
"Dispute" has the meaning set forth in Section 13.01.
-------
"Dispute Notice" has the meaning set forth in Section 13.02.
--------------
"Disputed Capital Contribution Amount" has the meaning set forth in
------------------------------------
Section 13.04(a).
"Disputed Indemnification Amount" has the meaning set forth in Section
-------------------------------
14.01(a).
<PAGE>
14
"Disputed Monetary Amount" has the meaning set forth in Section
------------------------
14.01(a).
"Distributable Cash" means, for each Fiscal Quarter, without
------------------
duplication:
(a) the Short-Term Investments of the Company and its subsidiaries on
the last day of such Fiscal Quarter, minus
(b) the Ordinary Course Debt of the Company and its subsidiaries on
the last day of such Fiscal Quarter, minus
(c) the Tax Distribution Amount to be paid in respect of such Fiscal
Quarter, minus
(d) funds held on the last day of such Fiscal Quarter for financing
Special Projects or Permitted Catlettsburg Capital Projects, minus
(e) if the notional repayment of principal for Special Project
Indebtedness or Permitted Catlettsburg Capital Project Indebtedness during
such Fiscal Quarter calculated using a notional repayment schedule
established and approved by the Board of Managers in accordance with the
Company Leverage Policy was more than the amount of actual principal
repayments for such Special Project Indebtedness or Permitted Catlettsburg
Project Indebtedness during such Fiscal Quarter, the amount of such excess,
plus
(f) if the amount of the actual principal repayments for Special
Project Indebtedness or Permitted Catlettsburg Capital Project Indebtedness
during such Fiscal Quarter was more than the notional repayment of
principal for such Special Project Indebtedness or Permitted Catlettsburg
Capital Project Indebtedness during such Fiscal Quarter (calculated in the
manner described in clause (e) above), the amount of such excess, plus or
minus
(g) any adjustments or reserves (including any adjustments for
minimum cash balance requirements,
<PAGE>
15
including cash reserves for accrued or withheld Taxes not yet due) in the
amounts and for the time periods established and approved by the Board of
Managers pursuant to a vote in accordance with Section 8.07(b).
"Distribution Date" has the meaning set forth in Section 5.01(a).
-----------------
"Distributions Calculation Statement" has the meaning set forth in
-----------------------------------
Section 5.01(c).
"EBITDA" means for any period:
------
(a) net income, plus
(b) to the extent deducted in computing such net income, the sum of
(i) estimated or actual Federal, state, local and foreign income tax
expense, (ii) interest expense, (iii) depreciation, depletion and
amortization expense, (iv) non-cash charges resulting from the cumulative
effect of changes in accounting principles, and (v) non-cash lower of cost
or market inventory or fixed asset writedowns; minus
(c) to the extent added in computing such net income, (i) any interest
income (excluding interest income on accounts receivable related to
marketing programs), (ii) non-cash gains resulting from the cumulative
effect of changes in accounting principles and (iii) non-cash lower of cost
or market inventory or fixed asset gains;
all as determined on a consolidated basis (x) in the case of any period ended
prior to the Closing Date, Marathon and its subsidiaries or Ashland and its
subsidiaries, as applicable, or (y) in the case of any period ending on or after
the Closing Date, with respect to the Company and its subsidiaries, in each case
in accordance with then Current GAAP. For purposes of this definition,
depreciation, depletion and amortization expense will include any gains
(deductions from depreciation, depletion and amortization) or losses (additions
to depreciation, depletion and amortization) on asset retirements and excess
purchase price amortization adjustments. For the avoidance of doubt,
<PAGE>
16
EBITDA shall not include any revenues or expenses constituting Member-Funded
Capital Expenditures or Member-Indemnified Expenditures.
"Executive Officers" has the meaning set forth in Section 9.01(a).
------------------
"Final Monetary Amount" has the meaning set forth in Section 14.03(a).
---------------------
"Financed Properties" means each of the properties listed in Schedule
-------------------
1.01.
"Fiscal Quarter" means the three-month period ended March 31, June 30,
--------------
September 30 and December 31 of each Fiscal Year.
"Fiscal Year" has the meaning set forth in Section 6.05.
-----------
"Fuelgas Interest" means the 1% interest in the Company which is owned
----------------
by Fuelgas.
"GAAP" means United States generally accepted accounting principles
----
applied on a consistent basis.
"Garyville Propylene Upgrade Project" means the propylene splitter
-----------------------------------
with a capacity of approximately 800 million pounds per year that is being
constructed at the Garyville refinery for the production of propylene.
"Historical EBITDA" means for any period ending prior to the Closing
-----------------
Date the sum of:
(a) EBITDA of the Marathon Business for such period as adjusted for
each of the "EBIT Adjustment" items set forth in lines 10-55 of Schedule B-
1 and each of the "Depreciation Adjustment" items set forth in lines 133
through 150 of Schedule B-1, in each case calculated for such period in the
same manner that such adjustments were calculated in Schedule B-1, plus
(b) EBITDA of the Ashland Business for such period as adjusted for
each of the "EBIT Adjustment"
<PAGE>
17
items set forth in lines 11-56 of Schedule B-2 and each of the
"Depreciation Adjustment" items set forth in lines 111-120 of Schedule B-2,
in each case calculated for such period in the same manner that such
adjustments were calculated in Schedule B-2;
all determined on a consolidated basis with respect to Marathon and its
subsidiaries or Ashland and its subsidiaries, as applicable, in accordance with
then Current GAAP.
"Initial GAAP" has the meaning set forth in Section 1.02.
------------
"Initial Term" has the meaning set forth in Section 2.03.
------------
"Maralube Express Business" has the meaning set forth in Section
-------------------------
14.03(d)(i) of the Put/Call, Registration Rights and Standstill Agreement.
"Marathon Crude Oil Purchase Program" has the meaning set forth in
-----------------------------------
Section 8.12.
"Marathon Designated Sublease Agreements" shall mean the Marathon
---------------------------------------
Sublease Agreements attached as Exhibits E-1, E-2 and E-3 to the Asset Transfer
and Contribution Agreement.
"Marathon-Funded Capital Expenditures" has the meaning set forth in
------------------------------------
Section 4.02(a).
"Material Adverse Effect" has the meaning set forth in the Asset
-----------------------
Transfer and Contribution Agreement.
"Member-Funded Capital Expenditures" has the meaning set forth in
----------------------------------
Section 4.02(a).
"Member-Indemnified Expenditures" has the meaning set forth in Section
-------------------------------
4.02(b).
"Monetary Dispute" has the meaning set forth in Section 14.01(a).
----------------
<PAGE>
18
"Non-Contracting Member" has the meaning set forth in Section 8.11(b).
----------------------
"Non-Delinquent Member" has the meaning set forth in Section 14.01.
---------------------
"Non-Terminating Member" has the meaning set forth in the Put/Call,
----------------------
Registration Rights and Standstill Agreement.
"Normal Annual Capital Budget Amount" means, for each Fiscal Year, an
-----------------------------------
amount equal to the sum of:
(i) an amount equal to 130% of the Average Annual DD&A for such
Fiscal Year, plus
(ii) if, with respect to any Fiscal Year, (a) the Average Adjusted
EBITDA for such Fiscal Year less the amount calculated pursuant to clause
(i) above for such Fiscal Year exceeds (b) $240 million (such excess, the
"Excess EBITDA" for such Fiscal Year), the sum of (1) the lesser of: (x)
--------------
10% of the Average Annual DD&A for such Fiscal Year and (y) the Excess
EBITDA for such Fiscal Year and (2) 50% of the amount by which the Excess
EBITDA for such Fiscal Year exceeds an amount equal to 10% of the Average
Annual DD&A for such Fiscal Year.
An example of the calculation of Adjusted DD&A, Adjusted EBITDA, Average Annual
DD&A, Average Adjusted EBITDA and the Normal Annual Capital Budget Amount is
shown in Schedule A. In the event of any inconsistency between such Schedule A
and the language of this definition of Normal Annual Capital Budget Amount,
neither shall control over the other.
"Offer Notice" has the meaning set forth in Section 10.04(a).
------------
"Ordinary Course Debt" means, without duplication, the aggregate
--------------------
outstanding principal amount of all loans and advances under any committed or
uncommitted credit facilities (including any commercial paper borrowings or
borrowings under the Revolving Credit Agreement, but excluding trade payables),
provided that Ordinary Course
- --------
<PAGE>
19
Debt shall not include any Permitted Intercompany Debt, any Special Project
Indebtedness or any Permitted Catlettsburg Capital Project Indebtedness.
"Ordinary Course Lease Expense" means, with respect to any Fiscal
-----------------------------
Year, the rental or lease expense for such Fiscal Year of assets rented or
financed by operating leases (as determined in accordance with Applicable GAAP).
"Original Lease" means the lease or charter underlying a Marathon
--------------
Designated Sublease Agreement or an Ashland Designated Sublease Agreement in
which Marathon or Ashland, as applicable, is the lessee or charterer.
"Other Critical Decision" means each of the Level III decisions set
-----------------------
forth in paragraphs 2(c)(iii), (v), (vii), (viii) and (ix) of the Retail
Integration Protocol.
"Packaged Motor Oil Business" has the meaning set forth in Section
---------------------------
14.03(h) of the Put/Call, Registration Rights and Standstill Agreement.
"Percentage Interest" has the meaning set forth in Section 3.01.
-------------------
"Permitted Catlettsburg Capital Project Indebtedness" has the meaning
---------------------------------------------------
set forth in the Company Leverage Policy.
"Permitted Catlettsburg Capital Projects" has the meaning set forth in
---------------------------------------
the Company Leverage Policy.
"Permitted Intercompany Debt" has the meaning set forth in the Company
---------------------------
Leverage Policy.
"Price Index" means the Consumer Price Index for All Urban Consumers
-----------
of the United States Department of Labor Bureau of Labor Statistics for all
Urban Areas (on the 1982-84 equals 100 standard).
"Primary Critical Decision" means each of the Level III decisions set
-------------------------
forth in paragraphs 2(c)(i), (ii), (iv) and (vi) of the Retail Integration
Protocol.
<PAGE>
20
"Prime Rate" means the rate of interest per annum publicly announced
----------
from time to time by Citibank, NA, as its prime rate in effect at its principal
office in New York; each change in the Prime Rate shall be effective on the date
such change is publicly announced as being effective.
"Private Label Packaged Motor Oil Business" has the meaning set forth
-----------------------------------------
in Section 14.03(h) of the Put/Call Registration Rights and Standstill
Agreement.
"Profit and Loss", as appropriate, means, for any period, the taxable
---------------
income or tax loss of the Company and its subsidiaries under Code Section 703(a)
and Treasury Regulation Section 1.703-1 for the Fiscal Year, adjusted as
follows:
(a) All items of income, gain, loss or deduction required to be
separately stated pursuant to Code Section 703(a)(1) shall be included;
(b) Tax exempt income as described in Code Section 705(a)(1)(B)
realized by the Company during such Fiscal Year shall be taken into account
as if it were taxable income;
(c) Expenditures of the Company described in Code Section
705(a)(2)(B) for such Fiscal Year, including items treated under Treasury
Regulation Section 1.704-1(b)(2)(iv)(i) as items described in Code Section
705(a)(2)(B), shall be taken into account as if they were deductible items;
(d) With respect to any property (other than money) which has been
contributed to the capital of the Company, "Profit" and "Loss" shall be
computed in accordance with the provisions of Treasury Regulation Section
1.704-1(b)(2)(iv)(g) by computing depreciation, amortization, income, gain,
loss or deduction based upon the fair market value of such property at the
date of contribution;
(e) With respect to any property of the Company which has been
revalued as required or permitted by Treasury Regulations under Code
Section 704(b),
<PAGE>
21
"Profit" or "Loss" shall be determined based upon the fair market value of
such property as determined in such revaluation; and
(f) With respect to any property of the Company which (i) is
distributed in kind to a Member, or (ii) has been revalued under Section
6.03 upon the occurrence of any event specified in Treasury Regulation
Section 1.704-1(b)(2)(iv)(f), the difference between the adjusted basis for
federal income tax purposes and the fair market value shall be treated as
gain or loss upon the disposition of such property.
"Qualified Candidate" has the meaning set forth in Section 9.02(c).
-------------------
"Quick Lube Business" has the meaning set forth in Section 14.03(h) of
-------------------
the Put/Call, Registration Rights and Standstill Agreement.
"Refundable Amount" has the meaning set forth in Section 14.03(d).
-----------------
"Representatives" has the meaning set forth in Section 8.01
---------------
"Response" has the meaning set forth in Section 13.02.
--------
"Retail Integration Protocol" means the Speedway SuperAmerica LLC
---------------------------
Retail Integration Protocol attached hereto as Exhibit A.
"Revolving Credit Agreement" has the meaning set forth in Section
--------------------------
2.2(a) of the Master Formation Agreement.
"Section 8.11(b) Affiliate Transaction" has the meaning set forth in
-------------------------------------
Section 8.11(b).
"Security Interest" has the meaning set forth in Section 14.05(a).
-----------------
"Selling Member" has the meaning set forth in Section 10.04(a).
--------------
<PAGE>
22
"Senior Manager" has the meaning set forth in Section 13.02.
--------------
"Shared Service" means an administrative service that is provided to
--------------
the Company or its subsidiaries by Marathon, Ashland or any of their respective
Affiliates pursuant to the Shared Services Agreement or provided to Marathon,
Ashland or any of their respective Affiliates by the Company or its subsidiaries
pursuant to the Shared Services Agreement.
"Shared Services Agreement" means the Shared Services Agreement by and
-------------------------
among Marathon, Ashland and the Company, including the Schedules thereto,
attached as Exhibit U to the Asset Transfer and Contribution Agreement.
"Short-Term Investments" means, without duplication, collected or
----------------------
available bank cash balances, the fair market value of any investment made by
the Company or any of its subsidiaries pursuant to the Company's Investment
Guidelines and the fair market value of any investment made by the Company or
any of its subsidiaries that should have been made pursuant to the Company's
Investment Guidelines, but excluding Incidental Cash and any cash balances that
represent uncollected funds.
"Significant Shared Service" means (a) any Shared Service related to
--------------------------
the Treasury and Cash Management function and (b) any Shared Service (or group
of related Shared Services) that results or is reasonably anticipated to result
in the payment by or to the Company or any of its subsidiaries of more than $2
million in any contract year in the period during which such Shared Service will
be provided. For purposes of determining whether the $2 million threshold of
this definition has been satisfied, payments for all Shared Services in each of
the following general administrative areas shall be aggregated within each area
specified below and considered related Shared Services: Human Resources; Health,
Environment and Safety; Law; Public Affairs; Governmental Affairs; Finance and
Accounting (including Internal Audit); Administrative Services; Information
Technology Services; Procurement; Business Development; Aviation; Engineering
and Technology; Economics; and Security.
<PAGE>
23
"Sole Arbitrator" has the meaning set forth in Appendix B.
---------------
"Special Project" has the meaning set forth in the Company Leverage
---------------
Policy.
"Special Project Indebtedness" has the meaning set forth in the
----------------------------
Company Leverage Policy.
"Special Termination Right" has the meaning set forth in Section
-------------------------
2.01(a) of the Put/Call, Registration Rights and Standstill Agreement.
"Subleased Property" has the meaning set forth in Section 4.01(c).
------------------
"Super Majority Decision" has the meaning set forth in Section 8.08.
-----------------------
"Surplus Cash" has the meaning assigned to such term in the Company
------------
Leverage Policy.
"Tax Distribution Amount" has the meaning set forth in Section
-----------------------
5.01(a).
"Tax Liability" means, with respect to a Fiscal Year, a Member's
-------------
liability for Federal, state, local and foreign taxes attributable to taxable
income allocated to such Member pursuant to Section 6.03 and Section 10.03,
taking into account any Tax deduction or loss specifically allocated to a Member
pursuant to this Agreement or any other Transaction Document.
"Term of the Company" has the meaning set forth in Section 2.03.
-------------------
"Terminating Member" has the meaning set forth in Section 2.01(a) of
------------------
the Put/Call, Registration Rights and Standstill Agreement.
"Unaudited Financial Statements" has the meaning set forth in Section
------------------------------
7.02(a).
<PAGE>
24
"Valvoline Business" has the meaning set forth in Section 14.03(h) of
------------------
the Put/Call, Registration Rights and Standstill Agreement.
SECTION 1.02. Applicable GAAP. In connection with the calculation
----------------
pursuant to this Agreement of Adjusted DD&A, Capital Expenditures or Ordinary
Course Lease Expenses, the determination of whether a lease is a Capital Lease
or the determination of whether the Company has entered into an operating lease
for purposes of Section 8.16 (each such calculation or determination, an
"Accounting Determination"), the Company shall apply then Current GAAP;
- -------------------------
provided, however, that if at any time after the date of this Agreement, a
- -------- -------
change shall occur in GAAP which would result in any Accounting Determination
being different under Current GAAP than such Accounting Determination would have
been under GAAP as in effect on the date of this Agreement ("Initial GAAP"),
------------
then (a) the Members shall negotiate in good faith to make such amendments to
the relevant provisions of this Agreement as shall be required to preserve the
economic and other results intended by the Members as of the date of this
Agreement with respect to such Accounting Determination and (b) unless and until
such time as the Members shall in good faith mutually agree to such amendments,
Initial GAAP shall be applied to make such Accounting Determination or, if the
Members shall have previously amended the relevant provisions of this Agreement
pursuant to this Section 1.02 in response to a prior change in GAAP, then GAAP
as in effect at the time the most recent such previous amendment was made shall
be used to make such Accounting Determination (the GAAP that is actually applied
by the Company in making any such Accounting Determination pursuant to this
Agreement being the "Applicable GAAP").
---------------
ARTICLE II
General Provisions
------------------
SECTION 2.01. Formation; Effectiveness. The Company has been formed
-------------------------
as a limited liability company pursuant to the provisions of the Delaware Act by
the filing of the Certificate of Formation with the Secretary of State of the
State of Delaware. Pursuant to Section 18-201(d) of
<PAGE>
25
the Delaware Act, the provisions of this Agreement shall be effective as of the
Closing Date. Each Member hereby adopts, confirms and ratifies the Certificate
of Formation and all acts taken in connection therewith. Ashland shall be
admitted as a member of the Company upon its execution and delivery of this
Agreement. Except as provided in this Agreement, the rights, duties,
liabilities and powers of the Members shall be as provided in the Delaware Act.
SECTION 2.02. Name. The name of the Company shall be Marathon
-----
Ashland Petroleum LLC. The Board of Managers may adopt such trade or fictitious
names as it may determine.
SECTION 2.03. Term. Subject to the provisions of Article XIV
-----
providing for early termination in certain circumstances and the provisions of
Article IX of the Put/Call, Registration Rights and Standstill Agreement, the
initial term of the Company (the "Initial Term") began on the date the
------------
Certificate of Formation was filed with the Secretary of State of the State of
Delaware, and shall continue until the close of business on December 31, 2022
and, thereafter, the term of the Company shall be automatically extended for
successive 10-year periods unless at least two years prior to the end of the
Initial Term or any succeeding 10-year period, as applicable, a Member notifies
the Board of Managers and the other Member in writing that it wants to terminate
the term of the Company at the end of the Initial Term or such 10-year period,
in which event, the term of the Company shall not thereafter be extended for a
successive ten-year term. The President of the Company shall notify each Member
in writing at least six months prior to each such two-year notification date
that the Term of the Company will be automatically extended unless a Member
provides a notice to the contrary pursuant to this Section 2.03. The failure of
the President of the Company to give such notice, or any defect in any notice so
given, shall not affect the Members' rights to terminate the Term of the Company
pursuant to this Section 2.03, and shall not result in a termination of the Term
of the Company unless a Member provides a notice to the contrary pursuant to
this Section 2.03. The Initial Term, together with any such extensions, is
hereinafter referred to as the "Term of the Company". The existence of the
-------------------
Company as a separate
<PAGE>
26
legal entity shall continue until the cancelation of the Certificate of
Formation in the manner provided in the Delaware Act.
SECTION 2.04. Registered Agent and Office. The name of the
----------------------------
registered agent of the Company for service of process on the Company in the
State of Delaware is The Corporation Trust Company, and the address of the
registered agent and the address of the office of the Company in the State of
Delaware is c/o The Corporation Trust Company, 1209 Orange Street, Wilmington,
Delaware 19801. The Board of Managers may change such office and such agent
from time to time in its sole discretion.
SECTION 2.05. Purpose. (a) The purpose of the Company is to engage
--------
in any lawful act or activity for which a limited liability company may be
formed under the Delaware Act (either directly or indirectly through one or more
subsidiaries). It is the Members' understanding and intent that (i) the Company
will be an independent, self-funding entity, (ii) no additional capital
contributions are expected to be required by the Members and (iii) the
administrative requirements of the Company will generally be provided by the
Company's own employees. In furtherance of this understanding and intent, and
without limiting the generality of the foregoing, unless the Members shall
mutually agree otherwise, the following administrative functions and services
shall be provided substantially by the Company and its subsidiaries' employees
(or by its unaffiliated third party contractors) under the supervision and
control of the Company's officers: Human Resources; Health, Environment and
Safety; Law; Finance and Accounting; Internal Audit; Treasury and Cash
Management; and Information Technology. For the avoidance of doubt, the Members
acknowledge and agree that the provision at any time of the specific Shared
Services identified and described in Schedule 10.2(e) to the Marathon Asset
Transfer and Contribution Agreement Disclosure Letter and Schedule 10.2(e) to
the Ashland Asset Transfer and Contribution Agreement Disclosure Letter to the
Company and its subsidiaries by the Members shall not be deemed to violate the
requirements of the immediately preceding sentence.
<PAGE>
27
(b) The Company, and the President on behalf of the Company, may
enter into and perform the Transaction Documents and the Commercial Documents to
which the Company is a party without any further act, vote or approval of the
Board of Managers or the Members notwithstanding any other provision of this
Agreement, the Delaware Act or other Applicable Law. The President of the
Company is hereby authorized to enter into such Transaction Documents and such
Commercial Documents on behalf of the Company, but such authorization shall not
be deemed a restriction on the power of the Board of Managers to enter into
other agreements on behalf of the Company.
SECTION 2.06. Powers. In furtherance of its purposes, but subject to
-------
all the provisions of this Agreement, the Company shall have the power and is
hereby authorized to:
(a) acquire by purchase, lease, contribution of property or
otherwise, own, operate, hold, sell, convey, transfer or dispose of any
real or personal property which may be necessary, convenient or incidental
to the accomplishment of the purpose of the Company;
(b) act as a trustee, executor, nominee, bailee, director, officer,
agent or in some other fiduciary capacity for any person or entity and to
exercise all the powers, duties, rights and responsibilities associated
therewith;
(c) take any and all actions necessary, convenient or appropriate as
trustee, executor, nominee, bailee, director, officer, agent or other
fiduciary, including the granting or approval of waivers, consents or
amendments of rights or powers relating thereto and the execution of
appropriate documents to evidence such waivers, consents or amendments;
(d) borrow money and issue evidences of indebtedness in furtherance
of any or all of the purposes of the Company, and secure the same by
<PAGE>
28
mortgage, pledge or other lien on the assets of the Company;
(e) invest any funds of the Company pending distribution or payment
of the same pursuant to the provisions of this Agreement;
(f) prepay in whole or in part, refinance, recast, increase, modify
or extend any Indebtedness of the Company and, in connection therewith,
execute any extensions, renewals or modifications of any mortgage or
security agreement securing such Indebtedness;
(g) enter into, perform and carry out contracts of any kind,
including, without limitation, contracts with any person or entity
affiliated with any of the Members, necessary to, in connection with,
convenient to, or incidental to the accomplishment of the purposes of the
Company;
(h) employ or otherwise engage employees, managers, contractors,
advisors, attorneys and consultants and pay reasonable compensation for
such services;
(i) enter into partnerships, limited liability companies, trusts,
associations, corporations or other ventures with other persons or entities
in furtherance of the purposes of the Company; and
(j) do such other things and engage in such other activities related
to the foregoing as may be necessary, convenient or incidental to the
conduct of the business of the Company, and have and exercise all of the
powers and rights conferred upon limited liability companies formed
pursuant to the Delaware Act.
ARTICLE III
Members
-------
SECTION 3.01. Members; Percentage Interests. The names and addresses
------------------------------
of the Members and their respective
<PAGE>
29
percentage interests in the Company ("Percentage Interests") are as follows:
--------------------
Percentage
Members Interests
------- -----------
Marathon Oil Company 62%
5555 San Felipe
P.O. Box 3128
Houston, TX 77056-2723
Ashland Inc. 38%
P.O. Box 391
Ashland, KY 41114
Marathon's Percentage Interest shall be deemed to include the Fuelgas Interest.
Promptly after the Closing, Marathon will cause Fuelgas to merge with and into
Marathon.
SECTION 3.02. Adjustments in Percentage Interests. Marathon's and
------------------------------------
Ashland's Percentage Interests, and the Percentage Interests of each other
Member, if any, shall be adjusted (a) at the time of any Transfer of such
Member's Membership Interests pursuant to Section 10.02 and (b) at the time of
the admission of each new Member pursuant to such terms and conditions as the
Board of Managers from time to time shall determine pursuant to a vote in
accordance with Section 8.07(b), in each case to take into account such Transfer
or admission of a new Member.
ARTICLE IV
Capital Contributions;
----------------------
Assumption of Assumed Liabilities
---------------------------------
SECTION 4.01. Contributions. (a) On or before the Closing Date,
--------------
Marathon shall contribute, convey, transfer, assign and deliver to the Company
or shall have contributed, conveyed, transferred, assigned and delivered to the
Company, the Marathon Transferred Assets, and Ashland shall contribute, convey,
transfer, assign and deliver to the Company or shall have contributed, conveyed,
transferred, assigned and delivered to the Company, the
<PAGE>
30
Ashland Transferred Assets, in each case pursuant to terms and conditions of the
Asset Transfer and Contribution Agreement. In addition, any additional assets
that Marathon or Ashland are required to contribute, convey, transfer, assign
and deliver to the Company at a later date pursuant to the terms and conditions
of the Asset Transfer and Contribution Agreement shall be so contributed at such
later date.
(b) The Company shall assume, as of the Closing Date, the Assumed
Liabilities pursuant to the terms of the Asset Transfer and Contribution
Agreement.
(c) Payments or Damages under Designated Sublease Agreements as
-----------------------------------------------------------
Contributions. (i) Each Member has agreed, pursuant to the Designated Sublease
- --------------
Agreements to which it is a party, to sublease to the Company or one of its
subsidiaries the assets or property listed on Schedule 4.01(c) ("Subleased
---------
Property") for a nominal consideration in lieu of transferring such property to
- --------
the Company or such subsidiary, free of any Liens, other than Permitted
Encumbrances, as a capital contribution.
(A) If at any time after the date of this Agreement a Member in its
capacity as a sublessor shall become the owner of any Subleased Property,
such Member shall promptly contribute, convey, transfer, assign and deliver
to the Company (or, if the Company so directs, to one of its subsidiaries)
at no cost to the Company or such subsidiary, and the Company hereby agrees
to accept, or to cause such subsidiary to accept, such Subleased Property
and the related Designated Sublease Agreement shall be terminated with
respect to such Subleased Property, all as more specifically set forth in
such Designated Sublease Agreement. In addition, if at any time after the
date of this Agreement a Member assigns to the Company (or a subsidiary of
the Company) a purchase option with respect to a Subleased Property
pursuant to a Designated Sublease Agreement and the Company or such
subsidiary exercises such purchase option and pays all or a portion of the
purchase price therefor, such Member shall promptly reimburse the Company
or such subsidiary such amount so paid and, if not so reimbursed, such
amount shall be subject to
<PAGE>
31
set-off pursuant to Section 14.04. Any such payment by the Company shall
be treated as a distribution to the appropriate Member for capital account
purposes, and any such amount paid to the Company or such subsidiary by a
Member in connection with such reimbursement obligation, or to the extent
of a set-off applied pursuant to Section 14.04 as a result of such failure
to so reimburse, shall be treated as a capital contribution to the Company.
(B) Any amount paid by the Company or any of its subsidiaries under a
Designated Sublease Agreement to cure or prevent a payment default by the
sublessor Member under the underlying Original Lease shall be reimbursed to
the Company or such subsidiary by such Member, and if not so reimbursed,
shall be subject to set-off pursuant to Section 14.04. Any such payment by
the Company shall be treated as a distribution to the appropriate Member
for capital account purposes, and any such amount paid to the Company or
such subsidiary by a Member in connection with a default of its payment
obligations under its respective Designated Sublease Agreements, or to the
extent of a set-off applied pursuant to Section 14.04 as a result of such
default, shall be treated as a capital contribution to the Company.
(C) None of the capital contributions pursuant to (A) and (B) above
shall result in any adjustment to the Members' respective Percentage
Interests in the Company.
(ii) If (A) a Member commences a voluntary case under any applicable
bankruptcy, insolvency, liquidation, receivership, reorganization or other
similar law now in effect, or an order for relief is entered against such Member
in an involuntary case under any such law and (B) a trustee of such Member
rejects a Designated Sublease Agreement of such Member, then (1) the Member
shall be obligated to reimburse the Company for the Loss to the Company as a
result of such rejected Designated Sublease Agreement, which Loss, if not so
reimbursed, shall be subject to set-off pursuant to Section 14.04 prior to the
interest of such Member in any distributions hereunder and
<PAGE>
32
(2) the amount of such Loss shall be deemed to be the loss of use of such
Subleased Property for the economic life thereof rather than any other period.
SECTION 4.02. Additional Contributions. (a) Member-Funded Capital
------------------------- ---------------------
Expenditures. For each Capital Expenditure project identified on Schedule
- -------------
4.02(a)-1, Marathon shall contribute to the Company the amount of funds
necessary to comply with its obligations under Section 7.1(j) of the Asset
Transfer and Contribution Agreement with respect to such Capital Expenditure
project as, when and if the Company actually incurs Capital Expenditures related
to such Capital Expenditure project (such Capital Expenditures, as, when and if
they are funded by Marathon, are referred to herein as the "Marathon-Funded
---------------
Capital Expenditures"). For each Capital Expenditure project identified on
- --------------------
Schedule 4.02(a)-2, Ashland shall contribute to the Company the amount of funds
necessary to comply with its obligations under Section 7.2(k) of the Asset
Transfer and Contribution Agreement with respect to such Capital Expenditure
project as, when and if the Company actually incurs Capital Expenditures related
to such Capital Expenditure project (such Capital Expenditures, as, when and if
they are funded by Ashland, are referred to herein as the "Ashland-Funded
--------------
Capital Expenditures", and together with the Marathon-Funded Capital
- --------------------
Expenditures, the "Member-Funded Capital Expenditures"). Each Member-Funded
----------------------------------
Capital Expenditure shall be treated as a capital contribution to the Company,
but shall not result in any adjustment to the Members' respective Percentage
Interests in the Company. To the extent permitted by applicable Tax law, any
Tax deduction by the Company of a Member-Funded Capital Expenditure shall be
specially allocated so that each Member will have the Tax benefit of its Member-
Funded Capital Expenditures.
(b) Indemnification Payments as Contributions. Any indemnity amount
------------------------------------------
paid by Marathon or Ashland to the Company under Article IX of the Asset
Transfer and Contribution Agreement (each a "Member-Indemnified Expenditure")
------------------------------
shall be treated as a capital contribution to the Company, but shall not result
in any adjustment to the Members' respective Percentage Interests in the
Company. A determination of whether the associated Loss will be deducted or
capitalized by the Company for Tax purposes
<PAGE>
33
shall be made by the Company at the direction of the Indemnifying Party. Any
Tax deduction or loss claimed by the Company with respect to the indemnified
amount shall be specially allocated to the Indemnifying Party.
(c) Other Additional Capital Contributions. The Members shall make
---------------------------------------
other additional capital contributions ("Agreed Additional Capital
-------------------------
Contributions") pro rata based on their respective Percentage Interests if and
--- ----
to the extent such capital contributions are approved by the Board of Managers
pursuant to a vote in accordance with Section 8.07(b).
(d) No Third-Party Beneficiaries. The provisions of this Agreement,
-----------------------------
including without limitation, this Section 4.02, are intended solely to benefit
the Members and, to the fullest extent permitted by Applicable Law, shall not be
construed as conferring any benefit upon any creditor of the Company other than
the Members, and no such creditor of the Company other than the Members shall be
a third-party beneficiary of this Agreement, and no Member or member of the
Board of Managers shall have any duty or obligation to any creditor of the
Company to issue any call for capital pursuant to this Agreement.
SECTION 4.03. Negative Balances; Withdrawal of Capital; Interest.
---------------------------------------------------
Neither of the Members shall have any obligation to the Company or to the other
Member to restore any negative balance in its Capital Account. Neither Member
may withdraw capital or receive any distributions from the Company except as
specifically provided herein. No interest shall be paid by the Company on any
capital contributions.
ARTICLE V
Distributions
-------------
SECTION 5.01. Distributions. (a) Within 45 days after the end of
--------------
each Fiscal Quarter, the Company shall
<PAGE>
34
distribute to the Members (the date of such distribution being a "Distribution
------------
Date") an amount in cash (the "Tax Distribution Amount") determined as follows:
- ---- -----------------------
(i) The maximum Tax Liability of each Member with respect to its
allocable portion (as provided in Section 6.03) of the Company's estimated
taxable income for such Fiscal Quarter shall be determined, based upon the
highest aggregate marginal statutory Federal, state and local income tax
rate (determined taking into account the deductibility, to the extent
allowed, of income-based taxes paid to governmental entities) to which any
Member may be subject for the related Fiscal Year (and excluding any
deferred taxes) (the "Aggregate Tax Rate").
------------------
(ii) If the Tax Liability determined in clause (i) is positive with
respect to either Member, there shall be a cash distribution to each of the
Members, in accordance with their Percentage Interests, of an aggregate
amount such that neither Member shall receive less than its Tax Liability.
(iii) In the event that the Tax Liability with respect to a Fiscal
Quarter, determined pursuant to clause (i) above, is negative with respect
to each Member, such negative Tax Liability shall not give rise to a
payment obligation on the part of either Member, but shall be carried
forward and shall offset the positive Tax Liability of the Members in
succeeding Fiscal Quarters.
(iv) Following a determination by the Company of the Company's actual
net taxable income with respect to a Fiscal Year, the maximum Tax Liability
of each Member with respect to its allocable portion (as provided in
Section 6.03) of the Company's net taxable income for such Fiscal Year
shall be determined, based upon the Aggregate Tax Rate. If the maximum Tax
Liability of any Member for the Fiscal Year is in excess of the cash
distributions previously made to the Member for such Fiscal Year under
clause (ii) above and subsection (b) below, the Company shall make a cash
distribution to all the Members, in accordance with their Percentage
<PAGE>
35
Interests, of an aggregate amount such that the excess is eliminated for
all the Members. Such distribution shall be made within 45 days of the
date the Company's actual net taxable income is determined.
(v) In the event that the Company Independent Auditors determine
pursuant to Section 7.02(d) that the Company's actual net taxable income
with respect to a Fiscal Year is greater than the amount determined by the
Company pursuant to clause (iv) above, the Company shall make a
determination of the amount of cash, if any, required to be distributed to
the Members, in accordance with their Percentage Interests, such that,
after taking into account cash distributions previously made to a Member
under clause (ii) above and subsection (b) below, no Member shall receive
less than its Tax Liability for such Fiscal Year based on such higher net
taxable income amount. The Company shall, within 15 days after the
determination is made, distribute such additional amount of cash to the
Members, in accordance with their Percentage Interests.
(vi) In the event that the Company Independent Auditors determine
pursuant to Section 7.02(d) that the Company's actual net taxable income
with respect to a Fiscal Year is less than the amount determined by the
Company pursuant to clause (iv) above, a determination shall be made of the
excess Tax Distribution Amount that was distributed to the Members in
respect of such Fiscal Year based on the Company's determination of its
actual net taxable income and the Company shall deduct from the next Tax
Distribution Amount payable to the Members pursuant to this Section 5.01,
the amount of such excess distribution.
(b) In addition to the distributions pursuant to Section 5.01(a), on
each Distribution Date, the Company shall distribute to the Members all
Distributable Cash for the Fiscal Quarter to which such Distribution Date
relates. Subject to Section 5.02(b), each such distribution shall be allocated
between the Members pro rata based upon their respective Percentage Interests.
--- ----
<PAGE>
36
(c) The Company shall prepare and distribute to each Member within 45
days after the end of each Fiscal Quarter a statement (a "Distributions
-------------
Calculation Statement") setting forth the calculations (in reasonable detail)
- ---------------------
used by the Company for purposes of distributions pursuant to this Section 5.01
of (i) the Tax Distribution Amount for each Member for such Fiscal Quarter, (ii)
the amount of Distributable Cash for such Fiscal Quarter and (iii) the
allocation of such Distributable Cash between the Members.
SECTION 5.02. Certain General Limitations. (a) Notwithstanding any
----------------------------
provision to the contrary contained in this Agreement, the Company, and the
Board of Managers on behalf of the Company, shall not be required to make a
distribution to either Member with respect to such Member's Membership Interests
if such distribution would violate Section 18-607 of the Delaware Act or other
applicable law.
(b) Notwithstanding any other provision of this Article V, all
amounts distributed to the Members in connection with a dissolution of the
Company or the sale or other disposition of all or substantially all the assets
of the Company that results in a dissolution of the Company shall be distributed
to the Members in accordance with their respective Capital Account balances, as
adjusted pursuant to Article VI for all Company operations up to and including
the date of such distribution.
SECTION 5.03. Distributions in Kind. The Company shall not
----------------------
distribute to the Members any assets in kind unless approved by the Board of
Managers pursuant to a vote in accordance with Section 8.07(b). If cash and
property in kind are to be distributed simultaneously, the Company shall
distribute such cash and property in kind in the same proportion to each Member,
unless otherwise approved by the Board of Managers pursuant to a vote in
accordance with Section 8.07(b). For purposes of determining amounts
distributable to Members under Section 5.01, for purposes of determining Profit
and Loss under Section 1.01, for purposes of making adjustments to Capital
Accounts under Article VI and for purposes of allocations under Article VI, any
property to be distributed in kind shall have the value assigned to such
property by the Board of Managers pursuant
<PAGE>
37
to a vote in accordance with Section 8.07(b) and such value shall be deemed to
be part of and included in Distributable Cash for purposes of determining
distributions to the Members under this Agreement.
SECTION 5.04. Distributions in the Event of an Exercise of the
------------------------------------------------
Marathon Call Right, Ashland Put Right or the Special Termination Rights. In
- -------------------------------------------------------------------------
the event of an exercise by Marathon of its Marathon Call Right or its Special
Termination Right or the exercise by Ashland of its Ashland Put Right or its
Special Termination Right pursuant to the Put/Call, Registration Rights and
Standstill Agreement, certain distributions to Ashland or Marathon, as
applicable, will be suspended in accordance with the provisions of Section 5.01
thereof.
ARTICLE VI
Allocations and Other Tax Matters
---------------------------------
SECTION 6.01. Maintenance of Capital Accounts.
--------------------------------
An account (a "Capital Account") shall be established and maintained in the
---------------
Company's books for each Member in accordance with Treasury Regulation Section
1.704-1(b)(2)(iv) and to which the following provisions apply to the extent not
inconsistent with such Regulation:
(a) There shall be credited to each Member's Capital Account (i) the
amount of money contributed by such Member to the Company (including
liabilities of the Company assumed by such Member as provided in Treasury
Regulation Section 1.704-1(b)(2)(iv)(c)), (ii) the fair market value of any
property contributed by the Member to the Company (net of liabilities
secured by such contributed property that the Company is considered to
assume or take subject to under Code Section 752), and (iii) such Member's
share of the Company's Profit;
(b) There shall be debited from each Member's Capital Account (i) the
amount of money distributed to such Member by the Company (including
liabilities of
<PAGE>
38
such Member assumed by the Company as provided in Treasury Regulation
Section 1.704-1(b)(2)(iv)(c)) other than amounts which are in repayment of
debt obligations of the Company to such Member, (ii) the fair market value
of property distributed to such Member (net of liabilities secured by such
property that such Member is considered to assume or take subject to under
Code Section 752), and (iii) such Member's share of the Company's Loss;
(c) To each Member's Capital Account there shall be credited, in the
case of an increase, or debited, in the case of a decrease, such Member's
share of any adjustment to the adjusted basis of Company assets pursuant to
Code Section 734(b) or Code Section 743(b) to the extent provided by
Treasury Regulation Section 1.704-(b)(2)(iv)(m); and
(d) Upon the transfer of all or any part of the Membership Interests
of a Member, the Capital Account of the transferee Member shall include the
portion of the Capital Account of the transferor Member attributable to
such transferred Membership Interest (or portion thereof).
SECTION 6.02. Allocation of Profit and Loss. (a) Except as provided
------------------------------
in Section 6.02(b), Profit or Loss for any Fiscal Year shall be allocated
between the Members in proportion to their respective Percentage Interests.
(b) To the extent any Tax deduction or loss is specifically allocated
to a Member pursuant to this Agreement (other than pursuant to Section 6.03) or
any other Transaction Document, including any deduction or loss indemnified by a
Member, any Member-Funded Capital Expenditure, any Member-Indemnified
Expenditure and any special allocations pursuant to Sections 6.12, 6.13 and
6.14, the associated Profit and Loss shall be allocated to the same Member.
SECTION 6.03. Tax Allocations. For income tax purposes only, each
----------------
item of income, gain, loss, deduction and credit of the Company shall be
allocated between the Members in accordance with their respective shares of
Profit
<PAGE>
39
and Loss, subject to the rules of Section 704(c)(1)(A) of the Code and the
Treasury Regulations promulgated thereunder. The allocation of income, gain,
loss and deduction with respect to property contributed by a Member to the
Company shall be pursuant to the method set forth in Treasury Regulation Section
1.704-3(c) (traditional method with curative allocations), with book
depreciation (as that term is used in Treasury Regulation Section 1.704-
1(b)(2)(iv)(g)(3)) for assets fully depreciated for federal income tax purposes
based on the applicable recovery period (as determined in Code Section 168(c))
for new assets of the same type. Any other elections or other decisions
relating to allocations under this Section 6.03, including the determination of
the fair market value of contributed property and the decision to adjust the
Capital Accounts to reflect the fair market value of the Company's assets upon
the occurrence of any event specified in Treasury Regulation Section 1.704-
1(b)(2)(iv)(f), shall be made jointly by the Members in any manner that
reasonably reflects the purpose and intention of this Agreement. Items
described in this Section 6.03 shall neither be credited nor charged to the
Members' Capital Accounts.
SECTION 6.04. Entity Classification. The Members intend that the
----------------------
Company be treated as a partnership for Federal income tax purposes.
Accordingly, neither the Tax Matters Partner nor either Member shall file any
election or return on its own behalf or on behalf of the Company that is
inconsistent with that intent.
SECTION 6.05. Fiscal Year. The fiscal year (the "Fiscal Year") of
------------ -----------
the Company for tax and accounting purposes shall be the 12-month (or shorter)
period ending on the last day of December of each year.
SECTION 6.06. Tax Returns. (a) The Company shall cause to be
------------
prepared and timely filed all Federal, state, local and foreign income tax
returns and reports required to be filed by the Company and its subsidiaries.
The Company shall provide copies of all the Company's Federal, state, local and
foreign tax returns (and any schedules or other required filings related to such
returns) that reflect items of income, gain, deduction, loss or credit that flow
to separate Member returns, to the Members
<PAGE>
40
for their review and comment prior to filing, except as otherwise agreed by the
Members. The Members agree in good faith to resolve any difference in the tax
treatment of any item affecting such returns and schedules. However, if the
Members are unable to resolve the dispute, the position of the Tax Matters
Partner shall be followed if nationally recognized tax counsel acceptable to
both Members provides an opinion that substantial authority exists for such
position. Substantial authority shall be given the meaning ascribed to it in
Code Section 6662. If the Members are unable to resolve the dispute prior to
the due date for filing the return, including approved extensions, the position
of the Tax Matters Partner shall be followed, and amended returns shall be filed
if necessary at such time the dispute is resolved. The costs of the dispute
shall be borne by the Company. The Members agree to file their separate Federal
income tax returns in a manner consistent with the Company's return, the
provisions of this Agreement and in accordance with applicable Federal income
tax law.
(b) The Company shall elect the most rapid method of depreciation and
amortization allowed under Applicable Law, unless the Members agree otherwise.
The failure of either Member to agree that the Company should elect a less rapid
method of depreciation or amortization is not subject to any dispute resolution
provisions.
(c) The Members shall provide each other with copies of all
correspondence or summaries of other communications with the Internal Revenue
Service or any state, local or foreign taxing authority (other than routine
correspondence and communications) regarding the tax treatment of the Company's
operations. No Member shall enter into settlement negotiations with the
Internal Revenue Service or any state, local or foreign taxing authority with
respect to any issue concerning the Company's income, gains, losses, deductions
or credits if the tax adjustment attributable to such issue (assuming the then
current Aggregate Tax Rate) would be $2 million or greater, without first giving
reasonable advance notice of such intended action to the other Member.
SECTION 6.07. Tax Matters Partner. (a) Initially, Marathon shall be
--------------------
the "Tax Matters Partner"
<PAGE>
41
of the Company within the meaning of Section 6231(a)(7) of the Code, and shall
act in any similar capacity under state, local or foreign law, but only with
respect to returns for which items of income, gain, loss, deduction or credit
flow to the separate returns of the Members. In the event of a transfer of any
Member's interest in the Company, the Tax Matters Partner shall be the Member
with the largest Percentage Interest following such transfer.
(b) The Tax Matters Partner shall incur no liability (except as a
result of the gross negligence or willful misconduct of the Tax Matters Partner)
to the other Member including, but not limited to, liability for any additional
taxes, interest or penalties owed by the other Member due to adjustments of
Company items of income, gain, loss, deduction or credit at the Company level.
SECTION 6.08. Duties of Tax Matters Partner. (a) Except as provided
------------------------------
in Section 6.08(b), the Tax Matters Partner shall cooperate with the other
Member and shall promptly provide the other Member with copies of notices or
other materials from, and inform the other Member of discussions engaged in
with, the Internal Revenue Service or any state, local or foreign taxing
authority and shall provide the other Member with notice of all scheduled
administrative proceedings, including meetings with agents of the Internal
Revenue Service or any state, local or foreign taxing authority, technical
advice conferences, appellate hearings, and similar conferences and hearings, as
soon as possible after receiving notice of the scheduling of such proceedings,
but in any case prior to the date of such scheduled proceedings.
(b) The duties of the Tax Matters Partner under Section 6.08(a) shall
not apply with respect to notices, materials, discussions, proceedings,
meetings, conferences, or hearings involving any issue concerning the Company's
income, gains, losses, deductions or credits if the tax adjustment attributable
to such issue (assuming the then current Aggregate Tax Rate) would be less than
$2 million except as otherwise required under Applicable Law.
(c) The Tax Matters Partner shall not extend the period of
limitations or assessments without the consent of
<PAGE>
42
the other Member, which consent shall not be unreasonably withheld.
(d) The Tax Matters Partner shall not file a petition or complaint in
any court, or file any claim, amended return or request for an administrative
adjustment with respect to partnership items, after any return has been filed,
with respect to any issue concerning the Company's income, gains, losses,
deductions or credits if the tax adjustment attributable to such issue (assuming
the then current Aggregate Tax Rate) would be $2 million or greater, unless
agreed by the other Member. If the other Member does not agree, the position of
the Tax Matters Partner shall be followed if nationally recognized tax counsel
acceptable to both Members issues an opinion that a reasonable basis exists for
such position. Reasonable basis shall be given the meaning ascribed to it for
purposes of applying Code Section 6662. The costs of the dispute shall be borne
by the Company.
(e) The Tax Matters Partner shall not enter into any settlement
agreement with the Internal Revenue Service or any state, local or foreign
taxing authority, either before or after any audit of the applicable return is
completed, with respect to any issue concerning the Company's income, gains,
losses, deductions or credits, unless any of the following apply:
(i) both Members agree to the settlement;
(ii) the tax effect of the issue if resolved adversely would be, and the tax
effect of settling the issue is, proportionately the same for both Members
(assuming each otherwise has substantial taxable income);
(iii) the Tax Matters Partner determines that the settlement of the issue is
fair to both Members and the amount of the tax adjustment attributable to such
issue (assuming the then current Aggregate Tax Rate) would be less than $2
million; or
(iv) nationally recognized tax counsel acceptable to both Members determines
that the settlement is fair to both Members and is one it would recommend to the
Company if both
<PAGE>
43
Members were owned by the same person and each had substantial taxable income.
In all events, the costs incurred by the Tax Matters Partner in performing its
duties hereunder shall be borne by the Company in accordance with the Shared
Services Agreement.
(f) The Tax Matters Partner may request extensions to file any tax
return or statement without the written consent of, but shall so inform, the
other Member.
SECTION 6.09. Survival of Provisions. The provisions of this
-----------------------
Agreement regarding the Company's tax returns and Tax Matters Partner shall
survive the termination of the Company and the transfer of any Member's interest
in the Company and shall remain in effect for the period of time necessary to
resolve any and all matters regarding the federal, state, local and foreign
taxation of the Company and items of Company income, gain, loss, deduction and
credit.
SECTION 6.10. Section 754 Election. In the event that a Member
---------------------
purchases the Membership Interests of a Selling Member pursuant to Section
10.04, the purchasing Member shall have the right to direct the Tax Matters
Partner to make an election under Section 754 of the Code. The purchasing Member
shall pay all costs incurred by the Company in connection with such election,
including any costs borne by the Company to maintain records required as a
result of such election. The purchasing Member, at its option and expense, may
maintain on behalf of the Company any records required as a result of such
election.
SECTION 6.11. Qualified Income Offset, Minimum Gain Chargeback.
-------------------------------------------------
Notwithstanding anything to the contrary in this Agreement, there is hereby
incorporated a qualified income offset provision which complies with Treasury
Regulation Section 1.704-1(b)(2)(ii)(d) and minimum gain chargeback and partner
minimum gain chargeback provisions which comply with the requirements of
Treasury Regulation Section 1.704-2 and such provisions shall apply to the
allocation of Profits and Losses.
<PAGE>
44
SECTION 6.12. Tax Treatment of Designated Sublease Agreements. (a)
------------------------------------------------
For purposes of Article VI, Ashland or Marathon, as the case may be, shall be
treated as transferring to the Company all of its interest in Subleased Property
pursuant to an Ashland Designated Sublease Agreement or a Marathon Designated
Sublease Agreement, as if the leasehold interest in such Subleased Property was
an Ashland Transferred Asset or a Marathon Transferred Asset.
(b) Payments under the Original Lease made by Ashland or Marathon, as
the case may be, after the effective date of the Ashland Designated Sublease
Agreement or Marathon Designated Sublease Agreement, as the case may be, shall
be treated as made by the Company or its subsidiaries, and then immediately
reimbursed by Ashland or Marathon, as the case may be.
(c) All items of loss, deduction and credit attributable to payments
under the Original Lease made by Ashland or Marathon, as the case may be,
including payments by the Company or any of its subsidiaries that are charged to
Ashland or Marathon by set-off or other means, shall be allocated entirely to
the Member incurring such payments.
(d) Depreciation and amortization deductions, if any, as well as any
deductions or offsets to taxable income or gain, attributable to property
described in the Ashland Designated Sublease Agreements or the Marathon
Designated Sublease Agreements, as the case may be, shall be allocated entirely
to Ashland or Marathon, as the case may be, except to the extent such deductions
or offsets are attributable to amounts paid by the Company or any of its
subsidiaries and not reimbursed by Ashland or Marathon, as the case may be,
either directly or indirectly.
SECTION 6.13. Tax Treatment of Reimbursed Liability Payments. Any
-----------------------------------------------
tax deduction or loss attributable to payments by the Company or any of its
subsidiaries of Assumed Liabilities, as described in Schedules 2.3(d) and 3.3(d)
to the Asset Transfer and Contribution Agreement, that are reimbursed by a
Member either directly or indirectly, shall be allocated entirely to such
Member.
<PAGE>
45
SECTION 6.14. Tax Treatment of Disproportionate Payments. Except as
-------------------------------------------
otherwise provided in this Agreement or in any other Transaction Document, any
Tax deduction or loss reflected on a Tax return, report or other Tax filing by
the Company, attributable to (i) payments made or costs incurred by a Member,
(ii) payments made or costs incurred by the Company and reimbursed or to be
reimbursed by a Member and (iii) payments made or costs incurred by the Company
and not shared among the Members based on their Percentage Interests, shall be
allocated among the Members to take into account the amounts paid, incurred,
reimbursed or shared by each.
ARTICLE VII
Books and Records
-----------------
SECTION 7.01. Books and Records; Examination. The Board of Managers
-------------------------------
shall keep or cause to be kept such books of account and records with respect to
the Company's business as they may deem appropriate. Each Member and its duly
authorized representatives shall have the right at any time to examine, or to
appoint independent certified public accountants (the fees of which shall be
paid by such Member) to examine, the books, records and accounts of the Company
and its subsidiaries, their operations and all other matters that such Member
may wish to examine, including, without limitation, all documentation relating
to actual or proposed transactions with either Member or any Affiliate of either
Member. The Company, and the Board of Managers, shall not have the right to
keep confidential from the Members any information that the Board of Managers
would otherwise be permitted to keep confidential from the Members pursuant to
Section 18-305(c) of the Delaware Act. The Company's books of account shall be
kept using the method of accounting determined by the Board of Managers. The
Company Independent Auditors (the "Company Independent Auditors") shall be an
----------------------------
independent public accounting firm selected by the Board of Managers pursuant to
a vote in accordance with Section 8.07(b) or Section 8.07(c), as applicable, and
shall initially be Price Waterhouse LLP.
<PAGE>
46
SECTION 7.02. Financial Statements and Reports. (a) Unaudited
--------------------------------- ---------
Monthly Financial Statements. (i) The Company shall prepare and send to each
- -----------------------------
Member (at the same time) promptly, but in no event later than noon on the 15th
Business Day after the last day of each month, the following unaudited financial
statements with respect to the Company and its subsidiaries: a balance sheet, a
statement of operations, a statement of cash flows and a statement of changes in
capital (collectively, "Unaudited Financial Statements") as at the end of and
------------------------------
for such month.
(ii) The Company shall prepare and send to each Member promptly, but
in no event later than noon on the 20th Business Day after the last day of each
month, an unaudited financial summary booklet containing a breakdown of such
operating and financial information by major department or division of the
Company and its subsidiaries as at the end of and for such month as either
Member shall reasonably request; provided that each Member shall be provided
--------
with the same information at the same time as the other Member.
(b) Unaudited Quarterly Financial Statements. The Company shall
-----------------------------------------
prepare and send to each Member (at the same time) promptly, but in no event
later than the 30th day after the last day of each Fiscal Quarter, (i) Unaudited
Financial Statements as at the end of and for such Fiscal Quarter; (ii) a
management's discussion and analysis of financial condition and results of
operations section prepared in accordance with Rule 303 of Regulation S-K of the
Securities Act with respect to such Fiscal Quarter; and (iii) an unaudited
statement of changes in the Members' capital accounts as at the end of and for
such Fiscal Quarter.
(c) Audited Annual Financial Statements. Within 75 days after the
------------------------------------
end of each Fiscal Year, the Board of Managers shall cause (i) an examination to
be made, at the expense of the Company, by the Company Independent Auditors,
covering (A) the assets, liabilities and capital of the Company and its
subsidiaries, and the Company's and its subsidiaries' operations during such
Fiscal Year, (B) an examination of the Distributions Calculation Statement for
such Fiscal Year, and (C) all other matters customarily included in such
examinations and (ii) to be delivered to
<PAGE>
47
each Member (at the same time) a copy of the report of such examination, stating
that such examination has been performed in accordance with generally accepted
auditing standards, together with (1) the following financial statements with
respect to the Company and its subsidiaries certified by such accountants as
having been prepared in accordance with GAAP: a balance sheet, a statement of
operations, a statement of cash flows and a statement of changes in capital as
at the end of and for such Fiscal Year (collectively, the "Audited Financial
-----------------
Statements") and (2) a management's discussion and analysis of financial
- ----------
condition and results of operations section prepared in accordance with Rule 303
of Regulation S-K of the Securities Act with respect to such Fiscal Year. The
Company shall prepare the Audited Financial Statements in such manner and form
as is necessary to enable Ashland to file such Audited Financial Statements with
the Commission in accordance with Item 3-09 of Regulation S-X under the Exchange
Act.
(d) Schedule of Members' Capital Accounts. (i) Preliminary Annual
-------------------------------------- ------------------
Capital Account Schedule. The Company shall prepare and send to each Member (at
- -------------------------
the same time) promptly, but in no event later than the 75th day after the last
day of each Fiscal Year, a schedule showing the respective Capital Accounts of
the Members based on the Company's estimated taxable income for such Fiscal
Year.
(ii) Examination. Within 15 days after the date the Company
------------
determines its net taxable income with respect to any Fiscal Year, but in no
event later than 7 months after the end of such Fiscal Year, the Board of
Managers shall cause (i) an examination to be made, at the expense of the
Company, by the Company Independent Auditors, covering (A) the determination of
the Company's taxable income with respect to such Fiscal Year and (B) the
respective Capital Accounts of the Members based on the Company's taxable income
for such Fiscal Year and (ii) to be delivered to each Member (at the same time)
a copy of the report of such examination, stating that such examination has been
performed in accordance with generally accepting auditing standards.
(iii) Final Annual Capital Account Schedule. The Company shall
--------------------------------------
prepare and send to each Member (at the same
<PAGE>
48
time) promptly, but in no event later than the 15th day after the date the
Company files its federal income tax return with respect to each Fiscal Year, a
schedule showing the respective Capital Accounts of the Members based on the
Company's actual taxable income for such Fiscal Year.
(e) Other Financial Information. The Company shall prepare and send
----------------------------
to each Member (at the same time) promptly such other financial information as a
Member shall from time to time reasonably request.
SECTION 7.03. Notice of Affiliate Transactions; Annual List. (a)
----------------------------------------------
(i) The Company shall notify each Member of any Affiliate Transaction (other
than an Affiliate Transaction that is a Significant Shared Service) that the
Company or any of its subsidiaries is considering entering into or renewing or
extending the term thereof (whether pursuant to contractual provisions thereof
or otherwise), which notice shall be given, to the extent reasonably possible,
sufficiently in advance of the time that the Company intends to enter into,
renew or extend the term of such Affiliate Transaction so as to provide the
Members with a reasonable opportunity to examine the documentation related to
such Affiliate Transaction.
(ii) The Company shall notify each Member of any Affiliate
Transaction that is a Significant Shared Service that the Company or any of its
subsidiaries is considering entering into or renewing or extending the term
thereof (whether pursuant to contractual provisions thereof or otherwise), which
notice shall be given, to the extent reasonably possible, sufficiently in
advance of the time that the Company intends to enter into, renew or extend the
term of such Affiliate Transaction so as to provide the Members with a
reasonable opportunity to examine the documentation related to such Affiliate
Transaction.
(b) Within 60 days after the end of each Fiscal Year, the Company
shall prepare and distribute to each Member a list setting forth a description
of each Affiliate Transaction entered into by the Company or any of its
subsidiaries during such Fiscal Year and identifying all of the parties to such
Affiliate Transactions; provided that if two or more Affiliate Transactions
--------
either (i) constitute a
<PAGE>
49
series of related transactions or agreements or (ii) are substantially the same
type of transaction or agreement, the Company need not separately describe each
such Affiliate Transaction but instead can describe such related or similar
Affiliated Transactions as a group.
ARTICLE VIII
Management of the Company
-------------------------
SECTION 8.01. Managing Members. The business and affairs of the
-----------------
Company shall be managed by the Members acting through their respective
representatives on the Board of Managers ("Representatives"). The President and
---------------
the Representatives shall be deemed "managers" of the Company within the meaning
of the Delaware Act. Except for such matters as may be delegated to a Member
from time to time by the Board of Managers pursuant to a vote in accordance with
Section 8.07(b), and subject to the provisions of Sections 6.07 and 6.08, no
Member shall act unilaterally on behalf of the Company or any of its
subsidiaries without the approval of the other Member and no Member shall have
the power unilaterally to bind the Company or any of its subsidiaries.
SECTION 8.02. Board of Managers. (a) The Members shall exercise
------------------
their management authority through a board of managers (the "Board of Managers")
-----------------
consisting of (i) the President of the Company, who shall not be deemed a
Representative hereunder and who shall not be entitled to vote on any matter
coming before the Board of Managers, and (ii) five Representatives, each of whom
shall be entitled to vote, three of whom shall be designated by Marathon and two
of whom shall be designated by Ashland. In the event of a Transfer by a Member
of its Membership Interests pursuant to Article X, effective at the time of such
Transfer, (i) such Member's Representatives shall automatically be removed from
the Board of Managers and (ii) the transferee of such Membership Interests shall
be permitted to designate the number of Representatives to the Board of Managers
as is equal to the number previously designated by the transferor of such
Membership Interests. Such transferee shall promptly notify the other Member as
to the names of the
<PAGE>
50
persons who such transferee has designated as its Representatives on the Board
of Managers.
(b) Each Representative may be removed and replaced, with or without
cause, at any time by the Member designating him or her, but, except as provided
in Section 8.02(a), may not be removed or replaced by any other means. A Member
who removes one or more of its Representatives from the Board of Managers shall
promptly notify the other Member as to the names of its replacement
Representatives.
SECTION 8.03. Responsibility of the Board of Managers. The Board of
----------------------------------------
Managers shall be responsible for overseeing the operations of the Company and
shall, in particular, have sole jurisdiction to approve each of the following
matters:
(i) hiring senior executives of the Company, evaluating their
performance and planning for their succession;
(ii) reviewing and approving Company strategies, Business Plans and
Annual Capital Budgets;
(iii) reviewing and approving significant external business
opportunities for the Company, including acquisitions, mergers and
divestitures;
(iv) reviewing and approving policies of the Company that maintain
high standards in areas of environmental responsibility, employee safety
and health, community, government, employee and customer relations;
(v) reviewing external and internal audits and management responses
thereto; and
(vi) establishing compensation and benefits policies for employees of
the Company.
SECTION 8.04. Meetings. (a) Except as set forth in Section 8.04(h),
---------
all actions of the Board of Managers
<PAGE>
51
shall be taken at meetings of the Board of Managers in accordance with this
Section 8.04.
(b) As soon as practicable after the appointment of the
Representatives, the Board of Managers shall meet for the purpose of
organization and the transaction of other business.
(c) Regular meetings of the Board of Managers shall be held at such
times as the Board of Managers shall from time to time determine, but no less
frequently than once each Fiscal Quarter; provided that an annual meeting of the
--------
Board of Managers (which annual meeting shall count as one of the regular
quarterly meetings) shall be held no later than June 30 of each Fiscal Year.
(d) Special meetings of the Board of Managers shall be held whenever
called by any Member. Any and all business may be transacted at a special
meeting that may be transacted at a regular meeting of the Board of Managers.
(e) The Board of Managers may hold its meetings at such place or
places as the Board of Managers may from time to time by resolution determine or
as shall be designated in the respective notices or waivers of notice thereof;
however, the Board of Managers shall consider holding meetings from time to time
at each of the Member's corporate headquarters and at the operational sites of
the Company.
(f) Notices of regular meetings of the Board of Managers or of any
adjourned meeting shall be given at least two weeks prior to such meeting,
unless otherwise agreed by each Member. Notices of special meetings of the
Board of Managers shall be mailed by the Secretary or an Assistant Secretary to
each member of the Board of Managers addressed to him or her at his or her
residence or usual place of business, so as to be received at least two Business
Days before the day on which such meeting is to be held, or shall be sent to him
or her by telegraph, cable, facsimile or other form of recorded communication or
be delivered personally, by overnight courier or by telephone so as to be
received not later than two Business Days before the day on which such meeting
is to be held. Such notice shall include
<PAGE>
52
the purpose, time and place of such meeting and shall set forth in reasonable
detail the matters to be considered at such meeting. However, notice of any
such meeting need not be given to any member of the Board of Managers if such
notice is waived by him or her in writing or by telegraph, cable, facsimile or
other form of recorded communication, whether before or after such meeting shall
be held, or if he or she shall be present at such meeting.
(g) Action by Communication Equipment. The members of the Board of
----------------------------------
Managers may participate in a meeting of the Board of Managers by means of video
or telephonic conferencing or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and such
participation shall constitute presence in person at such meeting.
(h) Unanimous Action by Written Consent. Any action required or
------------------------------------
permitted to be taken at any meeting of the Board of Managers may be taken
without a meeting if all the Representatives consent thereto in writing and such
writing is filed with the minutes of the proceedings of the Board of Managers.
(i) Organization. Meetings of the Board of Managers shall be
-------------
presided over by a chair, who will be a member of the Board of Managers selected
by a majority of the Board of Managers. The Secretary of the Company or, in the
case of his or her absence, any person whom the person presiding over the
meeting shall appoint, shall act as secretary of such meeting and keep the
minutes thereof.
SECTION 8.05. Compensation. Unless the Members otherwise agree, no
-------------
person shall be entitled to any compensation from the Company in connection with
his or her services as a Representative.
SECTION 8.06. Quorum. (a) Quorum for Super Majority Decisions.
------- ------------------------------------
Subject to Section 14.01(e) of the Put/Call, Registration Rights and Standstill
Agreement and Sections 14.01 and 14.05 and Section 5 of Schedule 8.14, at all
meetings of the Board of Managers, the quorum required for the transaction of
any business that constitutes a Super Majority Decision shall be the presence,
either in person or
<PAGE>
53
by proxy, of (i) at least one Representative of each Member and (ii) a majority
of all the Representatives on the Board of Managers (which may include the
Representatives referred to in the preceding clause (i)).
(b) Quorum for Other Decisions. Subject to Sections 14.01 and 14.05
---------------------------
and Section 5 of Schedule 8.14, at all meetings of the Board of Managers, the
quorum required for the transaction of any business that does not constitute a
Super Majority Decision shall be (i) in the case of all matters that were
described in the notice in reasonable detail for such meeting delivered to the
members of the Board of Managers pursuant to Section 8.04(f), the presence,
either in person or by proxy, of a majority of all the Representatives on the
Board of Managers and (ii) in the case of all matters that were not described in
the notice in reasonable detail for such meeting delivered to the members of the
Board of Managers pursuant to Section 8.04(f), the presence, either in person or
by proxy, of (A) at least one Representative of each Member and (B) a majority
of all the Representatives on the Board of Managers (which may include the
Representatives referred to in the preceding clause (A)).
(c) Rescheduled Meetings. The Company shall use its reasonable best
---------------------
efforts to schedule the time and place of each meeting of the Board of Managers
so as to ensure that a quorum will be present at each such meeting and that at
least one Representative of each Member will be present at each such meeting.
In the absence of a quorum at any such meeting or any adjournment or
adjournments thereof, a majority in voting interest of those present in person
or by proxy and entitled to vote thereat may reschedule such meeting from time
to time until the Representatives requisite for a quorum, as aforesaid, be
present in person or by proxy. At any such rescheduled meeting at which a
quorum is present, any business may be transacted that might have been
transacted at the meeting as originally called.
SECTION 8.07. Voting. (a) General. Each Representative shall be
------- --------
entitled to cast one vote on all matters coming before the Board of Managers.
In exercising their voting rights under this Agreement, the Representatives may
act by proxy.
<PAGE>
54
(b) Super Majority Decisions. Subject to Section 14.01(e) of the
-------------------------
Put/Call, Registration Rights and Standstill Agreement and Sections 14.01 and
14.05 and Section 5 of Schedule 8.14, all Super Majority Decisions to be decided
by the Board of Managers shall be approved by the unanimous affirmative vote of
the votes cast by the Representatives who are present, either in person or by
proxy, at a duly called meeting of the Board of Managers at which a quorum is
present. The parties acknowledge and agree that all references in this
Agreement, any other Transaction Document and any appendices, exhibits or
schedules hereto or thereto to any determination, decision, approval or other
form of authorization by the Board of Managers pursuant to a vote in accordance
with Section 8.07(b) shall be deemed to mean that such determination, decision,
approval or other form of authorization shall constitute a Super Majority
Decision which requires the approval of the Board of Managers in accordance with
this Section 8.07(b).
(c) Other Decisions. Subject to Sections 14.01 and 14.05 and Section
----------------
5 of Schedule 8.14, all matters other than Super Majority Decisions to be
decided by the Board of Managers shall be approved by the affirmative vote of a
majority of the votes cast by the Representatives who are present, either in
person or by proxy, at a duly called meeting of the Board of Managers at which a
quorum is present, unless the vote of a greater number of Representatives is
required by Applicable Law or this Agreement.
SECTION 8.08. Matters Constituting Super Majority Decisions. Subject
----------------------------------------------
to the provisions of Section 8.07(b), each of the following matters, and only
the following matters, shall constitute a "Super Majority Decision" which
-----------------------
requires the approval of the Board of Managers pursuant to Section 8.07(b):
(a) (i) the purchase or investment by the Company or any of its
subsidiaries of or in any assets or securities, or any group of assets
or securities, that have an aggregate purchase price or cost of more
than $20 million, if the purpose or effect of such purchase or
investment is to enable the
<PAGE>
55
Company to enter into a line of business other than (A) the Company's
Business as such Business is conducted on the Closing Date or (B) any
other line of business that is approved after the Closing Date by the
Board of Managers as a Super Majority Decision under this Section
8.08(a)(i) pursuant to a vote in accordance with Section 8.07(b),
provided that any such purchase or investment by the Company or any of
its subsidiaries shall not require a Super Majority Decision under
this Section 8.08(a) if and to the extent such purchase or investment
is being made to enable the Company to enter into the Bulk Motor Oil
Business, the Packaged Motor Oil Business, the Private Label Packaged
Motor Oil Business and/or the Quick Lube Business and, at the time of
such purchase or investment, (1) the Company and its subsidiaries are
permitted to engage in such business under Section 14.03(b) of the
Put/Call, Registration Rights and Standstill Agreement and (2) Ashland
and its Affiliates shall own (beneficially or otherwise) 20% or more
of the Valvoline Business (it being understood and agreed that this
proviso shall not limit or constitute an exception to any other
provision of Section 8.08); and
(ii) the determination of whether any new line of business approved by
the Board of Managers as a Super Majority Decision under Section
8.08(a)(i) should constitute a "Competitive Business" for purposes of
Section 14.01 of the Put/Call, Registration Rights and Standstill
Agreement;
(b) any reorganization, merger, consolidation or similar transaction
between the Company or any of its subsidiaries and any person (other than a
direct or indirect Wholly Owned Subsidiary of the Company) or any sale or
lease of all or substantially all of the Company's or any of its
subsidiaries' assets to any person (other than a direct or indirect Wholly
Owned Subsidiary of the Company);
<PAGE>
56
(c) the admission of a new Member (other than as a result of a
Transfer of an existing Member's Membership Interests pursuant to Article
X) or the issuance of any additional Membership Interests or other equity
interests to any person, including any existing Member;
(d) except as expressly provided in Sections 4.01(c), 4.02(a) and
4.02(b), the acceptance or requirement of any additional capital
contributions to the Company by either Member;
(e) the initial hiring of the following officers of the Company: the
President; the Executive Vice President; the officers principally in charge
of (i) refining, (ii) wholesale and branded marketing, (iii) retail
marketing (two initially), (iv) supply and transportation and (v)
environmental health and safety and human resources; the Senior Vice
President-Finance and Commercial Services of the Company; and the general
counsel of the Company;
(f) (i) the approval of Acquisition Expenditures, Capital Expenditures
and other expenditures included in the Annual Capital Budget for any
Fiscal Year (other than (A) Ordinary Course Lease Expenses, (B) up to
$100 million in the aggregate for all periods in Capital Expenditures
of the Company and its subsidiaries directly associated with the
Garyville Propylene Upgrade Project, (C) Member-Funded Capital
Expenditures, (D) Member-Indemnified Expenditures and (E) Capital
Expenditures of the Company and its subsidiaries directly associated
with Permitted Catlettsburg Capital Projects that are funded with
Permitted Catlettsburg Capital Project Indebtedness) that exceed the
Normal Annual Capital Budget Amount for such Fiscal Year; and
(ii) the incurrence of rentals or operating leases which result in
aggregate Ordinary Course Lease Expenses (other than Ordinary Course
Lease Expenses incurred under the Bareboat Charters) for any Fiscal
Year that exceed $80 million; provided, however, in the event the
-------- -------
Company or one of its
<PAGE>
57
subsidiaries shall make any acquisition or divestiture, the Members
shall negotiate in good faith to adjust the dollar amount set forth in
this Section 8.08(f)(ii) to take into account the effect of such
acquisition or divestiture;
(g) (i) except for any acquisition or capital project related to the
Bulk Motor Oil Business, the Packaged Motor Oil Business, the Private
Label Motor Oil Business and/or the Quick Lube Business, any
acquisition, divestiture or individual capital project (other than (i)
Ordinary Course Lease Expenses, (ii) up to $100 million in the
aggregate for all periods in Capital Expenditures of the Company and
its subsidiaries directly associated with the Garyville Propylene
Upgrade Project, (iii) Member-Funded Capital Expenditures, (iv)
Member-Funded Indemnified Expenditures and (v) Capital Expenditures of
the Company and its subsidiaries directly associated with Permitted
Catlettsburg Capital Projects that are funded with Permitted
Catlettsburg Capital Project Indebtedness) where the liability or
consideration involved is more than $50 million in the aggregate
(including contingent liabilities only to the extent required to be
reflected on the balance sheet of the Company in accordance with
Financial Accounting Standard Number 5 (or any successor or
superseding provision of Current GAAP));
(ii) any acquisitions or individual capital projects related to
the Bulk Motor Oil Business, the Packaged Motor Oil Business, the
Private Label Motor Oil Business and/or the Quick Lube Business during
any Fiscal Year where the liability or consideration involved is more
than $50 million in the aggregate in such Fiscal Year (including
contingent liabilities only to the extent required to be reflected on
the balance sheet of the Company in accordance with Financial
Accounting Standard Number 5 (or any successor or superseding
provision of Current GAAP)); provided that nothing in this Section
--------
8.08(g)(ii) shall be deemed or interpreted to permit the Company or
any of its
<PAGE>
58
subsidiaries to engage in any of such businesses except as and to the
extent expressly permitted under Section 14.03 of the Put/Call,
Registration Rights and Standstill Agreement;
(iii) for the avoidance of doubt, acquisitions or individual
capital projects related to the Maralube Express Business shall be
subject to clause (i) of this Section 8.08(g) and not clause (ii) of
this Section 8.08(g);
(h) the initiation or settlement of any action, suit, claim or
proceeding involving (i) an amount in excess of $50 million (with respect
to initiation) or $25 million (with respect to settlement), (ii) material
non-monetary relief (including, without limitation, entering into any
consent decree that has or could reasonably be expected to (A) impose any
material obligation on Ashland or any of its Affiliates or the Company or
any of its subsidiaries or (B) have a material adverse effect on the
business, operations, assets, liabilities, results of operations, cash
flows, condition (financial or otherwise) or prospects of Ashland or any of
its Affiliates or the Company or any of its subsidiaries) or (iii) the
initiation or settlement of any criminal action, suit, claim or proceeding
(other than a misdemeanor) if such criminal action, suit or proceeding has
or could reasonably be expected to (A) impose any material obligation on
Ashland or any of its Affiliates or (B) have a material adverse effect on
the business, operations, assets, liabilities, results of operations, cash
flows, condition (financial or otherwise) or prospects of Ashland or any of
its Affiliates;
(i) any change in the Company Independent Auditors unless the new firm
is one of the "Big Six" accounting firms (or any successor thereto) or a
firm of comparable stature in Ashland's opinion;
(j) any modification, alteration, amendment or termination of this
Agreement or any other Transaction Document to which the Company or any of
its subsidiaries is a party;
<PAGE>
59
(k) (i) in the case of any Affiliate Transaction that is not a Crude
Oil Purchase, a Significant Shared Service or a Designated Sublease
Agreement, (A) any Affiliate Transaction (other than the Affiliate
Transactions listed on Schedule 8.08(k)(i)(A) (the "Closing Date Affiliate
----------------------
Transactions")), (B) any material amendment to or change in the terms or
------------
provisions of any Affiliate Transaction that was either a Closing Date
Affiliate Transaction or previously approved by the Board of Managers
pursuant to Section 8.08(k)(i)(A) (it being understood that a renewal or
extension of the term of an Affiliate Transaction pursuant to contractual
provisions that were previously approved by the Board of Managers pursuant
to this Section 8.08(k)(i) or that were included in a Closing Date
Affiliate Transaction on the Closing Date shall be deemed for purposes of
this Agreement not to constitute a new Affiliate Transaction or a material
amendment to or change in an Affiliate Transaction) or (C) any amendment or
change in the terms or provisions of any agreement or transaction between
the Company or any of its subsidiaries and any Member or any Affiliate of
any Member which causes such agreement or transaction to become an
Affiliate Transaction;
(ii) in the case of Crude Oil Purchases, the approval of such Crude
Oil Purchases in accordance with Section 8.12(a);
(iii) in the case of any Significant Shared Service, (A) any agreement
or transaction constituting a Significant Shared Service (other than the
specific Significant Shared Services identified and described in Schedule
10.2(e) to the Asset Transfer and Contribution Agreement), (B) any material
amendment to or change in the terms and provisions of any Significant
Shared Service identified and described in Schedule 10.2(e) to the Asset
Transfer and Contribution Agreement or thereafter approved by the Board of
Managers in accordance with this Section 8.08(k)(iii), (C) subject to the
provisions of Section 8.11(b) and except as expressly provided in Section
8.12(b), any cancelation or failure by the Company or any of its
subsidiaries to
<PAGE>
60
renew any Significant Shared Service provided by Ashland or any Affiliate
of Ashland to the Company or any of its subsidiaries or provided by the
Company or any of its subsidiaries to Ashland or any Affiliate of Ashland
and (D) the periodic review and approval of Significant Shared Services in
accordance with Section 8.12(b); and
(iv) any material amendment to or change in the terms or provisions
of, cancelation, termination or failure to renew, any Designated Sublease
Agreement or any election by the Company to refuse or reject the
contribution of any Subleased Property to the Company or any of its
subsidiaries;
(l) the commencement of a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
the consent to the entry of an order for relief in an involuntary case
under any such law, or the consent to the appointment of or the taking
possession by a receiver, liquidator, assignee, custodian, trustee or
sequestrator (or similar official) of the Company or any of its
subsidiaries or for any substantial part of the Company's or any of its
subsidiaries' property, or the making of any general assignment for the
benefit of creditors;
(m) (i) the modification, alteration or amendment of the amount,
timing, frequency or method of calculation of distributions to the Members
from that provided in Article V or (ii) an adjustment to the amount of
Distributable Cash pursuant to clause (g) of the definition of
"Distributable Cash" in Section 1.01;
(n) (i) the modification, alteration or amendment of the Company
Leverage Policy, or (ii) the approval of any matter which the Company
Leverage Policy provides is to be approved by the Board of Managers as a
Super Majority Decision;
(o) (i) the approval of any distribution by the Company to the Members
of any assets in kind, (ii) the approval of any distribution by the Company
to the Members of cash and property in kind on a non-pro rata
<PAGE>
61
basis, and (iii) the determination of the value assigned to such assets in
kind;
(p) each Critical Decision or material amendment thereto made on or
prior to the Critical Decision Termination Date for such Critical Decision;
and
(q) the delegation to a Member of the power to unilaterally bind the
Company or any of its subsidiaries with respect to any matter.
SECTION 8.09. Annual Capital Budget. (a) In Fiscal Year 1999 and in
----------------------
each Fiscal Year thereafter, the Executive Officers of the Company shall timely
prepare or cause to be prepared a draft capital budget (the "Annual Capital
--------------
Budget") for such Fiscal Year, which shall set forth in reasonable line item
- ------
detail the proposed Acquisition Expenditures, Capital Expenditures and the
Ordinary Course Lease Expenditures of the Company and its subsidiaries for such
Fiscal Year, including all Ordinary Course Lease Expenditures and all Capital
Expenditures of the Company and its subsidiaries directly associated with the
Garyville Propylene Upgrade Project. In addition, to the extent that
information can reasonably be obtained on the nature of assets rented or
financed by operating leases, such information shall be presented along with the
Annual Capital Budget. Copies of the Annual Capital Budget shall be provided to
each Member (at the same time) and to the Board of Managers. No later than
November 15 of each Fiscal Year, the Executive Officers shall present to the
Board of Managers the Annual Capital Budget for their review, consideration and
approval, with such additions, deletions and changes thereto as the Board of
Managers shall deem necessary.
(b) If the Board of Managers shall fail to approve an Annual Capital
Budget for any Fiscal Year, the total expenditures provided for in the Annual
Capital Budget for such Fiscal Year shall be in an amount equal to the Normal
Annual Capital Budget Amount for such Fiscal Year.
(c) No later than July 15 of each Fiscal Year, the Board of Managers
shall review the Annual Capital Budget for such Fiscal Year and shall make such
additions,
<PAGE>
62
deletions and changes thereto as the Board of Managers shall deem necessary.
SECTION 8.10. Business Plan. In Fiscal Year 1999 and in each Fiscal
--------------
Year thereafter, the Executive Officers of the Company shall timely prepare or
cause to be prepared a draft business plan (the "Business Plan") for the next
-------------
three Fiscal Years. Copies of the Business Plan shall be provided to each
Member (at the same time) and to the Board of Managers. No later than November
15 of each Fiscal Year, the Executive Officers shall present to the Board of
Managers the Business Plan for their review, consideration and approval, with
such additions, deletions and changes thereto as the Board of Managers shall
deem necessary.
SECTION 8.11. Requirements as to Affiliate Transactions. (a) The
------------------------------------------
Company and its subsidiaries shall only be permitted to enter into or renew or
extend the term thereof (whether pursuant to contractual provisions thereof or
otherwise) an agreement or a transaction with a Member or an Affiliate of a
Member (which, solely for purposes of this Section 8.11, shall be deemed to
include any entity more than 10% of the voting stock or other ownership
interests of, or economic interest in, which is owned by a Member (other than
the Company or any of its subsidiaries)) on the same terms or on terms no less
favorable to the Company or such subsidiary than could be obtained from a third
party on an arm's-length basis (an "Arm's-Length Transaction").
------------------------
(b) (i) If (A) the Company or any subsidiary of the Company enters
into, renews or extends the term of (pursuant to contractual provisions thereof
that were previously approved by the Board of Managers or otherwise) or
materially amends or changes the terms or provisions of, any agreement or
transaction between the Company or any of its subsidiaries and any Member or any
Affiliate of any Member (a "Section 8.11(b) Affiliate Transaction") or proposes
-------------------------------------
to do any of the foregoing and (ii) not later than 90 days after receiving
written notice thereof from the Company pursuant to Section 7.03 or otherwise
(which notice describes the material terms and conditions of such transaction in
reasonable detail), the Member that is not (or whose Affiliate is not) a party
to such Section 8.11(b) Affiliate Transaction (the "Non-Contracting Member")
----------------------
<PAGE>
63
notifies the Company and the Member that is (or whose Affiliate is) a party to
such Section 8.11(b) Affiliate Transaction (the "Contracting Member") in writing
------------------
that the Non-Contracting Member believes in good faith that either such
Affiliate Transaction is not an Arm's-Length Transaction or that the quality of
the service being provided or to be provided by the Contracting Member is
inferior to that which the Company and its subsidiaries could otherwise obtain
on comparable terms and conditions, then the Company shall promptly (and, in any
event within 30 days) provide the Non-Contracting Member with a reasonably
detailed explanation of the basis for the Company's determination that such new,
renewed or extended Affiliate Transaction is an Arm's-Length Transaction or the
quality of the service being provided or to be provided to the Company and its
subsidiaries is not inferior.
(ii) If following receipt of such evidence, the Non-Contracting Member
is not reasonably satisfied that such Affiliate Transaction is an Arm's-Length
Transaction or the quality of the service being provided or to be provided to
the Company and its subsidiaries is not inferior, then, at the written request
of the Non-Contracting Member (such written request being an "Affiliate
---------
Transaction Dispute Notice"), the Company shall (A) modify the terms of such
- --------------------------
Affiliate Transaction so that it becomes an Arm's-Length Transaction, (B) if the
Company had given the Members written notice pursuant to Section 7.03(a) prior
to entering into, renewing or extending such Affiliate Transaction, not enter
into, renew or extend such Affiliate Transaction or (C) if the Company had given
the Members written notice pursuant to Section 7.03(a) prior to entering into,
renewing or extending such Affiliate Transaction, enter into, renew or extend
such Affiliate Transaction in which event the determination of whether such
Affiliate Transaction is an Arm's Length Transaction and/or whether the quality
of the service being provided is inferior shall be in accordance with the
Dispute Resolution Procedures set forth in Article XIII or (D) if the Company
shall not have given the Members written notice pursuant to Section 7.03(a)
prior to entering into, renewing or extending such Affiliate Transaction,
commence the dispute resolution procedures set forth in Article XIII.
<PAGE>
64
(iii) For purposes of Article XIII, a Non-Contracting Member's
delivery of an Affiliate Transaction Dispute Notice to the Company shall
constitute delivery of a Dispute Notice thereunder, and the Company shall be
required to deliver a Response to the Non-Contracting Member within 30 days
thereafter. If it is finally determined pursuant to such Dispute Resolution
Procedures that such Affiliate Transaction is an Arm's-Length Transaction and,
if disputed, that the quality of service being so provided is not inferior, then
the Company shall be permitted to enter into, renew or extend such Affiliate
Transaction. If it is finally determined pursuant to such Dispute Resolution
Procedures that such Affiliate Transaction is not an Arm's-Length Transaction or
that the quality of service being so provided is inferior, then the Company
shall either modify the terms of such Affiliate Transaction so that it becomes
an Arm's-Length Transaction and, if disputed, with an adequate level of quality
of service or not enter into, renew or extend such Affiliate Transaction. In
the event that such Affiliate Transaction has already been entered into, renewed
or extended, then (A) the Company and the Contracting Member shall make such
modifications to the terms of such Affiliate Transaction as are necessary so
that such Affiliate Transaction becomes an Arm's-Length Transaction and, if
disputed, with an adequate level of quality of service and (B) the Contracting
Member shall pay the Company an amount equal to the difference between (I) the
costs incurred by the Company under such Affiliate Transaction since the time of
such entering into, renewal or extension and (II) the costs that the Company
would have incurred under such Affiliate Transaction during such time period had
such Affiliate Transaction been an Arm's-Length Transaction and, if disputed,
with an adequate level of quality of service at the time of such initial
agreement, renewal or extension.
SECTION 8.12. Review of Certain Affiliate Transactions Related to
---------------------------------------------------
Crude Oil Purchases and Shared Services.
- ----------------------------------------
(a) (i) Not less than 30 days prior to the regular meeting of the
Board of Managers during the fourth Fiscal Quarter of each Fiscal Year (or,
if no regular meeting of the Board of Managers is scheduled during
<PAGE>
65
such Fiscal Quarter, at a special meeting of the Board of Managers during
such Fiscal Quarter), the Company shall submit to the Board of Managers a
reasonably detailed description of any proposed transactions or agreements
related to crude oil purchases by the Company and its subsidiaries from
Marathon or any Affiliate of Marathon that are intended to remain in effect
or to be put into effect during such next Fiscal Year (collectively, the
"Marathon Crude Oil Purchase Program"). Following such submission, the
------------------------------------
Company shall provide the Board of Managers promptly with such information
with respect to such Marathon Crude Oil Purchase Program and the Company's
other proposed crude oil purchases and policies for such next Fiscal Year
as any Representative shall reasonably request. At each such regular or
special meeting during the fourth Fiscal Quarter of each Fiscal Year, the
Board of Managers shall review such Marathon Crude Oil Purchase Program.
During such next Fiscal Year, the Company and its subsidiaries shall be
permitted to purchase crude oil from Marathon or any Affiliate of Marathon
only on the terms and conditions of the proposed transactions and
agreements submitted to and approved by the Board of Managers at such
regular or special meeting pursuant to a vote in accordance with Section
8.07(b) (the "Approved Marathon Crude Oil Purchase Program"). Any purchase
--------------------------------------------
(or group of related purchases) of crude oil by the Company or any of its
subsidiaries from Marathon or any Affiliate of Marathon during such Fiscal
Year that is an Affiliate Transaction for purposes of Section 8.08(k) and
is not made under or in accordance with the Approved Marathon Crude Oil
Purchase Program and any material amendment to or change in the Approved
Marathon Crude Oil Purchase Program during such Fiscal Year shall be made
only with the prior approval of the Board of Managers pursuant to a vote in
accordance with Section 8.07(b).
(ii) The Company shall prepare and send to each Member (at the same
time) promptly, but in no event later than the 30th day after the last day
of each Fiscal Quarter, (A) a summary of all Crude Oil Purchases during
such Fiscal Quarter, (B) a description of any amendments to, changes in or
deviations from the
<PAGE>
66
Approved Marathon Crude Oil Purchase Program in effect during such Fiscal
Quarter, (C) a description of any then known proposed amendments to,
changes in or deviations from the Approved Marathon Crude Oil Purchase
Program in effect during the remaining balance of the Fiscal Year and (D)
such other information with respect to purchases of crude oil by the
Company and its subsidiaries as either Member shall reasonably request.
(b)(i) All administrative services that Marathon, Ashland and each of
their respective Affiliates provide to the Company or any of its
subsidiaries, and that the Company and its subsidiaries provide to
Marathon, Ashland or any of their respective Affiliates, shall be pursuant
to the Shared Services Agreement. To the extent that there is a conflict
between the Shared Services Agreement, Schedule 10.2(e) to the Marathon
Asset Transfer and Contribution Agreement Disclosure Letter or Schedule
10.2(e) to the Ashland Asset Transfer and Contribution Agreement Disclosure
Letter, on the one hand, and this Agreement, on the other hand, this
Agreement shall control.
(ii) Not less than 90 days prior to each of the annual meetings of
the Board of Managers held in 2000, 2003 and every three years thereafter,
the Company shall submit to the Board of Managers the provisions of the
Shared Services Agreement that relate to each Significant Shared Service
then in effect or that is proposed to be put into effect. Following such
submission, the Company shall provide the Board of Managers promptly with
such information with respect to such Significant Shared Services and with
respect to any other Shared Services then being provided or proposed to be
provided as any Representative shall reasonably request. At each such
annual meeting, unless all the Representatives otherwise agree, the Board
of Managers shall review each such Significant Shared Service and shall
determine pursuant to a vote in accordance with Section 8.07(b) whether
such Significant Shared Service should be continued (or, in the case of any
proposed Significant Shared Service, put into effect). Unless the Board of
Managers
<PAGE>
67
approves pursuant to a vote in accordance with Section 8.07(b) the
continuation or effectiveness of a Significant Shared Service, the Shared
Service Agreement to the extent it relates to such Significant Shared
Service shall be terminated effective 90 days after such annual meeting or
at such later date as the Board of Managers shall specify pursuant to a
vote in accordance with Section 8.07(b) and the Company shall be deemed at
the time of such annual meeting to have given notice to the Member
providing or receiving (or whose Affiliate is providing or receiving) such
Significant Shared Service that the Company is terminating the Shared
Service Agreement with respect to such Significant Shared Service.
SECTION 8.13. Adjustable Amounts. Within 30 days following the date
-------------------
on which the United States Department of Labor Bureau of Labor Statistics for
all Urban Areas publishes the Price Index for the month of September of each
Fiscal Year commencing September, 1998, the Company shall determine whether the
Average Annual Level for the immediately preceding twelve-month period exceeds
the Base Level. If the Company determines that the Average Annual Level for
such twelve-month period exceeds the Base Level, then the Company shall increase
or decrease each of the dollar amounts set forth in this Agreement (other than
the $348 million and $346 million amounts set forth in the definition of
Adjusted DD&A, the $657 million, $600 million, $80 million, $20 million and
$12.4 million amounts set forth in the definition of Adjusted EBITDA, the $240
million amount set forth in the definition of "Normal Annual Capital Budget
Amount" in Section 1.01, the $100 million amount set forth in Section 8.08(f)(i)
and any dollar amount set forth in any Appendix, Exhibit or Schedule to this
Agreement, including Schedule 8.14) (each dollar amount that is adjusted
pursuant to this Section 8.13 being an "Adjustable Amount"), including, without
-----------------
limitation, the following amounts, to an amount calculated by multiplying the
relevant Adjustable Amount by a fraction whose numerator is the Average Annual
Level for such twelve-month period and whose denominator is the Base Level: (i)
the $100,000, $2 million and $25 million amounts set forth in the definition of
"Affiliate Transaction" and the $2 million amount set forth in the definition of
"Significant Shared Service" in each
<PAGE>
68
case in Section 1.01; (ii) the $2 million amount set forth in Section 6.06(c);
(iii) the $2 million amounts set forth in Sections 6.08(b), (d) and (e); (iv)
the $20 million amount set forth in Section 8.08(a)(i); (v) the $80 million
amount set forth on Section 8.08(f)(ii) (or such other dollar amount as shall be
agreed pursuant to the proviso to Section 8.08(f)(ii)); (vi) the $50 million
amount set forth in Section 8.08(g); (vii) the $50 million and $25 million
amounts set forth in Section 8.08(h)(i); and (viii) each $7.5 million amount set
forth in Section 14.01(a); provided that in no event shall any Adjustable Amount
--------
be decreased below the initial amount thereof set forth herein. Within five
Business Days after making such determinations, the Company shall distribute to
each Member a notice setting forth: (A) the amount by which the Average Annual
Level for such Fiscal Year exceeded the Base Level and (B) the calculations of
any adjustments made to the Adjustable Amounts pursuant to this Section 8.13.
Any adjustment made to the Adjustable Amounts pursuant to this Section 8.13
shall be effective as of January 1st of the next Fiscal Year.
SECTION 8.14. Company Leverage Policy. The leverage policy for the
------------------------
Company shall be the leverage policy set forth on Schedule 8.14, with such
modifications, alterations or amendments thereto as the Board of Managers shall
from time to time approve pursuant to a vote in accordance with Section 8.07(b)
(such leverage policy, as so modified, altered or amended, is referred to herein
as the "Company Leverage Policy").
-----------------------
SECTION 8.15. Company's Investment Guidelines.
--------------------------------
The Company's Senior Vice President-Finance and Commercial Services, Vice
President-Finance and Controller and Treasurer (or Treasury Manager) shall
constitute an Investment Policy Committee of the Company and shall establish
investment guidelines for the Company and its subsidiaries (such investment
guidelines, as they may be modified, altered or amended by such Investment
Policy Committee from time to time, are referred to herein as the "Company
-------
Investment Guidelines"). The initial Company Investment Guidelines is set forth
- ---------------------
on Schedule 8.15. The Company and its subsidiaries shall only make investments
that are permitted under the Company Investment Guidelines
<PAGE>
69
at the time of such investments. In addition, the Company and its subsidiaries
shall invest all Surplus Cash (after meeting daily cash requirements) in
accordance with the Company Investment Guidelines.
SECTION 8.16. Requirements as to Operating Leases. The Company and
------------------------------------
its subsidiaries shall not enter into any operating lease (as determined in
accordance with Applicable GAAP) if the purpose or intent of entering into such
operating lease is to circumvent the Company Leverage Policy or the super
majority voting requirement for Capital Expenditures of the Company set forth in
Section 8.08(f). The lease by the Company and its subsidiaries of vehicles,
railcars and computers in accordance with the historical practices of the
Ashland Business and the Marathon Business shall not be deemed to violate this
Section 8.16, provided, for the avoidance of doubt, that all Ordinary Course
Lease Expenses related to any such leases shall be considered Ordinary Course
Lease Expenses for the purposes of Section 8.08(f)(ii).
SECTION 8.17. Limitations on Actions Relating to the Calculation of
-----------------------------------------------------
Distributable Cash. Notwithstanding anything to the contrary contained in this
- -------------------
Agreement, the Company shall not, and shall cause its subsidiaries not to (a)
modify, alter or amend the Company Investment Guidelines, (b) accelerate the
payment of the Company's and its subsidiaries' accounts payable, (c) delay the
collection of the Company's and its subsidiaries' accounts receivable or (d)
take any other action, if the purpose or intent of such action is to reduce the
amount of Distributable Cash in a manner that is inconsistent with the intent of
the Members to maximize the amount of Distributable Cash distributions to the
Members.
SECTION 8.18. Reliance by Third Parties. Persons dealing with the
--------------------------
Company are entitled to rely conclusively upon the power and authority of the
Board of Managers herein set forth. Except as provided in this Agreement,
neither the President, nor a Representative, nor any Member shall have any
authority to bind the Company or any of its subsidiaries.
<PAGE>
70
SECTION 8.19. Integration of Retail Operations. (a) Until the
---------------------------------
Critical Decision is made regarding the location of the Company's retail
operations' headquarters, the Company's retail operations' business shall have
headquarters in both Enon, Ohio and Lexington, Kentucky.
(b)(i) The Company shall make a formal recommendation to the Board of
Managers with respect to each Critical Decision not later than the ten-month
anniversary of the Closing Date. Following receipt of a formal recommendation
with respect to any Critical Decision, Marathon and Ashland shall negotiate in
good faith to reach an agreement with respect to such Critical Decision not
later than the first anniversary of the Closing Date.
(ii) Each formal recommendation with respect to any Critical Decision
shall be accompanied by a report on the business and economic analyses used by
the Company to arrive at such recommendation, including but not limited to, a
reasonably detailed description of the risks and benefits of the recommended
decision and the anticipated impact of the recommended decision on the Speedway
and SuperAmerica brand images and business models.
(iii) Following receipt of any formal recommendation with respect to
any Critical Decision, each Member may request, and the Company shall promptly
provide to both Members, such additional information and analyses (including
studies by outside consultants) as such Member may reasonably request; provided,
--------
however, any additional information request shall not extend the Critical
- -------
Decision Termination Date.
(c) If any Primary Critical Decision shall not have been agreed by the
Board of Managers pursuant to a vote in accordance with Section 8.07(b) prior to
the first anniversary of the Closing Date, the Critical Decision Termination
Date with respect to such Primary Critical Decision shall be automatically, and
without any further action required by either Member, the Company or the Board
of Managers, extended until the fifteen-month anniversary of the Closing Date.
During the period of such extension, the Company shall provide promptly to each
Member such additional information or analyses (including studies by
<PAGE>
71
outside consultants) as either Member shall reasonably request. Not later than
30 days prior to the fifteen-month anniversary of the Closing Date, the Company
shall, if requested by either Member, again make a formal recommendation to the
Board of Managers with respect to such Primary Critical Decision. Such formal
recommendation shall include a report on the supporting business and economic
analyses described in Section 8.19(b)(ii). Any request for additional
information shall not extend the Critical Decision Termination Date.
(d) Until such time as the implementation of any Critical Decision
shall have been completed in all material respects, the President of the Company
shall report to the Board of Managers at each regular meeting of the Board of
Managers on the implementation of such Critical Decision and on any material
modifications or changes to such Critical Decision.
(e) To the extent there is any conflict between the terms and
provisions of this Agreement and the terms and provisions of the Retail
Integration Protocol, the terms and provisions of this Agreement shall control.
ARTICLE IX
Officers
--------
SECTION 9.01. (a) Election, Appointment and Term of Office. The
-----------------------------------------
executive officers of the Company (the "Executive Officers") shall consist
------------------
solely of: a President; an Executive Vice President; an officer principally in
charge of refining; an officer principally in charge of wholesale and branded
marketing; the officer or officers (two initially) principally in charge of
retail marketing; an officer principally in charge of supply and transportation;
an officer who shall be the Senior Vice President-Finance and Commercial
Services of the Company; and an officer who shall be the general counsel of the
Company. Schedule C sets forth a list of (i) the persons who Marathon and
Ashland have chosen to serve initially as the Executive Officers of the Company,
(ii) the executive office for which each such person is to serve and (iii)
whether
<PAGE>
72
each such person was designated by Marathon or Ashland. Marathon and Ashland
agree that the composition of the initial Executive Officers is intended to
reflect their respective Percentage Interests in the Company. Accordingly, if
any person identified on Schedule C is for any reason unable or unwilling to
serve as an Executive Officer at the Closing Date, the Member who designated
such person shall have the right to designate a substitute person, subject to
the right of the other Member to consent to such substitute nominee (which
consent shall not be unreasonably withheld). Marathon and Ashland shall cause
their respective Representatives to promptly approve the appointment of each
person listed on Schedule C to the related executive office position listed on
Schedule C.
(b) Except as otherwise determined by the Board of Managers, each
Executive Officer shall hold office until his or her death or until his or her
earlier resignation or removal in the manner hereinafter provided. Except as
otherwise expressly provided herein, the Executive Officers shall have such
powers and duties in the management of the Company as generally pertain to their
respective offices as if the Company were a corporation governed by the General
Corporation Law of the State of Delaware.
(c) The Board of Managers may elect or appoint such other officers to
assist and report to the Executive Officers as it deems necessary. Subject to
the preceding sentence, each such officer shall have such authority and shall
perform such duties as may be provided herein or as the Board of Managers may
prescribe. The Board of Managers may delegate to any Executive Officer the
power to choose such other officers and to prescribe their respective duties and
powers.
(d) Except as otherwise determined by the Board of Managers, if
additional officers are elected or appointed during the year pursuant to Section
9.01(c), each such officer shall hold office until his or her death or until his
or her earlier resignation or removal in the manner hereinafter provided.
SECTION 9.02. Resignation, Removal and Vacancies. (a) Any officer
-----------------------------------
may resign at any time by
<PAGE>
73
giving written notice to the President or the Secretary of the Company, and such
resignation shall take effect at the time specified therein or, if the time when
it shall become effective shall not be specified therein, when accepted by
action of the Board of Managers. Except as aforesaid, the acceptance of such
resignation shall not be necessary to make it effective.
(b) All officers and agents elected or appointed by the Board of
Managers shall be subject to removal at any time by the Board of Managers with
or without cause.
(c) Vacancies in all Executive Officer positions may only be filled
by the majority vote of the Representatives on the Board of Managers. In each
instance where a vacant Executive Officer position is to be filled, Marathon,
after consultation with the Company, shall first send Ashland a notice which
discloses the name and details of the candidate for the vacant Executive Officer
position that the Representatives of Marathon will nominate and vote in favor of
for such position. Ashland shall thereafter have the right, by notice to the
Company and Marathon within ten days after receipt of such notice from Marathon,
to veto such candidate. Each candidate that Marathon proposes for a vacant
Executive Officer position shall be a bona fide candidate who is willing and
able to serve and who Marathon in good faith believes is qualified to fill such
vacant Executive Officer position (a "Qualified Candidate"). In the event
-------------------
Ashland exercises its veto with respect to a Qualified Candidate, the vacancy
will be filled by the majority vote of the Representatives on the Board of
Managers.
SECTION 9.03. Duties and Functions of Executive Officers. (a)
------------------------------------------
President. The President of the Company, who shall be a non-voting member of
- ----------
the Board of Managers, shall be in charge of the day-to-day operations of the
Company and shall preside at all meetings of the Board of Managers and shall
perform such other duties and exercise such powers, as may from time to time be
prescribed by the Board of Managers.
(b) Executive Vice President. The Executive Vice President of the
-------------------------
Company initially shall report to the
<PAGE>
74
President and be the officer principally in charge of all supply, refining,
marketing and transportation operations of the Company other than the Company's
retail operations.
(c) Other Executive Officers. The Executive Officers of the Company
-------------------------
other than the President and the Executive Vice President shall perform such
duties and exercise such powers, as may from time to time be prescribed by the
President or the Board of Managers.
ARTICLE X
Transfers of Membership Interests
---------------------------------
SECTION 10.01. Restrictions on Transfers. (a) General. Except as
-------------------------- --------
expressly provided by this Article X, neither Member shall Transfer all or any
part of its Membership Interests to any person without first obtaining the
written approval of the other Member, which approval may be granted or withheld
in its sole discretion. Notwithstanding anything to the contrary contained in
this Agreement, no Transfer by a Member of its Membership Interests to any
person shall be made except to a permitted assignee under Article XV of the
Put/Call, Registration Rights and Standstill Agreement.
(b) Transfer by Operation of Law. In the event a Member shall be
-----------------------------
party to a merger, consolidation or similar business combination transaction
with a third party or sell all or substantially all its assets to a third party,
such Member may Transfer all (but not part) of its Membership Interests to such
third party; provided, however, that such Member shall not be permitted to
-------- -------
Transfer its Membership Interests to such third party as aforesaid if the
purpose or intent of such merger, consolidation, similar business combination
transaction or sale is to circumvent or avoid the application of Sections
10.01(c) and 10.04 to the Transfer of such Member's Membership Interests to such
third party.
(c) Transfer by Sale to Third Party. At any time after December 31,
--------------------------------
2002, a Member may sell all (but not part) of its Membership Interests (and, in
the case of
<PAGE>
75
Ashland, the Ashland LOOP/LOCAP Interest) to any person (other than a Transfer
by operation of law pursuant to Section 10.01(b), a Transfer to a Wholly Owned
Subsidiary pursuant to Section 10.01(d) or a Transfer by Ashland to Marathon
pursuant to Section 10.01(e)) if (i) it shall first have offered the other
Member the opportunity to purchase such Membership Interests (and, in the case
of Ashland, the Ashland LOOP/LOCAP Interest) pursuant to the right of first
refusal procedures set forth in Section 10.04, (ii) such sale is completed
within the time periods specified in Section 10.04, (iii) the other Member shall
have approved the purchaser of such Membership Interests (and, in the case of
Ashland, the Ashland LOOP/LOCAP Interest), which approval shall not be
unreasonably withheld or delayed and (iv) it shall use its commercially
reasonable best efforts to (A) terminate the outstanding Original Lease
underlying each of its Designated Sublease Agreements on or prior to the date of
such Transfer and (B) contribute the related Subleased Property to the Company
or one of its subsidiaries at no cost to the Company or such subsidiary on or
prior to the date of such Transfer; provided, however, that (i) such Member
-------- -------
shall not be obligated to pay more than a reasonable amount as consideration
therefor to, or make more than a reasonable financial accommodation in favor of,
or commence litigation against, a third party lessor with respect to any such
underlying Original Lease in order to obtain any consent required from such
lessor and (ii) any additional cost associated with exercising an option under
the Original Lease to purchase Subleased Property or to terminate the Original
Lease shall be deemed not to constitute an obligation to pay more than a
reasonable amount. In the event that such Member is unable to terminate an
outstanding Original Lease in accordance with this Section 10.02(b), then (i)
the Company shall be entitled to continue to sublease the Subleased Property
pursuant to the related Designated Sublease Agreement until the term of the
Original Lease expires, (ii) the Member shall continue to use its commercially
reasonable best efforts to terminate the Original Lease and contribute the
Subleased Property to the Company as provided above; provided, however that (A)
-------- -------
such Member shall not be obligated to pay more than a reasonable amount as
consideration therefor to, or make more than a reasonable financial
accommodation in favor of, or commence litigation against, a third party lessor
with respect to any
<PAGE>
76
such Original Lease in order to obtain any consent required from such lessor and
(b) any additional cost associated with exercising an option under the Original
Lease to purchase Subleased Property or to terminate the Original Lease shall be
deemed not to constitute an obligation to pay more than a reasonable amount and
(iii) if such Member subsequently acquires fee title to the Subleased Property,
such Member shall contribute such Subleased Property to the Company or one of
its subsidiaries at no cost to the Company or such subsidiary at such time. It
is expressly understood and agreed that, in determining whether to reasonably
withhold its approval of a proposed purchaser of Marathon's Membership Interests
pursuant to this Section 10.01(c), Ashland shall be entitled to consider the
creditworthiness of such proposed purchaser, including whether such proposed
purchaser is likely to be able to perform all of Marathon's and USX's respective
obligations under the Put/Call, Registration Rights and Standstill Agreement.
(d) Transfer to Wholly Owned Subsidiary. A Member may Transfer all
------------------------------------
(but not part) of its Membership Interests at any time to a Wholly Owned
Subsidiary of such Member if (i) such Member shall have received an opinion from
nationally recognized tax counsel acceptable to both Members that such Transfer
will not result in a termination of the status of the Company as a partnership
for Federal income tax purposes and (ii) the transferring Member enters into an
agreement with the other Member providing that so long as such Wholly Owned
Subsidiary holds such transferring Member's Membership Interests, such Wholly
Owned Subsidiary shall remain a Wholly Owned Subsidiary of such transferring
Member.
(e) Transfer Pursuant to Put/Call, Registration Rights and Standstill
-----------------------------------------------------------------
Agreement. Ashland may Transfer all of its Membership Interests to Marathon in
- ----------
connection with the exercise by Marathon of its Marathon Call Right or its
Special Termination Right or the exercise by Ashland of its Ashland Put Right.
In addition, Marathon may Transfer all of its Membership Interests to Ashland in
connection with the exercise by Ashland of its Special Termination Right.
(f) Consequences of Permitted Transfers. (i) In connection with any
------------------------------------
Transfer by a Member to a third party
<PAGE>
77
transferee pursuant to Section 10.01(b), (A) such third party transferee shall
at the time of such Transfer become subject to all of such transferring Member's
obligations hereunder and shall succeed to all of such transferring Member's
rights hereunder and (B) such transferring Member shall be relieved of all of
its obligations hereunder other than with respect to any default hereunder by
such transferring Member or any of its Affiliates hereunder that occurred prior
to the time of such Transfer.
(ii) In connection with any Transfer by a Member to a third party
transferee or to the other Member pursuant to Section 10.01(c), (A) such third
party transferee or such other Member shall at the time of such Transfer become
subject to all of such transferring Member's obligations hereunder and shall
succeed to all of such transferring Member's rights hereunder and (B) such
transferring Member shall at the time of such Transfer be relieved of all of its
obligations hereunder other than with respect to any default hereunder by such
transferring Member or any of its Affiliates that occurred prior to the time of
such Transfer.
(iii) In connection with any Transfer by a Member to a Wholly Owned
Subsidiary of such Member pursuant to Section 10.01(d), (A) such Wholly Owned
Subsidiary shall at the time of such Transfer become subject to all of such
Member's obligations hereunder and shall succeed to all of such Member's rights
hereunder and (B) such Member shall not be relieved of its obligations hereunder
without the prior written consent of the other Member, which consent shall not
be unreasonably withheld or delayed.
(iv) In connection with any Transfer by Ashland to Marathon pursuant
to Section 10.01(e), (A) Marathon shall at the time of such Transfer become
subject to all of Ashland's obligations hereunder and shall succeed to all of
Ashland's rights hereunder and (B) Ashland shall at the time of such Transfer be
relieved of all of its obligations hereunder other than with respect to any
default hereunder by Ashland or any of its Affiliates that occurred prior to the
Exercise Date (as such term is defined in the Put/Call, Registration Rights and
Standstill Agreement).
<PAGE>
78
(v) In connection with any Transfer by Marathon to Ashland pursuant
to Section 10.01(e), (A) Ashland shall at the time of such Transfer become
subject to all of Marathon's obligations hereunder and shall succeed to all of
Marathon's rights hereunder and (B) Marathon shall at the time of such Transfer
be relieved of all of its obligations hereunder other than with respect to any
default hereunder by Marathon or any of its Affiliates that occurred prior to
the Special Termination Exercise Date (as such term is defined in the Put/Call,
Registration Rights and Standstill Agreement).
(vi) In connection with any Transfer by Ashland to a third party
transferee pursuant to Section 10.01(b), 10.01(c) or 10.01(d), such third party
transferee shall at the time of such Transfer succeed to all of Ashland's veto
rights under Section 9.02(c); provided, that if Ashland Transfers its Membership
--------
Interests to a third party transferee pursuant to Section 10.01(c), such third
party transferee shall not thereafter be permitted to transfer its veto rights
under Section 9.02(c) to another third party transferee pursuant to Section
10.01(c).
(vii) In connection with any Transfer by a Member to a third party
transferee pursuant to this Article X, such transferring Member shall retain all
of the rights granted to a Member under Article VII to examine the books and
records of the Company and to receive financial statements and reports prepared
by the Company until such time following such Transfer as such transferring
Member ceases to have any liability under Article IX of the Asset Transfer and
Contribution Agreement.
(g) Consequences of an Unpermitted Transfer. Any Transfer of a
----------------------------------------
Member's Membership Interests made in violation of the applicable provisions of
this Agreement shall be void and without legal effect.
SECTION 10.02. Conditions for Admission. No transferee of all of the
-------------------------
Membership Interests of any Member shall be admitted as a Member hereunder
unless (a) such Membership Interests are Transferred to a person in compliance
with the applicable provisions of this Agreement, (b) such transferee shall have
executed and delivered to the
<PAGE>
79
Company such instruments as the Board of Managers deems necessary or desirable
in its reasonable discretion to effectuate the admission of such transferee as a
Member and to confirm the agreement of such transferee or recipient to be bound
by all the terms and provisions of this Agreement with respect to the Membership
Interests acquired by such transferee and (c) such transferee shall have
executed and delivered an assignment and assumption agreement pursuant to
Section 15.04 of the Put/Call, Registration Rights and Standstill Agreement.
SECTION 10.03. Allocations and Distributions. Subject to applicable
------------------------------
Treasury Regulations, upon the Transfer of all the Membership Interests of a
Member as herein provided, the Profit or Loss of the Company attributable to the
Membership Interests so transferred for the Fiscal Year during which such
Transfer occurs shall be allocated between the transferor and transferee as of
the date set forth on the written assignment, and such allocation shall be based
upon any permissible method agreed to by the Members that is provided for in
Code Section 706 and the Treasury Regulations issued thereunder. Except as
otherwise expressly provided in Section 5.01 of the Put/Call, Registration
Rights and Standstill Agreement, distributions shall be made to the holder of
record of the Membership Interests on the date of distribution.
SECTION 10.04. Right of First Refusal. (a) If a Member (the
-----------------------
"Selling Member") shall desire to sell all (but not part) of its Membership
- ---------------
Interests (which, for purposes of this Section 10.04, shall be deemed to
include, in the case of Ashland, the Ashland LOOP/LOCAP Interest) pursuant to
Section 10.01(c), then the Selling Member shall give notice (the "Offer Notice")
------------
to the other Member, identifying the proposed purchaser from whom it has
received a bona fide offer and setting forth the proposed sale price (which
shall be payable only in cash or purchase money obligations secured solely by
the Membership Interests being sold) and the other material terms and conditions
upon which the Selling Member is proposing to sell such Membership Interests to
such proposed purchaser. No such sale shall encompass or be conditioned upon
the sale or purchase of any property other than such Membership Interests (other
than, in the case of Ashland, the Ashland LOOP/LOCAP Interest).
<PAGE>
80
The other Member shall have 30 days from receipt of the Offer Notice to elect,
by notice to the Selling Member, to purchase the Membership Interests offered
for sale on the terms and conditions set forth in the Offer Notice.
(b) If a Member makes such election, the notice of election shall
state a closing date not later than 60 days after the date of the Offer Notice.
If such Member breaches its obligation to purchase the Membership Interests of
the Selling Member on the same terms and conditions as those contained in the
Offer Notice after giving notice of its election to make such purchase (other
than where such breach is due to circumstances beyond such Member's reasonable
control), then, in addition to all other remedies available, the Selling Member
may, at any time for a period of 270 days after such default, sell such
Membership Interests to any person at any price and upon any other terms without
further compliance with the procedures set forth in Section 10.04.
(c) If the other Member gives notice within the 30-day period
following the Offer Notice from the Selling Member that it elects not to
purchase the Membership Interests, the Selling Member may, within 120 days after
the end of such 30-day period (or 270 days in the case where such parties have
received a second request under HSR), sell such Membership Interests to the
identified purchaser (subject to clause (iii) of Section 10.01(c)) on terms and
conditions no less favorable to the Selling Member than the terms and conditions
set forth in such Offer Notice. In the event the Selling Member shall desire to
offer the Membership Interests for sale on terms and conditions less favorable
to it than those previously set forth in an Offer Notice, the procedures set
forth in this Section 10.04 must again be initiated and applied with respect to
the terms and conditions as modified.
SECTION 10.05. Restriction on Resignation or Withdrawal. Except in
-----------------------------------------
connection with a Transfer permitted pursuant to Section 10.01, neither Member
shall resign or withdraw from the Company without the consent of the other
Member. Any purported resignation or withdrawal from the Company in violation
of this Section 10.05 shall be null and void and of no force or effect.
<PAGE>
81
ARTICLE XI
Liability, Exculpation and Indemnification
------------------------------------------
SECTION 11.01. Liability. Except as otherwise provided by the
----------
Delaware Act, the debts, obligations and liabilities of the Company, whether
arising in contract, tort or otherwise, shall be solely the debts, obligations
and liabilities of the Company, and no Covered Person shall be obligated
personally for any such debt, obligation or liability of the Company solely by
reason of being a Covered Person.
SECTION 11.02. Exculpation. (a) No Covered Person shall be liable
------------
to the Company or any other Covered Person for any loss, damage or claim
incurred by reason of any act or omission performed or omitted by such Covered
Person in good faith on behalf of the Company and in a manner reasonably
believed to be within the scope of authority conferred on such Covered Person by
this Agreement, except that a Covered Person shall be liable for any such loss,
damage or claim incurred by reason of such Covered Person's gross negligence,
wilful misconduct or breach of Section 12.02.
(b) A Covered Person shall be fully protected in relying in good
faith upon the records of the Company and upon such information, opinions,
reports or statements presented to the Company by any person as to any matters
the Covered Person reasonably believes are within such other person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Company, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which distributions to Members might properly be paid.
SECTION 11.03. Indemnification. To the fullest extent permitted by
----------------
Applicable Law, a Covered Person shall be entitled to indemnification from the
Company for any loss, damage or claim incurred by such Covered Person by reason
of any act or omission performed or omitted by such
<PAGE>
82
Covered Person in good faith on behalf of the Company and in a manner reasonably
believed to be within the scope of authority conferred on such Covered Person by
this Agreement, except that no Covered Person shall be entitled to be
indemnified in respect of any loss, damage or claim incurred by such Covered
Person by reason of gross negligence, wilful misconduct or breach of Section
12.02 with respect to such acts or omissions; provided, however, that any
-------- -------
indemnity under this Section 11.03 shall be provided out of and to the extent of
Company assets only, and no Covered Person shall have any personal liability on
account thereof.
ARTICLE XII
Fiduciary Duties
----------------
SECTION 12.01. Duties and Liabilities of Covered Persons. To the
------------------------------------------
extent that, at law or in equity, a Covered Person has duties (including
fiduciary duties) and liabilities relating thereto to the Company or to any
other Covered Person, a Covered Person acting under this Agreement shall not be
liable to the Company or to any other Covered Person for its good faith reliance
on the provisions of this Agreement. The provisions of this Agreement, to the
extent that they expand or restrict the duties and liabilities of a Covered
Person otherwise existing at law or in equity, are agreed by the parties hereto
to replace such other duties and liabilities of such Covered Person.
SECTION 12.02. Fiduciary Duties of Members of the Company and Members
------------------------------------------------------
of the Board of Managers. Each Member and each member of the Board of Managers
- -------------------------
shall have the fiduciary duties of loyalty and care (similar to the fiduciary
duties of loyalty and care of directors of a business corporation governed by
the General Corporation Law of the State of Delaware) to the Company and all of
the Members. Notwithstanding any provision of this Agreement to the contrary,
each Member and each member of the Board of Managers agrees to and shall
exercise good faith, fairness and loyalty to the Company and to all of the
Members, and shall make all decisions in a manner that such Member or such
member of the Board of Managers reasonably believes to
<PAGE>
83
be in the best interest of the Company and all of the Members. Notwithstanding
the foregoing, this Section 12.02 is not intended to limit a Member's ability to
exercise or enforce any of its rights and remedies under this Agreement and the
other Transaction Documents in good faith, including, without limitation,
Article IX of the Asset Transfer and Contribution Agreement.
ARTICLE XIII
Dispute Resolution Procedures
-----------------------------
SECTION 13.01. General. All controversies, claims or disputes
--------
between the Members or between the Company and either Member that arise out of
or relate to this Agreement or the construction, interpretation, performance,
breach, termination, enforceability or validity of this Agreement, or the
commercial, economic or other relationship of the parties hereto, whether such
claim is based on rights, privileges or interests recognized by or based upon
statute, contract, tort, common law or otherwise and whether such claim existed
prior to or arises on or after the date of this Agreement (a "Dispute") shall be
-------
resolved in accordance with the provisions of this Article XIII (except as
otherwise expressly provided in Sections 6.06 and 6.08). Notwithstanding
anything to the contrary contained in this Article XIII, nothing in this Article
XIII shall limit the ability of the directors and officers of either Member from
communicating directly with the directors and officers of the other Member.
SECTION 13.02. Dispute Notice and Response. Either Member may give
----------------------------
the other Member written notice (a "Dispute Notice") of any Dispute which has
--------------
not been resolved in the normal course of business. Within fifteen Business
Days after delivery of the Dispute Notice, the receiving Member shall submit to
the other Member a written response (the "Response"). The Dispute Notice and
--------
the Response shall each include (i) a statement setting forth the position of
the Member giving such notice, a summary of the arguments supporting such
position and, if applicable, the relief sought and (ii) the name and title of a
senior manager of such Member who has authority to settle the
<PAGE>
84
Dispute and will be responsible for the negotiations related to the settlement
of the Dispute (the "Senior Manager").
--------------
SECTION 13.03. Negotiation Between Senior Managers. (a) Within 10
------------------------------------
days after delivery of the Response provided for in Section 13.02, the Senior
Managers of both Members shall meet or communicate by telephone at a mutually
acceptable time and place, and thereafter as often as they reasonably deem
necessary, and shall negotiate in good faith to attempt to resolve the Dispute
that is the subject of such Dispute Notice. If such Dispute has not been
resolved within 45 days after delivery of the Dispute Notice, then the Members
shall attempt to settle the Dispute pursuant to Section 13.04.
(b) All negotiations between the Senior Managers pursuant to this
Section 13.03 shall be treated as compromise and settlement negotiations.
Nothing said or disclosed, nor any document produced, in the course of such
negotiations which is not otherwise independently discoverable shall be offered
or received as evidence or used for impeachment or for any other purpose in any
current or future arbitration or litigation.
SECTION 13.04. Negotiation Between Chief Executive Officer and
-----------------------------------------------
President. (a) If the Dispute has not been resolved by negotiation between the
- ----------
Senior Managers pursuant to Section 13.03, then within 10 Business Days after
the expiration of the 45 day period provided in Section 13.03, the Chief
Executive Officer of Ashland and the President of Marathon shall meet or
communicate by telephone at a mutually acceptable time and place, and thereafter
as often as they reasonably deem necessary, and shall negotiate in good faith to
attempt to resolve the Dispute that is the subject of such Dispute Notice. If
such Dispute has not been resolved within 20 Business Days after the expiration
of the 45 day period provided in Section 13.03, then (i) if the Dispute relates
solely to (A) a claim by a Member or the Board of Managers that the other Member
has failed to pay the Company a Designated Sublease Amount or an amount in
respect of a Member-Funded Capital Expenditure, a Member-Funded Indemnity
Expenditure or an Agreed Additional Capital Contribution required to be made by
it pursuant to Section 4.02 (a "Disputed Capital
----------------
<PAGE>
85
Contribution Amount"), (B) the determination of any of the following amounts
- -------------------
with respect to any period: distributions pursuant to Article V; the Aggregate
Tax Rate; Adjusted DD&A; Adjusted EBITDA; EBITDA; Distributable Cash; the
Average Annual Level and adjustments to Adjustable Amounts; the Normal Annual
Capital Budget Amount; Ordinary Course Lease Expenses; Profit and Loss; the Tax
Distribution Amount; the Tax Liability of any Member; and the determination of
fair market value of property distributed in kind under Section 15.03, (C) the
resolution of any dispute arising under Section 8.11(b) with respect to
Affiliate Transactions or (D) the resolution of any dispute arising under
Section 8.12 with respect to certain Affiliate Transactions related to Crude Oil
Purchases and Shared Services (any Dispute relating to any of the matters set
forth in clause (A), (B), (C) or (D) above being referred to herein as an
"Arbitratable Dispute"), such Dispute shall be settled pursuant to the
- ---------------------
arbitration procedures set forth in Appendix B and (ii) if the Dispute does not
relate primarily to an Arbitratable Dispute, each party hereto shall be
permitted to take such actions at law or in equity as it is otherwise permitted
to take or as may be available under Applicable Law.
(b) All negotiations between the Chief Executive Officer of Ashland
and the President of Marathon pursuant to this Section 13.04 shall be treated
as compromise and settlement negotiations. Nothing said or disclosed, nor any
document produced, in the course of such negotiations which is not otherwise
independently discoverable shall be offered or received as evidence or used for
impeachment or for any other purpose in any current or future arbitration or
litigation.
SECTION 13.05. Right to Equitable Relief Preserved. Notwithstanding
------------------------------------
anything in this Agreement or Appendix B to the contrary, either Member or the
Company may at any time seek from any court of the United States located in the
State of Delaware or from any Delaware state court, any interim, provisional or
injunctive relief that may be necessary to protect the rights or property of
such party or maintain the status quo before, during or after the pendency of
the negotiation process or the arbitration proceeding or any other proceeding
contemplated by Section 13.03 or 13.04.
<PAGE>
86
ARTICLE XIV
Rights and Remedies with Respect to Monetary Disputes
-----------------------------------------------------
SECTION 14.01. Ability of Company to Borrow to Fund Disputed Monetary
------------------------------------------------------
Amounts. (a) If the Company or a Member on behalf of the Company (a "Non-
- -------- ---
Delinquent Member") claims that the other Member (a "Delinquent Member") owes
- ----------------- -----------------
the Company a monetary amount in respect of either (i) a Disputed Capital
Contribution Amount or (ii) an indemnification obligation under Article IX of
the Asset Transfer and Contribution Agreement that the Company or the Non-
Delinquent Member claims the Delinquent Member owes the Company and is either
(A) past due or (B) in dispute (a "Disputed Indemnification Amount") (each such
-------------------------------
claim described in clauses (i) and (ii) above being a "Monetary Dispute", and
----------------
each such claimed amount being a "Disputed Monetary Amount"), and if (1) the
------------------------
Disputed Monetary Amount itself, or when added together all other Disputed
Monetary Amounts, exceeds $7.5 million; (2) the Board of Managers (by vote of a
majority of the Representatives of the Non-Delinquent Member at a special or
regular meeting of the Board of Managers (which majority shall constitute a
quorum for purposes of the transaction of such business)) has determined that an
out-of-pocket disbursement of such Disputed Monetary Amount or any portion
thereof by the Company or one of its subsidiaries within the next twelve months
is reasonably necessary for the operation and conduct of the Company's Business
and, accordingly, that such amount should be paid within the next twelve months;
(3) the aggregate amount of all Disputed Monetary Amounts (or portions thereof)
that the Board of Managers shall have determined pursuant to clause (2) above
should be paid within the next twelve months (such aggregate amount being the
"Additional Required Cash Amount") exceeds $7.5 million; (4) postponement by the
- --------------------------------
Company or such subsidiary of such disbursement until such time as the Monetary
Dispute is reasonably likely to be finally resolved pursuant to an arbitration
proceeding in accordance with Appendix B to this Agreement or Appendix B to the
Asset Transfer and Contribution Agreement, as applicable (an "Arbitration
-----------
Proceeding"), would have, or would reasonably be expected to have, a Material
- ----------
Adverse Effect on the Company's Business;
<PAGE>
87
and (5) the Delinquent Member has not paid the Company the Disputed Monetary
Amount pursuant to Section 14.02 or otherwise, then the Board of Managers (by
vote of a majority of the Representatives of the Non-Delinquent Member at a
special or regular meeting of the Board of Managers (which majority shall
constitute a quorum for purposes of the transaction of such business)) shall be
permitted to cause the Company to incur an amount of Indebtedness equal to such
Additional Required Cash Amount, which Indebtedness may be borrowed from a third
party or the Non-Delinquent Member.
(b) If the Non-Delinquent Member lends the Company the Additional
Required Cash Amount pursuant to Section 14.01(a), then (i) the amount actually
lent by the Non-Delinquent Member (the "Advanced Amount") and all accrued
---------------
interest thereon shall be due and payable on the Arbitration Payment Due Date
(provided that the Company shall be permitted to prepay the Advanced Amount in
- ---------
whole or in part at any time prior to such date); and (ii) the Advanced Amount
shall bear interest at the Base Rate from the date on which such advance is made
until the date that the Advanced Amount, together with all interest accrued
thereon, is repaid to the Non-Delinquent Member.
SECTION 14.02. Interim Payment of Disputed Monetary Amount. In order
--------------------------------------------
to reduce the amount of liquidated damages that a Delinquent Member would be
required to pay to the Company pursuant to Section 14.03 in the event that such
Delinquent Member loses in an Arbitration Proceeding with respect to a Monetary
Dispute, the Delinquent Member shall be permitted to pay the Company the related
Disputed Monetary Amount prior to the commencement of such Arbitration
Proceeding. The Arbitration Tribunal or Sole Arbitrator, as applicable, shall
not take into consideration in determining the liability of the Delinquent
Member, a decision by such Delinquent Member to pay the Disputed Monetary Amount
prior to the commencement of the Arbitration Proceeding.
SECTION 14.03. Liquidated Damages. (a) No Interim Payment of
------------------- ---------------------
Disputed Monetary Amount--Delinquent Member is Found Liable for Final Monetary
- ------------------------------------------------------------------------------
Amount. If (i) it is finally determined in an Arbitration Proceeding that a
- -------
Delinquent Member owes the Company a monetary amount in
<PAGE>
88
respect of (A) a Disputed Capital Contribution Amount or (B) a Disputed
Indemnification Amount (each such finally determined amount being a "Final
-----
Monetary Amount") and (ii) the Delinquent Member had not paid the Company the
- ---------------
Disputed Monetary Amount prior to the commencement of such Arbitration
Proceeding pursuant to Section 14.02, then the Delinquent Member shall promptly,
and in any event on or before the tenth Business Day following the date on which
the Arbitration Tribunal or Sole Arbitrator makes its final determination (such
tenth Business Day being the "Arbitration Payment Due Date"), pay to the Company
----------------------------
(A) the Final Monetary Amount, together with interest, accrued from the
commencement of the Arbitration Proceeding to the date that the Delinquent
Member pays the Final Monetary Amount to the Company, on the Final Monetary
Amount, at a rate per annum equal to (1) during the period from the commencement
of the Arbitration Proceeding to the Arbitration Payment Due Date, the Prime
Rate and (2) at any time thereafter, 150% of the Prime Rate, in each case, with
daily accrual of interest, plus (B) an amount equal to 25% of the Final Monetary
Amount.
(b) Interim Payment of Disputed Monetary Amount--Delinquent Member is
-----------------------------------------------------------------
Found Liable for the Same Amount. If (i) it is finally determined in an
- ---------------------------------
Arbitration Proceeding that a Delinquent Member owes the Company a Final
Monetary Amount, (ii) the Final Monetary Amount is equal to the Disputed
Monetary Amount and (iii) the Delinquent Member had paid the Company the
Disputed Monetary Amount prior to the commencement of such Arbitration
Proceeding pursuant to Section 14.02, then if the Final Monetary Amount is equal
to the Disputed Monetary Amount, the Delinquent Member shall not owe the Company
any other amount in respect of the Monetary Dispute.
(c) Interim Payment of Disputed Monetary Amount--Delinquent Member is
-----------------------------------------------------------------
Found Liable for a Greater Amount. If (i) it is finally determined in an
- ----------------------------------
Arbitration Proceeding that a Delinquent Member owes the Company a Final
Monetary Amount, (ii) the Final Monetary Amount is greater than the Disputed
Monetary Amount and (iii) the Delinquent Member had paid the Company the
Disputed Monetary Amount prior to the commencement of such Arbitration
Proceeding pursuant to Section 14.02, then the Delinquent Member shall
<PAGE>
89
promptly, and in any event on or before the Arbitration Payment Due Date, pay to
the Company an amount (an "Additional Monetary Amount") equal to (A) the Final
--------------------------
Monetary Amount less (B) the Disputed Monetary Amount, together with interest,
accrued from the commencement of the Arbitration Proceeding to the date that the
Delinquent Member pays the Additional Monetary Amount to the Company, on the
Additional Monetary Amount, at a rate per annum equal to (1) during for the
period from the commencement of the Arbitration Proceeding to the Arbitration
Payment Due Date, the Prime Rate and (2) at any time thereafter, 150% of the
Prime Rate, in each case, with daily accrual of interest.
(d) Interim Payment of Disputed Monetary Amount--Delinquent Member is
-----------------------------------------------------------------
Found Liable for a Lesser Amount. If (i) it is finally determined in an
- ---------------------------------
Arbitration Proceeding that a Delinquent Member owes the Company a Final
Monetary Amount, (ii) the Final Monetary Amount is less than the Disputed
Monetary Amount and (iii) the Delinquent Member had paid the Company the
Disputed Monetary Amount prior to the commencement of such Arbitration
Proceeding, then the Company shall promptly, and in any event on or before the
Arbitration Payment Due Date, repay to the Delinquent Member an amount (a
"Refundable Amount") equal to (A) the Disputed Monetary Amount less (B) the
- ------------------
Final Monetary Amount, together with interest, accrued from the commencement of
the Arbitration Proceeding to the date that the Company repays the Refundable
Amount to the Delinquent Member, on the Refundable Amount, at a rate per annum
equal to (1) during the period from the commencement of the Arbitration
Proceeding to the Arbitration Payment Due Date, the Prime Rate and (2) at any
time thereafter, 150% of the Prime Rate, in each case, with daily accrual of
interest.
(e) Interim Payment of Disputed Monetary Amount--Delinquent Member is
-----------------------------------------------------------------
Found Not Liable for Disputed Monetary Amount. If (i) it is finally determined
- ----------------------------------------------
in an Arbitration Proceeding that a Delinquent Member does not owe the Company
the related Disputed Monetary Amount and (ii) the Delinquent Member had paid the
Company the Disputed Monetary Amount prior to the commencement of such
Arbitration Proceeding, then the Company shall promptly, and in any event on or
before the Arbitration Payment Due Date, repay to the Delinquent Member an
amount equal to the
<PAGE>
90
Disputed Monetary Amount, together with interest, accrued from the commencement
of the Arbitration Proceeding to the date that the Company repays the Disputed
Monetary Amount to the Delinquent Member, on the Disputed Monetary Amount, at a
rate per annum equal to (A) during the period from the commencement of the
Arbitration Proceeding to the Arbitration Payment Due Date, the Prime Rate and
(B) at any time thereafter, 150% of the Prime Rate, in each case, with daily
accrual of interest.
SECTION 14.04. Right of Set-Off. Notwithstanding any provision to
-----------------
the contrary contained in this Agreement, if at the time of a Distribution Date
a Delinquent Member has failed to pay the Company an amount that it was required
pursuant to Section 14.03 to pay to the Company on or before such Distribution
Date, then on such Distribution Date, the Company shall be permitted to set off
from the distribution that it would otherwise be required to make to such
Delinquent Member pursuant to Section 5.01 on such Distribution Date, an amount
equal to such unpaid amount. If the amount of the distribution that such
Delinquent Member was otherwise entitled to receive pursuant to Section 5.01 on
such Distribution Date is less than the aggregate amount that such Delinquent
Member owes to the Company pursuant to Section 14.03, then the Company shall be
permitted to set off from subsequent distributions that it would otherwise make
to such Delinquent Member pursuant to Section 5.01 the remaining unpaid amount
until such time as such remaining unpaid amount shall have been paid in full. A
Delinquent Member's interest in distributions to be made to such Delinquent
Member pursuant to Section 5.01 shall be reduced by any amount set off by the
Company against such distributions pursuant to this Section 14.04(a).
SECTION 14.05. Security Interest. (a) Each Member hereby agrees
------------------
that if (i) it has failed to pay the Company an amount that it was required to
pay to the Company pursuant to Section 14.03 on or prior to the related
Arbitration Payment Due Date, and (ii) the Board of Managers (by vote of a
majority of the Representatives of the other Member at a special or regular
meeting of the Board of Managers (which majority shall constitute a quorum for
purposes of the transaction of such business) so requests, such Member shall (A)
on the Business Day next following
<PAGE>
91
such Arbitration Payment Due Date, grant to the Company, as security for the
performance of its obligation to pay the Company such amount owed (but for no
other amount), a first priority security interest in its Membership Interests
and the proceeds thereof (a "Security Interest"), all under the Uniform
-----------------
Commercial Code of the State of Delaware and (ii) promptly thereafter, execute
and deliver to the Company all financing statements and other instruments that
the Board of Managers (by vote of a majority of the Representatives of the other
Member at a special or regular meeting of the Board of Managers (which majority
shall constitute a quorum for purposes of the transaction of such business)) may
request to effectuate and carry out the preceding provisions of this Section
14.05(a). The Company shall be entitled to all the rights and remedies of a
secured party under the Uniform Commercial Code of the State of Delaware with
respect to any Security Interest granted by such Member. At the option of the
Company, this Agreement or a carbon, photographic, or other copy hereof may
serve as a financing statement with respect to any such Security Interest. For
purposes of perfecting a Security Interest, a Member's Membership Interests
shall be deemed to be a "security" governed by Chapter 8 of the Delaware Uniform
Commercial Code and as such term is therein defined in Section 8-102(c)
thereunder.
(b) If the Company incurs Indebtedness pursuant to Section 14.01 by
borrowing from a Non-Delinquent Member, the Company shall be permitted to assign
all its rights with respect to a Security Interest granted to it pursuant to
Section 14.05(a) to such Non-Delinquent Member as security for such
Indebtedness; provided that such Non-Delinquent Member shall not be permitted to
--------
assign such Security Interest to a third party.
<PAGE>
92
ARTICLE XV
Dissolution and Termination
---------------------------
SECTION 15.01. Dissolution. The Company shall be dissolved and its
------------
business and affairs wound up upon the earliest to occur of any one of the
following events:
(a) the expiration of the Term of the Company;
(b) the sale or other disposition of all or substantially all the
property of the Company;
(c) the written consent of both Members;
(d) the unanimous agreement of all Representatives on the Board of
Managers;
(e) the bankruptcy, involuntary liquidation or dissolution of either
Member; or
(f) the entry of a decree of judicial dissolution pursuant to Section
18-802 of the Delaware Act.
The bankruptcy, involuntary liquidation of dissolution of a Member shall cause a
Member to cease to be a member of the Company. Notwithstanding the foregoing,
the Company shall not be dissolved and its business and affairs shall not be
wound up upon the occurrence of any event specified in (i) clause (e) above if
within 90 days after the date on which such event occurs, the remaining Member
elects in writing to continue the business of the Company or (ii) clause (a)
above if a Non-Terminating Member purchases the Membership Interests of the
Terminating Member pursuant to its Special Termination Right. Except as
provided in this paragraph and Section 15.01(e), and to the fullest extent
permitted by the Delaware Act, the occurrence of an event that causes a Member
to cease to be a member of the Company shall not cause the Company to be
dissolved or its business or affairs to be wound up, and upon the occurrence of
such an event, the business of the Company shall continue without dissolution.
<PAGE>
93
SECTION 15.02. Winding Up of Company. Upon dissolution, the
----------------------
Company's business shall be liquidated in an orderly manner. The Board of
Managers shall act as the liquidating trustee (unless the Board of Managers
elects to appoint a liquidating trustee) to wind up the affairs of the Company
pursuant to this Agreement. In performing its duties, the liquidating trustee
is authorized to sell, distribute, exchange or otherwise dispose of the assets
of the Company in accordance with the Delaware Act and in any reasonable manner
that the liquidating trustee shall determine to be in the best interest of the
Members or their successors-in-interest.
SECTION 15.03. Distribution of Property. In the event the Board of
-------------------------
Managers determines that it is necessary in connection with the liquidation of
the Company to make a distribution of property in kind, such property shall be
transferred and conveyed to the Members so as to vest in each of them as a
tenant in common an undivided interest in the whole of such property equal to
their interests in the property based upon the amount of cash that would be
distributed to each of the Members in accordance with Article V if such property
were sold for an amount of cash equal to the fair market value of such property,
as determined and approved by the Board of Managers pursuant to a vote in
accordance with Section 8.07(b).
SECTION 15.04. Time Limitation. Any liquidating distribution
----------------
pursuant to this Article XV shall be made no later than the later of (a) the end
of the taxable year during which such liquidation occurs and (b) 90 days after
the date of such liquidation.
SECTION 15.05. Termination of Company. The Company shall terminate
-----------------------
when all assets of the Company, after payment of or due provision for all debts,
liabilities and obligations of the Company, shall have been distributed to the
Members in the manner provided for in this Agreement, and the Certificate of
Formation shall have been canceled in the manner provided by the Delaware Act.
<PAGE>
94
ARTICLE XVI
Miscellaneous
-------------
SECTION 16.01. Notices. Any notice, consent or approval to be given
--------
under this Agreement shall be in writing and shall be deemed to have been given
if delivered: (i) personally by a reputable courier service that requires a
signature upon delivery; (ii) by mailing the same via registered or certified
first-class mail, postage prepaid, return receipt requested; or (iii) by
telecopying the same with receipt confirmation (followed by a first-class
mailing of the same) to the intended recipient. Any such writing will be deemed
to have been given: (a) as of the date of personal delivery via courier as
described above; (b) as of the third calendar day after depositing the same into
the custody of the postal service as evidenced by the date-stamped receipt
issued upon deposit of the same into the mails as described above; and (c) as of
the date and time electronically transmitted in the case of telecopy delivery as
described above, in each case addressed to the intended party at the address set
forth below:
To the Board of Managers:
Marathon Ashland Petroleum LLC
539 South Main Street
Findlay, Ohio 45840
Attn: General Counsel
Phone: (419) 422-2121
Fax: (419) 421-4115
To Marathon:
Marathon Oil Company
5555 San Felipe
P.O. Box 3128
Houston, TX 77056-2723
Attn: General Counsel
Phone: (713) 296-4137
Fax: (713) 296-4171
<PAGE>
95
To Ashland:
Ashland Inc.
1000 Ashland Drive
Russell, KY 41169
Attn: General Counsel
Phone: (606) 329-3333
Fax: (606) 329-3823
Any party may designate different addresses or telecopy numbers by notice to the
other parties.
SECTION 16.02. Merger and Entire Agreement. This Agreement
----------------------------
(including the Exhibits, Schedules and Appendices attached hereto), together
with the other Transaction Documents (including the exhibits, schedules and
appendices thereto) and certain other agreements executed contemporaneously with
the Master Formation Agreement constitutes the entire Agreement of the parties
hereto and supersedes any prior understandings, agreements, or representations
by or among the parties hereto, written or oral, to the extent they relate in
any way to the subject matter hereof.
SECTION 16.03. Assignment. A party hereto shall not assign all or
-----------
any of its rights, obligations or benefits under this Agreement to any third
party otherwise than (i) in connection with a Transfer of its Membership
Interests pursuant to Article X, (ii) with the prior written consent of the
other party hereto, which consent may be withheld in such party's sole
discretion, (iii) the granting by a Member of a Security Interest to the Company
pursuant to Section 14.05 or (iv) pursuant to Article V of the Put/Call,
Registration Rights and Standstill Agreement, and any attempted assignment not
in compliance with this Section 16.03 shall be void ab initio.
-- ------
SECTION 16.04. Parties in Interest. This Agreement shall inure to
--------------------
the benefit of, and be binding upon, the parties hereto and their respective
successors, legal representatives and permitted assigns.
SECTION 16.05. Counterparts. This Agreement may be executed in
-------------
counterparts, each of which shall be deemed
<PAGE>
96
an original, but all of which together shall constitute one and the same
instrument.
SECTION 16.06. Amendment; Waiver. This Agreement may not be amended
------------------
except in a written instrument signed by each of the parties hereto and
expressly stating it is an amendment to this Agreement. Any failure or delay on
the part of any party hereto in exercising any power or right hereunder shall
not operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power preclude any other or further exercise thereof or the
exercise of any other right or power hereunder or otherwise available at law or
in equity.
SECTION 16.07. Severability. If any term, provision, covenant, or
-------------
restriction of this Agreement or the application thereof to any person or
circumstance, at any time or to any extent, is held by a court of competent
jurisdiction or other Governmental Authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement (or the application of such provision in other
jurisdictions or to persons or circumstances other than those to which it was
held invalid or unenforceable) shall in no way be affected, impaired or
invalidated, and to the extent permitted by Applicable Law, any such term,
provision, covenant or restriction shall be restricted in applicability or
reformed to the minimum extent required for such to be enforceable. This
provision shall be interpreted and enforced to give effect to the original
written intent of the parties hereto prior to the determination of such
invalidity or unenforceability.
SECTION 16.08. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
--------------
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT
GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF. THIS AGREEMENT
SHALL BE CONSTRUED IN ACCORDANCE WITH SECTION 18-1101 OF THE DELAWARE ACT. ANY
RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY CLAIM OR PROCEEDING RELATED TO OR
ARISING OUT OF THIS AGREEMENT, OR ANY TRANSACTION OR CONDUCT IN CONNECTION
HEREWITH, IS WAIVED.
<PAGE>
97
SECTION 16.09. Enforcement. The parties hereto agree that
------------
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties hereto shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement in the
Delaware Chancery Court; provided that if the Delaware Chancery Court does not
--------
have jurisdiction with respect to such matter, the parties hereto shall be
entitled to enforce specifically the terms and provisions of this Agreement in
any court of the United States located in the State of Delaware or in Delaware
state court, this being in addition to any other remedy to which they are
entitled at law or in equity. In addition, each of the parties hereto (i)
consents to submit itself to the personal jurisdiction of the Delaware Chancery
Court in the event that any dispute arises out of this Agreement or any of the
transactions contemplated by this Agreement; provided that if the Delaware
--------
Chancery Court does not have jurisdiction with respect to any such dispute, such
party consents to submit itself to the personal jurisdiction of any Federal
court located in the State of Delaware or any Delaware state court, (ii) agrees
to appoint and maintain an agent in the State of Delaware for service of legal
process, (iii) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, (iv)
agrees that it will not plead or claim in any such court that any action
relating to this Agreement or any of the transactions contemplated by this
Agreement in any such court has been brought in an inconvenient forum and (v)
agrees that it will not initiate any action relating to this Agreement or any of
the transactions contemplated by this Agreement in any court other than (1) the
Delaware Chancery Court, or (2) if the Delaware Chancery Court does not have
jurisdiction with respect to such action, a Federal court sitting in the State
of Delaware or a Delaware state court.
SECTION 16.10. Creditors. None of the provisions of this Agreement
----------
shall be for the benefit of or enforceable by any creditor of the Company or of
any Member.
<PAGE>
98
SECTION 16.11. No Bill for Accounting. In no event shall either
-----------------------
Member have any right to file a bill for an accounting or any similar
proceeding.
SECTION 16.12. Waiver of Partition. Each Member hereby waives any
--------------------
right to partition of the Company property.
SECTION 16.13. Table of Contents, Headings and Titles. The table of
---------------------------------------
contents and section headings of this Agreement and titles given to Exhibits and
Schedules to this Agreement are for reference purposes only and are to be given
no effect in the construction or interpretation of this Agreement.
SECTION 16.14. Use of Certain Terms; Rules of Construction. As used
--------------------------------------------
in this Agreement, the words "herein", "hereof" and "hereunder" and other words
------ ------ ---------
of similar import refer to this Agreement as a whole and not to any particular
paragraph, subparagraph, section, subsection or other subdivision. Whenever the
context may require, any pronoun used in this Agreement shall include the
corresponding masculine, feminine or neuter forms, and the singular form of
nouns, pronouns and verbs shall include the plural and vice versa. Each party
hereto agrees that any rule of construction to the effect that any ambiguities
are to be resolved against the drafting party shall not be employed in the
interpretation or construction of this Agreement or any Transaction Document.
SECTION 16.15. Holidays. Notwithstanding any deadline for payment,
---------
performance, notice or election under this Agreement, if such deadline falls on
a date that is not a Business Day, then the deadline for such payment, perform-
ance, notice or election will be extended to the next succeeding Business Day.
SECTION 16.16. Third Parties. Nothing herein expressed or implied is
--------------
intended or shall be construed to confer upon or give any person and their
respective successors, legal representatives and permitted assigns any rights,
remedies or basis for reliance upon, under or by reason of this Agreement.
<PAGE>
99
SECTION 16.17. Liability for Affiliates. Except where and to the
-------------------------
extent that a contrary intention otherwise appears, where a Member undertakes to
cause its Affiliates to take or abstain from taking any action, such undertaking
shall mean (i) in the case of any Affiliate that is controlled by such Member,
that such Member shall cause such Affiliate to take or abstain from taking such
action and (ii) in the case of an Affiliate that controls or is under common
control with such Member, that such Member shall use its commercially reasonable
best efforts to cause such Affiliates to take or abstain from taking such
action; provided, however, that such Member shall not be required to violate, or
-------- -------
cause any director of such Affiliate to violate, any fiduciary duty to minority
shareholders of such Affiliate.
IN WITNESS WHEREOF, this Agreement has been duly
executed by the Members as of the day and year first above written.
MARATHON OIL COMPANY
by /s/ Victor G. Beghini
____________________________
Name: Victor G. Beghini
Title: President
ASHLAND INC.
by /s/ Paul W. Chellgren
____________________________
Name: Paul W. Chellgren
Title: Chairman of the Board
and Chief Executive
Officer
<PAGE>
Exhibit 10.2
================================================================================
PUT/CALL, REGISTRATION RIGHTS
AND
STANDSTILL AGREEMENT
Dated as of January 1, 1998
among
MARATHON OIL COMPANY,
USX CORPORATION,
ASHLAND INC.
and
MARATHON ASHLAND PETROLEUM LLC
================================================================================
<PAGE>
Contents, p. 1
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I
Certain Definitions; Adjustable Amounts; Representations and Warranties
----------------------------------------------------------------------
<S> <C>
SECTION 1.01. Definitions................................................. 2
SECTION 1.02. Adjustable Amounts.......................................... 17
SECTION 1.03. Representations and Warranties.............................. 18
ARTICLE II
Special Termination Right
-------------------------
SECTION 2.01. Special Termination Right................................... 20
SECTION 2.02. Special Termination Price................................... 20
SECTION 2.03. Method of Exercise.......................................... 21
ARTICLE III
Marathon Call Right
-------------------
SECTION 3.01. Marathon Call Right......................................... 21
SECTION 3.02. Marathon Call Price......................................... 21
SECTION 3.03. Method of Exercise.......................................... 22
SECTION 3.04. Limitation on Marathon's Ability To Exercise
its Marathon Call Right................................ 22
ARTICLE IV
Ashland Put Right
-----------------
SECTION 4.01. Ashland Put Right........................................... 22
SECTION 4.02. Ashland Put Price........................................... 23
SECTION 4.03. Method of Exercise.......................................... 26
SECTION 4.04. Ashland Put Price Election Notice........................... 26
SECTION 4.05. Limitation on Ashland's Ability To Exercise
its Ashland Put Right.................................. 27
</TABLE>
<PAGE>
Contents, p. 2
<TABLE>
<CAPTION>
ARTICLE V
Termination of Certain Distributions; Revocable Proxies
-------------------------------------------------------
<S> <C>
SECTION 5.01. Termination of Certain Distributions........................ 27
SECTION 5.02. Revocable Proxies........................................... 30
ARTICLE VI
Determination of the Appraised Value of the Company
---------------------------------------------------
SECTION 6.01. Determination of Appraised Value of the
Company................................................ 31
ARTICLE VII
Determination of the Fair Market Value of Securities
----------------------------------------------------
SECTION 7.01. General..................................................... 35
SECTION 7.02. Determination of Fair Market Value of
Marathon Debt Securities............................... 35
SECTION 7.03. Determination of Fair Market Value of
Actively Traded Marathon Equity Securities............. 35
SECTION 7.04. Determination of Fair Market Value of Non-
Actively Traded Marathon Equity Securities............. 39
ARTICLE VIII
Certain Matters Relating to Securities
--------------------------------------
SECTION 8.01. Certain Requirements with Respect to
Marathon Debt Securities............................... 42
SECTION 8.02. Procedures with Respect to the Issuance of
Securities............................................. 42
SECTION 8.03. Holding Period.............................................. 45
SECTION 8.04. Manner of Sale of Marathon Equity
Securities............................................. 45
ARTICLE IX
Closing; Conditions to Closing; Consequences of Delay
-----------------------------------------------------
SECTION 9.01. Closing..................................................... 46
SECTION 9.02. Conditions to Closing....................................... 49
SECTION 9.03. Consequences of a Delayed Closing of the
Marathon Call Right or the Ashland Put Right
Where Ashland Is at Fault.............................. 54
</TABLE>
<PAGE>
Contents, p. 3
<TABLE>
<S> <C>
SECTION 9.04. Consequences of a Delayed Closing of the
Marathon Call Right or the Ashland Put Right
Where Marathon or USX Is at Fault...................... 55
SECTION 9.05. Consequences of a Delayed Closing of the
Marathon Call Right or the Ashland Put Right
Where No Party Is at Fault............................. 57
SECTION 9.06. Consequences of Delayed Second or Third
Scheduled Installment Payment.......................... 58
SECTION 9.07. Consequences of a Delayed Closing of the
Special Termination Right Where Terminating
Member Is at Fault..................................... 58
SECTION 9.08. Consequences of a Delayed Closing of the
Special Termination Right Where Non-
Terminating Member Is at Fault......................... 60
SECTION 9.09. Consequences of Delayed Closing of Special
Termination Right Where No Party Is at
Fault.................................................. 62
ARTICLE X
Registration Rights
-------------------
SECTION 10.01. Registration upon Request................................... 63
SECTION 10.02. Covenants of the Issuer..................................... 67
SECTION 10.03. Fees and Expenses........................................... 72
SECTION 10.04. Indemnification and Contribution............................ 73
SECTION 10.05. Underwriting Agreement; Purchase
Agreement.............................................. 77
SECTION 10.06. Undertaking To File Reports................................. 78
ARTICLE XI
Covenants
---------
SECTION 11.01. Cooperation; Commercially Reasonable Best
Efforts................................................ 78
SECTION 11.02. Antitrust Notification; FTC or DOJ
Investigation.......................................... 78
SECTION 11.03. Governmental Filings re: Ashland LOOP/LOCAP
Interest............................................... 80
SECTION 11.04. Designated Sublease Agreements.............................. 81
</TABLE>
<PAGE>
Contents, p. 4
<TABLE>
<CAPTION>
ARTICLE XII
Standstill Agreement
--------------------
<S> <C>
SECTION 12.01. Restrictions of Certain Actions by Marathon
and USX................................................ 83
SECTION 12.02. Restrictions of Certain Actions by
Ashland................................................ 86
ARTICLE XIII
Indemnification
---------------
SECTION 13.01. Indemnification re: Ashland Representatives'
Revocable Proxies and the Ashland LOOP/LOCAP
Revocable Proxy........................................ 88
SECTION 13.02. Indemnification re: Marathon Representatives
Revocable Proxies...................................... 89
SECTION 13.03. Indemnification re: Transfer of Economic
Interests in the Ashland LOOP/LOCAP Interest
to Marathon, the Company or a Person
Designated by Marathon................................. 89
SECTION 13.04. Procedures Relating to Indemnification Under
This Article XIII...................................... 90
ARTICLE XIV
Company Competitive Businesses;
-------------------------------
Detrimental Activities; Limitations on the
------------------------------------------
Company Entering into Valvoline's Business
------------------------------------------
SECTION 14.01. Competitive Businesses...................................... 90
SECTION 14.02. Detrimental Activities...................................... 94
SECTION 14.03. Limitations on the Company Entering into the
Valvoline Business..................................... 96
SECTION 14.04. Purchase Price of Competitive Business
Assets.................................................103
</TABLE>
<PAGE>
Contents, p. 5
<TABLE>
<CAPTION>
ARTICLE XV
Survival; Assignment
--------------------
<S> <C>
SECTION 15.01. Survival and Assignment re: Marathon and
USX....................................................106
SECTION 15.02. Survival and Assignment re: Ashland........................107
SECTION 15.03. Survival and Assignment re: the
Company................................................109
SECTION 15.04. Assignment and Assumption Agreements........................109
SECTION 15.05. Consequences of Unpermitted Assignments.....................110
ARTICLE XVI
Dispute Resolution Procedures
-----------------------------
SECTION 16.01. General.....................................................110
SECTION 16.02. Dispute Notice and Response.................................110
SECTION 16.03. Negotiation Between Chief Executive
Officers...............................................110
SECTION 16.04. Right to Equitable Relief Preserved.........................111
ARTICLE XVII
Miscellaneous
-------------
SECTION 17.01. Notices.....................................................111
SECTION 17.02. Merger and Entire Agreement.................................113
SECTION 17.03. Parties in Interest.........................................113
SECTION 17.04. Counterparts................................................113
SECTION 17.05. Amendment; Waiver...........................................113
SECTION 17.06. Severability................................................113
SECTION 17.07. GOVERNING LAW...............................................114
SECTION 17.08. Enforcement.................................................114
SECTION 17.09. Table of Contents, Headings and Titles......................115
SECTION 17.10. Use of Certain Terms; Rules of
Construction...........................................115
SECTION 17.11. Holidays....................................................115
SECTION 17.12. Third Parties...............................................115
SECTION 17.13. Liability for Affiliates....................................115
SECTION 17.14. Schedules...................................................116
</TABLE>
<PAGE>
Contents, p. 6
APPENDIX A Certain Definitions
SCHEDULE 1.03(c) Conflicts
SCHEDULE 1.03(d) Consents
SCHEDULE 14.01(a) Competitive Businesses
<PAGE>
PUT/CALL, REGISTRATION RIGHTS AND STANDSTILL AGREEMENT dated as
of [January 1], 1998,/2/ by and among MARATHON OIL COMPANY, an
Ohio corporation ("Marathon"), USX CORPORATION, a Delaware
--------
corporation ("USX"), ASHLAND INC., a Kentucky corporation
---
("Ashland"), and MARATHON ASHLAND PETROLEUM LLC, a Delaware
---------
limited liability company (the "Company").
-------
Preliminary Statement
---------------------
WHEREAS Marathon and Ashland have previously entered into a Master
Formation Agreement dated as of December 12, 1997, relating to the formation of
the Company, which will own and operate certain of Marathon's and Ashland's
respective petroleum supply, refining, marketing, and transportation businesses;
WHEREAS Marathon and Ashland have previously entered into an Asset
Transfer and Contribution Agreement dated as of December 12, 1997, pursuant to
which, among other things, Marathon and Ashland will transfer their respective
Businesses (as defined below) to the Company;
WHEREAS Marathon, USX and Ashland have previously entered into a
Parent Agreement dated as of December 12, 1997;
WHEREAS Marathon and Ashland have entered into an LLC Agreement dated
as of the date hereof in order to establish the rights and responsibilities of
each of them with respect to the governance, financing and operation of the
Company;
WHEREAS Marathon and Ashland have agreed that under certain
circumstances, Ashland will sell to Marathon and Marathon will purchase from
Ashland all of Ashland's Membership Interests and the Ashland LOOP/LOCAP
Interest (each as defined below), upon the terms and subject to the conditions
set forth herein;
- ---------------------------------
/2/ To be dated as of the Closing Date under the Master Formation Agreement.
<PAGE>
2
WHEREAS Marathon and Ashland have agreed that if Marathon or Ashland
elects to terminate the Term of the Company pursuant to Section 2.03 of the LLC
Agreement, then the non-terminating Member shall have the right to purchase from
the terminating Member all of the terminating Member's Membership Interests,
upon the terms and subject to the conditions set forth herein;
WHEREAS Marathon and USX have agreed that Marathon and USX will grant
Ashland certain registration rights with respect to any Securities (as defined
below) that Marathon or USX issues to Ashland pursuant to this Agreement in
connection with the purchase by Marathon of Ashland's Membership Interests and
the Ashland LOOP/LOCAP Interest, upon the terms and subject to the conditions
set forth herein;
WHEREAS Marathon and USX have agreed to certain restrictions with
respect to actions relating to Ashland Voting Securities (as defined below),
upon the terms and subject to the conditions set forth herein;
WHEREAS Ashland has agreed to certain restrictions with respect to
actions relating to USX Voting Securities (as defined below), upon the terms and
subject to the conditions set forth herein; and
WHEREAS Marathon, USX and Ashland have agreed to certain restrictions
with respect to certain of their business activities, upon the terms and subject
to the conditions set forth herein.
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
Certain Definitions; Adjustable Amounts;
----------------------------------------
Representations and Warranties
------------------------------
SECTION 1.01. Definitions. Defined terms used in this Agreement
------------
shall have the meanings ascribed to them by definition in this Agreement or in
Appendix A. In addition,
<PAGE>
3
when used herein the following terms have the following meanings:
"Actively Traded Marathon Equity Securities" means Marathon Equity
------------------------------------------
Securities for which there is an active trading market on the National Market
System of the NASDAQ or on a National Securities Exchange during the period
commencing 30 days prior to the Closing Date or applicable Installment Payment
Date and ending on the Closing Date or such Installment Payment Date.
"Adjustable Amount" has the meaning set forth in Section 1.02.
-----------------
"Adjustable Amounts Notice" has the meaning set forth in Section 1.02.
-------------------------
"Adjustment Year" has the meaning set forth in Section 1.02.
---------------
"Agreement" means this Put/Call, Registration Rights, and Standstill
---------
Agreement, as the same may be amended, restated, supplemented or otherwise
modified from time to time.
"Appraised Value Determination Date" has the meaning set forth in
----------------------------------
Section 6.01(c).
"Appraised Value of the Company" has the meaning set forth in Section
------------------------------
6.01(c).
"Ashland Designated Sublease Agreements" means the Ashland Sublease
---------------------------------------
Agreements attached as Exhibits L-1, L-2, L-3 and L-4 to the Asset Transfer and
Contribution Agreement.
"Ashland Exercise Period Distributions" has the meaning set forth in
-------------------------------------
Section 5.01(a)(i).
"Ashland LOOP/LOCAP Interest" means (i) the 4.0% interest in LOOP LLC
---------------------------
owned by Ashland on the date hereof pursuant to the limited liability company
agreement of LOOP LLC dated as of October 18, 1996, among Ashland, Marathon Pipe
Line Company, Murphy Oil Corporation, Shell Oil Company and Texaco Inc. and (ii)
the 86.20 shares of common stock of LOCAP, Inc. owned by Ashland, which shares
on the date hereof represent an 8.6% interest in LOCAP, Inc.; provided
--------
<PAGE>
4
that in the event there is a reclassification of the LOOP, LLC membership
interests or the common stock of LOCAP, Inc. into one or more different types or
classes of securities, the "Ashland LOOP/LOCAP Interest" shall instead include
such different types or classes of securities.
"Ashland LOOP/LOCAP Irrevocable Proxy" has the meaning set forth in
------------------------------------
Section 9.02(e).
"Ashland LOOP/LOCAP Revocable Proxy" has the meaning set forth in
----------------------------------
Section 5.02(c).
"Ashland Material Adverse Effect" means, for purposes of Section 1.03,
-------------------------------
either (i) a material adverse effect on the ability of Ashland to perform its
obligations under this Agreement or (ii) an effect on the business, operations,
assets, liabilities, results of operations, cash flows, condition (financial or
otherwise) or prospects of Ashland's Business which results in a Loss of two
million dollars ($2,000,000) or more, or, if such Loss is not susceptible to
being measured in monetary terms, is otherwise materially adverse to Ashland's
Business; provided that any such effect relating to or resulting from any change
--------
in the price of petroleum or petroleum byproducts, general economic conditions
or local, regional, national or international industry conditions (including
changes in financial or market conditions) shall be deemed not to constitute an
Ashland Material Adverse Effect.
"Ashland Membership Interests" means the initial Membership Interests
----------------------------
of Ashland on the date hereof, together with any additional Membership Interests
that Ashland may hereafter acquire.
"Ashland Put Exercise Date" has the meaning set forth in Section 4.03.
-------------------------
"Ashland Put Exercise Notice" has the meaning set forth in Section
---------------------------
4.03.
"Ashland Put Price" has the meaning set forth in Section 4.01.
-----------------
"Ashland Put Price Election Date" has the meaning set forth in Section
-------------------------------
4.04(b).
<PAGE>
5
"Ashland Put Price Election Notice" has the meaning set forth in
---------------------------------
Section 4.04(a).
"Ashland Put Right" has the meaning set forth in Section 4.01.
-----------------
"Ashland Representatives Revocable Proxies" has the meaning set forth
-----------------------------------------
in Section 5.02(a).
"Ashland Special Termination Right" means the Special Termination
---------------------------------
Right granted to Ashland pursuant to Section 2.01.
"Ashland Voting Securities" means the securities of Ashland (i) having
-------------------------
the power under ordinary circumstances to elect at least a majority of the board
of directors of Ashland (whether or not any senior class of stock has voting
power by reason of any contingency) or (ii) convertible into or exchangeable for
securities of Ashland having the power under ordinary circumstances to elect at
least a majority of the board of directors of Ashland (whether or not any senior
class of stock has voting power by reason of any contingency).
"Average Annual Level" means for any twelve-month period ending on
--------------------
December 31 of any calendar year, the average of the level of the Price Index
ascertained by adding the twelve monthly levels of the Price Index during such
twelve-month period and dividing the total by twelve.
"Base Level" has the meaning set forth in the LLC Agreement.
----------
"Base Rate" means a rate of interest closely approximating that of
---------
comparable term senior debt securities or debt obligations priced to trade at
par issued by USX or issued by Marathon and fully guaranteed by USX, or issued
by a firm of comparable credit standing.
"Blackout Period" has the meaning set forth in Section 10.01(b).
---------------
"Bulge Bracket Investment Banking Firm" means an investment banking
-------------------------------------
firm that is listed as one of the top 10 investment banking firms for all
domestic equity issues in terms of the aggregate dollar amount of such issues
(with full credit given to the lead manager) as reported in the
<PAGE>
6
latest issue of Investment Dealers' Digest or a publication (or otherwise) of
similar national repute which provides rankings of investment banking firms by
size of domestic issues.
"Bulk Motor Oil Business" has the meaning set forth in Section
-----------------------
14.03(h).
"Cash" means United States dollars or immediately available funds in
----
United States dollars.
"Closing" has the meaning set forth in Section 9.01(a).
-------
"Closing Date" has the meaning set forth in Section 9.01(a).
------------
"Commission" means the Securities and Exchange Commission or any
----------
successor agency having jurisdiction under the Securities Act.
"Company Competitive Business" has the meaning set forth in Section
----------------------------
14.01(a).
"Company Competitive Business Assets" has the meaning set forth in
-----------------------------------
Section 14.01(d).
"Company Competitive Third Party" has the meaning set forth in Section
-------------------------------
14.01(d).
"Company Material Adverse Effect" means, for purposes of Section 1.03,
-------------------------------
an effect on the business, operations, assets, liabilities, results of
operations, cash flows, condition (financial or otherwise) or prospects of the
Company's Business which results in a Loss of two million dollars ($2,000,000)
or more, or, if such Loss is not susceptible to being measured in monetary
terms, is otherwise materially adverse to the Company's Business; provided that
--------
any such effect relating to or resulting from any change in the price of
petroleum or petroleum byproducts, general economic conditions or local,
regional, national or international industry conditions (including changes in
financial or market conditions) shall be deemed not to constitute a Company
Material Adverse Effect.
"Competitive Business Purchase Price" has the meaning set forth in
-----------------------------------
Section 14.04.
<PAGE>
7
"Confidential Information" has the meaning set forth in Section
------------------------
14.02(b).
"Confidentiality Agreement" has the meaning set forth in Section
-------------------------
14.02(b).
"Delayed Closing Date" has the meaning set forth in Section 9.03(b).
--------------------
"Delayed Closing Date Interest Period" has the meaning set forth in
------------------------------------
Section 9.03(b).
"Delayed Installment Payment Date" has the meaning set forth in
--------------------------------
Section 9.06.
"Delayed Installment Payment Date Interest Period" has the meaning set
------------------------------------------------
forth in Section 9.06.
"Demand Registration" has the meaning set forth in Section 10.01(a).
-------------------
"Designated Sublease Agreements" means the Ashland Designated Sublease
--------------------------------
Agreements and the Marathon Designated Sublease Agreements.
"Disclosing Party" has the meaning set forth in Section 14.02(b).
----------------
"Dispute" has the meaning set forth in Section 16.01.
-------
"Dispute Notice" has the meaning set forth in Section 16.02.
--------------
"Distributable Cash" has the meaning set forth in the LLC Agreement.
------------------
"Escrow Account" has the meaning set forth in Section 5.01(a)(ii)(B).
--------------
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"Exercise Date" means the Special Termination Exercise Date, the
-------------
Marathon Call Exercise Date or the Ashland Put Exercise Date, as applicable.
<PAGE>
8
"Exercise Period Distributions" means Ashland Exercise Period
-----------------------------
Distributions or Marathon Exercise Period Distributions, as applicable.
"Fair Market Value" has the meaning set forth in Section 7.01.
-----------------
"14.01(d) Presentation Meeting" has the meaning set forth in Section
-----------------------------
14.01(d).
"14.01(d) Scheduled Closing Date" has the meaning set forth in Section
-------------------------------
14.01(d).
"14.03(d) Offer Notice" has the meaning set forth in Section 14.03(d).
---------------------
"14.03(d) Purchase Election Notice" has the meaning set forth in
---------------------------------
Section 14.03(d).
"14.03(d) Scheduled Closing Date" has the meaning set forth in Section
-------------------------------
14.03(d).
"14.03(f) Offer Notice" has the meaning set forth in Section
---------------------
14.03(f)(i).
"14.03(f) Purchase Election Notice" has the meaning set forth in
---------------------------------
Section 14.03(f)(i).
"14.04 Appraisal Process Commencement Date" has the meaning set forth
-----------------------------------------
in Section 14.04.
"14.04 Appraisal Report" has the meaning set forth in Section 14.04.
----------------------
"14.04 Initial Opinion Values" has the meaning set forth in Section
----------------------------
14.04.
"14.04 Subsequent Appraisal Process Commencement Date" has the meaning
----------------------------------------------------
set forth in Section 14.04.
"14.04 Third Opinion Value" has the meaning set forth in Section
-------------------------
14.04.
"Fully Distributed Sale" has the meaning set forth in Section 8.04.
----------------------
<PAGE>
9
"Holding Period" has the meaning set forth in Section 8.03.
--------------
"Installment Payment" has the meaning set forth in Section 4.02(b).
-------------------
"Installment Payment Date" means a Scheduled Installment Payment Date
------------------------
or a Delayed Installment Payment Date, as applicable.
"Investment Grade Rating" means a rating of BBB-or higher by S&P or
-----------------------
Baa3 or higher by Moody's or the equivalent of such rating by S&P and Moody's.
"Issuer" has the meaning set forth in Section 10.01(a).
------
"Issuer Material Adverse Effect" means either (i) a material adverse
------------------------------
effect on the ability of the Issuer to perform its obligations under this
Agreement or (ii) a material adverse effect on the business, operations, assets,
liabilities, results of operations, cash flows, condition (financial or
otherwise) or prospects of the Issuer and its subsidiaries, taken as a whole;
provided, however, that any such effect relating to or resulting from any change
- -------- -------
in the price of petroleum or petroleum byproducts, general economic conditions
or local, regional, national or international industry conditions (including
changes in financial or market conditions) or any change in applicable tax laws
or regulations shall be deemed not to constitute an Issuer Material Adverse
Effect.
"LIBOR Rate" means, for any one-month period or portion thereof, the
----------
per annum rate (rounded to the nearest 1/10,000 of 1%) for U.S. dollar deposits
for such one-month period which appears on Bloomberg Page DG522a Equity GPGX as
of 11:00 a.m. London time on the second London business day preceding the first
day of such one-month period. "Bloomberg Page DG522a Equity GPGX" means the
---------------------------------
display page designated "DG522a Equity GPGX" on the Bloomberg, L.P. quotation
service (or replacement page or successor service for displaying comparable
rates).
"Losses" has the meaning set forth in Section 10.04.
------
<PAGE>
10
"Long Term Debt" means Indebtedness with a maturity of one year or
--------------
longer.
"Maralube Express Business" has the meaning set forth in Section
-------------------------
14.03(d)(i).
"Marathon Call Exercise Date" has the meaning set forth in Section
---------------------------
3.03.
"Marathon Call Exercise Notice" has the meaning set forth in Section
-----------------------------
3.03.
"Marathon Call Price" has the meaning set forth in Section 3.01.
-------------------
"Marathon Call Right" has the meaning set forth in Section 3.01.
-------------------
"Marathon Debt Securities" has the meaning set forth in Section 8.01.
------------------------
"Marathon Designated Sublease Agreements" means the Marathon Sublease
----------------------------------------
Agreements attached as Exhibits E-1, E-2 and E-3 to the Asset Transfer and
Contribution Agreement.
"Marathon Equity Securities" means any of (i) the class of common
--------------------------
stock of USX designated as USX-Marathon Group Common Stock, par value $1.00 per
share, (ii) the class of common equity securities of Marathon or, if USX has
transferred all of the assets and liabilities of the Marathon Group to a
Marathon Group Subsidiary (as such term is defined in the Certificate of
Incorporation of USX) pursuant to Section 2(a) of Division I of Article Fourth
of the Certificate of Incorporation of USX and the Board of Directors of USX has
declared that all of the outstanding shares of USX-Marathon Group Common Stock
be exchanged for shares of common stock of the Marathon Group Subsidiary, the
Marathon Group Subsidiary; provided, that so long as Marathon shall be a
--------
subsidiary of USX, such common equity securities shall constitute Marathon
Equity Securities only if such class accounts for USX's primary ownership
interest in Marathon, or (iii) the common equity securities of USX (but only if
a single class of common equity securities of USX exists), in each case (1)
registered pursuant to Section 12 of the Exchange Act and (2) issued to Ashland
pursuant to Section 4.02(c); provided that in the event there is a
--------
<PAGE>
11
reclassification of any of the foregoing classes of common stock into one or
more different types or classes of securities, "Marathon Equity Securities"
shall instead include such different types or classes of securities.
"Marathon Exercise Period Distributions" has the meanings set forth in
--------------------------------------
Section 5.01(b)(i).
"Marathon Material Adverse Effect" means, for purposes of Section
--------------------------------
1.03, either (i) a material adverse effect on the ability of Marathon to perform
its obligations under this Agreement or (ii) an effect on the business,
operations, assets, liabilities, results of operations, cash flows, condition
(financial or otherwise) or prospects of Marathon's Business which results in a
Loss of two million dollars ($2,000,000) or more, or, if such Loss is not
susceptible to being measured in monetary terms, is otherwise materially adverse
to Marathon's Business; provided that any such effect relating to or resulting
--------
from any change in the price of petroleum or petroleum byproducts, general
economic conditions or local, regional, national or international industry
conditions (including changes in financial or market conditions) shall be deemed
not to constitute a Marathon Material Adverse Effect.
"Marathon Membership Interests" means the initial Membership Interests
-----------------------------
of Marathon on the date hereof, together with any additional Membership
Interests that Marathon may hereafter acquire.
"Marathon Representatives Revocable Proxies" has the meaning set forth
------------------------------------------
in Section 5.02(b).
"Marathon Special Termination Right" means the Special Termination
----------------------------------
Right granted to Marathon pursuant to Section 2.01.
"Market Value of the Company" has the meaning set forth in Section
---------------------------
6.01(c).
"Maximum Offering Size" has the meaning set forth in Section 10.01(e).
---------------------
"Mid-Level Employee" has the meaning set forth in Section
------------------
14.02(a)(ii).
<PAGE>
12
"Minimum Lube Oil Purchase Amount" has the meaning set forth in
--------------------------------
Section 14.03(h).
"Moody's" means Moody's Investors Service Inc. and any successor
-------
thereto.
"National Securities Exchange" means a securities exchange registered
----------------------------
as a national securities exchange under Section 6 of the Exchange Act.
"9.04(b) Post-Scheduled Closing Date Distribution Amount" has the
-------------------------------------------------------
meaning set forth in Section 9.04(b).
"9.08(b) Post-Scheduled Closing Date Distribution Amount" has the
-------------------------------------------------------
meaning set forth in Section 9.08(b).
"Non-Terminating Member" has the meaning set forth in Section 2.01(a).
----------------------
"Offering Memorandum" means any offering memorandum prepared in
-------------------
connection with a sale of Securities effected in accordance with Section 4(2) or
Rule 144A under the Securities Act, including all amendments and supplements to
such offering memorandum, all exhibits thereto and all materials incorporated by
reference in such offering memorandum.
"Other Holders" has the meaning set forth in Section 10.01(e).
-------------
"Packaged Motor Oil Business" has the meaning set forth in Section
---------------------------
14.03(h).
"Percentage Interest" has the meaning set forth in the LLC Agreement.
-------------------
"Permitted Investments" means any of the following: (i) any
---------------------
investment in direct obligations of the United States of America or any agency
thereof or obligations Guaranteed by the United States of America or any agency
thereof; (ii) investments in time deposit accounts, certificates of deposit and
money market deposits maturing within 180 days of the date of acquisition
thereof issued by a bank or trust company which is organized under the laws of
the United States of America, any state thereof or any foreign country
recognized by the United States of America having capital, surplus and undivided
profits
<PAGE>
13
aggregating in excess of $250,000,000 (or the foreign currency equivalent
thereof) and whose Long Term debt is rated "A" (or higher) by Moody's or S&P;
(iii) repurchase agreements having terms of not more than 30 days that are (A)
collateralized by underlying securities of the types described in clause (i)
above having a fair market value at the time the Company enters into such
repurchase agreements of at least 102% of the principal amount of such
repurchase agreements and (B) entered into with a bank meeting the
qualifications described in clause (ii) above; (iv) investments in commercial
paper, maturing not more than 90 days after the date of acquisition, issued by a
corporation (other than an Affiliate of any of the parties hereto) organized and
in existence under the laws of the United States of America, any state thereof
or any foreign country recognized by the United States of America with a rating
at the time as of which any investment therein is made of both "P-1" (or higher)
according to Moody's and "A-1" (or higher) according to S&P; and (v) investments
in securities with maturities of six months or less from the date of acquisition
issued or fully guaranteed by any state, commonwealth or territory of the United
States of America, or by any political subdivision or taxing authority thereof,
and rated at least "A" by S&P or "A" by Moody's.
"Price Index" has the meaning set forth in the LLC Agreement.
-----------
"Private Label Packaged Motor Oil Business" has the meaning set forth
-----------------------------------------
in Section 14.03(h).
"Qualifying Public Offering" has the meaning set forth in Section
--------------------------
8.04.
"Quick Lube Business" has the meaning set forth in Section 14.03(h).
-------------------
"Registration Statement" means any registration statement under the
----------------------
Securities Act which permits the public offering of Securities, including the
prospectus included therein, all amendments and supplements to such registration
statement or prospectus, including post-effective amendments, all exhibits
thereto and all materials incorporated by reference in such registration
statement.
"Representatives" has the meaning set forth in Section 14.02(b).
---------------
<PAGE>
14
"Response" has the meaning set forth in Section 16.02.
--------
"Required Disclosure" has the meaning set forth in Section 7.03(a).
-------------------
"Required Disclosure Date" has the meaning set forth in Section
------------------------
7.03(a).
"Scheduled Closing Date" has the meaning set forth in Section 9.01(a).
----------------------
"Scheduled Installment Payment Date" has the meaning set forth in
----------------------------------
Section 4.02(b).
"Securities" means Marathon Debt Securities and/or Marathon Equity
----------
Securities.
"Securities Act" means the Securities Act of 1933.
--------------
"Securities Document" has the meaning set forth in Section 8.02.
-------------------
"Senior Employee" has the meaning set forth in Section 14.02(a)(ii).
---------------
"S&P" means Standard & Poor's Corporation and any successor thereto.
---
"7.03(b) Appraisal Process Commencement Date" has the meaning set
-------------------------------------------
forth in Section 7.03(b).
"7.03(b) Appraisal Report" has the meaning set forth in Section
------------------------
7.03(b).
"7.03(b) Discount Amount" has the meaning set forth in Section
-----------------------
7.03(b).
"7.03(b) Initial Opinion Values" has the meaning set forth in Section
------------------------------
7.03(b).
"7.03(b) Subsequent Appraisal Process Commencement Date" has the
------------------------------------------------------
meaning set forth in Section 7.03(b).
"7.03(b) Third Opinion Value" has the meaning set forth in Section
---------------------------
7.03(b).
<PAGE>
15
"7.04 Appraisal Process Commencement Date" has the meaning set forth
----------------------------------------
in Section 7.04(b).
"7.04 Appraisal Report" has the meaning set forth in Section 7.04(b).
---------------------
"7.04 Discount Amount" has the meaning set forth in Section 7.04(b).
--------------------
"7.04 Initial Opinion Values" has the meaning set forth in Section
---------------------------
7.04(b).
"7.04 Subsequent Appraisal Process Commencement Date" has the meaning
---------------------------------------------------
set forth in Section 7.04(b).
"7.04 Third Opinion Value" has the meaning set forth in Section
------------------------
7.04(b).
"6.01 Appraisal Process Commencement Date" has the meaning set forth
----------------------------------------
in Section 6.01(b).
"6.01 Appraisal Report" has the meaning set forth in Section 6.01(b).
---------------------
"6.01 Initial Opinion Values" has the meaning set forth in Section
---------------------------
6.01(b).
"6.01 Subsequent Appraisal Process Commencement Date" has the meaning
---------------------------------------------------
set forth in Section 6.01(b).
"6.01 Third Opinion Value" has the meaning set forth in Section
------------------------
6.01(b).
"Special Termination Exercise Date" has the meaning set forth in
---------------------------------
Section 2.03.
"Special Termination Exercise Notice" has the meaning set forth in
-----------------------------------
Section 2.03.
"Special Termination Price" has the meaning set forth in Section
-------------------------
2.01(a).
"Special Termination Right" has the meaning set forth in Section
-------------------------
2.01(a).
"Tax Liability" has the meaning set forth in the LLC Agreement.
-------------
<PAGE>
16
"Tax Liability Distributions" means the cash distributions to which a
---------------------------
Member is entitled pursuant to Section 5.01(a) of the LLC Agreement.
"Terminating Member" has the meaning set forth in Section 2.01(a).
------------------
"Terminating Member's Membership Interests" means, if Ashland is the
-----------------------------------------
Terminating Member, the Ashland Membership Interests and, if Marathon is the
Terminating Member, the Marathon Membership Interests.
"Terminating Member's Percentage Interest" means, if Ashland is the
----------------------------------------
Terminating Member, the Ashland Percentage Interest and, if Marathon is the
Terminating Member, the Marathon Percentage Interest.
"Termination Notice" has the meaning set forth in Section 2.01(a).
------------------
"Trading Day" means any day on which the New York Stock Exchange is
-----------
open for business.
"Underwritten Public Offering" means an underwritten public offering
----------------------------
of Securities pursuant to an effective Registration Statement under the
Securities Act.
"USX Material Adverse Effect" means, for purposes of Section 1.03, a
---------------------------
material adverse effect on the ability of USX to perform its obligations under
this Agreement.
"USX Voting Securities" means the securities of USX (i) having the
---------------------
power under ordinary circumstances to elect at least a majority of the board of
directors of USX (whether or not any senior class of stock has voting power by
reason of any contingency) or (ii) convertible into or exchangeable for
securities of USX having the power under ordinary circumstances to elect at
least a majority of the board of directors of USX (whether or not any senior
class of stock has voting power by reason of any contingency); provided, that
--------
each class of common equity securities of USX, and any securities of USX
convertible into or exchangeable for any such class, shall constitute USX Voting
Securities regardless of whether such class has the power under ordinary
circumstances to elect at least a majority of the board of directors of USX.
<PAGE>
17
"Valvoline" has the meaning set forth in Section 14.03(h).
---------
"Valvoline Business" has the meaning set forth in Section 14.03(h).
------------------
"Valvoline Competitive Business Assets" has the meaning set forth in
-------------------------------------
Section 14.03(d).
"Valvoline Competitive Third Party" has the meaning set forth in
---------------------------------
Section 14.03(d).
"Weighted Average Price" has the meaning set forth in Section 7.03(a).
----------------------
SECTION 1.02. Adjustable Amounts. Within 30 days following the date
-------------------
on which the United States Department of Labor Bureau of Labor Statistics for
all Urban Areas publishes the Price Index for (a) the month of December, 2002
and (b) thereafter, the month of December in each five year anniversary of the
year 2002 (the year 2002 and each such five year anniversary being an
"Adjustment Year"), the Company shall determine whether the Average Annual Level
- ----------------
for the applicable Adjustment Year exceeds the Base Level. If the Company
determines that the Average Annual Level for such Adjustment Year exceeds the
Base Level, then the Company shall increase or decrease each of the following
amounts (each, an "Adjustable Amount") to an amount calculated by multiplying
-----------------
the relevant Adjustable Amount by a fraction whose numerator is the Average
Annual Level for such Adjustment Year and whose denominator is the Base Level:
(i) the two million dollars ($2,000,000) amount set forth in the definition of
"Ashland Material Adverse Effect"; (ii) the two million dollars ($2,000,000)
amount set forth in the definition of "Company Material Adverse Effect"; (iii)
the two million dollars ($2,000,000) amount set forth in the definition of
"Marathon Material Adverse Effect"; (iv) the $250 million amount set forth in
clause (ii) of the definition of "Permitted Investments" in Section 1.01; and
(v) the $100 million and $25 million amounts set forth in Section 10.01(a);
provided that in no event shall any Adjustable Amount be decreased below the
- --------
initial amount thereof set forth herein. Within five Business Days after making
such determinations, the Company shall distribute to each Member a notice (an
"Adjustable Amounts Notice") setting forth: (A) the amount by which the Average
- --------------------------
Annual Level for such Adjustment Year exceeded the
<PAGE>
18
Base Level and (B) the calculations of any adjustments made to the Adjustable
Amounts pursuant to this Section 1.02. Any adjustment made to the Adjustable
Amounts pursuant to this Section 1.02 shall be effective as of the date on which
the Company delivers to the Members the related Adjustable Amounts Notice.
SECTION 1.03. Representations and Warranties. Each of Marathon and
-------------------------------
USX represents and warrants to Ashland, and Ashland represents and warrants to
each of Marathon and USX, in each case as of the date hereof and will be
required to represent and warrant as of any Closing Date, as follows:
(a) Due Organization, Good Standing and Power. It is a corporation
------------------------------------------
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation with the power and authority to own,
lease and operate its assets and to conduct the business now being or to be
conducted by it. It is duly authorized, qualified or licensed to do
business as a foreign corporation or other organization in good standing in
each of the jurisdictions in which its right, title or interest in or to
any of the assets held by it or the business conducted by it requires such
authorization, qualification or licensing, except where the failure to be
so authorized, qualified, licensed or in good standing would not have and
would not reasonably be expected to have, individually or in the aggregate,
a Marathon Material Adverse Effect, a USX Material Adverse Effect or an
Ashland Material Adverse Effect, as the case may be. It has all requisite
power and authority to enter into this Agreement and to perform its
obligations hereunder.
(b) Authorization and Validity of Agreements. The execution and
-----------------------------------------
delivery by it of this Agreement and the consummation by it of the
transactions contemplated hereby have been duly authorized and approved by
all necessary corporate or other action on its part. This Agreement has
been duly executed and delivered by it. This Agreement is its legal, valid
and binding obligation, enforceable against it in accordance with its
terms.
(c) Lack of Conflicts. Except as set forth on Schedule 1.03(c) to the
------------------ ----------------
Marathon, USX or Ashland Put/Call, Registration Rights and Standstill
Disclosure
<PAGE>
19
Letter, as applicable, neither the execution and delivery by it of this
Agreement nor the consummation by it of the transactions contemplated
hereby does or will (i) conflict with, or result in the breach of any
provision of, its charter or by-laws or similar governing or organizational
documents or any of its subsidiaries, (ii) violate any Applicable Law or
any permit, order, award, injunction, decree or judgment of any
Governmental Authority applicable to or binding upon it or any of its
subsidiaries or to which any of their respective properties or assets is
subject, (iii) violate, conflict with or result in the breach or
termination of, or otherwise give any other person the right to terminate,
or constitute a default, an event of default or an event which with notice,
lapse of time or both, would constitute a default or an event of default
under the terms of, any mortgage, indenture, deed of trust or lease or
other agreement or instrument to which it or any of its subsidiaries is a
party or by which any of their respective properties or assets is subject,
except, in the case of clauses (ii) or (iii), for such violations,
conflicts, breaches, terminations and defaults which would not have and
would not reasonably be expected to have, individually, a Company Material
Adverse Effect.
(d) No Consents. Except as set forth on Schedule 1.03(d) to the
------------ ----------------
Marathon, USX or Ashland Put/Call, Registration Rights and Standstill
Disclosure Letter, as applicable, no Governmental Approval or other consent
is required by it for the execution and delivery by it of this Agreement or
for the consummation of the transactions contemplated hereby except (a) for
such Governmental Approvals or other consents as have been obtained or are
contemplated hereby to be obtained after Closing or (b) where the failure
to obtain such Governmental Approvals or other consents would not have and
would not reasonably be expected to have, individually, a Company Material
Adverse Effect.
<PAGE>
20
ARTICLE II
----------
Special Termination Right
-------------------------
SECTION 2.01. Special Termination Right. (a) If Ashland or Marathon
--------------------------
(the "Terminating Member") notifies the Board of Managers of the Company and the
------------------
other Member (the "Non-Terminating Member") in writing pursuant to Section 2.03
----------------------
of the LLC Agreement that it wants to terminate the term of the Company at the
end of the Initial Term or any succeeding 10-year period (any such notice being
a "Termination Notice"), then, subject to Section 2.01(b), the Non-Terminating
------------------
Member shall have the right, exercisable at any time during the 180-day period
following its receipt from the Terminating Member of a Termination Notice, to
purchase from the Terminating Member on the Scheduled Closing Date (the "Special
-------
Termination Right"), and the Terminating Member shall thereupon be required to
- -----------------
sell to the Non-Terminating Member on the Scheduled Closing Date, all of its
Membership Interests and, in the circumstance where Ashland is the Terminating
Member, the Ashland LOOP/LOCAP Interest, for an aggregate amount equal to the
purchase price (the "Special Termination Price") set forth in Section 2.02(a),
-------------------------
plus interest on the Special Termination Price at a rate per annum equal to the
Base Rate, with daily accrual of interest, for the period commencing on the
Special Termination Exercise Date and ending on the Scheduled Closing Date. The
Special Termination Right shall automatically terminate at the close of business
on the 180th day following the Non-Terminating Member's receipt of a Termination
Notice, unless previously exercised by the Non-Terminating Member in accordance
with the provisions of Section 2.03.
(b) Notwithstanding anything to the contrary contained in Section
2.01(a), if Marathon and Ashland each deliver a Terminating Notice to the Board
of Managers of the Company and the other Member, then neither Marathon nor
Ashland shall have a Special Termination Right.
SECTION 2.02. Special Termination Price. (a) Amount. The Special
-------------------------- -------
Termination Price shall be an amount equal to the product of (i) 100% of the
Appraised Value of the Company multiplied by (ii) the Terminating Member's
Percentage Interest.
<PAGE>
21
(b) Timing of Payment. The Non-Terminating Member shall pay the
------------------
entire Special Termination Price, together with accrued interest calculated as
set forth in Section 2.01, on the Scheduled Closing Date.
(c) Form of Consideration. The Non-Terminating Member shall pay the
----------------------
Special Termination Price, and all accrued interest, in Cash.
SECTION 2.03. Method of Exercise. The Non-Terminating Member shall
-------------------
exercise its Special Termination Right by delivering to the Terminating Member a
notice of such exercise (the "Special Termination Exercise Notice"). The date
-----------------------------------
of the Terminating Member's receipt of the Special Termination Exercise Notice
shall be deemed to be the date of the Non-Terminating Member's exercise of its
Special Termination Right (the "Special Termination Exercise Date") and, except
---------------------------------
as expressly provided in Sections 9.08(a) and 9.09, the Non-Terminating Member's
exercise of its Special Termination Right shall thereafter be irrevocable.
ARTICLE III
Marathon Call Right
-------------------
SECTION 3.01. Marathon Call Right. Subject to Section 3.04, at any
--------------------
time on and after December 31, 2004, Marathon shall have the right to purchase
from Ashland on the Scheduled Closing Date (the "Marathon Call Right"), and
-------------------
Ashland shall thereupon be required to sell to Marathon on the Scheduled Closing
Date, all of Ashland's Membership Interests and the Ashland LOOP/LOCAP Interest,
for an aggregate amount equal to the purchase price (the "Marathon Call Price")
-------------------
set forth in Section 3.02(a), plus interest on the Marathon Call Price at a rate
per annum equal to the Base Rate, with daily accrual of interest, for the period
commencing on the Marathon Call Exercise Date and ending on the Scheduled
Closing Date.
SECTION 3.02. Marathon Call Price. (a) Amount. The Marathon Call
-------------------- -------
Price shall be an amount equal to the product of (i) 115% of the Appraised Value
of the Company multiplied by (ii) Ashland's Percentage Interest.
<PAGE>
22
(b) Timing of Payment. Marathon shall pay the entire Marathon Call
------------------
Price, together with accrued interest calculated as set forth in Section 3.01,
on the Scheduled Closing Date.
(c) Form of Consideration. Marathon shall pay the Marathon Call
---------------------
Price, and all accrued interest, in Cash.
SECTION 3.03. Method of Exercise. Marathon shall exercise its
-------------------
Marathon Call Right by delivering to Ashland a notice of such exercise (the
"Marathon Call Exercise Notice"). The date of Ashland's receipt of the Marathon
- ------------------------------
Call Exercise Notice shall be deemed to be the date of Marathon's exercise of
its Marathon Call Right (the "Marathon Call Exercise Date") and, except as
---------------------------
expressly provided in Sections 9.03(a), 9.04(a) and 9.05, Marathon's exercise of
its Marathon Call Right shall thereafter be irrevocable.
SECTION 3.04. Limitation on Marathon's Ability To Exercise its
------------------------------------------------
Marathon Call Right. If prior to the Marathon Call Exercise Date, Ashland
- --------------------
elects to Transfer its Membership Interests to a third party pursuant to Section
10.01(c) of the LLC Agreement, and in connection therewith delivers to Marathon
the requisite Offer Notice pursuant to Section 10.04 of the LLC Agreement,
Marathon shall not be permitted to exercise its Marathon Call Right for a period
commencing on the date of Marathon's receipt of such Offer Notice and ending on
the earliest of (i) 120 days (or 270 days if a second request has been made
under HSR) following such receipt, (ii) the closing of such Transfer, and (iii)
the date such proposed Transfer by Ashland shall have been finally abandoned.
After such period, Marathon shall be entitled to exercise its Marathon Call
Right.
ARTICLE IV
Ashland Put Right
-----------------
SECTION 4.01. Ashland Put Right. Subject to Section 4.05, at any
------------------
time after December 31, 2004, Ashland shall have the right to sell to Marathon
on the Scheduled Closing Date (the "Ashland Put Right"), and Marathon shall
-----------------
thereupon be required to purchase from Ashland on the Scheduled Closing Date,
all of Ashland's Membership Interests and the Ashland LOOP/LOCAP Interest, for
an
<PAGE>
23
aggregate amount equal to the purchase price (the "Ashland Put Price") set forth
-----------------
in Section 4.02, plus interest on the Ashland Put Price (or, in the event that
Marathon elects to pay the Ashland Put Price in installments, any unpaid portion
of the Ashland Put Price) at a rate per annum equal to the Base Rate, with daily
accrual of interest, for the period commencing on the Ashland Put Exercise Date
and ending on the Scheduled Closing Date (or, in the event that Marathon elects
to pay the Ashland Put Price in installments, on the applicable Scheduled
Installment Payment Date).
SECTION 4.02. Ashland Put Price. (a) Amount. The Ashland Put Price
------------------ -------
shall be an amount equal to the sum of (i) for that portion of the Ashland Put
Price to be paid to Ashland in Cash or in Marathon Debt Securities, an amount
equal to the product of (x) 85% of the Appraised Value of the Company multiplied
by (y) Ashland's Percentage Interest multiplied by (z) the percentage of the
Ashland Put Price to be paid to Ashland in Cash and/or in Marathon Debt
Securities, plus (ii) for that portion of the Ashland Put Price to be paid to
Ashland in Marathon Equity Securities, an amount equal to the product of (x) 90%
of the Appraised Value of the Company multiplied by (y) Ashland's Percentage
Interest multiplied by (z) the percentage of the Ashland Put Price to be paid to
Ashland in Marathon Equity Securities.
(b) Timing of Payment. Subject to Section 4.02(d), Marathon shall
------------------
have the right to elect, by specifying in the Ashland Put Price Election Notice,
to (i) pay the entire Ashland Put Price on the Scheduled Closing Date or (ii)
pay the Ashland Put Price in three equal installments (each an "Installment
-----------
Payment"), in either case, together with accrued interest calculated as set
- -------
forth in Section 4.01. If Marathon elects to pay the Ashland Put Price in
installments, Marathon shall pay Ashland (x) the first Installment Payment on
the Scheduled Closing Date; (y) the second Installment Payment on the first
anniversary of the Scheduled Closing Date; and (z) the third Installment Payment
on the second anniversary of the Scheduled Closing Date (each such date being a
"Scheduled Installment Payment Date"), in each case, together with accrued
----------------------------------
interest calculated as set forth in Section 4.01.
(c) Form of Consideration. Subject to Section 4.02(d), Marathon
----------------------
shall have the right to elect, by specifying in an Ashland Put Price Election
Notice, to pay
<PAGE>
24
the Ashland Put Price (i) entirely in Cash or (ii) in a combination of Cash and
Securities; provided that at least 50% of the Ashland Put Price (and at least
--------
50% of each Installment Payment if Marathon elects to pay in installments) shall
consist of Cash; provided further, that the sum of (x) the Fair Market Value of
-------- -------
any Securities issued to Ashland on the Closing Date (or on any Installment
Payment Date) plus (y) the amount of Cash paid to Ashland on the Closing Date
(or on such Installment Payment Date) in respect of the Ashland Put Price, in
each case exclusive of any interest paid thereon, shall equal the Ashland Put
Price (or the applicable Installment Payment); and provided further, that in no
-------- -------
event shall Marathon or USX issue to Ashland an amount of Marathon Equity
Securities that would cause Ashland to own, directly or indirectly, at the
Closing or on any Scheduled Installment Payment Date in the aggregate 10% or
more of the number of shares of such class of Marathon Equity Securities that
are outstanding on the Closing Date and are publicly held (it being understood
and agreed that for purposes of this Section 4.02(c), any shares of such class
of Marathon Equity Securities that are either held by Marathon or any of its
Affiliates or subject to restrictions on transfer shall not be considered
publicly held). Marathon shall pay all accrued interest in Cash.
(d) Consequences of Failure to Make Certain Elections.
-------------------------------------------------
Notwithstanding anything to the contrary in this Agreement:
(i) if Marathon fails to deliver to Ashland an Ashland Put Price
Election Notice within the requisite time period set forth in Section
4.04(a) or if Marathon delivers to Ashland an Ashland Put Price Election
Notice that states that the entire Ashland Put Price will be paid at
Closing but does not state whether any portion of the Ashland Put Price
will be paid in Securities, Marathon shall thereafter be required to pay
Ashland the entire Ashland Put Price in Cash on the Closing Date;
(ii) if Marathon delivers to Ashland an Ashland Put Price Election
Notice pursuant to Section 4.04(a) that does not indicate whether it is
electing to pay the Ashland Put Price in installments, Marathon shall
thereafter be required to pay Ashland the entire Ashland Put Price on the
Closing Date;
<PAGE>
25
(iii) if Marathon delivers to Ashland an Ashland Put Price Election
Notice pursuant to Section 4.04(a) that does not indicate the form of
consideration regarding the Ashland Put Price (or, if such Ashland Put
Price Election Notice states that Marathon has elected to pay the Ashland
Put Price in installments, the first Installment Payment), Marathon shall
thereafter be required to pay Ashland the entire Ashland Put Price (or
first Installment Payment) in Cash on the Closing Date;
(iv) if Marathon has elected in its Ashland Put Price Election Notice
delivered pursuant to Section 4.04(b) to pay the Ashland Put Price in
installments and thereafter if Marathon fails to deliver to Ashland an
Ashland Put Price Election Notice within the requisite time period set
forth in Section 4.04(b) for any Scheduled Installment Payment Date,
Marathon shall thereafter be required to pay Ashland the entire Installment
Payment in Cash on the applicable Installment Payment Date;
(v) if Marathon elects in any Ashland Put Price Election Notice to
issue (or to have USX issue) to Ashland Actively Traded Marathon Equity
Securities on the Closing Date (or applicable Installment Payment Date) and
at any time prior to the Closing Date (or such Installment Payment Date),
such Securities cease for whatever reason to be Actively Traded Marathon
Equity Securities, Marathon shall thereafter be required to pay Ashland the
entire Ashland Put Price (or the applicable Installment Payment) in Cash on
the Closing Date (or applicable Installment Payment Date); and
(vi) if Marathon elects in any Ashland Put Price Election Notice to
issue (or to have USX issue) to Ashland Actively Traded Marathon Equity
Securities on the Closing Date (or applicable Installment Payment Date) and
Marathon fails to give the related Required Disclosure on the applicable
Required Disclosure Date, Marathon shall thereafter be required to pay to
Ashland the entire Ashland Put Price (or the applicable Installment
Payment) in Cash on the Closing Date (or on such Installment Payment Date).
<PAGE>
26
SECTION 4.03. Method of Exercise. Ashland may exercise its Ashland
-------------------
Put Right by delivering to Marathon a notice of such exercise (the "Ashland Put
-----------
Exercise Notice"). The date of Marathon's receipt of the Ashland Put Exercise
- ---------------
Notice shall be deemed to be the date of Ashland's exercise of its Ashland Put
Right (the "Ashland Put Exercise Date") and, except as expressly provided in
-------------------------
Sections 9.03(a), 9.04(a) and 9.05, Ashland's exercise of its Ashland Put Right
shall thereafter be irrevocable.
SECTION 4.04. Ashland Put Price Election Notice. (a) Notice re:
---------------------------------- -----------
Closing. Within five Business Days after the Appraised Value Determination
- --------
Date, Marathon shall notify Ashland (a "Ashland Put Price Election Notice") as
---------------------------------
to (i) whether it elects to pay the Ashland Put Price (A) entirely at Closing or
(B) in three equal installments and (ii) whether Marathon elects to pay part of
the Ashland Put Price or first Installment Payment, as applicable, at Closing in
Securities, and, if so, (A) the name of the issuer of such Securities, (B) the
type of such Securities, (C) the portion of the Ashland Put Price or first
Installment Payment, as applicable, which will be comprised of such
Securities, (D) whether it elects to impose a Holding Period with respect to any
of such Securities and (E) the length of any such Holding Period.
(b) Notices re: Second and Third Scheduled Installment Payment
-----------------------------------------------------------
Dates. Within 45 days prior to each of the second and third Scheduled
- ------
Installment Payment Dates, if applicable, Marathon shall deliver to Ashland an
Ashland Put Price Election Notice as to whether Marathon elects to pay part of
the applicable Installment Payment in Securities, and, if so, (i) the name of
the issuer of such Securities, (ii) the type of Securities, (iii) the portion of
the applicable Installment Payment which will be comprised of such Securities,
(iv) whether it elects to impose a Holding Period with respect to any of such
Securities and (v) the length of any such Holding Period. The date of Ashland's
receipt of any Ashland Put Price Election Notice is referred to herein as the
"Ashland Put Price Election Date" with respect to such Ashland Put Price
- --------------------------------
Election Notice.
(c) Additional Information With Respect to Securities. If Marathon
--------------------------------------------------
elects to pay any part of the Ashland Put Price in Securities, then in addition
to the information provided to Ashland in the Ashland Put Price Election Notice
pursuant to Section 4.04(a) or 4.04(b),
<PAGE>
27
Marathon shall provide Ashland and its advisors with any other information
concerning such Securities that Ashland or its advisors may reasonably request.
(d) Irrevocability of Elections. Marathon's elections as set forth
---------------------------
in an Ashland Put Price Election Notice shall be irrevocable upon Ashland's
receipt of such Ashland Put Price Election Notice; provided that at any time
--------
prior to the date that is ten Business Days prior to the Closing Date (or
applicable Installment Payment Date) Marathon shall have the right to change a
previous election to pay part of the Ashland Put Price (or applicable
Installment Payment) in Securities to an election to pay a greater portion of or
the entire Ashland Put Price (or applicable Installment Payment) in Cash, or to
change a previous election to pay the Ashland Put Price in installments to an
election to pay the entire or remaining Ashland Put Price on the Closing Date
(or applicable Installment Payment Date).
SECTION 4.05. Limitation on Ashland's Ability To Exercise its Ashland
-------------------------------------------------------
Put Right. If prior to the Ashland Put Exercise Date, Marathon elects to
- ----------
Transfer all of its Membership Interests to a third party pursuant to Section
10.01(c) of the LLC Agreement, and in connection therewith delivers to Ashland
the requisite Offer Notice pursuant to Section 10.04 of the LLC Agreement,
Ashland shall not be permitted to exercise its Ashland Put Right for a period
commencing on the date of Ashland's receipt of such Offer Notice and ending on
the earlier of (i) 120 days (270 days if a second request has been made under
HSR) following such receipt, (ii) the closing of such Transfer, and (iii) the
date such proposed Transfer by Marathon shall have been finally abandoned.
After such period, Ashland shall be entitled to exercise its Ashland Put Right.
ARTICLE V
Termination of Certain Distributions; Revocable Proxies
-------------------------------------------------------
SECTION 5.01. Termination of Certain Distributions. (a)
-------------------------------------
Distributions to Ashland. (i) Subject to Sections 9.04(a), 9.05, 9.08(a) and
- -------------------------
9.09, in the event that Marathon exercises its Marathon Call Right or its
Special Termination Right, or in the event that Ashland exercises its Ashland
Put Right, then on the relevant
<PAGE>
28
Exercise Date, Ashland shall cause each of its Representatives to authorize
Marathon's Representatives to cause the Company to withhold from Ashland all
distributions of Distributable Cash and all Tax Liability Distributions that
Ashland would otherwise be entitled to receive pursuant to Article V of the LLC
Agreement during the period from the relevant Exercise Date to the Closing Date,
other than (i) all distributions of Distributable Cash and Tax Liability
Distributions that are attributable to any Fiscal Quarter that ends on or prior
to the close of business on the relevant Exercise Date, (ii) a pro rata portion
of all distributions of Distributable Cash and Tax Liability Distributions that
are attributable to the portion of a Fiscal Quarter that begins prior to the
relevant Exercise Date and that ends after such Exercise Date and (iii) all Tax
Liability Distributions that are attributable to the period from the relevant
Exercise Date to the Closing Date to the extent that Ashland has any Tax
Liability during such period ("Ashland Exercise Period Distributions").
-------------------------------------
(ii) Any Ashland Exercise Period Distributions withheld from Ashland
pursuant to Section 5.01(a)(i) shall be distributed by the Company as follows:
(A) if at the time such distribution is so withheld, either (1) USX's
Long Term Debt has an Investment Grade Rating and USX has agreed in writing
to guarantee (which guarantee shall be a guarantee of payment) Marathon's
obligations to pay to Ashland in the circumstances set forth in Sections
9.04(a) and 9.05 (pursuant to a guarantee agreement in form and substance
reasonably satisfactory to Ashland and its counsel) or (2) Marathon's Long
Term Debt has an Investment Grade Rating, then the Company shall pay such
Ashland Exercise Period Distributions directly to Marathon; and
(B) if at the time such distribution is so withheld, (1) Marathon's
Long Term Debt does not have an Investment Grade Rating and (2) either (x)
USX's Long Term Debt does not have an Investment Grade Rating or (y) USX's
Long Term Debt has an Investment Grade Rating but USX has not agreed in
writing to guarantee Marathon's payment obligations described in clause (2)
of subparagraph (A) above, then Marathon's Representatives shall cause the
Company to, and the Company shall, deposit all Ashland Exercise Period
<PAGE>
29
Distributions into an escrow account to be established by the Company (the
"Escrow Account") and to release such deposits from the Escrow Account only
--------------
in accordance with this Agreement. All amounts in the Escrow Account shall
be invested only in Permitted Investments.
(b) Distributions to Marathon. (i) Subject to Sections 9.08(a) and
--------------------------
9.09, in the event that Ashland exercises its Special Termination Right in
accordance with the terms hereof, then on the Special Termination Exercise Date,
Marathon shall cause each of its Representatives to authorize Ashland's
Representatives to cause the Company to withhold from Marathon all distributions
of Distributable Cash and all Tax Liability Distributions that Marathon would
otherwise be entitled to receive pursuant to Article V of the LLC Agreement
during the period from the Special Termination Exercise Date to the Closing
Date, other than (A) all distributions of Distributable Cash and Tax Liability
Distributions that are attributable to any Fiscal Quarter that ends on or prior
to the close of business on the Special Termination Exercise Date, (B) a pro
rata portion of all distributions of Distributable Cash and Tax Liability
Distributions that are attributable to the portion of a Fiscal Quarter that
begins prior to the Special Termination Exercise Date and that ends after the
Special Termination Exercise Date and (C) all Tax Liability Distributions that
are attributable to the period from the Special Termination Exercise Date to the
Closing Date to the extent that Marathon has any Tax Liability during such
period ("Marathon Exercise Period Distributions").
--------------------------------------
(ii) Any Marathon Exercise Period Distributions withheld from Ashland
pursuant to Section 5.01(a) shall be distributed by the Company as follows:
(A) if at the time such distribution is so withheld, Ashland's Long
Term Debt has an Investment Grade Rating, then the Company shall pay such
Marathon Exercise Period Distributions directly to Ashland; and
(B) if at the time such distribution is so withheld, Ashland's Long
Term Debt does not have an Investment Grade Rating, then Ashland's
Representatives shall cause the Company to, and the Company shall, deposit
all Marathon Exercise Period Distributions into an Escrow Account and to
release such deposits from the
<PAGE>
30
Escrow Account only in accordance with this Agreement. All amounts in the
Escrow Account shall be invested only in Permitted Investments.
SECTION 5.02. Revocable Proxies. (a) Ashland Representatives
------------------ -----------------------
Revocable Proxies. Subject to Sections 9.04(a), 9.05, 9.08(a) and 9.09, in the
- ------------------
event that Marathon exercises its Marathon Call Right or its Special Termination
Right, or in the event that Ashland exercises its Ashland Put Right, then on the
relevant Exercise Date, Ashland shall cause each of its Representatives to grant
to Marathon's Representatives a proxy (the "Ashland Representatives Revocable
---------------------------------
Proxies") which shall authorize Marathon's Representatives to cast each Ashland
- -------
Representative's vote at a Board of Managers' meeting (but not by written
consent in lieu of a meeting in accordance with Section 8.04(h) of the LLC
Agreement unless Marathon shall have given Ashland prior written notice of the
specific action to be taken by such written consent) in favor of or against any
of the Super Majority Decisions described in Sections 8.08 of the LLC Agreement,
as Marathon's Representatives shall, in their sole discretion, determine, other
than any vote with respect to a Super Majority Decision described in Sections
8.08(c) (admission of a new Member; issuance of additional Membership
Interests), 8.08(d) (additional capital contributions), 8.08(i) (change in
Company's independent auditors), 8.08(j) (amendments to LLC Agreement or other
Transaction Documents to which Company or its subsidiaries is a party), 8.08(l)
(bankruptcy), 8.08(m) (modification of provisions re: distributions of
Distributable Cash) or 8.08(q) (delegation to a Member of power to unilaterally
bind the Company), with respect to which Ashland's Representatives shall retain
all of their rights and authority to vote; provided that Marathon shall not, and
--------
shall cause each of its Representatives not to, take any action through the
exercise of the Ashland Representatives Revocable Proxies to cause the Company's
status as a partnership for Federal income tax purposes to terminate prior to
the Closing Date.
(b) Marathon Representative Revocable Proxy. Subject to Sections
----------------------------------------
9.08(a) and 9.09, in the event that Ashland exercises its Special Termination
Right, then on the Special Exercise Date, Marathon shall cause each of its
Representatives to grant to Ashland's Representatives a proxy (the "Marathon
--------
Representatives Revocable Proxies") which shall authorize Ashland's
- ---------------------------------
Representatives to cast each
<PAGE>
31
Marathon Representative's vote at a Board of Managers' meeting (but not by
written consent in lieu of a meeting in accordance with Section 8.04(h) of the
LLC Agreement unless Ashland shall have given Marathon prior written notice of
the specific action to be taken by such written consent) in favor of or against
any of the Super Majority Decisions described in Sections 8.08 of the LLC
Agreement, as Ashland's Representatives shall, in their sole discretion,
determine, other than any vote with respect to a Super Majority Decision
described in Section 8.08(c), 8.08(d), 8.08(i), 8.08(j), 8.08(l), 8.08(m) or
8.08(q) (except as expressly provided in Section 5.01), with respect to which
Marathon's Representatives shall retain all of their rights and authority to
vote; provided that Ashland shall not, and shall cause each of its
--------
Representatives not to, take any action through the exercise of the Marathon
Representatives Revocable Proxies to cause the Company's status as a partnership
for Federal income tax purposes to terminate prior to the Closing Date.
(c) Ashland LOOP/LOCAP Revocable Proxy. Subject to Sections 9.04(a),
-----------------------------------
9.05, 9.08(a) and 9.09, in the event that Marathon exercises its Marathon Call
Right or its Special Termination Right, or in the event that Ashland exercises
its Ashland Put Right, then on the relevant Exercise Date, Ashland shall grant
to Marathon, or such other person as Marathon shall designate, a proxy (the
"Ashland LOOP/LOCAP Revocable Proxy") which shall authorize Marathon and its
- -----------------------------------
Representatives (or such other person) to exercise on Ashland's behalf, all of
Ashland's voting rights with respect to the Ashland LOOP/LOCAP Interest.
ARTICLE VI
Determination of the Appraised Value of the Company
---------------------------------------------------
SECTION 6.01. Determination of Appraised Value of the Company. (a)
------------------------------------------------
Negotiation Period. If Marathon exercises its Special Termination Right or its
- -------------------
Marathon Call Right or if Ashland exercises its Special Termination Right or its
Ashland Put Right, then for a period of 60 days following the relevant Exercise
Date, Marathon and Ashland shall negotiate in good faith to seek to reach
agreement as to the Market Value of the Company. If Marathon and Ashland reach
such an agreement, then the Market Value of the Company shall be deemed to be
the amount so agreed upon by Marathon and Ashland.
<PAGE>
32
(b) Appraisal Process. In the event Marathon and Ashland are unable
------------------
to reach an agreement as to the Market Value of the Company within the 60-day
period referred to in Section 6.01(a), then within five Business Days after the
expiration of such 60-day period (such fifth Business Day being referred to
herein as the "6.01 Appraisal Process Commencement Date"), Marathon and Ashland
----------------------------------------
each shall select a nationally recognized investment banking firm to (i) prepare
a report which (A) sets forth such investment banking firm's determination of
the Market Value of the Company (which shall be a single amount as opposed to a
range) and (B) includes work papers which indicate the basis for and calculation
of the Market Value of the Company (a "6.01 Appraisal Report") and (ii) deliver
---------------------
to Marathon or Ashland, as the case may be, an oral and written opinion
addressed to such party as to the Market Value of the Company. The fees and
expenses of each investment banking firm shall be paid by the party selecting
such investment banking firm. Each of Marathon and Ashland shall instruct its
respective investment banking firm to (i) not consult with the other investment
banking firm with respect to its view as to the Market Value of the Company
prior to the time that both investment banking firms have delivered their
respective opinions to Marathon or Ashland, as applicable, (ii) determine the
Market Value of the Company in accordance with Section 6.01(c), (iii) deliver
their respective 6.01 Appraisal Reports, together with their oral and written
opinions as to the Market Value of the Company (the "6.01 Initial Opinion
--------------------
Values"), within 60 days after the 6.01 Appraisal Process Commencement Date, and
(iv) deliver a copy of its written opinion and its 6.01 Appraisal Report to the
Company, the other party and the other party's investment banking firm at the
time it delivers its oral and written opinion to Marathon or Ashland, as
applicable.
If the 6.01 Initial Opinion Values differ and the lesser 6.01 Initial
Opinion Value equals or exceeds 90% of the greater 6.01 Initial Opinion Value,
the Market Value of the Company shall be deemed to be an amount equal to (i) the
sum of the 6.01 Initial Opinion Values divided by (ii) two.
<PAGE>
33
If the 6.01 Initial Opinion Values differ and the lesser 6.01 Initial
Opinion Value is less than 90% of the greater 6.01 Initial Opinion Value, then:
(i) within two Business Days after both investment banking firms have
delivered their respective opinions to Marathon or Ashland, as applicable,
each investment banking firm shall, at a single meeting at which Marathon,
Ashland, the Company and the other investment banking firm are present,
make a presentation with respect to its 6.01 Initial Opinion Value. At
such presentation, Marathon, Ashland, the Company and the other investment
banking firm shall be entitled to ask questions as to the basis for and the
calculation of such investment banking firm's 6.01 Initial Opinion Value;
and
(ii) Marathon and Ashland shall, within five Business Days after the
date Marathon and Ashland receive the 6.01 Initial Opinion Values (such
fifth Business Day being referred to herein as the "6.01 Subsequent
---------------
Appraisal Process Commencement Date"), jointly select a third nationally
-----------------------------------
recognized investment banking firm to (A) prepare a 6.01 Appraisal Report
and (B) deliver an oral and written opinion addressed to Marathon and
Ashland as to the Market Value of the Company. The fees and expenses of
such third investment banking firm shall be paid 50% by Marathon and 50% by
Ashland. Such third investment banking firm shall not be provided with the
6.01 Initial Opinion Values and shall not consult with the initial invest
ment banking firms with respect thereto. During such five-Business Day
period, Marathon and Ashland shall negotiate in good faith to independently
reach an agreement as to the Market Value of the Company. If Marathon and
Ashland reach such an agreement, then the Market Value of the Company shall
be deemed to be the amount so agreed upon by Marathon and Ashland. If
Marathon and Ashland are unable to reach such an agreement, then Marathon
and Ashland shall instruct such third investment banking firm to (A)
determine the Market Value of the Company in accordance with Section
6.01(c) and (B) deliver its 6.01 Appraisal Report, together with its oral
and written opinion (the "6.01 Third Opinion Value"), within 60 days after
------------------------
the 6.01 Subsequent Appraisal Process Commencement Date. The Market Value
of the Company in such circumstance shall
<PAGE>
34
be deemed to be an amount equal to (A) the sum of (x) the 6.01 Third
Opinion Value plus (y) whichever of the two 6.01 Initial Opinion Values is
closer to the 6.01 Third Opinion Value (or, if the 6.01 Third Opinion Value
is exactly halfway between the two 6.01 Initial Opinion Values, the 6.01
Third Opinion Value), divided by (B) two.
(c) Definition of Market Value of the Company. For purposes of this
------------------------------------------
Agreement, the Market Value of the Company (the "Market Value of the Company")
---------------------------
means the fair market value of the combined common equity of the Company as of
the relevant Exercise Date, (including, in the circumstance where Marathon has
exercised its Marathon Call Right or its Special Termination Right or Ashland
has exercised its Ashland Put Right, the Ashland LOOP/LOCAP Interest) assuming
the consummation of a transaction designed to achieve the highest value of such
combined common equity. In determining the Market Value of the Company, (i)
consideration should be given as to (A) all possible transaction participants
(other than Marathon or Ashland or their respective Affiliates) and categories
of possible transactions; (B) a range of analytical methodologies, potentially
including, but not limited to, the following: comparable trading analysis,
comparable transaction analysis, discounted cash flow analysis, leveraged buyout
analysis and break-up analysis; and (C) the value to the Company of all
indemnification obligations of Marathon, USX and Ashland in favor of the Company
pursuant to any Transaction Document (including, without limitation, Article IX
of the Asset Transfer and Contribution Agreement), to the extent such
indemnification obligations remain in effect after the Closing and (ii) no
separate incremental value will be attributed to the Ashland LOOP/ LOCAP
Interest. In determining the Market Value of the Company, no consideration
should be given to the values that are initially assigned to assets of the
Company for purchase accounting or tax accounting purposes. The Market Value of
the Company as determined pursuant to this Section 6.01 is referred to herein as
the "Appraised Value of the Company", and the date on which the Market Value of
------------------------------
the Company is so determined is referred to herein as the "Appraised Value
---------------
Determination Date".
- ------------------
<PAGE>
35
ARTICLE VII
Determination of the Fair Market Value of Securities
----------------------------------------------------
SECTION 7.01. General. The fair market value of any Securities to be
--------
issued to Ashland on the Closing Date and on any subsequent Installment Payment
Date, shall be determined pursuant to the following procedures (the fair market
value of such Securities as so determined being the "Fair Market Value" of such
-----------------
Securities).
SECTION 7.02. Determination of Fair Market Value of Marathon Debt
---------------------------------------------------
Securities. The Fair Market Value of any Marathon Debt Securities shall be
- -----------
deemed to be an amount equal to the aggregate stated principal amount of such
Marathon Debt Securities.
SECTION 7.03. Determination of Fair Market Value of Actively Traded
-----------------------------------------------------
Marathon Equity Securities. (a) Fair Market Value Where There is No Holding
- --------------------------- -------------------------------------------
Period. The Fair Market Value of any Actively Traded Marathon Equity Securities
- -------
to be issued to Ashland on the Closing Date or applicable Installment Payment
Date for which Marathon has not elected a Holding Period shall be deemed to be
an amount equal to the product of (i) the aggregate number of such Actively
Traded Marathon Equity Securities to be issued to Ashland multiplied by (ii) the
Weighted Average Price (as defined below) of such Actively Traded Marathon
Equity Securities on the National Market System of the NASDAQ or the relevant
National Securities Exchange, as reported by The Wall Street Journal or, if not
-----------------------
reported thereby, as reported by any other authoritative source, for the ten
full Trading Days immediately preceding the Business Day immediately preceding
the Closing Date or applicable Installment Payment Date; provided that at least
--------
five Trading Days prior to the commencement of such ten full Trading Day period
(the "Required Disclosure Date"), Marathon shall have made appropriate public
------------------------
disclosure (including by issuing a press release and filing a copy of such press
release with the Commission) of (A) the existence of the Transaction, (B) the
Ashland Put Price and (C) the information required to be included in the Ashland
Put Price Election Notice (each such public disclosure being a "Required
--------
Disclosure"). Marathon shall provide Ashland with a copy of each Required
- ----------
Disclosure prior to Marathon making such disclosure public. Any such Required
Disclosure shall be in form and substance reasonably satisfactory to Ashland
<PAGE>
36
and its counsel. For purposes of this Section 7.03(a), the "Weighted Average
----------------
Price" means the quotient of (1) the product of (x) the number of shares in each
- -----
trade in such Actively Traded Marathon Equity Securities that occurred during
such ten full Trading Day period multiplied by (y) the price at which each such
trade occurred, divided by (2) the total number of shares traded in such
Actively Traded Marathon Equity Securities that occurred during such ten full
Trading Day period. In the event of (i) any split, combination or
reclassification of the class of Actively Traded Marathon Equity Securities to
be issued to Ashland on the Closing Date or applicable Installment Payment Date,
(ii) any issuance or the authorization of any issuance of any other securities
in exchange or in substitution for the shares of such class of Actively Traded
Marathon Equity Securities or (iii) any issuance or declaration of cash or stock
dividends or other distributions with respect to such class of Actively Traded
Marathon Equity Securities, in each case at any time during the ten full Trading
Day period referred to above, Marathon and Ashland shall make such adjustment to
the Fair Market Value of such Actively Traded Equity Securities determined
pursuant to this Section 7.03(a) as Marathon and Ashland shall mutually agree so
as to preserve the economic benefits to Ashland expected on the date of this
Agreement as a result of the issuance to it of such Actively Traded Marathon
Equity Securities as part of the Ashland Put Price.
(b) Fair Market Value Where There is a Holding Period. In the event
--------------------------------------------------
that Marathon elects pursuant to Section 4.04(a) or 4.04(b) to impose a Holding
Period on any Actively Traded Marathon Equity Securities, the Fair Market Value
of such Actively Traded Marathon Equity Securities shall be deemed to be an
amount equal to (i) the Fair Market Value of such Actively Traded Marathon
Equity Securities as determined pursuant to Section 7.03(a), minus (ii) a
discount factor that takes into account such limitation on Ashland's ability to
freely trade such Actively Traded Marathon Equity Securities (a "7.03(b)
-------
Discount Amount"). The 7.03(b) Discount Amount with respect to the Fair Market
- ---------------
Value of such Actively Traded Marathon Equity Securities shall be determined
pursuant to the following procedures:
(i) Negotiation Period. For a period of 15 days following the
-------------------
applicable Ashland Put Price Election Date, Marathon and Ashland will
negotiate in good faith to seek to reach an agreement as to the 7.03(b)
<PAGE>
37
Discount Amount. If Marathon and Ashland reach such an agreement, then the
7.03(b) Discount Amount shall be deemed to be the amount so agreed upon by
Marathon and Ashland.
(ii) Appraisal Process. In the event Marathon and Ashland are unable
------------------
to reach an agreement as to the 7.03(b) Discount Amount within the 15-day
period referred to in clause (i) above, then within five Business Days
after the expiration of such 15-day period (such fifth Business Day being
referred to herein as the "7.03(b) Appraisal Process Commencement Date"),
-------------------------------------------
Marathon and Ashland each shall select a nationally recognized investment
banking firm to (A) prepare a report which (1) sets forth such investment
banking firm's determination of the 7.03(b) Discount Amount (which shall be
a single amount as opposed to a range) and (2) includes work papers which
indicate the basis for and the calculation of the 7.03(b) Discount Amount
(a "7.03(b) Appraisal Report") and (B) deliver to Marathon or Ashland, as
------------------------
the case may be, an oral and written opinion addressed to such party as to
the 7.03(b) Discount Amount. The fees and expenses of each investment
banking firm shall be paid by the party selecting such investment banking
firm. Each of Marathon and Ashland shall instruct its respective
investment banking firm to (i) not consult with the other investment
banking firm with respect to its view as to the 7.03(b) Discount Amount
prior to the time that both investment banking firms have delivered their
respective opinions to Marathon and Ashland, as applicable, (ii) deliver
their respective 7.03(b) Appraisal Reports, together with their oral and
written opinions as to the 7.03(b) Discount Amount (the "7.03(b) Initial
---------------
Opinion Values"), within 15 days after the 7.03(b) Appraisal Process
--------------
Commencement Date, and (iii) deliver a copy of its written opinion and its
7.03(b) Appraisal Report to the Company, the other party and the other
party's investment banking firm at the time it delivers its oral and
written opinion to Marathon or Ashland, as applicable.
If the 7.03(b) Initial Opinion Values differ and the lesser
7.03(b) Initial Opinion Value equals or exceeds 90% of the greater 7.03(b)
Initial Opinion Value, the 7.03(b) Discount Amount shall be deemed to
<PAGE>
38
be an amount equal to (1) the sum of the 7.03(b) Initial Opinion Values
divided by (2) two.
If the 7.03(b) Initial Opinion Values differ and the lesser
7.03(b) Initial Opinion Value is less than 90% of the greater 7.03(b)
Initial Opinion Value, then:
(i) within two Business Days after both investment banking firms have
delivered their respective opinions to Marathon or Ashland, as applicable,
each investment banking firm shall, at a single meeting at which Marathon,
Ashland, the Company and the other investment banking firm are present,
make a presentation with respect to its 7.03(b) Initial Opinion Value. At
such presentation, Marathon, Ashland, the Company and the other investment
banking firm shall be entitled to ask questions as to the basis for and the
calculation of such investment banking firm's 7.03(b) Initial Opinion
Value; and
(ii) Marathon and Ashland shall, within five Business Days after the
date Marathon and Ashland receive the 7.03(b) Initial Opinion Values (such
fifth Business Day being referred to herein as the "7.03(b) Subsequent
------------------
Appraisal Process Commencement Date"), jointly select a third nationally
-----------------------------------
recognized investment banking firm to (i) prepare a 7.03(b) Appraisal
Report and (ii) deliver an oral and written opinion addressed to Marathon
and Ashland as to the 7.03(b) Discount Amount. The fees and expenses of
such third investment banking firm shall be paid 50% by Marathon and 50% by
Ashland. Such third investment banking firm shall not be provided with the
7.03(b) Initial Opinion Values and shall not consult with the initial
investment banking firms with respect thereto. During such five-Business
Day period, Marathon and Ashland shall negotiate in good faith to
independently reach an agreement as to the 7.03(b) Discount Amount. If
Marathon and Ashland reach such an agreement, then the 7.03(b) Discount
Amount shall be deemed to be the amount so agreed upon by Marathon and
Ashland. If Marathon and Ashland are unable to reach such an agreement,
then Marathon and Ashland shall instruct such third investment banking firm
to deliver its 7.03(b) Appraisal Report, together with its oral and written
opinion as to the 7.03(b) Discount Amount (the "7.03(b) Third Opinion
---------------------
Value"),
------
<PAGE>
39
within 15 days after the 7.03(b) Subsequent Appraisal Process Commencement
Date. The 7.03(b) Discount Amount in such circumstance shall be deemed to
be an amount equal to (1) the sum of (x) the 7.03(b) Third Opinion Value
plus (y) whichever of the two 7.03(b) Initial Opinion Values is closer to
the 7.03(b) Third Opinion Value (or, if the 7.03(b) Third Opinion Value is
exactly halfway between the two 7.03(b) Initial Opinion Values, the 7.03(b)
Third Opinion Value), divided by (2) two.
SECTION 7.04. Determination of Fair Market Value of Non-Actively
--------------------------------------------------
Traded Marathon Equity Securities. (a) Negotiation Period. If Marathon
- ---------------------------------- -------------------
proposes to issue (or to have issued) to Ashland Marathon Equity Securities that
are not Actively Traded Marathon Equity Securities, then for a period of 15 days
following the applicable Ashland Put Price Election Date, Marathon and Ashland
will negotiate in good faith to seek to reach an agreement as to the Fair Market
Value of such Marathon Equity Securities, taking into account, if there is a
Holding Period, a discount factor that takes into account such limitation on
Ashland's ability to freely trade such Marathon Equity Securities (a "7.04
----
Discount Amount"). If Marathon and Ashland reach such an agreement, then the
- ---------------
Fair Market Value of such Marathon Equity Securities shall be deemed to be the
amount so agreed upon by Marathon and Ashland.
(b) Appraisal Process. In the event Marathon and Ashland are unable
------------------
to reach an agreement as to such Fair Market Value of Marathon Equity Securities
and such 7.04 Discount Amount, if any, within the 15-day period referred to in
clause (a) above, then within five Business Days after the expiration of such
15-day period (such fifth Business Day being referred to herein as the "7.04
----
Appraisal Process Commencement Date"), Marathon and Ashland each shall select a
- -----------------------------------
nationally recognized investment banking firm to (i) prepare a report which (1)
sets forth such investment banking firm's determination of the Fair Market Value
of such Marathon Equity Securities (which shall be a single amount as opposed to
a range), taking into account, if there is a Holding Period, a 7.04 Discount
Amount, which is determined by such investment banking firm, and (2) includes
work papers which separately indicate the basis for and the calculation of the
Fair Market Value of such Marathon Equity Securities and, if there is a Holding
Period, the basis for and the calculation of the 7.04 Discount Amount (a "7.04
----
<PAGE>
40
Appraisal Report") and (ii) deliver to Marathon or Ashland, as the case may be,
- ----------------
an oral and written opinion addressed to such party as to the Fair Market Value
of such Marathon Equity Securities (which opinion shall take into account a 7.04
Discount Amount if there is a Holding Period with respect to such Marathon
Equity Securities). The fees and expenses of each investment banking firm shall
be paid by the party selecting such investment banking firm. Each of Marathon
and Ashland shall instruct its respective investment banking firm to (i) not
consult with the other investment banking firm with respect to its view as to
the Fair Market Value of such Marathon Equity Securities and the 7.04 Discount
Amount prior to the time that both investment banking firms have delivered their
respective opinions to Marathon and Ashland, as applicable, (ii) deliver their
respective 7.04 Appraisal Reports, together with their oral and written opinions
as to the Fair Market Value of such Marathon Equity Securities (the "7.04
----
Initial Opinion Values"), within 15 days after the 7.04 Appraisal Process
- ----------------------
Commencement Date, and (iii) deliver a copy of its written opinion and its 7.04
Appraisal Report to the Company, the other party and the other party's
investment banking firm at the time it delivers its oral and written opinion to
Marathon or Ashland, as applicable.
If the 7.04 Initial Opinion Values differ and the lesser 7.04 Initial
Opinion Value equals or exceeds 90% of the greater 7.04 Initial Opinion Value,
the Fair Market Value of such Marathon Equity Securities shall be deemed to be
an amount equal to (1) the sum of the 7.04 Initial Opinion Values divided by (2)
two.
If the 7.04 Initial Opinion Values differ and the lesser 7.04 Initial
Opinion Value is less than 90% of the greater 7.04 Initial Opinion Value, then:
(i) within two Business Days after both investment banking firms have
delivered their respective opinions to Marathon or Ashland, as applicable,
each investment banking firm shall, at a single meeting at which Marathon,
Ashland, the Company and the other investment banking firm are present,
make a presentation with respect to its 7.04 Initial Opinion Value. At
such presentation, Marathon, Ashland, the Company and the other investment
banking firm shall be entitled to ask questions as to the basis for and the
calculation of
<PAGE>
41
such investment banking firm's 7.04 Initial Opinion Value; and
(ii) Marathon and Ashland shall, within five Business Days after the
date Marathon and Ashland receive the 7.04 Initial Opinion Values (such
fifth Business Day being referred to herein as the "7.04 Subsequent
---------------
Appraisal Process Commencement Date"), jointly select a third nationally
-----------------------------------
recognized investment banking firm to (i) prepare a 7.04 Appraisal Report
and (ii) deliver an oral and written opinion addressed to Marathon and
Ashland as to the Fair Market Value of such Marathon Equity Securities
(which opinion shall take into account a 7.04 Discount Amount if there is a
Holding Period with respect to such Marathon Equity Securities). The fees
and expenses of such third investment banking firm shall be paid 50% by
Marathon and 50% by Ashland. Such third investment banking firm shall not
be provided with the 7.04 Initial Opinion Values and shall not consult with
the initial investment banking firms with respect thereto. During such
five-Business Day period, Marathon and Ashland shall negotiate in good
faith to independently reach an agreement as to the Fair Market Value of
such Marathon Equity Securities. If Marathon and Ashland reach such an
agreement, then the Fair Market Value of such Marathon Equity Securities
shall be deemed to be the amount so agreed upon by Marathon and Ashland.
If Marathon and Ashland are unable to reach such an agreement, then
Marathon and Ashland shall instruct such third investment banking firm to
deliver its 7.04 Appraisal Report, together with its oral and written
opinion as to the Fair Market Value of such Marathon Equity Securities (the
"7.04 Third Opinion Value"), within 15 days after the 7.04 Subsequent
------------------------
Appraisal Process Commencement Date. The Fair Market Value of such
Marathon Equity Securities in such circumstance shall be deemed to be an
amount equal to (i) the sum of (x) the 7.04 Third Opinion Value plus (y)
whichever of the two 7.04 Initial Opinion Values is closer to the 7.04
Third Opinion Value (or, if the 7.04 Third Opinion Value is exactly halfway
between the two 7.04 Initial Opinion Values, the 7.04 Third Opinion Value),
divided by (ii) two.
<PAGE>
42
ARTICLE VIII
Certain Matters Relating to Securities
--------------------------------------
SECTION 8.01. Certain Requirements with Respect to Marathon Debt
--------------------------------------------------
Securities. All debt securities issued to Ashland pursuant to Section 4.02(c)
- -----------
shall (i) be unsecured senior public fixed income debt securities of (a) USX or
(b) Marathon and fully guaranteed as to performance by USX; (ii) have maturities
of 5 to 7 years; (iii) have yields which are comparable to those of 5 to 7 year
public debt instruments issued by companies whose Long Term Debt at the time of
the issuance of such debt securities to Ashland is rated by S&P and Moody's at
least equal to the respective ratings by S&P and Moody's of USX's Long Term
Debt; (iv) be priced to trade at par initially; and (v) have covenants
substantially the same as those included in other outstanding senior publicly
traded debt instruments of USX, including a negative pledge providing for pari
passu security rights and usual and customary successorship provisions
concerning changes in USX's ownership (all such debt securities are referred to
herein as "Marathon Debt Securities").
------------------------
SECTION 8.02. Procedures with Respect to the Issuance of Securities.
------------------------------------------------------
All Securities to be issued hereunder shall be accompanied on the Closing Date
or applicable Installment Payment Date by (i) a certificate from an authorized
officer of the Issuer and (ii) an opinion from such Issuer's counsel, in each
case as to such matters as Ashland may reasonably request, including, but not
limited to the matters substantially as follows (which shall be made as of the
Closing Date or applicable Installment Payment Date):
(i) the Issuer is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation
with the power and authority to own, lease and operate its assets and to
conduct the business now being or to be conducted by it. The Issuer is
duly authorized, qualified or licensed to do business as a foreign
corporation or other organization in good standing in each of the
jurisdictions in which its right, title or interest in or to any of the
assets held by it or the business conducted by it requires such
authorization, qualification or licensing, except where the failure to
<PAGE>
43
be so authorized, qualified, licensed or in good standing would not,
individually or in the aggregate, result in an Issuer Material Adverse
Effect;
(ii) the Issuer's authorized capitalization is as set forth in its
Exchange Act filings (or, in the circumstance where Ashland has made a
Demand Registration, as set forth in the Registration Statement or Offering
Memorandum, as applicable, with respect to such Securities). All of the
outstanding equity securities of the Issuer are duly and validly authorized
and issued, are fully paid and nonassessable and were not issued in
violation of or subject to any preemptive rights or other contractual
rights to purchase securities;
(iii) if such Securities are Marathon Equity Securities, such
Securities are duly authorized, validly issued and outstanding, are fully
paid and nonassessable, and were not issued in violation of or subject to
any preemptive rights or other contractual rights to purchase securities;
(iv) if such Securities are Marathon Debt Securities, such Securities
have been duly authorized and validly issued by the Issuer and constitute
legal, valid and binding obligations of the Issuer enforceable against the
Issuer in accordance with their terms, except as such enforcement is
subject to the effect of any applicable bankruptcy, insolvency,
reorganization or other law relating to or affecting creditors' rights
generally and general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
(v) such Securities conform in all material respects to the
description thereof contained in the Issuer's Exchange Act filings (or, in
the circumstance where Ashland has made a Demand Registration, to the
description thereof contained in the Registration Statement or Offering
Memorandum, as applicable, with respect to such Securities) and the
certificates evidencing such Securities will be, upon issuance, in due and
proper form;
(vi) if such Securities are Marathon Equity Securities, such
Securities have been authorized
<PAGE>
44
conditionally for listing on each national securities exchange on which the
other securities of the Issuer of the same class are listed at the time of
the Closing Date or Installment Payment Date, subject to issuance and
certain other conditions that are not material;
(vii) if such Securities are Marathon Debt Securities, the execution
and delivery by the Issuer of each agreement pursuant to which such
Securities have been issued or which relate to such Securities (each, a
"Securities Document") and the consummation by it of the transactions
--------------------
contemplated thereby have been duly authorized and approved by all
necessary corporate or other action on the part of the Issuer. Each
Securities Document has been duly executed and delivered by the Issuer and
constitutes its legal, valid and binding obligation, enforceable against it
in accordance with its terms, except as such enforcement is subject to the
effect of any applicable bankruptcy, insolvency, reorganization or other
law relating to or affecting creditors' rights generally and general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law);
(viii) neither the execution and delivery by the Issuer of the
Securities Documents (in the case of Marathon Debt Securities), nor the
issuance of the Securities pursuant to this Agreement and/or such
Securities Documents will (a) conflict with, or results in the breach of
any provision of, the charter or by-laws or similar governing or
organizational documents of the Issuer or any of its subsidiaries, (b)
violate any Applicable Law or any permit, order, award, injunction, decree
or judgment of any Governmental Authority applicable to or binding upon the
Issuer or any of its subsidiaries or to which any of their respective
properties is subject or (c) violate, conflict with or result in the breach
or termination of, or otherwise give any other person the right to
terminate, or constitute a default, event of default or an event which with
notice, lapse of time or both, would constitute a default or event of
default under the terms of, any mortgage, indenture, deed of trust or lease
or other agreement or instrument to which the Issuer or any of its
subsidiaries is a party or by which any of their respective properties or
<PAGE>
45
assets is subject, except, in the case of clauses (b) and (c) for such
violations, conflicts, breaches, terminations and defaults which would not,
individually or in the aggregate, result in an Issuer Material Adverse
Effect; and
(ix) except as set forth on a schedule to such certificate or
opinion, no Governmental Approval or other consent is required by the
Issuer for the execution and delivery by it of the Securities Documents (in
the case of Marathon Debt Securities) or the issuance of the Securities
pursuant to this Agreement and/or such Securities Documents, except (a) for
such Governmental Approvals or other consents as have been obtained or (b)
where the failure to obtain such Governmental Approvals or other consents
would not, individually or in the aggregate, result in an Issuer Material
Adverse Effect.
If any Securities are issued by Marathon and guaranteed by USX, each of Marathon
and USX shall provide Ashland with a certificate and an opinion of counsel in
accordance with this Section 8.02.
SECTION 8.03. Holding Period. If Marathon elects (by so notifying
---------------
Ashland in the Ashland Put Price Election Notice) to impose a Holding Period
with respect to sales by Ashland of Marathon Equity Securities issued to Ashland
on the Closing Date or on an Installment Payment Date, as applicable, then
Ashland shall not be permitted to sell such Marathon Equity Securities during
such Holding Period. The term "Holding Period", with respect to any Marathon
--------------
Equity Securities, means the period commencing on the Closing Date or applicable
Installment Payment Date and ending on such later date as Marathon shall state
in the Ashland Put Price Election Notice; provided that the length of a Holding
--------
Period with respect to any Marathon Equity Securities shall in no event exceed
30 days.
SECTION 8.04. Manner of Sale of Marathon Equity Securities. Ashland
---------------------------------------------
agrees to sell all Marathon Equity Securities (i) pursuant to a bona fide
Underwritten Public Offering managed by one or more Bulge Bracket Investment
Banking Firms selected by Ashland, or by one or more other investment banking
firms selected by Ashland and to which Marathon or USX shall not have reasonably
objected, in a manner reasonably designed to effect a broad distribution of
<PAGE>
46
such Marathon Equity Securities (a "Qualifying Public Offering"), (ii) to any
--------------------------
person, provided that after giving effect to such sale such person beneficially
owns, together with such person's Affiliates, no more than 5% of the Marathon
Equity Securities of the relevant issuer then outstanding on a fully diluted
basis (a "Fully Distributed Sale") or (iii) to a broker or underwriter selected
----------------------
by Ashland who agrees to effect any subsequent transfer by it of such Marathon
Equity Securities in a Qualifying Public Offering or a Fully Distributed Sale.
ARTICLE IX
Closing; Conditions to Closing; Consequences of Delay
-----------------------------------------------------
SECTION 9.01. Closing. (a) Closing Date. The closing (the
-------- -------------
"Closing") of (i) the purchase and sale of Ashland's Membership Interests and
-------
the Ashland LOOP/LOCAP Interest pursuant to Marathon's exercise of its Special
Termination Right or Marathon Call Right or Ashland's exercise of its Ashland
Put Right or (ii) the purchase and sale of Marathon's Membership Interests
pursuant to Ashland's exercise of its Special Termination Right, shall be held
at the offices of Marathon, at 10:00 a.m. on the later of (x) the 60th day after
the Appraised Value Determination Date (or at such other place or at such other
time or such other date as Marathon and Ashland shall mutually agree) (the
"Scheduled Closing Date") and (y) the fifth Business Day following the
- -----------------------
satisfaction or waiver of all conditions to the obligations of Marathon and
Ashland set forth in Section 9.02. The date on which the Closing actually
occurs is referred to herein as the "Closing Date".
------------
(b) Purchase Procedures in the Event of the Exercise by Marathon of
---------------------------------------------------------------
its Special Termination Right or its Marathon Call Right. In the event that
- ---------------------------------------------------------
Marathon exercises its Special Termination Right or Marathon Call Right, at the
Closing:
(i) Marathon shall deliver to Ashland, in Cash or by wire transfer to
a bank account designated in writing by Ashland, immediately available
funds in an amount equal to the sum of (x) the Special Termination Price or
Marathon Call Price, as applicable, plus (y) the amount of interest payable
pursuant to Section 3.01, plus (z) the amount of interest, if any,
<PAGE>
47
payable pursuant to Section 9.04(b), 9.05, 9.08(b) or 9.09;
(ii) Ashland shall Transfer to Marathon (or, if Marathon so elects by
written notice to Ashland, a Wholly Owned Subsidiary of Marathon or USX) in
accordance with Article X of the LLC Agreement, all of Ashland's Membership
Interests;
(iii) Ashland shall Transfer to Marathon or, if Marathon so elects by
written notice to Ashland, to the Company or such other person as Marathon
shall direct, the Ashland LOOP/LOCAP Interest; and
(iv) the Company shall release to Marathon any amounts held in the
Escrow Account, including any income earned thereon.
(c) Purchase Procedures in the Event of the Exercise by Ashland of
--------------------------------------------------------------
its Ashland Put Right. In the event that Ashland exercises its Ashland Put
- ----------------------
Right, at the Closing:
(i) Marathon shall deliver to Ashland, in Cash or by wire transfer to
a bank account designated in writing by Ashland, immediately available
funds in an amount equal to the sum of (x) the Cash portion of the Ashland
Put Price or first Installment Payment, as applicable, plus (y) the amount
of interest payable pursuant to Section 4.01, plus (z) the amount of
interest, if any, payable pursuant to Section 9.04(b), 9.05, 9.08(b) or
9.09;
(ii) Marathon and/or USX, as applicable, shall issue the Securities
to be issued on the Closing Date, if any, which Securities shall be
accompanied by the certificate(s) and opinion(s) referred to in Section
8.02;
(iii) Ashland shall Transfer to Marathon or, if Marathon so elects by
written notice to Ashland, a Wholly Owned Subsidiary of Marathon or USX in
accordance with Article X of the LLC Agreement, all of Ashland's Membership
Interests;
(iv) Ashland shall Transfer to Marathon or, if Marathon so elects by
written notice to Ashland, to the
<PAGE>
48
Company or such other person as Marathon shall direct, the Ashland
LOOP/LOCAP Interest; and
(v) the Company shall release to Marathon any amounts held in the
Escrow Account, including any income earned thereon.
In addition, on each of two remaining Scheduled Installment Payment Dates, if
any, (i) Marathon shall deliver to Ashland, in Cash or by wire transfer to a
bank account (which bank account has been designated in writing by Ashland at
least two Business Days prior to the applicable Installment Payment Date),
immediately available funds in an amount equal to the sum of (x) the Cash
portion of the second and third Installment Payments, respectively, plus (y) the
amount of interest payable pursuant to Section 4.01, plus (z) the amount of
interest, if any, payable pursuant to Section 9.04(b) or 9.05; and (ii) Marathon
and/or USX, as applicable, shall issue the Securities to be issued on such
Installment Payment Dates, if any, which Securities shall be accompanied by the
certificate(s) and opinion(s) referred to in Section 8.02.
(d) Purchase Procedures in the Event of the Exercise by Ashland of
--------------------------------------------------------------
its Special Termination Right. In the event that Ashland exercises its Special
- ------------------------------
Termination Right at the Closing:
(i) Ashland shall deliver to Marathon, in Cash or by wire transfer to
a bank account designated in writing by Marathon, immediately available
funds in an amount equal to the sum of (x) the Special Termination Price
plus (y) the amount of interest payable pursuant to Section 2.01, plus (z)
the amount of interest, if any, payable pursuant to Section 9.08(b) or
9.09;
(ii) Marathon shall Transfer to Ashland (or, if Ashland so elects by
written notice to Marathon, a Wholly Owned Subsidiary of Ashland) in
accordance with Article X of the LLC Agreement, all of Marathon's
Membership Interests; and
(iii) the Company shall release to Ashland any amounts held in the
Escrow Account, including any income earned thereon.
<PAGE>
49
SECTION 9.02. Conditions to Closing. (a) Marathon's Obligation in
---------------------- ------------------------
the Event of an Exercise by Marathon of its Special Termination Right or its
- ----------------------------------------------------------------------------
Marathon Call Right or an Exercise by Ashland of its Ashland Put Right.
- -----------------------------------------------------------------------
Marathon's obligation to purchase and pay for Ashland's Membership Interests and
the Ashland LOOP/LOCAP Interest pursuant to this Agreement in the event of an
exercise by Marathon of its Special Termination Right or its Marathon Call Right
or in the event of an exercise by Ashland of its Ashland Put Right is subject in
each case to the satisfaction (or waiver by Marathon) as of the Closing of the
following conditions:
(i) As of the Closing Date, there shall be no (i) injunction or
restraining order of any nature issued by any Governmental Authority which
directs, or which has the effect of directing, that the Closing shall not
be consummated as herein provided or (ii) investigation, action or other
proceeding that shall have been brought by any Governmental Authority and
be pending on the Closing Date, or that shall have been threatened by any
Governmental Authority, in any such case against Marathon or Ashland in
connection with the consummation of the transactions contemplated by this
Agreement which is reasonably likely to result in an injunction or
restraining order which directs, or which has the effect of directing, that
the Closing shall not be consummated as herein provided;
(ii) the waiting period under the HSR Act, if applicable to the
purchase and sale of Ashland's Membership Interests pursuant to this
Agreement shall have expired or been terminated; and
(iii) Ashland shall have Transferred to Marathon (or, if Marathon
shall have so elected by written notice to Ashland, a Wholly Owned
Subsidiary of Marathon or USX) all of its Membership Interests on the
Closing Date free and clear of all Liens.
It is understood and agreed that a breach by Ashland of any of its
representations or warranties in this Agreement shall not constitute a condition
to Marathon's obligation to purchase and pay for Ashland's Membership Interests
and the Ashland LOOP/LOCAP Interest pursuant to this Agreement in the
circumstances set forth above; provided that Marathon shall not be deemed to
--------
have waived any right to make a Claim
<PAGE>
50
against Ashland with respect to any Loss that Marathon suffers as a result of
any such breach.
(b) Ashland's Obligation in the Event of an Exercise by Marathon of
---------------------------------------------------------------
its Special Termination Right or its Marathon Call Right or an Exercise by
- --------------------------------------------------------------------------
Ashland of its Ashland Put Right. Ashland's obligation to sell its Membership
- ---------------------------------
Interests and the Ashland LOOP/LOCAP Interest to Marathon pursuant to this
Agreement in the event of an exercise by Marathon of its Special Termination
Right or its Marathon Call Right or in the event of an exercise by Ashland of
its Ashland Put Right is subject in each case to the satisfaction (or waiver by
Ashland) as of the Closing of the following conditions:
(i) As of the Closing Date, there shall be no (i) injunction or
restraining order of any nature issued by any Governmental Authority which
directs, or which has the effect of directing, that the Closing shall not
be consummated as herein provided or (ii) investigation, action or other
proceeding that shall have been brought by any Governmental Authority and
be pending on the Closing Date, or threatened by any Governmental
Authority, in any such case against Marathon or Ashland in connection with
the consummation of the transactions contemplated by this Agreement which
is reasonably likely to result in an injunction or restraining order which
directs, or which has the effect of directing, that the Closing shall not
be consummated as herein provided;
(ii) the waiting period under HSR Act, if applicable to the purchase
and sale of Ashland's Membership Interests pursuant to this Agreement shall
have expired or been terminated;
(iii) Marathon shall have delivered to Ashland, in Cash or by wire
transfer to a bank account designated in writing by Ashland, immediately
available funds in an amount equal to (x) the Special Termination Price or
Marathon Call Price, as applicable, or the Cash portion of the Ashland Put
Price or applicable Installment Payment, plus (y) the amount of interest
payable pursuant to Section 3.01 or 4.01, as applicable, plus (z) the
amount of interest, if any, payable pursuant to Section 9.04(b) or 9.05;
and
<PAGE>
51
(iv) Marathon or USX, as applicable, shall have issued the Securities
to be issued on the Closing Date, if any, accompanied by the certificate(s)
and opinion(s) referred to in Section 8.02.
It is understood and agreed that a breach by Marathon or USX of any of its
respective representations or warranties in this Agreement shall not constitute
a condition to Ashland's obligation to sell its Membership Interests and the
Ashland LOOP/LOCAP Interest to Marathon pursuant to this Agreement in the
circumstances set forth above; provided that Ashland shall not be deemed to have
--------
waived any right to make a Claim against Marathon or USX with respect to any
Loss that Ashland suffers as a result of any such breach.
(c) Ashland's Obligation in the Event of an Exercise by Ashland of
--------------------------------------------------------------
its Special Termination Right. Ashland's obligation to purchase and pay for
- ------------------------------
Marathon's Membership Interests pursuant to this Agreement in the event of an
exercise by Ashland of its Special Termination Right is subject to the
satisfaction (or waiver by Ashland) as of the Closing of the following
conditions:
(i) As of the Closing Date, there shall be no (i) injunction or
restraining order of any nature issued by any Governmental Authority which
directs, or which has the effect of directing, that the Closing shall not
be consummated as herein provided or (ii) investigation, action or other
proceeding that shall have been brought by any Governmental Authority and
be pending on the Closing Date, or that shall have been threatened by any
Governmental Authority, in any such case against Marathon or Ashland in
connection with the consummation of the transactions contemplated by this
Agreement which is reasonably likely to result in an injunction or
restraining order which directs, or which has the effect of directing, that
the Closing shall not be consummated as herein provided;
(ii) the waiting period under the HSR Act, if applicable to the
purchase and sale of Marathon's Membership Interests pursuant to this
Agreement shall have expired or been terminated; and
(iii) Marathon shall have Transferred to Ashland (or, if Ashland
shall have so elected by written notice to Marathon, a Wholly Owned
Subsidiary of Ashland) all
<PAGE>
52
of its Membership Interests on the Closing Date free and clear of all
Liens.
It is understood and agreed that a breach by Marathon or USX of any of its
respective representations or warranties in this Agreement shall not constitute
a condition to Ashland's obligation to purchase and pay for Marathon's
Membership Interests pursuant to this Agreement in the circumstances set forth
above; provided that Ashland shall not be deemed to have waived any right to
--------
make a Claim against Marathon or USX with respect to any Loss that Ashland
suffers as a result of any such breach.
(d) Marathon's Obligation in the Event of an Exercise by Ashland of
---------------------------------------------------------------
its Special Termination Right. Marathon's obligation to sell its Membership
- ------------------------------
Interests to Ashland pursuant to this Agreement in the event of an exercise by
Ashland of its Special Termination Right is subject to the satisfaction (or
waiver by Marathon) as of the Closing of the following conditions:
(i) As of the Closing Date, there shall be no (i) injunction or
restraining order of any nature issued by any Governmental Authority which
directs, or which has the effect of directing, that the Closing shall not
be consummated as herein provided or (ii) investigation, action or other
proceeding that shall have been brought by any Governmental Authority and
be pending on the Closing Date, or threatened by any Governmental
Authority, in any such case against Marathon or Ashland in connection with
the consummation of the transactions contemplated by this Agreement which
is reasonably likely to result in an injunction or restraining order which
directs, or which has the effect of directing, that the Closing shall not
be consummated as herein provided;
(ii) the waiting period under HSR Act, if applicable to the purchase
and sale of Marathon's Membership Interests pursuant to this Agreement
shall have expired or been terminated; and
(iii) Ashland shall have delivered to Marathon, in Cash or by wire
transfer to a bank account designated in writing by Marathon, immediately
available funds in an amount equal to (x) the Special Termination Price
plus (y) the amount of interest payable pursuant to
<PAGE>
53
Section 2.01 plus (z) the amount of interest, if any, payable pursuant to
Section 9.08(b) or 9.09.
It is understood and agreed that a breach by Ashland of any of its
representations or warranties in this Agreement shall not constitute a condition
to Marathon's obligation to sell its Membership Interests to Ashland pursuant to
this Agreement in the circumstances set forth above; provided that Marathon
--------
shall not be deemed to have waived any right to make a Claim against Ashland
with respect to any Loss that Marathon suffers as a result of any such breach.
(e) Consequences of Inability To Transfer the Ashland LOOP/LOCAP
------------------------------------------------------------
Interest on the Closing Date. It shall not be a condition to the Closing of the
- -----------------------------
Marathon Call Right, the Ashland Put Right or the Marathon Special Termination
Right, as applicable, that Ashland shall have Transferred the Ashland LOOP/LOCAP
Interest to Marathon, the Company or such other person as Marathon shall direct.
In the event that any consents or approvals required for such Transfer are not
obtained prior to the Closing of the Marathon Call Right, the Ashland Put Right
or the Marathon Special Termination Right, as applicable, and as a consequence
Ashland is not able to Transfer the Ashland LOOP/LOCAP Interest to Marathon, the
Company or such other person as Marathon shall direct, as applicable, on the
Closing Date, the parties hereto shall use their commercially reasonable best
efforts to achieve any lawful and reasonable (including with respect to the
costs and expenses to be borne by Ashland) arrangement proposed by Marathon
under which Marathon or the Company, as applicable, shall obtain the economic
claims, rights and benefits under the Ashland LOOP/LOCAP Interest. Such
reasonable arrangement may include (i) Ashland subcontracting, sublicensing or
subleasing to Marathon, the Company or such other person as Marathon shall
direct, as applicable, any and all of Ashland's rights, and delegating all of
Ashland's obligations, under the Ashland LOOP/LOCAP Interest, and (ii) Ashland
granting to Marathon, the Company or such other person as Marathon shall direct,
as applicable, a proxy (the "Ashland LOOP/LOCAP Irrevocable Proxy") which shall
------------------------------------
authorize such party to exercise on Ashland's behalf, all of Ashland's voting
rights with respect to the Ashland LOOP/LOCAP Interest. The costs and expenses
incurred in connection with any such arrangements shall be borne 62% by Marathon
and 38% by Ashland.
<PAGE>
54
SECTION 9.03. Consequences of a Delayed Closing of the Marathon Call
------------------------------------------------------
Right or the Ashland Put Right Where Ashland Is at Fault. (a) Right to Revoke
- -------------------------------------------------------------------------------
Ashland Put Exercise Notice or Marathon Call Exercise Notice. If the Closing of
- -------------------------------------------------------------
the Marathon Call Right or the Ashland Put Right shall not have occurred on or
prior to the date that is 180 days after the Scheduled Closing Date, and (i) the
delay is due to (x) a failure by Ashland to timely perform in any material
respect any of its covenants and agreements contained herein or (y) the fact
that any of Ashland's representations and warranties contained herein have
ceased to be true and correct in any material respect, and (ii) neither Marathon
nor USX shall have (x) failed to timely perform in any material respect any of
its covenants and agreements contained herein or (y) breached any of its
representations and warranties contained herein in any material respect, then
Marathon shall thereafter have the right, exercisable at any time prior to the
Closing by written notice to Ashland, to revoke Ashland's Ashland Put Exercise
Notice or its Marathon Call Exercise Notice, as applicable.
(b) Adjustment to Ashland Put Price or Marathon Call Price. If the
-------------------------------------------------------
Closing of the Marathon Call Right or the Ashland Put Right does not occur on
the Scheduled Closing Date, and (i) the delay is due to (x) a failure by Ashland
to timely perform in any material respect any of its covenants and agreements
contained herein or (y) the fact that any of Ashland's representations and
warranties contained herein have ceased to be true and correct in any material
respect, and (ii) neither Marathon nor USX shall have (x) failed to timely
perform in any material respect any of its covenants and agreements contained
herein or (y) breached any of its representations and warranties contained
herein in any material respect, then on such later date on which the Closing
actually takes place (such later date being the "Delayed Closing Date") Marathon
--------------------
shall deduct from the Marathon Call Price or the Ashland Put Price (or the first
Installment Payment, as applicable) payable to Ashland on the Delayed Closing
Date, an amount equal to the amount of interest accrued during the period
commencing at 12:01 a.m. on the day immediately following the Scheduled Closing
Date and ending on and including the Delayed Closing Date (the "Delayed Closing
---------------
Date Interest Period") on the Marathon Call Price, or the Ashland Put Price (or
- --------------------
the first Installment Payment thereof, as applicable), at a rate per
<PAGE>
55
annum equal to the 30-day LIBOR Rate multiplied by 1.5, with daily accrual of
interest.
(c) Other Consequences. In the event that Marathon revokes Ashland's
-------------------
Ashland Put Exercise Notice or its Marathon Call Exercise Notice pursuant to
Section 9.03(a), each of Marathon and Ashland shall thereafter have the right to
exercise their respective Marathon Call Right and Ashland Put Right in
accordance with the terms of this Agreement. Any such revocation shall not
operate as a release of Ashland from any liability it may have to Marathon for
any breach of its obligations under this Agreement and such revocation shall not
in any way preclude Marathon from exercising any right or power hereunder or
otherwise available to it at law or in equity as a result of any such breach.
SECTION 9.04. Consequences of a Delayed Closing of the Marathon Call
------------------------------------------------------
Right or the Ashland Put Right Where Marathon or USX Is at Fault. (a)
- -----------------------------------------------------------------
Revocation of Proxies; Payment of Distributions to Ashland; Right To Revoke
- ---------------------------------------------------------------------------
Ashland Put Exercise Notice or Marathon Call Exercise Notice. If the Closing of
- -------------------------------------------------------------
the Marathon Call Right or the Ashland Put Right does not occur on the Scheduled
Closing Date, and (i) the delay is due to (x) a failure by Marathon or USX to
timely perform in any material respect any of its respective covenants and
agreements contained herein or (y) the fact that any of Marathon's or USX's
respective representations and warranties contained herein (or in any
certificate required to be delivered to Ashland pursuant to Section 9.02(b)(iv))
have ceased to be true and correct in any material respect, and (ii) Ashland
shall not have (x) failed to timely perform in any material respect any of its
covenants and agreements contained herein or (y) breached any of its
representations and warranties contained herein in any material respect, then
(i) effective as of 12:01 a.m. on the day immediately following the Scheduled
Closing Date, all Ashland Representatives Revocable Proxies and the Ashland
LOOP/LOCAP Revocable Proxy shall automatically be revoked; (ii) Marathon shall,
and shall cause each of its Representatives to, promptly take all such actions
as are necessary to provide that the Company shall thereupon resume making
distributions of Distributable Cash and Tax Liability Distributions directly to
Ashland pursuant to Article V of the LLC Agreement; (iii) Marathon shall
immediately pay to Ashland an amount equal to all Exercise Period Distributions
received by
<PAGE>
56
Marathon from the Company in accordance with the provisions of Section
5.01(a)(ii), together with interest on each such Exercise Period Distribution at
a rate per annum equal to the Base Rate, with daily accrual of interest, from
(but excluding) the date such amount was otherwise payable to Ashland (or, if
earlier, the date such amount was paid to Marathon) to (and including) the date
such amount is paid to Ashland in accordance with the provisions of this clause
(iii); (iv) the Company shall immediately release to Ashland all amounts then
held in the Escrow Account, including any income earned thereon; and (v) if the
Closing shall not have occurred on or prior to the date that is 180 days after
the Scheduled Closing Date, Ashland thereafter shall have the right, exercisable
at any time prior to the Closing by written notice to Marathon, to revoke its
Ashland Put Exercise Notice or Marathon's Marathon Call Exercise Notice, as
applicable.
(b) Adjustments to Ashland Put Price or Marathon Call Price. In
--------------------------------------------------------
addition, if the Closing of the Marathon Call Right or the Ashland Put Right
does not occur on the Scheduled Closing Date, and (i) the delay is due to (x) a
failure by Marathon or USX to timely perform in any material respect any of its
respective covenants and agreements contained herein or (y) the fact that any of
Marathon's or USX's respective representations and warranties contained herein
have ceased to be true and correct in any material respect, and (ii) Ashland
shall not have (x) failed to timely perform in any material respect any of its
covenants and agreements contained herein or (y) breached any of its
representations and warranties contained herein in any material respect, then
Marathon shall be entitled to deduct from the Marathon Call Price or from the
Ashland Put Price (or the first Installment Payment, as applicable) payable to
Ashland on the Delayed Closing Date, an amount (the "9.04(b) Post-Scheduled
----------------------
Closing Date Distribution Amount") equal to the amount of any Ashland Exercise
- --------------------------------
Period Distributions that Ashland shall have received from the Company in Cash
during the Delayed Closing Date Interest Period and, on the Delayed Closing
Date, Marathon shall pay to Ashland in addition to the Marathon Call Price or
the Ashland Put Price (or the first Installment Payment, as applicable) and
related accrued interest payable pursuant to Section 3.01 or 4.01, as
applicable, an amount in Cash equal to the amount of interest accrued during the
Delayed Closing Interest Period on an amount equal to (1) the Marathon Call
Price or the Ashland Put Price (or the first Installment Payment thereof,
<PAGE>
57
as applicable) minus (2) the 9.04(b) Post-Scheduled Closing Date Distribution
Amount, at a rate per annum equal to the 30-day LIBOR Rate multiplied by 1.5,
with daily accrual of interest.
(c) Other Consequences. In the event that Ashland revokes its
-------------------
Ashland Put Exercise Notice or Marathon's Marathon Call Exercise Notice pursuant
to clause (v) of Section 9.03(a), each of Ashland and Marathon shall thereafter
have the right to exercise their respective Ashland Put Right and Marathon Call
Right in accordance with the terms of this Agreement. Any such revocation shall
not operate as a release of Marathon or USX from any liability it may have to
Ashland for any breach of its obligations under this Agreement and such
revocation shall not in any way preclude Ashland from exercising any right or
power hereunder or otherwise available to it at law or in equity as a result of
any such breach.
SECTION 9.05. Consequences of a Delayed Closing of the Marathon Call
------------------------------------------------------
Right or the Ashland Put Right Where No Party Is at Fault. If the Closing of
- ----------------------------------------------------------
the Marathon Call Right or the Ashland Put Right does not occur on the Scheduled
Closing Date, and the delay is not due to a failure by any party hereto to
timely perform in any material respect any of its respective covenants and
agreements contained herein or to the fact that any party's representations and
warranties contained herein have ceased to be true and correct in any material
respect, then Marathon shall pay to Ashland on the Delayed Closing Date, in
addition to the Marathon Call Price or the Ashland Put Price (or the first
Installment Payment, as applicable) and related accrued interest payable
pursuant to Section 3.01 or 4.01, as applicable, an amount in Cash equal to the
amount of interest accrued during the Delayed Closing Interest Period on the
Marathon Call Price or the Ashland Put Price (or the first Installment Payment,
as applicable), at a rate per annum equal to the Base Rate, with daily accrual
of interest. If the Delayed Closing Date does not occur on or prior to the date
that is 180 days after the Scheduled Closing Date and the delay is not due to an
action or failure to act by any of Marathon, USX or Ashland, then (i) effective
as of 12:01 a.m. on the day immediately following the last day of such 180-day
period, all Ashland Representatives Revocable Proxies and the Ashland LOOP/LOCAP
Revocable Proxy shall automatically be revoked; (ii) Marathon shall, and shall
cause each of its
<PAGE>
58
Representatives to, promptly take all such actions as are necessary to provide
that the Company shall resume making distributions of Distributable Cash and Tax
Liability Distributions directly to Ashland pursuant to Article V of the LLC
Agreement; (iii) Marathon shall immediately pay to Ashland an amount equal to
all Exercise Period Distributions received by Marathon from the Company in
accordance with the provisions of Section 5.01(a)(ii), together with interest on
each such Exercise Period Distribution at a rate per annum equal to the Base
Rate, with daily accrual of interest, from (but excluding) the date such amount
was otherwise payable to Ashland (or, if earlier, the date such amount was paid
to Marathon) to (and including) the date such amount is paid to Ashland in
accordance with the provisions of this clause (iii); (iv) the Company shall
immediately release to Ashland all amounts then held in the Escrow Account,
including any income earned thereon; and (v) the parties shall be restored to
their rights as though the Ashland Put Right or the Marathon Call Right had
never been exercised, without liability to any party and without any effect on
the ability of Ashland to exercise its Ashland Put Right or Marathon to exercise
its Marathon Call Right in accordance with the terms of this Agreement in the
future.
SECTION 9.06. Consequences of Delayed Second or Third Scheduled
-------------------------------------------------
Installment Payment. If Marathon shall fail to make an Installment Payment on
- --------------------
the second or third Scheduled Installment Payment Date, if applicable, then on
such later date on which the applicable Installment Payment is actually made
(such later date being a "Delayed Installment Payment Date"), Marathon shall pay
--------------------------------
to Ashland, in addition to the applicable Installment Payment and related
accrued interest payable pursuant to Section 3.01 or 4.01, as applicable, an
amount in Cash equal to the amount of interest accrued during the period
commencing on the day immediately following the Scheduled Installment Payment
Date and ending on and including the date of the payment of the relevant
Installment Payment (the "Delayed Installment Payment Date Interest Period") on
------------------------------------------------
the applicable Installment Payment, at a rate per annum equal to the 30 day
LIBOR Rate multiplied by 1.5, with daily accrual of interest.
SECTION 9.07. Consequences of a Delayed Closing of the Special
------------------------------------------------
Termination Right Where Terminating Member Is at Fault. (a) Continuation of
- ------------------------------------------------------ ---------------
Term of the Company; Right to Specific Performance. If the Closing of the
- ---------------------------------------------------
Special Termination Right shall not have occurred on or prior to the
<PAGE>
59
Scheduled Closing Date, and (i) the delay is due to (x) a failure by the
Terminating Member (or, if Marathon is the Terminating Member, Marathon or USX)
to timely perform in any material respect any of its covenants and agreements
contained herein or (y) the fact that any of the Terminating Member's (or, if
Marathon is the Terminating Member, Marathon's or USX's) representations and
warranties contained herein have ceased to be true and correct in any material
respect, and (ii) the Non-Terminating Member (or, if Marathon is the Non-
Terminating Member, Marathon or USX) shall not have (x) failed to timely perform
in any material respect any of its covenants and agreements contained herein or
(y) breached any of its representations and warranties contained herein in any
material respect, then the Non-Terminating Member shall have the right to elect,
by written notice to the Company and the Terminating Member, to either (i)
terminate the Term of the Company at the end of the Initial Term or the then-
current 10-year extension thereof, as applicable (in which case the Term of the
Company shall automatically terminate upon the expiration of the Initial Term or
the then-current 10-year extension thereof), or (ii) extend the Term of the
Company for two additional years following the expiration of the Initial Term or
the then-current 10-year extension thereof, as applicable (in which case the
Term of the Company shall automatically be extended for such additional two-year
period).
(b) Adjustment to Special Termination Price. If the Closing of the
----------------------------------------
Special Termination Right does not occur on the Scheduled Closing Date, and (i)
the delay is due to (x) a failure by the Terminating Member (or, if Marathon is
the Terminating Member, Marathon or USX) to timely perform in any material
respect any of its covenants and agreements contained herein or (y) the fact
that any of the Terminating Member's (or, if Marathon is the Terminating Member,
Marathon's or USX's) representations and warranties contained herein have ceased
to be true and correct in any material respect, and (ii) the Non-Terminating
Member (or, if Marathon is the Terminating Member, Marathon or USX) shall not
have (x) failed to timely perform in any material respect any of its covenants
and agreements contained herein or (y) breached any of its representations and
warranties contained herein in any material respect, then on the Delayed Closing
Date the Non-Terminating Member shall deduct from the Special Termination Price
payable to the Terminating Member on the Delayed Closing Date, an amount equal
to the amount of interest accrued during the Delayed
<PAGE>
60
Closing Date Interest Period on the Special Termination Price, at a rate per
annum equal to the 30-day LIBOR Rate multiplied by 1.5, with daily accrual of
interest.
SECTION 9.08. Consequences of a Delayed Closing of the Special
------------------------------------------------
Termination Right Where Non-Terminating Member Is at Fault. (a) Revocation of
- ---------------------------------------------------------- -------------
Proxies; Payment of Distributions to Terminating Member; Right to Revoke Special
- --------------------------------------------------------------------------------
Termination Exercise Notice. If the Closing of the Special Termination Right
- ----------------------------
does not occur on the Scheduled Closing Date, and (i) the delay is due to a
failure by the Non-Terminating Member (or, if Marathon is the Non-Terminating
Member, Marathon or USX) to timely perform in any material respect any of its
covenants and agreements contained herein or (y) the fact that any of the Non-
Terminating Member's (or, if Marathon is the Non-Terminating Member, Marathon's
or USX's) representations and warranties contained herein have ceased to be true
and correct in any material respect, and (ii) the Terminating Member (or, if
Marathon is the Terminating Member, Marathon or USX) shall not have (x) failed
to timely perform in any material respect any of its covenants and agreements
contained herein or (y) breached any of its representations and warranties
contained herein in any material respect, then (i) effective as of 12:01 a.m. on
the day immediately following the Scheduled Closing Date, all Marathon
Representative Revocable Proxies (in the circumstance where Marathon is the
Terminating Member) or all Ashland Representative Revocable Proxies and the
Ashland LOOP/LOCAP Revocable Proxy (in the circumstance where Ashland is the
Terminating Member) shall automatically be revoked; (ii) the Non-Terminating
Member shall, and shall cause each of its Representatives to, promptly take all
such actions as are necessary to provide that the Company shall thereupon resume
making distributions of Distributable Cash and Tax Liability Distributions
directly to the Terminating Member pursuant to Article V of the LLC Agreement;
(iii) the Non-Terminating Member shall immediately pay to the Terminating Member
an amount equal to all Exercise Period Distributions received by the Non-
Terminating Member from the Company in accordance with the provisions of Section
5.01(a)(ii) or Section 5.01(b)(ii), as applicable, together with interest on
each such Exercise Period Distribution at a rate per annum equal to the Base
Rate, with daily accrual of interest, from (but excluding) the date such amount
was otherwise payable to the Terminating Member (or, if earlier, the date such
amount was paid to the Non-Terminating Member) to (and including) the
<PAGE>
61
date such amount is paid to the Terminating Member in accordance with the
provisions of this clause (iii); (iv) the Company shall immediately release to
the Terminating Member all amounts then held in the Escrow Account, including
any income earned thereon; and (v) if the Closing shall not have occurred on or
prior to the date that is 120 days before the expiration of the Initial Term or
the then-current 10-year extension thereof, each of the Terminating Member and
the Non-Terminating Member thereafter shall have the right, exercisable at any
time prior to the Closing by written notice to the other party, to revoke the
Non-Terminating Member's Special Termination Exercise Notice, in which event the
Term of the Company shall automatically terminate upon the expiration of the
Initial Term or the then-current 10-year extension thereof.
(b) Adjustments to Special Termination Price. In addition, if the
-----------------------------------------
Closing of the Special Termination Right does not occur on the Scheduled Closing
Date, and (i) the delay is due to (x) a failure by the Non-Terminating Member
(or, if Marathon is the Non-Terminating Member, Marathon or USX) to timely
perform in any material respect any of its covenants and agreements contained
herein or (y) the fact that any of the Non-Terminating Member's (or, if Marathon
is the Non-Terminating Member, Marathon's or USX's) representations and
warranties contained herein have ceased to be true and correct in any material
respect, and (ii) the Terminating Member (or, if Marathon is the Terminating
Member, Marathon or USX) shall not have (x) failed to timely perform in any
material respect any of its covenants and agreements contained herein or (y)
breached any of its representations and warranties contained herein in any
material respect, then the Non-Terminating Member shall be entitled to deduct
from the Special Termination Price payable to the Terminating Member on the
Delayed Closing Date, an amount (the "9.08(b) Post-Scheduled Closing Date
-----------------------------------
Distribution Amount") equal to the amount of any Exercise Period Distributions
- -------------------
that the Terminating Member shall have received from the Company in Cash during
the Delayed Closing Date Interest Period and, on the Delayed Closing Date, the
Non-Terminating Member shall pay to the Terminating Member in addition to the
Special Termination Price and related accrued interest payable pursuant to
Section 2.01, an amount in Cash equal to the amount of interest accrued during
the Delayed Closing Interest Period on an amount equal to (1) the Special
Termination Price minus (2) the 9.08(b) Post-Scheduled Closing Date Distribution
Amount, at a rate
<PAGE>
62
per annum equal to the 30-day LIBOR Rate multiplied by 1.5, with daily accrual
of interest.
(c) Other Consequences. In the event that the Terminating Member
-------------------
revokes the Non-Terminating Member's Special Termination Exercise Notice, then
the Non-Terminating Member shall not thereafter have the right to exercise its
Special Termination Right. Any such revocation shall not operate as a release
of the Non-Terminating Member from any liability it may have to the Terminating
Member for any breach of its obligations under this Agreement and such
revocation shall not in any way preclude the Terminating Member from exercising
any right or power hereunder or otherwise available to it at law or in equity as
a result of any such breach.
SECTION 9.09. Consequences of Delayed Closing of Special Termination
------------------------------------------------------
Right Where No Party Is at Fault. If the Closing of the Special Termination
- ---------------------------------
Right does not occur on the Scheduled Closing Date, and the delay is not due to
a failure by any party hereto to timely perform in any material respect any of
its respective covenants and agreements contained herein or to the fact that any
party's representations and warranties contained herein have ceased to be true
and correct in any material respect, then the Non-Terminating Member shall pay
to the Terminating Member on the Delayed Closing Date, in addition to the
Special Termination Price and related accrued interest payable pursuant to
Section 2.01, an amount in Cash equal to the amount of interest accrued during
the Delayed Closing Interest Period on the Special Termination Price, at a rate
per annum equal to the Base Rate, with daily accrual of interest. If the
Delayed Closing Date does not occur on or prior to the date that is 120 days
before the expiration of the Initial Term or the then-current 10-year extension
thereof and the delay is not due to an action or failure to act by the
Terminating Member or the Non-Terminating Member, then (i) effective as of 12:01
a.m. on the day immediately following such 120th day before the expiration of
the Initial Term or the then-current 10-year extension thereof, all Marathon
Representative Revocable Proxies (in the circumstance where Marathon is the
Terminating Member) or all Ashland Representative Revocable Proxies and the
Ashland LOOP/LOCAP Revocable Proxy (in the circumstance where Ashland is the
Terminating Member) shall be revoked; (ii) the Non-Terminating Member shall, and
shall cause each of its Representatives to, promptly take all such actions as
<PAGE>
63
are necessary to provide that the Company shall resume making distributions of
Distributable Cash and Tax Liability Distributions directly to the Terminating
Member pursuant to Article V of the LLC Agreement; (iii) the Non-Terminating
Member shall immediately pay to the Terminating Member an amount equal to all
Exercise Period Distributions received by the Non-Terminating Member from the
Company in accordance with the provisions of Section 5.01(a)(ii) or Section
5.01(b)(ii), as applicable, together with interest on each such Exercise Period
Distribution at a rate per annum equal to the Base Rate, with daily accrual of
interest, from (but excluding) the date such amount was otherwise payable to the
Terminating Member (or, if earlier, the date such amount was paid to the Non-
Terminating Member) to (and including) the date such amount is paid to the
Terminating Member in accordance with the provisions of this clause (iii); (iv)
the Company shall immediately release to the Terminating Member all amounts then
held in the Escrow Account, including any income earned thereon; and (v) the
Term of the Company shall automatically terminate upon the expiration of the
Initial Term or the then-current 10-year extension thereof.
ARTICLE X
Registration Rights
-------------------
SECTION 10.01. Registration upon Request. (a) Ashland shall have the
--------------------------
right to make a written demand upon the issuer or, in the case of any Marathon
Debt Securities issued by Marathon and guaranteed by USX, issuers of any class
of Securities delivered or to be delivered to Ashland as payment of any portion
of the Ashland Put Price (both parties hereinafter referred to collectively as
the "Issuer"), on not more than six separate occasions (subject to the
------
provisions of this Section 10.01), to either, at Ashland's option, (i) register
under the Securities Act all or a portion of such Securities for purposes of a
public offering by Ashland of such Securities or (ii) prepare an Offering
Memorandum that covers all or a portion of such Securities for purposes of a
private placement by Ashland of such Securities (either of such requests being
referred to herein as a "Demand Registration") that were not registered under
-------------------
the Securities Act at the time of issuance thereof to Ashland on the Closing
Date or Installment Payment Date, as the case may be, and the Issuer shall use
its best efforts
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64
to file a Registration Statement and cause such Securities to be registered
under the Securities Act (in the case of a Demand Registration for a public
offering) or to prepare a final Offering Memorandum (in the case of a Demand
Registration for a private placement) (i) in the case of any Securities to be
delivered to Ashland on the Closing Date or any Installment Payment Date, not
later than the Scheduled Closing Date or applicable Scheduled Installment
Payment Date or (ii) in the case of any Securities that have been delivered to
Ashland on the Closing Date or any Installment Payment Date, in each case not
later than 60 days after such written demand by Ashland; provided that each
--------
Demand Registration shall cover Securities having an aggregate fair market value
(based on the then-current market value of such Securities or, if such market
value cannot be determined, based on the expected offering price of such
Securities) equal to (i) in the case of a public offering, $100 million or more,
unless Ashland shall hold less than $100 million of Securities, in which event,
the remaining Securities held by Ashland and (ii) in the case of a private
placement, $25 million or more, unless Ashland shall hold less than $25 million
of Securities, in which event, the remaining Securities held by Ashland.
(b) Notwithstanding the provisions of Section 10.01(a), the Issuer
(i) shall not be obligated to prepare or file more than one Registration
Statement pursuant to this Section 10.01 during any six month period (measured
from the effective date (or, in the case of a private placement, the closing
date) of the most recently requested Demand Registration to the date of the
demand by Ashland for a subsequent Demand Registration) and (ii) shall be
entitled to postpone the filing of any Registration Statement otherwise required
to be prepared and filed by it pursuant to Section 10.01(a), and to prevent
Ashland from initially distributing any Offering Memorandum required to be
prepared by the Issuer pursuant to Section 10.01(a), in each case (x) if the
Issuer is actively pursuing an Underwritten Public Offering, for a period of up
to 90 days following the closing of any Underwritten Public Offering; provided
--------
that the Issuer is advised by its managing underwriter or underwriters in
writing (with a copy to Ashland), that the price at which securities would be
offered in such offering would, in its or in their opinion, be materially
adversely affected by the registration or the initial dissemination of the
Offering Memorandum so requested, or (y) for a period of up to 90 days if the
<PAGE>
65
Issuer determines in its reasonable judgment and in good faith that the
registration and distribution of such Securities (or the private placement
thereof, in the case of a sale by Ashland of such securities pursuant to Section
4(2) or Rule 144A of the Securities Act) would materially adversely impair or
interfere with in any material respect any contemplated material financing,
acquisition, disposition, corporate reorganization or other similar transaction
involving the Issuer or any of its subsidiaries or Affiliates ((x) or (y) being
hereinafter referred to as a "Blackout Period"), provided, however, that the
--------------- -------- -------
aggregate number of days included in all Blackout Periods during any consecutive
12 months shall not exceed 180 days, and; provided further, however, that a
---------------- -------
period of at least 30 days shall elapse between the termination of any Blackout
Period and the commencement of the immediately succeeding Blackout Period. In
the event of such postponement, Ashland shall have the right to withdraw such
request for registration or request for preparation of an Offering Memorandum by
giving written notice to the Issuer within 20 days after receipt of notice of
postponement and, in the event of such withdrawal, such request shall not be
counted for purposes of determining the number of Demand Registrations to which
Ashland is entitled pursuant to Section 10.01(a).
(c) A registration requested pursuant to this Section 10.01 shall not
be deemed to have been effected unless the Registration Statement relating
thereto (i) has become effective under the Securities Act and (ii) has remained
effective for a period of at least 90 days (or such shorter period in which all
Securities included in such registration have actually been sold thereunder);
provided, however, that if after any Registration Statement requested pursuant
- -------- -------
to this Section 10.01 becomes effective such Registration Statement is
interfered with by any stop order, injunction or other order or requirement of
the Commission or other Governmental Authority solely due to the actions or
omissions to act of the Issuer prior to being effective for 90 days and less
than 75% of the Securities have been sold thereunder, such Registration
Statement shall be at the sole expense of the Issuer and shall not constitute a
Demand Registration. In addition, a request for the preparation of an Offering
Memorandum pursuant to this Section 10.01 shall not be deemed to have been
effected unless the information contained in such Offering Memorandum has
remained "reasonably current" (as such term is defined in Rule 144A
<PAGE>
66
under the Securities Act) for a period of at least 90 days (or such shorter
period in which all Securities covered by such Offering Memorandum have actually
been sold thereunder); provided, however, that if such Offering Memorandum is
-------- -------
interfered with by any stop order, injunction or other order or requirement of
the Commission or other Governmental Authority solely due to the actions or
omissions to act of the Issuer prior to such Offering Memorandum being made
available to Ashland for 90 days and less than 75% of the Securities have been
sold pursuant thereto, such Offering Memorandum shall be at the sole expense of
the Issuer and shall not constitute a Demand Registration.
(d) On or after the date hereof, the Issuer shall not grant to any
other holder of its securities, whether currently outstanding or issued in the
future, any incidental or "piggy-back" registration rights with respect to any
Registration Statement filed or Offering Memorandum prepared pursuant to a
Demand Registration under this Section 10.01 and, without the prior consent of
Ashland, will not permit any holder of its securities to participate in any
offering or private placement made pursuant to a Demand Registration under this
Section 10.01.
(e) If a Demand Registration involves an Underwritten Public Offering
and the managing underwriter or underwriters shall advise the Issuer and Ashland
in writing that, in its view, the number of securities requested to be included
in such registration (including, without limitation, Securities requested to
be included by Ashland, securities which the Issuer proposes to be included, and
securities proposed to be included by other holders of securities entitled to
include securities in such registration pursuant to incidental or "piggy-back"
registration rights other than those pursuant to this Article X (the "Other
-----
Holders")) exceeds the largest number of shares of securities which can be sold
- -------
without having an adverse effect on such offering, including the price at which
such securities can be sold (the "Maximum Offering Size"), the Issuer shall
---------------------
include in such registration, in the priority listed below, up to the Maximum
Offering Size:
(i) first, all Securities requested to be registered by Ashland;
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67
(ii) second, all securities requested to be included in such
registration by any Other Holder (allocated, if necessary, for the offering
not to exceed the Maximum Offering Size, pro rata among such Other Holders
on the basis of the relative number of securities requested to be included
in such registration); and
(iii) third, any securities proposed to be registered by the Issuer
or by any Other Holders pursuant to incidental or "piggy-back" registration
rights.
(f) Ashland may, at any time, prior to the effective date of the
Registration Statement or the initial distribution of the Offering Memorandum
relating to such request, revoke such request by providing a written notice to
the Issuer, in which case such request, as so revoked, shall not constitute a
Demand Registration.
SECTION 10.02. Covenants of the Issuer. (a) Registration Statement
------------------------ ----------------------
Covenants. In the event that any Securities are to be registered pursuant to
- ----------
Section 10.01, the Issuer covenants and agrees that it shall (i) use its best
efforts to effect the registration, (ii) cooperate in the sale of the Securities
and (iii) as expeditiously as possible:
(1) prepare and file with the Commission a Registration Statement with
respect to such Securities on Form S-3, if permitted, or otherwise on any
form for which the Issuer then qualifies or which counsel for the Issuer
shall deem appropriate, and which form shall be available for the sale of
the Securities in accordance with the intended methods of distribution
thereof, and use its best efforts to cause such Registration Statement to
become and remain effective;
(2) prepare and file with the Commission amendments and supplements to
such Registration Statement and prospectus used in connection therewith as
may be necessary to maintain the effectiveness of such registration and to
comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such Registration Statement until
the earlier of (i) such time as all of such securities have been disposed
of in accordance with the
<PAGE>
68
intended methods of disposition by Ashland set forth in such Registration
Statement and (ii) the expiration of 90 days after the date such
Registration Statement becomes effective; provided that before filing a
--------
Registration Statement or prospectus, or any amendments or supplements
thereto, the Issuer shall furnish to Ashland and its counsel, copies of all
documents proposed to be filed;
(3) furnish to Ashland such number of copies of such Registration
Statement and of each amendment and supplement thereto (in each case
including all exhibits), such number of copies of the prospectus and
prospectus supplement, as applicable, in conformity with the requirements
of the Securities Act, and such other documents as Ashland may reasonably
request in order to facilitate the disposition of the Securities by
Ashland;
(4) use its best efforts to register or qualify such Securities
covered by such Registration Statement under such other securities or blue
sky laws of such jurisdictions as Ashland shall reasonably request, and do
any and all other acts and things which may be reasonably necessary or
advisable to enable Ashland to consummate the disposition in such
jurisdictions of the Securities owned by Ashland, except that the Issuer
shall not for any such purpose be required to (i) qualify generally to do
business as a foreign corporation in any jurisdiction where, but for the
requirements of this Section 10.04(a)(4), it would not be obligated to be
so qualified, (ii) subject itself to taxation in any such jurisdiction or
(iii) consent to general service of process in any such jurisdiction);
(5) use its best efforts to cause such Securities covered by such
Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable Ashland
to consummate the disposition of such Securities;
(6) notify Ashland at any time when a prospectus relating to a
Registration Statement is required to be delivered under the Securities Act
within the appropriate period mentioned in Section 10.02(a)(2), of the
happening of any event as a result of which such Registration Statement
contains an untrue statement of
<PAGE>
69
a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light
of the circumstances then existing, and at the request of Ashland, prepare
and furnish to Ashland a reasonable number of copies of an amended or
supplemental prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such Securities, such prospectus shall not
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing;
(7) otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission, and make available to Ashland, as soon
as reasonably practicable (but not more than eighteen months) after the
effective date of the Registration Statement, an earnings statement which
shall satisfy the provisions of Section 11(a) of the Securities Act and the
rules and regulations promulgated thereunder;
(8) use its best efforts to cause all such Securities that are
Marathon Equity Securities to be listed on any securities exchange on which
the securities of the Issuer are then listed, if such Securities are not
already so listed and if such listing is then permitted under the rules of
such exchange, and to provide a transfer agent and registrar for such
Securities covered by such Registration Statement no later than the
effective date of such Registration Statement;
(9) use its best efforts to obtain a "cold comfort" letter or letters
from the Issuer's independent public accountants in customary form; and
(10) cooperate with Ashland and the managing underwriter or
underwriters, if any, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing the
Securities to be sold under such Registration Statement, and enable such
Securities to be in such denominations and registered in such names as the
managing underwriter or underwriters, if any, or Ashland may request.
<PAGE>
70
(b) Offering Memorandum Covenants. In the event that any Securities
------------------------------
are to be sold by Ashland by means of an Offering Memorandum prepared by the
Issuer pursuant to Sections 10.01, the Issuer covenants and agrees that it shall
(i) cooperate in the sale of the Securities and (ii) as expeditiously as
possible:
(1) prepare the Offering Memorandum;
(2) prepare amendments and supplements to such Offering Memorandum as
may be necessary to keep the information in such Offering Memorandum
"reasonably current" (as such term is defined in Rule 144A under the
Securities Act) and to comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such Offering
Memorandum until the earlier of (i) such time as all of such securities
have been disposed of in accordance with the intended methods of
disposition by Ashland set forth in such Offering Memorandum and (ii) the
expiration of 90 days after the date such Offering Memorandum (in
definitive form) is circulated to the initial purchasers; provided that
--------
before making any amendments or supplements thereto, the Issuer shall
furnish to Ashland and its counsel, copies of all proposed amendments or
supplements;
(3) furnish to Ashland such number of copies of such Offering
Memorandum and of each amendment and supplement thereto (in each case
including all exhibits), and such other documents as Ashland may reasonably
request in order to facilitate the disposition of the Securities by
Ashland;
(4) use its best efforts to register or qualify such Securities
covered by such Offering Memorandum under such other securities or blue sky
laws of such jurisdictions as Ashland shall reasonably request, and do any
and all other acts and things which may be reasonably necessary or
advisable to enable Ashland to consummate the disposition in such
jurisdictions of the Securities owned by Ashland, except that the Issuer
shall not for any such purpose be required to (i) qualify generally to do
business as a foreign corporation in any jurisdiction where, but for the
requirements of this Section 10.02(b)(4), it would not be obligated to be
so qualified, (ii) subject itself to
<PAGE>
71
taxation in any such jurisdiction or (iii) consent to general service of
process in any such jurisdiction);
(5) use its best efforts to cause such Securities covered by such
Offering Memorandum to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable Ashland
to consummate the disposition of such Securities;
(6) notify Ashland at any time prior to the completion of the sale of
the Securities by Ashland that are covered by the Offering Memorandum, of
the happening of any event as a result of which such Offering Memorandum
contains an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then
existing, and at the request of Ashland, prepare and furnish to Ashland a
reasonable number of copies of an amended or supplemental Offering
Memorandum as may be necessary so that, as thereafter delivered to the
purchasers of such Securities, such Offering Memorandum shall not contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing;
(7) otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission;
(8) use its best efforts to cause all such Securities that are
Marathon Equity Securities to be listed on any securities exchange on which
the securities of the Issuer are then listed, if such Securities are not
already so listed and if such listing is then permitted under the rules of
such exchange, and to provide a transfer agent and registrar for such
Securities covered by such Offering Memorandum no later than the effective
date of such Offering Memorandum;
(9) use its best efforts to obtain a "cold comfort" letter or letters
from the Issuer's independent public accountants in customary form; and
<PAGE>
72
(10) cooperate with Ashland and the initial purchasers, if any, to
facilitate the timely preparation and delivery of certificates representing
the Securities to be sold under such Offering Memorandum, and enable such
Securities to be in such denominations and registered in such names as the
initial purchasers, if any, or Ashland may request.
The Issuer may require Ashland to furnish the Issuer with such
information regarding Ashland and pertinent to the disclosure requirements
relating to the registration and/or the distribution of such Securities pursuant
to this Article X as the Issuer may from time to time reasonably request in
writing.
Ashland agrees that, upon receipt of any notice from the Issuer of the
happening of any event of the kind described in Section 10.02(a)(6) or
10.02(b)(6), or of the imposition by the Issuer of a Blackout Period of the type
described in clause (y) of 10.01(b)(ii), Ashland shall forthwith discontinue
such disposition of such Securities pursuant to the Registration Statement or
Offering Memorandum covering such Securities until Ashland's receipt of the
copies of the supplemented or amended prospectus or Offering Memorandum
contemplated by Section 10.02(a)(6) and 10.02(b)(6), respectively, or the
expiration of such Blackout Period, as applicable, and, if so directed by the
Issuer, Ashland shall deliver to the Issuer (at the Issuer's expense) all
copies, other than permanent file copies then in Ashland's possession, of the
prospectus or Offering Memorandum covering such Securities current at the time
of receipt of such notice. In the event the Issuer shall give any such notice,
the period mentioned in Section 10.02(a)(2) or 10.02(b)(2), as applicable, shall
be extended by the number of days during the period from the date of the giving
of such notice pursuant to Section 10.02(a)(6) or 10.02(b)(6), as applicable,
and through the date when Ashland shall have received the copies of the
supplemented or amended prospectus or Offering Memorandum contemplated by
Section 10.02(a)(6) or 10.02(b)(6), respectively, or the expiration of such
Blackout Period, as applicable.
SECTION 10.03. Fees and Expenses. In connection with any
------------------
registration pursuant to this Article X or the preparation of any Offering
Memorandum pursuant to this Article X, (i) Ashland shall pay all agent fees and
commissions and underwriting discounts and commissions
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73
related to the Securities being sold by Ashland and the fees and disbursements
of its counsel and accountants and (ii) the Issuer shall pay all fees and
disbursements of its counsel and accountants and the expenses, including fees
incurred in the preparation of a cold comfort letter requested by Ashland
pursuant to Section 10.02(a)(9) or 10.02(b)(9), as applicable. All others fees
and expenses in connection with any Registration Statement or Offering
Memorandum (including, without limitation, all registration and filing fees, all
printing costs, all fees and expenses of complying with securities or blue sky
laws) shall be borne by Ashland; provided that Ashland shall not pay any
--------
expenses relating to work that would otherwise be incurred by the Issuer
including, but not limited to, the preparation and filing of periodic reports
with the Commission.
SECTION 10.04. Indemnification and Contribution. In the case of any
---------------------------------
offering registered pursuant to this Article X or any private placement pursuant
to an Offering Memorandum prepared by the Issuer pursuant to this Article X, the
Issuer agrees to indemnify and hold Ashland, each underwriter or initial
purchaser, if any, of the Securities under such registration or covered by such
Offering Memorandum and each person who controls any of the foregoing within the
meaning of Section 15 of the Securities Act, and any director, officer,
employee, stockholder, partner, agent or representative, of the foregoing,
harmless against any and all losses, claims, damages or liabilities (including
reasonable legal fees and other reasonable expenses incurred in the
investigation and defense thereof) (collectively "Losses") to which they or any
------
of them may become subject under the Securities Act or otherwise, insofar as any
such Losses shall arise out of or shall be based upon (i) any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement (as amended if the Issuer shall have filed with the Commission any
amendment thereof) or Offering Memorandum (as amended if the Issuer shall have
prepared and delivered to Ashland for private distribution any amendment to such
Offering Memorandum), or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading or (ii) any untrue statement or alleged untrue statement of a
material fact contained in the prospectus relating to the sale of such
Securities (as amended or supplemented if the Issuer shall have filed with the
Commission any amendment
<PAGE>
74
thereof or supplement thereto), or the omission or alleged omission to state
therein a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading; provided
--------
that the indemnification contained in this Section 10.04 shall not apply to such
Losses which shall arise out of or shall be based upon any such untrue statement
or alleged untrue statement, or any such omission or alleged omission, which
shall have been made in reliance upon and in conformity with information
furnished in writing to the Issuer by Ashland or such underwriter or initial
purchaser, as the case may be, specifically for use in connection with the
preparation of the Registration Statement, the prospectus contained in the
Registration Statement or the Offering Memorandum, as applicable, or any such
amendment thereof or supplement therein.
Notwithstanding the foregoing provisions of this Section 10.04, the
Issuer shall not be liable to Ashland, any person who participates as an
underwriter in the offering or sale of such Securities, any person who
participates as an initial purchaser in the private placement of such Securities
or any other person, if any, who controls Ashland or any underwriter or initial
purchaser (within the meaning of the Securities Act), under the indemnity
agreement in this Section 10.04 for any such Losses that arise out of Ashland's
or such other person's failure to send or give a copy of the final prospectus or
final Offering Memorandum to the person asserting an untrue statement or alleged
untrue statement or omission or alleged omission at or prior to the written
confirmation of the sale of the Securities to such person if such statement or
omission was corrected in such final prospectus or final Offering Memorandum and
the Issuer has previously furnished copies thereof in accordance with this
Agreement.
In the case of each offering registered pursuant to this Article X and
each private placement pursuant to this Article X, Ashland shall agree, and each
underwriter or initial purchaser, if any, participating therein shall agree,
substantially in the same manner and to the same extent as set forth in the
preceding paragraph, severally to indemnify and hold harmless the Issuer and
each person who controls the Issuer within the meaning of Section 15 of the
Securities Act, and any director, officer, employee, stockholder, partner, agent
or representative of the Issuer, with respect to any statement in or omission
from such
<PAGE>
75
Registration Statement (as amended or as supplemented, if amended or
supplemented as aforesaid) or Offering Memorandum (as amended or as
supplemented, if amended or supplemented as aforesaid), as applicable, if such
statement or omission shall have been made in reliance upon and in conformity
with information furnished in writing to the Issuer by Ashland or such
underwriter or initial purchaser, as the case may be, specifically for use in
connection with the Registration Statement, the prospectus contained in such
Registration Statement or the Offering Memorandum, as applicable, or any such
amendment thereof or supplement thereto.
Each party indemnified under this Section 10.04 shall, promptly after
receipt of notice of the commencement of any claim against any such indemnified
party in respect of which indemnity may be sought hereunder, notify the
indemnifying party in writing of the commencement thereof. The failure of any
indemnified party to so notify an indemnifying party of any action shall not
relieve the indemnifying party from any liability in respect of such action
which it may have to such indemnified party on account of the indemnity
contained in this Section 10.04, unless (and only to the extent) the
indemnifying party was prejudiced by such failure, and in no event shall such
failure relieve the indemnifying party from any other liability which it may
have to such indemnified party. In case any action in respect of which
indemnification may be sought hereunder shall be brought against any indemnified
party and it shall notify an indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it may desire, jointly with any other indemnifying party similarly
notified, to assume the defense thereof through counsel reasonably satisfactory
to the indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under this
Section 10.04 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof, other than reasonable
costs of investigation (unless (i) such indemnified party reasonably objects to
such assumption on the grounds that there may be defenses available to it which
are different from or in addition to those available to such indemnifying party,
(ii) the indemnifying party and such indemnified party shall have mutually
agreed to the retention of such counsel or (iii) in the reasonable opinion
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76
of such indemnified party representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding, in which case the
indemnified party shall be reimbursed by the indemnifying party for the
reasonable expenses incurred in connection with retaining one firm of separate
legal counsel; provided that (i) in circumstances where Ashland or an
--------
underwriter or initial purchaser is the indemnifying party, the indemnifying
party shall not be liable for more than one firm of legal counsel for all
indemnified parties and (ii) in circumstances where the Issuer is the
indemnifying party, the indemnifying party shall not be liable for more than (A)
one firm of legal counsel for Ashland, each person who controls Ashland within
the meaning of Section 15 of the Securities Act, and any director, officer,
employee, stockholder, partner, agent or representative of Ashland, and (B) one
firm of legal counsel for the underwriters or initial purchasers, if any,
indemnified under this Section 10.04, each person who controls such underwriters
or initial purchasers within the meaning of Section 15 of the Securities Act,
and any director, officer, employee, stockholder, partner, agent or
representative of such underwriters or initial purchasers). No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement of any claim or pending or threatened proceeding in respect of
which the indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all liability
arising out of such claim or proceeding. If an indemnifying party shall have
expressly acknowledged its indemnification obligations with respect to a claim
or pending or threatened proceeding, then the indemnified party with respect to
such claim or pending or threatened proceeding shall not, without the prior
written consent of the indemnifying party, effect any settlement of such claim
or pending or threatened proceeding.
If the indemnification provided for in this Section 10.04 is
unavailable to an indemnified party or is insufficient to hold such indemnified
party harmless from any Losses in respect of which this Section 10.04 would
otherwise apply by its terms (other than by reason of exceptions provide
herein), then each applicable
<PAGE>
77
indemnifying party, in lieu of indemnifying such indemnified party, shall have a
joint and several obligation to contribute to the amount paid or payable by such
indemnified party as a result of such Losses, in such proportion as is
appropriate to reflect the relative benefits received by and fault of the
indemnifying party, on the one hand, and such indemnified party, on the other
hand, in connection with the offering or private placement to which such
contribution relates as well as any other relevant equitable considerations.
The relative benefit shall be determined by reference to, among other things,
the amount of proceeds received by each party from the offering or private
placement to which such contribution relates. The relative fault shall be
determined by reference to, among other things, each party's relative knowledge
and access to information concerning the matter with respect to which the claim
was asserted, and the opportunity to correct and prevent any statement or
omission. The amount paid or payable by a party as a result of any Losses shall
be deemed to include any legal or other fees or expenses incurred by such party
in connection with any investigation or proceeding, to the extent such party
would have been indemnified for such expenses if the indemnification provided
for in this Section 10.04 was available to such party.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 10.04 were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
SECTION 10.05. Underwriting Agreement; Purchase Agreement. In
-------------------------------------------
connection with any underwritten offering or private placement of Securities
pursuant to a Demand Registration under Section 10.01, the Issuer and Ashland
shall enter into an underwriting agreement with the underwriters for such
offering or a purchase agreement with the initial purchasers for such private
placement, such underwriting agreement or purchase agreement to contain such
representations and warranties by the Issuer and Ashland and such other terms
and provisions as are customarily contained
<PAGE>
78
in underwriting agreements with respect to secondary distributions or purchase
agreements with respect to private placements, including, without limitation,
indemnities and contribution to the effect and to the extent provided in Section
10.04 (and customary provisions with respect to indemnities and contribution by
such underwriters or initial purchasers).
SECTION 10.06. Undertaking To File Reports. For as long as Ashland
----------------------------
holds Securities, the Issuer shall use its best efforts to file, on a timely
basis, all annual, quarterly and other reports required to be filed by it under
Sections 13 and 15(d) of the Exchange Act and the rules and regulations of the
Commission thereunder, as amended from time to time, or any successor statute or
provisions.
ARTICLE XI
Covenants
---------
SECTION 11.01. Cooperation; Commercially Reasonable Best Efforts.
--------------------------------------------------
Each of the parties hereto shall cooperate with each other in good faith, and
shall cause their respective officers, employees, agents, auditors and
representatives to cooperate with each other in good faith, to cause the Closing
to occur. In addition, each of the parties hereto shall use its commercially
reasonable best efforts to cause the Closing to occur.
SECTION 11.02. Antitrust Notification; FTC or DOJ Investigation. (a)
-------------------------------------------------
Each of Marathon, USX and Ashland shall as promptly as practicable, but in no
event later than 30 days following the relevant Exercise Date, file with the FTC
and the DOJ the notification and report form, if any, required for the
transactions contemplated hereby and any supplemental information requested in
connection therewith pursuant to the HSR Act. Any such notification and report
form and supplemental information shall be in substantial compliance with the
requirements of the HSR Act. Each of Marathon, USX and Ashland shall furnish to
the other such necessary information and reasonable assistance as the other may
request in connection with its preparation of any filing or submission which is
necessary under the HSR Act. Each of Marathon, USX and Ashland shall keep each
other apprised of the status of any communications with, and any inquiries or
requests for additional information from, the FTC and the
<PAGE>
79
DOJ and shall comply promptly with any such inquiry or request.
(b) In the event that Marathon, USX and Ashland are not required to
file with the FTC and the DOJ any notification and report form pursuant to the
HSR Act, but the FTC or the DOJ nevertheless commences an investigation with
respect to the transactions contemplated hereby, each of Marathon, USX and
Ashland shall comply promptly with any inquiry or request made by the DOJ or the
FTC in connection with such investigation.
(c) In the event that Marathon, USX and Ashland file notification and
report forms with the FTC and the DOJ pursuant to Section 11.02(a) or the FTC or
the DOJ commences an investigation with respect to the transactions contemplated
hereby, then, in addition to the obligations of Marathon, USX and Ashland set
forth in Section 11.02(a) and 11.02(b), as applicable, Marathon, USX and Ashland
agree as follows:
(i) In the case of Marathon's exercise of its Marathon Call Right,
each of Marathon and USX shall take all such actions as are necessary to
obtain any clearance required under the HSR Act or from the FTC or DOJ in
connection with any such investigation, as applicable, for the purchase and
sale of Ashland's Membership Interests and the Ashland LOOP/LOCAP Interest
pursuant to this Agreement, including divesting or holding separate any
assets or commencing or defending litigation; provided, however, that
-------- -------
neither Marathon nor USX shall be required to take any action proposed by
the FTC or the DOJ that would or would reasonably be expected to have a
material adverse effect on the business, operations, assets, liabilities,
results of operations, cash flows, condition (financial or otherwise) or
prospects of the Company and its subsidiaries, taken as a whole.
(ii) In the case of (A) Ashland's exercise of its Ashland Put Right
or (B) Marathon's exercise of its Special Termination Right, each of
Marathon and USX shall take all such actions as are necessary to obtain any
clearance required under the HSR Act or from the FTC or DOJ in connection
with any such investigation, as applicable, for the purchase and sale of
Ashland's Membership Interests and the Ashland LOOP/LOCAP
<PAGE>
80
Interest pursuant to this Agreement, including divesting or holding
separate any assets or commencing or defending litigation; provided,
--------
however, that neither Marathon nor USX shall be required to take any action
-------
proposed by the FTC or the DOJ that would or would reasonably be expected
to have a material adverse effect on the business, operations, assets,
liabilities, results of operations, cash flows, condition (financial or
otherwise) or prospects of (A) the Company and its subsidiaries, taken as a
whole, (B) Marathon and its subsidiaries, taken as a whole, or (C) USX and
its subsidiaries, taken as a whole.
(iii) In the case of Ashland's exercise of its Special Termination
Right, Ashland shall take all such actions as are necessary to obtain any
clearance required under the HSR Act or from the FTC or DOJ in connection
with any such investigation, as applicable, for the purchase and sale of
Marathon's Membership Interests pursuant to this Agreement, including
divesting or holding separate any assets or commencing or defending
litigation; provided, however, that Ashland shall not be required to take
-------- -------
any action proposed by the FTC or the DOJ that would or would reasonably be
expected to have a material adverse effect on the business, operations,
assets, liabilities, results of operations, cash flows, condition
(financial or otherwise) or prospects of (A) the Company and its
subsidiaries, taken as a whole or (B) Ashland and its subsidiaries, taken
as a whole.
SECTION 11.03. Governmental Filings re: Ashland LOOP/LOCAP Interest.
-----------------------------------------------------
(a) Each of the parties hereto shall as promptly as practical, but in no event
later than five Business Days following the relevant Exercise Date, file all
documentation with all relevant Governmental Entities that is required to be
filed with such Governmental Entities in connection with the purchase and sale
of the Ashland LOOP/LOCAP Interest on the Scheduled Closing Date. Each of the
parties hereto shall keep the other apprised of the status of any communications
with, and any inquiries or requests for additional information from, such
Governmental Entities and shall comply promptly with any such inquiry or
request.
<PAGE>
81
(b) In addition to the obligations of the parties hereto set forth in
Section 11.03(a), Marathon and USX agree as follows:
(i) In the case of Marathon's exercise of its Marathon Call Right,
each of Marathon and USX shall take all such actions as are necessary to
obtain any requisite approvals from such Governmental Entities as are
required in connection with the purchase and sale of the Ashland LOOP/LOCAP
Interest pursuant to this Agreement, including commencing or defending
litigation; provided, however, that neither Marathon nor USX shall be
-------- -------
required to take any such action that would or would reasonably be expected
to have a material adverse effect on the business, operations, assets,
liabilities, results of operations, cash flows, condition (financial or
otherwise) or prospects of the Company and its subsidiaries, taken as a
whole.
(ii) In the case of Marathon's exercise of its Special Termination
Right or Ashland's exercise of its Ashland Put Right, each of Marathon and
USX shall take all such actions as are necessary to obtain any requisite
approvals from such Governmental Entities as are required in connection
with the purchase and sale of the Ashland LOOP/LOCAP Interest pursuant to
this Agreement, including commencing or defending litigation; provided,
--------
however, that neither Marathon nor USX shall be required to take any such
-------
action that would or would reasonably be expected to have a material
adverse effect on the business, operations, assets, liabilities, results of
operations, cash flows, condition (financial or otherwise) or prospects of
(A) the Company and its subsidiaries, taken as a whole, (B) Marathon and
its subsidiaries, taken as a whole, or (C) USX and its subsidiaries, taken
as a whole.
SECTION 11.04. Designated Sublease Agreements. (a) Ashland
------------------------------- -------
Designated Sublease Agreements. In the event of (i) Marathon's exercise of its
- -------------------------------
Marathon Call Right, (ii) Ashland's exercise of its Ashland Put Right or (iii)
Marathon's exercise of its Special Termination Right, Ashland shall use its
commercially reasonable best efforts to (A) terminate the outstanding Original
Lease underlying each Ashland Designated Sublease Agreement on or prior to
Closing and (B) contribute the related Subleased Property to the Company or one
of its subsidiaries at no cost to the
<PAGE>
82
Company or such subsidiary on or prior to Closing; provided, however, that (i)
-------- -------
Ashland shall not be obligated to pay more than a reasonable amount as
consideration therefor to, or make more than a reasonable financial
accommodation in favor of, or commence litigation against, a third party lessor
with respect to any such underlying Original Lease in order to obtain any
consent required from such lessor and (ii) any additional cost associated with
exercising an option under the Original Lease to purchase Subleased Property
shall be deemed not to constitute an obligation to pay more than a reasonable
amount. In the event that Ashland is unable to terminate an outstanding
Original Lease in accordance with this Section 11.04(a), then (i) the Company
shall be entitled to continue to sublease the Subleased Property pursuant to the
related Ashland Designated Sublease Agreement until the term of the Original
Lease expires, (ii) Ashland shall continue to use its commercially reasonable
best efforts to terminate the Original Lease and contribute the Subleased
Property to the Company as provided above; provided, however, that (A) Ashland
-------- -------
shall not be obligated to pay more than a reasonable amount as consideration
therefor to, or make more than a reasonable financial accommodation in favor of,
or commence litigation against, a third party lessor with respect to any such
underlying Original Lease in order to obtain any consent required from such
lessor and (B) any additional cost associated with exercising an option under
the Original Lease to purchase Subleased Property shall be deemed not to
constitute an obligation to pay more than a reasonable amount and (iii) if
Ashland subsequently acquires fee title to the Subleased Property, Ashland shall
contribute such Subleased Property to the Company or one of its subsidiaries at
no cost to the Company or such subsidiary at such time.
(b) Marathon Designated Sublease Agreements. In the event of
----------------------------------------
Ashland's exercise of its Special Termination Right, Marathon shall use its
commercially reasonable best efforts to (A) terminate the outstanding Original
Lease underlying each Marathon Designated Sublease Agreement on or prior to
Closing and (B) contribute the related Subleased Property to the Company or one
of its subsidiaries at no cost to the Company or such subsidiary on or prior to
Closing; provided, however, that (i) Marathon shall not be obligated to pay more
-------- -------
than a reasonable amount as consideration therefor to, or make more than a
reasonable financial accommodation in favor of, or commence litigation against,
a third party lessor with respect to any such
<PAGE>
83
underlying Original Lease in order to obtain any consent required from such
lessor and (ii) any additional cost associated with exercising an option under
the Original Lease to purchase Subleased Property shall be deemed not to
constitute an obligation to pay more than a reasonable amount. In the event
that Marathon is unable to terminate an outstanding Original Lease in accordance
with this Section 11.04(b), then (i) the Company shall be entitled to continue
to sublease the Subleased Property pursuant to the related Marathon Designated
Sublease Agreement until the term of the Original Lease expires, (ii) Marathon
shall continue to use its commercially reasonable best efforts to terminate the
Original Lease and contribute the Subleased Property to the Company as provided
above; provided, however, that (A) Marathon shall not be obligated to pay more
-------- -------
than a reasonable amount as consideration therefor to, or make more than a
reasonable financial accommodation in favor of, or commence litigation against,
a third party lessor with respect to any such underlying Original Lease in order
to obtain any consent required from such lessor and (B) any additional cost
associated with exercising an option under the Original Lease to purchase
Subleased Property shall be deemed not to constitute an obligation to pay more
than a reasonable amount and (iii) if Marathon subsequently acquires fee title
to the Subleased Property, Marathon shall contribute such Subleased Property to
the Company or one of its subsidiaries at no cost to the Company or such
subsidiary at such time.
ARTICLE XII
Standstill Agreement
--------------------
SECTION 12.01. Restrictions of Certain Actions by Marathon and USX.
----------------------------------------------------
Each of Marathon and USX covenants and agrees that, from the date hereof through
the six-month anniversary of the earlier to occur of (a) the date that Ashland
and its Affiliates do not own any Membership Interests, and (b) the date that
Marathon and its Affiliates do not own any Membership Interests, it shall not,
and it shall cause each of its Affiliates (including, for the avoidance of
doubt, Employee Benefit Plans of USX, Marathon and their respective Affiliates)
not to, singly or as part of a partnership, limited partnership, syndicate or
other
<PAGE>
84
group (as those terms are defined in Section 13(d)(3) of the Exchange Act),
directly or indirectly:
(i) acquire, offer to acquire, or agree to acquire, by purchase, gift
or otherwise, more than 1% of any class of any Ashland Voting Securities,
except (A) pursuant to a stock split, stock dividend, rights offering,
recapitalization, reclassification or similar transaction, (B) in
connection with the transfer of Ashland Voting Securities to a Marathon or
USX Employee Benefit Plan as contemplated by Section 3.1(v) of the Asset
Transfer and Contribution Agreement or (C) the ownership by any Employee
Benefit Plan of USX, Marathon or any of their respective Affiliates of any
interest in any diversified index, mutual or pension fund managed by an
independent investment advisor, which fund in turn holds, directly or
indirectly, Ashland Voting Securities; provided that not more than 5% of
--------
such fund's assets are comprised of Ashland Voting Securities;
(ii) make, or in any way participate in any "solicitation" of
"proxies" to vote (as such terms are defined in Rule 14a-1 under the
Exchange Act), solicit any consent or communicate with or seek to advise or
influence any person or entity with respect to the voting of any Ashland
Voting Securities or become a "participant" in any "election contest" (as
such terms are defined or used in Rule 14a-11 under the Exchange Act) with
respect to Ashland;
(iii) form, join, encourage or in any way participate in the
formation of, any "person" within the meaning of Section 13(d)(3) of the
Exchange Act with respect to any Ashland Voting Securities;
(iv) deposit any Ashland Voting Securities into a voting trust or
subject any such Ashland Voting Securities to any arrangement or agreement
with respect to the voting thereof;
(v) initiate, propose or otherwise solicit shareholders for the
approval of one or more shareholder proposals with respect to Ashland as
described in Rule 14a-8 under the Exchange Act, or induce or attempt to
induce any other person to initiate any shareholder proposal;
<PAGE>
85
(vi) seek election to or seek to place a representative on the Board
of Directors of Ashland or seek the removal of any member of the Board of
Directors of Ashland;
(vii) except with the approval of management of Ashland, call or seek
to have called any meeting of the shareholders of Ashland;
(viii) otherwise act to seek to control, disrupt or influence the
management, business, operations, policies or affairs of Ashland;
(ix) (A) solicit, seek to effect, negotiate with or provide any
information to any other person with respect to, (B) make any statement or
proposal, whether written or oral, to the Board of Directors of Ashland or
any director or officer of Ashland with respect to, or (C) otherwise make
any public announcement or proposal whatsoever with respect to, any form of
business combination transaction involving Ashland (other than the
Transaction), including, without limitation, a merger, exchange offer, or
liquidation of Ashland's assets, or any restructuring, recapitalization or
similar transaction with respect to Ashland;
(x) seek to have Ashland waive, amend or modify any of the provisions
contained in this Section 12.01;
(xi) disclose or announce any intention, plan or arrangement
inconsistent with the foregoing; or
(xii) advise, assist, instigate or encourage any third party to do any
of the foregoing.
If either Marathon or USX or any of their respective Affiliates owns
or acquires any Ashland Voting Securities in violation of this Section 12.01,
such Ashland Voting Securities shall immediately be disposed of to persons who
(i) are not Marathon or USX or Affiliates thereof and (ii) do not own,
individually or as part of a "group" (within the meaning of Section 13(d)(3) of
the Exchange Act), more than 5% of the then outstanding Ashland Voting
Securities; provided that Ashland may also pursue any other available remedy to
--------
which it may be entitled as a result of such violation.
<PAGE>
86
SECTION 12.02. Restrictions of Certain Actions by Ashland. Ashland
-------------------------------------------
covenants and agrees that, from the date hereof through the later to occur of
(a) the six-month anniversary of the earlier to occur of (i) the date that
Marathon and its Affiliates do not own any Membership Interests and (ii) the
date that Ashland and its Affiliates do not own any Membership Interests and (b)
in the event that Ashland or its Affiliates acquires USX Voting Securities
pursuant to the Closing of the Ashland Put Right, the date on which Ashland and
its Affiliates do not own more than 5% of the then outstanding USX Voting
Securities, it shall not, and it shall cause each of its Affiliates (including,
for the avoidance of doubt, Employee Benefit Plans of Ashland and its
Affiliates) not to, singly or as part of a partnership, limited partnership,
syndicate or other group (as those terms are defined in Section 13(d)(3) of the
Exchange Act), directly or indirectly:
(i) acquire, offer to acquire, or agree to acquire, by purchase, gift
or otherwise, more than 1% of any class of USX Voting Securities, except
(A) pursuant to a stock split, stock dividend, rights offering,
recapitalization, reclassification or similar transaction and except for
any issuance of USX Voting Securities to Ashland as payment of any portion
of the Ashland Put Price in accordance with the provisions of this
Agreement or (B) the ownership by any Employee Benefit Plan of Ashland or
any of its Affiliates of any interest in any diversified index, mutual or
pension fund managed by an independent investment advisor, which fund in
turn holds, directly or indirectly, USX Voting Securities; provided that
--------
not more than 5% of such fund's assets are comprised of USX Voting
Securities;
(ii) make, or in any way participate in any "solicitation" of
"proxies" to vote (as such terms are defined in Rule 14a-1 under the
Exchange Act), solicit any consent or communicate with or seek to advise or
influence any person or entity with respect to the voting of any USX Voting
Securities or become a "participant" in any "election contest" (as such
terms are defined or used in Rule 14a-11 under the Exchange Act) with
respect to USX;
(iii) form, join, encourage or in any way participate in the formation
of, any "person" within
<PAGE>
87
the meaning of Section 13(d)(3) of the Exchange Act with respect to any USX
Voting Securities;
(iv) deposit any USX Voting Securities into a voting trust or subject
any such USX Voting Securities to any arrangement or agreement with respect
to the voting thereof;
(v) initiate, propose or otherwise solicit shareholders for the
approval of one or more shareholder proposals with respect to USX as
described in Rule 14a-8 under the Exchange Act, or induce or attempt to
induce any other person to initiate any shareholder proposal;
(vi) seek election to or seek to place a representative on the Board
of Directors of USX or seek the removal of any member of the Board of
Directors of USX or seek the removal of any member of the Board of
Directors of USX;
(vii) except with the approval of management of USX, call or seek to
have called any meeting of the shareholders of USX;
(viii) otherwise act to seek to control, disrupt or influence the
management, business, operations, policies or affairs of USX;
(ix) (A) solicit, seek to effect, negotiate with or provide any
information to any other person with respect to, (B) make any statement or
proposal, whether written or oral, to the Board of Directors of USX or any
director or officer of USX with respect to, or (C) otherwise make any
public announcement or proposal whatsoever with respect to, any form of
business combination transaction involving USX (other than the
Transaction), including, without limitation, a merger, exchange offer, or
liquidation of USX's assets, or any restructuring, recapitalization or
similar transaction with respect to USX;
(x) seek to have USX waive, amend or modify any of the provisions
contained in this Section 12.02;
(xi) disclose or announce any intention, plan or arrangement
inconsistent with the foregoing; or
<PAGE>
88
(xii) advise, assist, instigate or encourage any third party to do any
of the foregoing.
If Ashland or any of its Affiliates owns or acquires any USX Voting
Securities in violation of this Section 12.02, such USX Voting Securities shall
immediately be disposed of to persons who (i) are not Ashland or Affiliates
thereof and (ii) do not own, individually or as part of a "group" (within the
meaning of Section 13(d)(3) of the Exchange Act), more than 5% of the then
outstanding USX Voting Securities; provided that USX may also pursue any other
--------
available remedy to which it may be entitled as a result of such violation.
ARTICLE XIII
Indemnification
---------------
SECTION 13.01. Indemnification re: Ashland Representatives'
---------------------------------------------
Revocable Proxies and the Ashland LOOP/LOCAP Revocable Proxy. In the event that
- -------------------------------------------------------------
Ashland's Representatives grant Marathon's Representatives the Ashland
Representatives Revocable Proxies pursuant to Section 5.02(a) and Ashland grants
to Marathon or a person designated by Marathon, as applicable, the Ashland
LOOP/LOCAP Revocable Proxy pursuant to Section 5.02(c), each of Marathon, USX
and the Company agree to indemnify and hold Ashland, its Representatives, their
respective Affiliates and any director, officer, employee, stockholder, partner,
agent or representative of Ashland or its Affiliates harmless against any and
all Losses to which they or any of them may become subject, insofar as any such
Losses shall arise out of, are based upon or relate to any obligations or
liabilities of whatever kind and nature, primary or secondary, direct or
indirect, absolute or contingent, known or unknown, whether or not accrued,
which arise on or after the relevant Exercise Date and which are attributable to
(i) in the event that the Closing occurs, (A) the Company and its subsidiaries
or LOOP, LLC or LOCAP, Inc., (B) Ashland's ownership interest in the Company or
the Ashland LOOP/LOCAP Interest, (C) actions taken by Marathon's Representatives
pursuant to the Ashland Representatives Revocable Proxies or (D) actions taken
by Marathon or the Company, as applicable, pursuant to the Ashland LOOP/LOCAP
Revocable Proxy, and (ii) in the event that Ashland or Marathon revokes
Ashland's Ashland Put Exercise Notice or Marathon's Marathon Call
<PAGE>
89
Exercise Notice pursuant to Section 9.03(a), 9.04(a), 9.05, 9.08(a) or 9.09, or
Ashland revokes Marathon's Special Termination Exercise Notice pursuant to
Section 9.08(a) or 9.09 (A) actions taken by Marathon's Representatives pursuant
to the Ashland Representatives Revocable Proxies or (B) actions taken by
Marathon or the Company, as applicable, pursuant to the Ashland LOOP/LOCAP
Revocable Proxy.
SECTION 13.02. Indemnification re: Marathon Representatives
---------------------------------------------
Revocable Proxies. In the event that Marathon's Representatives grant Ashland's
- ------------------
Representatives the Marathon Representatives Revocable Proxies pursuant to
Section 5.02(b), each of Ashland and the Company agree to indemnify and hold
Marathon, its Representatives, their respective Affiliates and any director,
officer, employee, stockholder, partner, agent or representative of Marathon or
its Affiliates harmless against any and all Losses to which they or any of them
may become subject, insofar as any such Losses shall arise out of, are based
upon or relate to any obligations or liabilities of whatever kind and nature,
primary or secondary, direct or indirect, absolute or contingent, known or
unknown, whether or not accrued, which arise on or after the Special Termination
Exercise Date and which are attributable to (i) in the event that the Closing
occurs, (A) the Company and its subsidiaries or (B) actions taken by Ashland's
Representatives pursuant to the Marathon Representatives Revocable Proxies and
(ii) in the event that Marathon revokes Ashland's Special Termination Exercise
Notice pursuant to Section 9.08(a) or 9.09, actions taken by Ashland's
Representatives pursuant to the Marathon Representatives Revocable Proxies.
SECTION 13.03. Indemnification re: Transfer of Economic Interests in
------------------------------------------------------
the Ashland LOOP/LOCAP Interest to Marathon, the Company or a Person Designated
- -------------------------------------------------------------------------------
by Marathon. To the extent that Ashland is unable to Transfer the Ashland
- ------------
LOOP/LOCAP Interest to Marathon, the Company or a person designated by Marathon,
as applicable, at Closing, and as a result thereof, Ashland enters into any
arrangement under which Marathon, the Company or such other person shall obtain
the economic claims, rights and benefits under the Ashland LOOP/LOCAP interest,
including a grant to Marathon, the Company or such other person, as applicable,
of the Ashland LOOP/LOCAP Irrevocable Proxy, each of Marathon, USX and the
Company agree to indemnify and hold Ashland, its Representatives, their
respective Affiliates and any director, officer, employee, stockholder, partner,
agent or
<PAGE>
90
representative of Ashland or its Affiliates harmless against any and all Losses
to which they or any of them may become subject, insofar as any such Losses
shall arise out of, be based upon or relate to any obligations or liabilities of
whatever kind and nature, primary or secondary, direct or indirect, absolute or
contingent, known or unknown, whether or not accrued, which arise on or after
the relevant Exercise Date and which are attributable to (i) LOOP, LLC, (ii)
LOCAP, Inc., (iii) Ashland's ownership interest in LOOP, LLC and LOCAP, Inc.,
(iv) any such arrangements between Ashland and Marathon, the Company or such
other person or (v) actions taken by Marathon, the Company or such other person,
as applicable, pursuant to the Ashland LOOP/LOCAP Irrevocable Proxies.
SECTION 13.04. Procedures Relating to Indemnification Under This
-------------------------------------------------
Article XIII. The procedures for Indemnification under this Article XIII shall
- -------------
be the procedures for indemnification set forth in Section 9.7 of the Asset
Transfer and Contribution Agreement.
ARTICLE XIV
Company Competitive Businesses;
-------------------------------
Detrimental Activities; Limitations on the
------------------------------------------
Company Entering into Valvoline's Business
------------------------------------------
SECTION 14.01. Competitive Businesses. (a) Subject to Sections
-----------------------
14.01(b), 14.01(d) and 14.03(c), and except to the extent otherwise provided in
Schedule 14.01(a), each of Marathon, USX and Ashland hereby agrees that during
- -----------------
the Term of the Company, it shall not, and it shall cause its Affiliates not to,
engage in any business within North America which is substantially in
competition with (i) the Company's Business conducted on the date hereof or (ii)
any new line of business of the Company that the Board of Managers has approved
in accordance with Section 8.07(b) of the LLC Agreement (but only if and to the
extent that the Board of Managers specifically determined pursuant to Section
8.07(b) of the LLC Agreement that such new line of business should also
constitute a Company Competitive Business) (each such business in clauses (i)
and (ii), a "Company Competitive Business"); provided, however, that nothing in
---------------------------- -------- -------
this Section 14.01 shall be deemed or interpreted to prohibit Ashland or any of
its Affiliates from engaging in the Valvoline Business.
<PAGE>
91
(b) Notwithstanding any limitation contained in Section 14.01(a),
Marathon, USX and Ashland and their respective Affiliates shall be permitted to
engage in a Company Competitive Business if: (i) Marathon or Ashland, as
applicable, shall have first presented the Company, at a meeting of the Board of
Managers at which at least one of the Representatives of the other Member was
present, with the opportunity to pursue or engage in such Company Competitive
Business and (ii) one or more of the Representatives of the other Member on the
Board of Managers shall have voted against the Company pursuing such Company
Competitive Business.
(c) If Marathon, USX or Ashland or any of their respective Affiliates
is permitted pursuant to Section 14.01(b) to engage in a Company Competitive
Business and, in connection therewith, wishes to use any of the properties,
facilities or other assets of the Company or any of its subsidiaries, Marathon
or Ashland and their respective Representatives will negotiate in good faith
with the Company to reach a reasonable agreement as to the nature and scope of
any agreement between the Company or any such subsidiary and such Member with
respect to the use of such property, facility or other assets. Any transaction
relating to such property, facility or assets shall be deemed for purposes of
the LLC Agreement to constitute an Affiliate Transaction that was entered into
outside the ordinary course of the Company's business.
(d) Notwithstanding any limitation contained in Section 14.01(a),
Marathon, USX and Ashland and their respective Affiliates shall be permitted to
purchase: (i) less than an aggregate of 10% of any class of stock of a person
engaged, directly or indirectly, in one or more Competitive Businesses (a
"Company Competitive Third Party"); provided that such stock is listed on a
- -------------------------------- --------
national securities exchange or is quoted on the National Market System of
NASDAQ; (ii) less than 10% in value of any instrument of Indebtedness of a
Company Competitive Third Party; (iii) a Company Competitive Third Party
(whether by merger or purchase of all or substantially all of such Company
Competitive Third Party's assets) which engages, directly or indirectly, in one
or more Company Competitive Businesses which accounted for less than 20% of such
Company Competitive Third Party's consolidated revenues for the most recently
completed fiscal quarter; and (iv) a Company Competitive Third Party (whether by
merger or purchase of
<PAGE>
92
all or substantially all of such Company Competitive Third Party's assets or
otherwise) which engages, directly or indirectly, in one or more Company
Competitive Businesses which accounted for greater than 20% of such Company
Competitive Third Party's consolidated revenues for the most recently completed
fiscal quarter; provided that a purchase by Marathon, USX or Ashland or any of
--------
their respective Affiliates of a Company Competitive Third Party pursuant to
this clause (iv) shall only be permitted if within 30 Business Days after the
earlier to occur of (A) the execution of definitive agreements with respect to
such purchase or (B) the closing of such purchase, Marathon, USX, Ashland or
such Affiliate, as applicable, shall present the Company with the opportunity to
purchase the portion of such Company Competitive Third Party's business that is
in substantial competition with the Company in North America (the "Company
-------
Competitive Business Assets") at a purchase price determined in accordance with
- ---------------------------
Section 14.04, at a special or regular meeting of the Board of Managers (such
meeting, a "14.01(d) Presentation Meeting").
-----------------------------
(e) If the Board of Managers determines at the 14.01(d) Presentation
Meeting (by a vote of a majority of the Representatives of the Member not
purchasing such Company Competitive Third Party's business at a special or
regular meeting of the Board of Managers (which majority shall constitute a
quorum for purposes of the transaction of business)) to purchase the Company
Competitive Business Assets, the closing date with respect to such purchase
shall not be later than 60 days after the date of the determination of the
Purchase Price pursuant to Section 14.04 or, if later, 30 days after the Company
has received any antitrust clearance or other Governmental Approval required in
connection with such purchase (the "14.01(d) Scheduled Closing Date"). If the
-------------------------------
Company breaches its obligation to purchase the Company Competitive Business
Assets on the 14.01(d) Scheduled Closing Date after the Board of Managers shall
have determined to make such purchase as provided in the immediately preceding
sentence (other than where such breach is due to circumstances beyond the
Company's reasonable control), then Marathon, USX, Ashland or such Affiliate, as
applicable, shall be permitted to retain such Company Competitive Business
Assets and the Company shall cease to have the right to purchase such Company
Competitive Business Assets. If the Company breaches its obligation to purchase
the Company Competitive Business Assets on the 14.01(d) Scheduled Closing Date
after
<PAGE>
93
the Board of Managers shall have determined to make such purchase as provided in
the first sentence of this Section 14.01(e)and such breach is due to
circumstances beyond the Company's reasonable control, then, if the closing of
the purchase by the Company of the Company Competitive Business Assets does not
occur within 270 days after the Scheduled Closing Date, Marathon, USX, Ashland
or such Affiliate, as applicable, shall be permitted to retain such Company
Competitive Business Assets and the Company shall cease to have the right to
purchase such Company Competitive Business Assets. If the Board of Managers
determines at the 14.01(d) Presentation Meeting not to purchase such Company
Competitive Business Assets, then Marathon, USX, Ashland or such Affiliate, as
applicable, shall be permitted to retain such Company Competitive Business
Assets and the Company shall cease to have the right to purchase such Company
Competitive Business Assets.
(f) It is the intention of each of the parties hereto that if any of
the restrictions or covenants contained in this Section 14.01 is held by a court
of competent jurisdiction to cover a geographic area or to be for a length of
time that is not permitted by Applicable Law, or is in any way construed by a
court of competent jurisdiction to be too broad or to any extent invalid, such
provision shall not be construed to be null, void and of no effect, but to the
extent such provision would be valid or enforceable under Applicable Law, a
court of competent jurisdiction shall construe and interpret or reform this
Section 14.01 to provide for a covenant having the maximum enforceable
geographic area, time period and other provisions (not greater than those
contained in this Section 14.01) as shall be valid and enforceable under such
Applicable Law. Each of the parties hereto acknowledges that any breach of the
terms, conditions or covenants set forth in this Section 14.01 shall be
competitively unfair and may cause irreparable damage to the Company because of
the special, unique, unusual, extraordinary and intellectual character of the
Company's business, and the Company's recovery of damages at law will not be an
adequate remedy. Accordingly, each of the parties hereto agrees that for any
breach of the terms, covenants or agreements of this Section 14.01, a
restraining order or an injunction or both may be issued against such person, in
addition to any other rights or remedies the Company or the other parties hereto
may have.
<PAGE>
94
SECTION 14.02. Detrimental Activities. (a) Solicitation, Recruiting
----------------------- ------------------------
or Hiring of Employees. Each of Marathon, USX and Ashland hereby agrees that
- -----------------------
during the Term of the Company, without the consent of each of the Members, it
shall not, and it shall cause its Affiliates not to, solicit, recruit or hire
any employee of the Company or any of its subsidiaries (other than solicitations
that are directed at the public in general in publications available to the
public in general) if:
(i) such employee is an Executive Officer or the officer principally
in charge of environmental health and safety and human resources, unless,
subject to clauses (iii) and (iv) below, such solicitation, recruitment or
hiring is consented to in advance by Ashland (in the case of a
solicitation, recruitment or hiring by Marathon, USX or any of their
respective Affiliates) or by Marathon (in the case of a solicitation,
recruitment or hiring by Ashland or any of its Affiliates), which consent
shall not be unreasonably withheld;
(ii) such employee reports directly to (A) an Executive Officer or
the officer principally in charge of environmental health and safety and
human resources(a "Senior Employee") or (B) a Senior Employee (a "Mid-Level
--------------- ---------
Employee"), unless, subject to clauses (iii) and (iv) below, at the time of
--------
such solicitation, recruitment or hiring, the total number of Senior
Employees and Mid-Level Employees that have been hired by Marathon, USX,
Ashland and their respective Affiliates during the then preceding twenty-
four months is less than 10% of the total number of Senior Employees and
Mid-Level Employees employed by the Company at the time Marathon, USX,
Ashland or an Affiliate thereof wishes to solicit, recruit or hire such
Senior Employee or Mid-Level Employee (based on the average number of
Senior Employees and Mid-Level Employees employed by the Company during
such twenty-four-month period);
(iii) the hiring of such employee, when considered together with all
other employees hired by Marathon, USX, Ashland and their respective
Affiliates during the then preceding twenty-four months, would have or
would reasonably be expected to have, a significant
<PAGE>
95
detrimental impact on the department of the Company in which such employee
is then working; or
(iv) such employee is being solicited, recruited or hired for a
position in a Competitive Business of such person or such person's
Affiliates.
Notwithstanding the foregoing, the employees of the Company shall not be
required to accept any job offer by Marathon, USX, Ashland or any of their
respective Affiliates and a refusal to accept such a job offer shall not
negatively affect an employee's career opportunities at the Company.
(b) Disclosure of Confidential Information. Each of Marathon, USX
---------------------------------------
and Ashland (each, a "Disclosing Party") hereby agrees that during the Term of
----------------
the Company, it shall not, and it shall cause its Affiliates not to, disclose or
furnish to anyone any confidential information relating to the Company and its
subsidiaries ("Confidential Information") except pursuant to a confidentiality
------------------------
agreement in form and substance reasonably satisfactory to the other parties
hereto which expressly provides that the other parties hereto shall be a
beneficiary thereof (a "Confidentiality Agreement"). The foregoing restriction
-------------------------
on disclosure of Confidential Information shall not apply to (i) information
which is or becomes part of the public domain through no fault or breach of the
Disclosing Party; (ii) information which at the time of disclosure is already in
the possession of the Disclosing Party in written form and was not received
directly or indirectly from the Company or any of its subsidiaries under a
requirement of confidentiality; (iii) information received by the Disclosing
Party from a third party; provided that the Disclosing Party, after reasonable
--------
inquiry, has no reason to believe that the third party obtained the information
directly or indirectly from the Company or any of its subsidiaries under a
requirement of confidentiality; (iv) information required to be disclosed under
subpoena or other mandatory legal process; provided, that the Disclosing Party
--------
shall give the Company timely notice of the service of the subpoena or other
process so that the Company may seek a protective order or other legal remedy to
prevent such disclosure; (v) information which has been subsequently and
independently acquired or developed by the Disclosing Party without violating
any of its obligations under this Section 14.02(b) or under any Confidentiality
Agreement; and (vi) information which is required or advisable to be disclosed
<PAGE>
96
under the Securities Act or the Exchange Act. Notwithstanding the foregoing, a
Disclosing Party shall be permitted to disclose Confidential Information to its
directors, officers, employees, auditors, agents, advisors and representatives
(such persons being collectively referred as its "Representatives") if the
---------------
Disclosing Party informs its Representatives of the confidential nature of the
Confidential Information and obtains their agreement to be bound by this Section
14.02(b) and not to disclose such Confidential Information to any other person.
Each Disclosing Party shall be responsible for any breach of this Section 14.02
by its Representatives.
SECTION 14.03. Limitations on the Company Entering into the Valvoline
------------------------------------------------------
Business. (a) Subject to Sections 14.03(b) and 14.03(d), the Company hereby
- ---------
agrees that it shall not, and it shall cause its Affiliates (other than
Marathon, Ashland and their respective subsidiaries (other than the Company and
its subsidiaries)) not to, engage in any business worldwide which is
substantially in competition with the Valvoline Business. Notwithstanding the
foregoing, the provisions of this Section 14.03(a) shall terminate on the first
date on which Ashland and its Affiliates shall own (beneficially or otherwise)
less than 20% of the Valvoline Business.
(b)(i) Notwithstanding any limitation contained in Section 14.03(a),
if in any two consecutive calendar years, (A) Valvoline shall not have
purchased from the Company and its subsidiaries a quantity of lube oil at
least equal to the Minimum Lube Oil Purchase Amount and (B)(1) such failure
to purchase was due to the fact that the Company and Valvoline could not in
good faith agree to mutually acceptable terms and conditions for the sale
by the Company and its subsidiaries to Valvoline of at least such quantity
of lube oil and (2) such failure was not due, in whole or in part, to the
failure of the Company and its subsidiaries to produce and offer for sale
to Valvoline the Minimum Lube Oil Purchase Amount during either such
calendar year, the failure of the Company and its subsidiaries to produce
and offer for sale to Valvoline lube oil satisfying contractual
specifications or any other failure of the Company or its subsidiaries to
satisfy in any material respect any of its then existing material
contractual obligations to Valvoline, then the Company and its subsidiaries
shall be permitted to
<PAGE>
97
engage in a business which is substantially in competition with Valvoline's
Bulk Motor Oil Business and/or Valvoline's Packaged Motor Oil Business
(but, except as expressly permitted in Section 14.03(a), no other business
that constitutes part of the Valvoline Business); provided that,
--------
notwithstanding the foregoing, the Company and its subsidiaries shall not
be permitted to enter into or engage in any such business if the Company
and its subsidiaries shall have substantially ceased production at the
Catlettsburg, Kentucky refinery of lube oil for sale to third parties
(other than due to a force majeure or an inability to find a willing buyer
for its lube oil) for any period of 90 consecutive days or more prior to
the time the Company and its subsidiaries shall first enter or propose to
enter into such business.
(ii) Notwithstanding any limitation contained in Section 14.03(a), if
in each of the four calendar years following the consecutive two-year
period provided for in Section 14.03(b)(i), (A) Valvoline shall not have
purchased from the Company and its subsidiaries a quantity of lube oil at
least equal to the Minimum Lube Oil Purchase Amount and (B)(1) such failure
to purchase was due to the fact that the Company and Valvoline could not in
good faith agree to mutually acceptable terms and conditions for the sale
by the Company and its subsidiaries to Valvoline of at least such quantity
of lube oil and (2) such failure was not due, in whole or in part, to the
failure of the Company and its subsidiaries to produce and offer for sale
to Valvoline the Minimum Lube Oil Purchase Amount during any such calendar
year, the failure of the Company and its subsidiaries to produce and offer
for sale to Valvoline lube oil satisfying contractual specifications or any
other failure of the Company or its subsidiaries to satisfy in any material
respect any of its existing material contractual obligations to Valvoline,
then at any time after the conclusion of such consecutive four-year period,
the Company and its subsidiaries shall be permitted to engage in a business
which is substantially in competition with Valvoline's Private Label
Packaged Motor Oil Business and/or Valvoline's Quick Lube Business;
provided that, notwithstanding the foregoing, the Company and its
--------
subsidiaries shall not be permitted to enter into or engage in any such
business if the Company and its subsidiaries shall have
<PAGE>
98
substantially ceased production at the Catlettsburg, Kentucky refinery of
lube oil for sale to third parties (other than due to a force majeure or an
inability to find a willing buyer for its lube oil) for any period of 90
consecutive days or more prior to the time the Company and its subsidiaries
shall first enter or propose to enter into such business.
(iii) The provisions set forth in this Section 14.03(b) permitting the
Company and its subsidiaries to engage in a new business in competition
with the Valvoline Business if certain conditions are satisfied shall be an
exception only to the super majority vote requirement in Section 8.08(a) of
the LLC Agreement, and shall not be an exception to any other supermajority
vote requirements of Section 8.08 of the LLC Agreement.
(c) Notwithstanding any limitation contained in Section 14.01(a), if
at any time the Company or any of its subsidiaries enters into, other than as
expressly permitted in Section 14.03(d), either the Bulk Motor Oil Business, the
Packaged Motor Oil Business, the Private Label Packaged Motor Oil Business or
the Quick Lube Business, Ashland and its subsidiaries thereafter shall be
permitted to enter into a business which is substantially in competition with
the Company's lube oil production business.
(d) Notwithstanding any limitation contained in Section 14.03(a),
subject to Section 8.08 of the LLC Agreement, the Company and its subsidiaries
shall be permitted to (i) engage, directly or through its own dealers, jobbers
or jobber dealers, in the business currently conducted under the brand name
"Maralube Express" (the "Maralube Express Business"); (ii) engage, directly or
-------------------------
through its own dealers, jobbers or jobber dealers, in the truck stop oil change
business; (iii) engage, directly or through its own dealers, jobbers, or jobber
dealers, in the oil, lubricants, antifreeze and other, in each case automotive
fluid change business and auto and light truck maintenance service, in each case
incidental to operating their service stations or other retail units; (iv)
engage, directly or through its own dealers, jobbers, or jobber dealers, in the
sale of lubricants to farm, government, school and other similar commercial
accounts; (v) engage, directly or through its own dealers, jobbers, or jobber
dealers, in the sale of car care products and chemicals,
<PAGE>
99
antifreeze and rust preventatives in service stations or similar retail units
that are owned or operated by them, in each case incidental to operating their
service stations or other retail units; (vi) engage, directly or through its own
dealers, jobbers, or jobber dealers, in the collection of used lubricants at
service stations or similar retail units that are owned or operated by them, in
each case incidental to operating their service stations or other retail units;
(vii) enter into contractual agreements with Valvoline or other third party
packagers with respect to the packaging by Valvoline or such other third party
packagers of lube oil products for sale (A) in service stations or similar
retail units that are owned or operated by the Company and its subsidiaries or
its dealers, jobbers or jobber dealers or to farm, government, school or other
similar commercial accounts pursuant to clause (iv) above and (B) solely under
the brandnames or trademarks of such service stations; and (viii) purchase a
Person (whether by merger or purchase of all or substantially all the assets or
otherwise) which engages, directly or indirectly, in a business that is
substantially in competition with the Valvoline Business (a "Valvoline
---------
Competitive Third Party") provided that less than 33% of such Valvoline
- -----------------------
Competitive Third Party's consolidated revenues for the most recently completed
fiscal quarter are derived from businesses which are substantially in
competition with Valvoline's Business; provided further that a purchase by the
--------
Company or one of its subsidiaries of a Valvoline Competitive Third Party shall
be permitted only if within 30 Business Days after the earlier to occur of (A)
the execution of definitive agreements with respect to such purchase or (B) the
closing of such purchase, the Company shall give notice (a "14.03(d) Offer
--------------
Notice") to Ashland, identifying the portion of such Valvoline Competitive Third
- ------
Party's business that is substantially in competition with the Valvoline
Business (the "Valvoline Competitive Business Assets") and offering to sell to
-------------------------------------
Ashland such Valvoline Competitive Business Assets at a purchase price
determined in accordance with Section 14.04.
(e) Ashland shall have 90 days from receipt of the 14.03(d) Offer
Notice to elect, by notice to the Company (a "14.3(d) Purchase Election
-------------------------
Notice"), to purchase such Valvoline Competitive Business Assets. If Ashland
- ------
makes such election, the notice of election shall state a closing date not later
than 60 days after the date of the Section 14.03(d) Purchase Election Notice or,
if later, 30 days after Ashland has received any antitrust clearance or other
<PAGE>
100
Governmental Approval required in connection with such purchase (a "14.03(d)
--------
Scheduled Closing Date"). If Ashland breaches its obligation to purchase the
- ----------------------
Valvoline Competitive Business Assets on the 14.03(d) Scheduled Closing Date
after giving notice of its election to make such purchase (other than where such
breach is due to circumstances beyond Ashland's reasonable control), then the
Company shall be permitted to retain such Valvoline Competitive Business Assets.
If Ashland breaches its obligation to purchase the Valvoline Competitive
Business Assets on the 14.03(d) Scheduled Closing Date after giving notice of
its election to make such purchase and such breach is due to circumstances
beyond Ashland's reasonable control, then, if the closing of the purchase by
Ashland of the Valvoline Competitive Business Assets does not occur within 270
days after the Scheduled Closing Date, the Company shall be permitted to retain
such Valvoline Competitive Business Assets. If Ashland elects not to purchase
such Valvoline Competitive Business Assets, then the Company shall be permitted
to retain such Valvoline Competitive Business Assets.
(f) (i) If the Company and its subsidiaries are permitted under
Section 14.03(d) to retain any Valvoline Competitive Business Assets and, at any
time thereafter, the Company or any such subsidiary shall determine to sell such
Valvoline Competitive Business Assets (or any portion thereof), then the Company
shall give notice (a "14.03(f) Valvoline Offer Notice") to Ashland, identifying
-------------------------------
the proposed purchaser from whom it has received a bona fide offer and setting
forth the proposed sale price (which shall be payable only in cash or purchase
money obligations secured solely by such Valvoline Competitive Business Assets
(or portion thereof) being sold) and the other material terms and conditions
upon which the Company is proposing to sell such Valvoline Competitive Business
Assets to such identified purchaser (or portion thereof). No such sale shall
encompass or be conditioned upon the sale or purchase of any property other than
such Valvoline Competitive Business Assets (or portion thereof). Ashland shall
have 90 days from receipt of the Valvoline Offer Notice to elect, by notice to
the Company (a "14.03(f) Valvoline Purchase Election Notice"), to purchase such
-------------------------------------------
Valvoline Competitive Business Assets (or portion thereof) on the terms and
conditions set forth in the 14.03(f) Valvoline Offer Notice.
<PAGE>
101
(ii) If Ashland makes such election, the notice of election shall
state a closing date not later than 60 days after the date of the 14.03(f)
Valvoline Purchase Election Notice. If Ashland breaches its obligation to
purchase such Valvoline Competitive Business Assets (or portion thereof) on the
same terms and conditions as those contained in the 14.03(f) Valvoline Offer
Notice after giving notice of its election to make such purchase (other than
where such breach is due to circumstances beyond Ashland's reasonable control),
then the Company may, at any time for a period of 270 days after such default,
sell such Valvoline Competitive Business Assets (or portion thereof) to any
person at any price and upon any other terms without further compliance with the
procedures set forth in this Section 14.03(f).
(iii) If Ashland gives notice within the 90-day period following the
14.03(f) Valvoline Offer Notice from the Company that it elects not to purchase
such Valvoline Competitive Business Assets (or portion thereof), the Company
may, within 120 days after the end of such 90-day period (or 270 days in the
case where such parties have received a second request under HSR), sell such
Valvoline Competitive Business Assets to the identified purchaser on terms and
conditions no less favorable to the Company than the terms and conditions set
forth in such 14.03(f) Valvoline Offer Notice. In the event the Company shall
desire to offer such Valvoline Competitive Business Assets (or portion thereof)
for sale to such identified purchaser or to any other person on terms and
conditions less favorable to it than those previously set forth in a 14.03(f)
Valvoline Offer Notice, the procedures set forth in this Section 14.03(f) must
again be initiated and applied with respect to the terms and conditions as
modified.
(g) It is the intention of each of the parties hereto that if any of
the restrictions or covenants contained in this Section 14.03 is held by a court
of competent jurisdiction to cover a geographic area or to be for a length of
time that is not permitted by Applicable Law, or is in any way construed by a
court of competent jurisdiction to be too broad or to any extent invalid, such
provision shall not be construed to be null, void and of no effect, but to the
extent such provision would be valid or enforceable under Applicable Law, a
court of competent jurisdiction shall construe and interpret or reform this
Section 14.03 to provide for a covenant having the maximum enforceable
geographic area, time period and other
<PAGE>
102
provisions (not greater than those contained in this Section 14.03) as shall be
valid and enforceable under such Applicable Law. Each of the parties hereto
acknowledges that any breach of the terms, conditions or covenants set forth in
this Section 14.03 shall be competitively unfair and may cause irreparable
damage because of the special, unique, unusual, extraordinary and intellectual
character of the applicable business, and recovery of damages at law will not be
an adequate remedy. Accordingly, each of the parties hereto agrees that for any
breach of the terms, covenants or agreements of this Section 14.03, a
restraining order or an injunction or both may be issued against such person, in
addition to any other rights or remedies the aggrieved party may have.
(h) For purposes of this Agreement, the following terms shall have
the following meanings:
(i) "Bulk Motor Oil Business" means sales of blended (finished) motor
-----------------------
oil in tanker truck, barge and tanker railcar quantities.
(ii) "Minimum Lube Oil Purchase Amount" means a quantity of lube oil
--------------------------------
at least equal to 70% of the quantity of lube oil that Valvoline purchased
from the Catlettsburg, Kentucky refinery in the 1997 calendar year.
(iii) "Packaged Motor Oil Business" means the ownership, use and/or
---------------------------
operation (including toll processing through a third party's plant) of
packaging facilities for the sale of packaged motor oil under third party
brandnames or trademarks.
(iv) "Private Label Packaged Motor Oil Business" means the sale of
-----------------------------------------
packaged motor oil under third party and/or the Company's brand names or
trademarks.
(v) "Quick Lube Business" means the provision of services for
-------------------
changing oil, lubricants, antifreeze and other automotive fluids for
passenger car and light commercial trucks and the provision of maintenance
checks and related services.
(vi) "Valvoline" means the Valvoline division of Ashland.
---------
<PAGE>
103
(vii) "Valvoline Business" means the business currently engaged in by
------------------
Valvoline, including (A) the production and marketing of automotive and
industrial oils, automotive car care products and chemicals, antifreeze,
rust preventives, (B) automotive services and (C) environmental recycling
services (including collection of used oil, filters and related items). For
the avoidance of doubt, the Valvoline Business includes the Bulk Motor Oil
Business, the Packaged Motor Oil Business, the Private Label Packaged Motor
Oil Business and the Quick Lube Business.
SECTION 14.04. Purchase Price of Competitive Business Assets. In the
----------------------------------------------
event that (x) the Company elects to purchase any Company Competitive Business
Assets pursuant to the proviso to Section 14.01(d)(iv) or (y) Ashland elects to
purchase any Valvoline Competitive Business Assets pursuant to the second
proviso to Section 14.03(d)(viii), the purchase price of such Company
Competitive Business Assets or Valvoline Competitive Business Assets (the
"Competitive Business Purchase Price") shall be determined pursuant to the
- ------------------------------------
following procedures:
(a) Negotiation Period. For a period of 15 days following the date
-------------------
the Board of Managers approves such purchase, Marathon and Ashland will
negotiate in good faith to seek to reach an agreement as to the Competitive
Business Purchase Price. If Marathon and Ashland reach such an agreement,
then the Competitive Business Purchase Price shall be deemed to be the
amount so agreed upon by Marathon and Ashland.
(b) Appraisal Process. (i) In the event Marathon and Ashland are
------------------
unable to reach an agreement as to the Competitive Business Purchase Price
within the 15 day period referred to in clause (a) above, then within five
Business Days after the expiration of such 15-day period (such fifth
Business Day being referred to herein as the "14.04 Appraisal Process
-----------------------
Commencement Date"), Marathon and Ashland each shall select a nationally
-----------------
recognized investment banking firm to (A) prepare a report which (1) sets
forth such investment banking firm's determination of the Competitive
Business Purchase Price (which shall be a single amount as opposed to a
range) and (2) includes work papers which indicate the basis for the
calculations of the Competitive Business Purchase Price
<PAGE>
104
(a "14.04 Appraisal Report") and (B) deliver to Marathon or Ashland, as the
----------------------
case may be, an oral and written opinion addressed to such party as to the
Competitive Business Purchase Price.
(ii) The fees and expenses of each investment banking firm shall be
paid by the party selecting such investment banking firm.
(iii) Each of Marathon and Ashland shall instruct its respective
investment banking firm to (A) not consult with the other investment
banking firm with respect to its view as to the Competitive Business
Purchase Price prior to the time that both investment banking firms have
delivered their respective opinions to Marathon and Ashland, as applicable,
(B) deliver their respective 14.04 Appraisal Reports, together with their
oral and written opinions as to the Competitive Business Purchase Price
(the "14.04 Initial Opinion Values"), within 15 days after the 14.04
----------------------------
Appraisal Process Commencement Date, and (C) deliver a copy of its written
opinion and its 14.04 Appraisal Report to the Company, the other party and
the other party's investment banking firm at the time it delivers its oral
and written opinion to Marathon or Ashland, as applicable.
(iv) If the 14.04 Initial Opinion Values differ and the lesser 14.04
Initial Opinion Value equals or exceeds 90% of the greater 14.04 Initial
Opinion Value, the Competitive Business Purchase Price shall be deemed to
be an amount equal to (A) the sum of the 14.04 Initial Opinion Values
divided by (B) two.
(v) If the 14.04 Initial Opinion Values differ and the lesser 14.04
Initial Opinion Value is less than 90% of the greater 14.04 Initial Opinion
Value then:
(A) within two Business Days after both investment banking firms
have delivered their respective opinions to Marathon or Ashland, as
applicable, each investment banking firm shall, at a single meeting at
which Marathon, Ashland, the Company and the other investment banking
firm are present, make a presentation with respect to its 14.04
Initial Opinion Value. At such presentation, Marathon, Ashland, the
Company and the other
<PAGE>
105
investment banking firm shall be entitled to ask questions as to the
basis for and the calculation of such investment banking firm's 14.04
Initial Opinion Value; and
(B) Marathon and Ashland shall, within five Business Days after
the date Marathon and Ashland receive the 14.04 Initial Opinion Values
(such fifth Business Day being referred to herein as the "14.04
-----
Subsequent Appraisal Process Commencement Date"), jointly select a
----------------------------------------------
third nationally recognized investment banking firm to (1) prepare a
14.04 Appraisal Report and (2) deliver an oral and written opinion
addressed to Marathon and Ashland as to the Competitive Business
Purchase Price. The fees and expenses of such third investment
banking firm shall be paid 50% by Marathon and 50% by Ashland. Such
third investment banking firm shall not be provided with the 14.04
Initial Opinion Values and shall not consult with the initial
investment banking firms with respect thereto. During such five-
Business Day period, Marathon and Ashland shall negotiate in good
faith to independently reach an agreement as to the Competitive
Business Purchase Price. If Marathon and Ashland reach such an
agreement, then the Competitive Business Purchase Price shall be
deemed to be the amount so agreed upon by Marathon and Ashland. If
Marathon and Ashland are unable to reach such an agreement, then
Marathon and Ashland shall instruct such third investment banking firm
to deliver its 14.04 Appraisal Report, together with its oral and
written opinion as to the Competitive Business Purchase Price (the
"14.04 Third Opinion Value"), within 15 days after the 14.04
--------------------------
Subsequent Appraisal Process Commencement Date. The Competitive
Business Purchase Price in such circumstances shall be deemed to be an
amount equal to (I) the sum of (x) the 14.04 Third Opinion Value plus
(y) which ever of the two 14.04 Initial Opinion Values is closer to
the 14.04 Third Opinion Value (or, if the 14.04 Third Opinion Value is
exactly halfway between the two 14.04 Initial Opinion Values, the
14.04 Third Opinion Value), divided by (II) two.
<PAGE>
106
ARTICLE XV
Survival; Assignment
--------------------
SECTION 15.01. Survival and Assignment re: Marathon and USX. (a)
----------------------------------------------
General. Except as expressly permitted by this Section 15.01, neither Marathon
- --------
nor USX shall assign all or any part of its rights and obligations hereunder to
any person without first obtaining the written approval of each of the other
parties hereto, which approval may be granted or withheld in such parties' sole
discretion.
(b) Merger or Sale of Substantially All of Marathon's or USX's
----------------------------------------------------------
Assets. In the event that Marathon or USX shall be a party to a merger,
- -------
consolidation or other similar business combination transaction with a third
party or sell all or substantially all its assets to a third party, Marathon's
or USX's, as the case may be, rights and obligations hereunder shall be
assignable to such third party in connection with such transaction; provided,
--------
however, that Marathon or USX shall not be permitted to assign its rights and
- -------
obligations hereunder to such third party as aforesaid if the purpose or intent
of such merger, consolidation, similar business combination transaction or sale
is to circumvent or avoid the application of Sections 10.01(c) and 10.04 of the
LLC Agreement to the related Transfer of Marathon's Membership Interests to such
third party.
(c) Transfer of Marathon's Membership Interests Pursuant to Section
---------------------------------------------------------------
10.01(c) of the LLC Agreement. In the event that Marathon Transfers all of its
- ------------------------------
Membership Interests to a third party pursuant to Section 10.01(c) of the LLC
Agreement, then:
(i) such third party shall at the time of such Transfer become
subject to all of Marathon's and USX's respective obligations hereunder and
shall succeed to all of Marathon's and USX's respective rights hereunder;
(ii) such third party and its ultimate parent, if any, shall each
become subject to the same standstill obligations that apply to Marathon
and USX under Section 12.01, which standstill provisions shall remain in
effect with respect to such third party and its ultimate parent, if any,
through the six-month
<PAGE>
107
anniversary of the earlier to occur of (a) the date that Ashland and its
Affiliates do not own any Membership Interests and (b) the date that such
third party and its Affiliates do not own any Membership Interests;
(iii) such third party and its ultimate parent, if any, shall each
become subject to the same non-compete covenants that apply to Marathon and
USX under Article XIV; and
(iv) Marathon and USX shall each be relieved of all of its
obligations hereunder other than (1) any default hereunder by Marathon or
USX or any of their respective Affiliates that occurred prior to the time
of such Transfer; (2) Marathon's and USX's respective obligations under
Section 12.01 (which are in addition to, and not in lieu of such third
party's obligations under Section 12.01); (3) Marathon's and USX's
respective obligations under Article X with respect to any Securities that
Marathon and/or USX issued to Ashland pursuant to Section 4.02(c) prior to
such Transfer or that Marathon and/or USX intends to issue to Ashland
pursuant to Section 4.02(c) after such Transfer; and (4) Marathon's and
USX's respective obligations under Article XIV (which shall survive for six
months from the date of such Transfer and which are in addition to, and not
in lieu of such third party's obligations under Article XIV).
(d) Assignment of Marathon's Marathon Call Right and Special
--------------------------------------------------------
Termination Right. In the event of an assignment by Marathon of its rights and
- ------------------
obligations under this Agreement to a third party pursuant to this Section
15.01, Marathon's rights and obligations related to its Marathon Call Right and
its Special Termination Right shall also be assigned to such third party;
provided, that such third party shall not be permitted to exercise the Marathon
- --------
Call Right until the third anniversary of the date of such assignment.
SECTION 15.02. Survival and Assignment re: Ashland. (a) General.
------------------------------------- --------
Except as expressly permitted by this Section 15.02, Ashland shall not assign
all or any part of its rights and obligations hereunder to any person without
first obtaining the prior written approval of each
<PAGE>
108
of the other parties hereto, which approval may be granted in such parties' sole
discretion.
(b) Merger or Sale of Substantially all of Ashland's Assets. In the
--------------------------------------------------------
event that Ashland shall be a party to a merger, consolidation or other similar
business combination transaction with a third party or sell all or substantially
all of its assets to a third party, Ashland's rights and obligations hereunder
shall be assignable to such third party in connection with such transaction;
provided, however, that Ashland shall not be permitted to assign its rights and
- -------- -------
obligations hereunder to such third party as aforesaid if the purpose or intent
of such merger, consolidation, similar business combination transaction or sale
is to circumvent or avoid the application of Sections 10.01(c) and 10.04 of the
LLC Agreement to the related Transfer of Ashland's Membership Interests to such
third party.
(c) Transfer of Membership Interests Pursuant to Section 10.01(c) of
----------------------------------------------------------------
the LLC Agreement. In the event that Ashland Transfers all of its Membership
- ------------------
Interests to a third party pursuant to Section 10.01(c) of the LLC Agreement,
then:
(i) such third party shall at the time of such Transfer become
subject to all of Ashland's obligations hereunder and shall succeed to all
of Ashland's rights hereunder;
(ii) such third party and its ultimate parent, if any, shall each
become subject to the same standstill obligations that apply to Ashland
under Section 12.02, which standstill provisions shall remain in effect
with respect to such third party and its ultimate parent, if any, through
the later to occur of (i) the six-month anniversary of the earlier to occur
of (A) the date that Marathon and its Affiliates do not own any Membership
Interests and (B) the date that such third party and its Affiliates do not
own any Membership Interests and (ii) in the event that such third party or
its Affiliates acquires USX Voting Securities pursuant to the Closing of
the Ashland Put Right, the date on which such third party and its
Affiliates do not own more than 5% of the then outstanding USX Voting
Securities;
<PAGE>
109
(iii) such third party and its ultimate parent, if any, shall each
become subject to the same non-compete covenants that apply to Ashland
under Article XIV;
(iv) Ashland shall be relieved of all of its obligations hereunder
other than (1) any default hereunder by Ashland or any of its Affiliates
that occurred prior to the time of such Transfer; (2) Ashland's obligations
under Section 12.02 (which are in addition to, and not in lieu of such
third party's obligations under Section 12.02); and (3) Ashland's
obligations under Article XIV (which shall survive for six months from the
date of such Transfer and which are in addition to, and not in lieu of such
third party's obligations under Article XIV); and
(v) Ashland shall retain all of its rights under Article X with
respect to any Securities that are issued to Ashland pursuant to Section
4.02(c) prior to or after the date of such Transfer (which rights shall be
in addition to and not in lieu of the rights that the third party of
Ashland's Membership Interests is entitled to under Article X).
(d) Assignment of Ashland's Ashland Put Right and Special Termination
-----------------------------------------------------------------
Right. In the event of an assignment by Ashland of its rights and obligations
- ------
under this Agreement to a third party pursuant to this Section 15.02, Ashland's
rights and obligations related to its Ashland Put Right and its Special
Termination Right shall also be assigned to such third party; provided that such
--------
third party shall not be permitted to exercise the Ashland Put Right until the
third anniversary of the date of such assignment.
SECTION 15.03. Survival and Assignment re: the Company. The Company
-----------------------------------------
shall not be permitted to assign its rights and obligations hereunder without
the prior written consent of each of the other parties hereto, which consent
shall not be unreasonably withheld.
SECTION 15.04. Assignment and Assumption Agreements. Any assignment
-------------------------------------
of Marathon's, USX's, Ashland's or the Company's respective rights and
obligations hereunder pursuant to this Article XV shall be pursuant to an
assignment and assumption agreement by and among the third party, such third
party's ultimate parent, if any, and each
<PAGE>
110
of the parties hereto, in such form as the parties hereto shall reasonably
approve.
SECTION 15.05. Consequences of Unpermitted Assignments. Any attempted
----------------------------------------
assignment in violation of this Article XV shall be void and without legal
effect.
ARTICLE XVI
Dispute Resolution Procedures
-----------------------------
SECTION 16.01. General. All controversies, claims or disputes that
--------
arise out of or relate to the Agreement or the construction, interpretation,
performance, breach, termination, enforceability or validity of the Agreement,
or the commercial economic or other relationship of the parties thereto, whether
such claim is based on rights, privileges or interests recognized by or based
upon statute, contract, tort, common law or otherwise and whether such claim
existed prior to or arises on or after the date of the Agreement (a "Dispute")
-------
shall be resolved in accordance with the provisions of this Article XVI.
Notwithstanding anything to the contrary contained in this Article XVI, nothing
in this Article XVI shall limit the ability of the directors and officers of a
party hereto from communicating directly with the directors and officers of any
other party hereto.
SECTION 16.02. Dispute Notice and Response. A party hereto may give
----------------------------
another party hereto written notice (a "Dispute Notice") of any Dispute which
--------------
has not been resolved in the normal course of business. Within fifteen Business
Days after delivery of the Dispute Notice, the receiving party shall submit to
the other party a written response (the "Response"). The Dispute Notice and the
--------
Response shall each include a statement setting forth the position of the party
giving such notice, a summary of the arguments supporting such position and, if
applicable, the relief sought.
SECTION 16.03. Negotiation Between Chief Executive Officers. (a) If
---------------------------------------------
a Dispute Notice is delivered prior to the Closing, within 10 Business Days
after delivery of the Response provided for in Section 16.02, the Chief
Executive Officer (in the case of Ashland and USX) and/or the President (in the
case of Marathon and the Company) of
<PAGE>
111
each party to such Dispute shall meet or communicate by telephone at a mutually
acceptable time and place, and thereafter as often as they reasonably deem
necessary, and shall negotiate in good faith to attempt to resolve the Dispute
that is the subject of such Dispute Notice. If such Dispute has not been
resolved within 20 Business Days after the delivery of the Response as provided
for in Section 16.02, then each party shall be permitted to take such actions at
law or in equity as it is otherwise permitted to take or as may be available
under Applicable Law.
(b) All negotiations between the Chief Executive Officer(s) and/or
the President(s) pursuant to this Section 16.03 shall be treated as compromise
and settlement negotiations. Nothing said or disclosed, nor any document
produced, in the course of such negotiations which is not otherwise
independently discoverable shall be offered or received as evidence or used for
impeachment or for any other purpose in any current or future arbitration or
litigation.
SECTION 16.04. Right to Equitable Relief Preserved. Notwithstanding
------------------------------------
anything in this Agreement to the contrary, any party hereto may at any time
seek from any court of the United States located in the State of Delaware or
from any Delaware state court, any interim, provisional or injunctive relief
that may be necessary to protect the rights or property of such party or
maintain the status quo before, during or after the pendency of the negotiation
process or any other proceeding contemplated by Section 16.03.
ARTICLE XVII
Miscellaneous
-------------
SECTION 17.01. Notices. Any notice, consent or approval to be given
--------
under this Agreement shall be in writing and shall be deemed to have been given
if delivered: (i) personally by a reputable courier service that requires a
signature upon delivery; (ii) by mailing the same via registered or certified
first-class mail, postage prepaid, return receipt requested; or (iii) by
telecopying the same with receipt confirmation (followed by a first-class
mailing of the same) to the intended recipient. Any such writing will be deemed
to have been given: (a) as of the date of
<PAGE>
112
personal delivery via courier as described above; (b) as of the third calendar
day after depositing the same into the custody of the postal service as
evidenced by the date-stamped receipt issued upon deposit of the same into the
mails as described above; and (c) as of the date and time electronically
transmitted in the case of telecopy delivery as described above, in each case
addressed to the intended party at the address set forth below:
To Marathon:
Marathon Oil Company
5555 San Felipe
P.O. Box 3128
Houston, TX 77056
Attn: General Counsel
Phone: (713) 296-4137
Fax: (713) 296-4171
To USX:
USX Corporation
600 Grant Street
Pittsburgh, PA, 15219-4776
Attn: General Counsel
Phone: (412) 433-1121
Fax: (412) 433-2015
To Ashland:
Ashland Inc.
1000 Ashland Drive
Russell, KY 41169
Attn: General Counsel
Phone: (606) 329-3333
Fax: (606) 329-3823
To the Company:
Marathon Ashland Petroleum LLC
539 South Main Street
Findlay, Ohio 45840
Attn: General Counsel
Phone: (419) 421-4115
Fax: (419) 422-2121
<PAGE>
113
Any party may designate different addresses or telecopy numbers by notice to the
other parties.
SECTION 17.02. Merger and Entire Agreement. This Agreement
----------------------------
(including the Schedules and Appendices attached hereto), together with the
other Transaction Documents (including the exhibits, schedules and appendices
thereto) and certain other agreements executed contemporaneously with the Master
Formation Agreement constitutes the entire Agreement of the parties hereto and
supersedes any prior understandings, agreements, or representations by or among
the parties hereto, written or oral, to the extent they relate in any way to the
subject matter hereof.
SECTION 17.03. Parties in Interest. This Agreement shall inure to
--------------------
the benefit of, and be binding upon, the parties hereto and their respective
successors, legal representatives and permitted assigns.
SECTION 17.04. Counterparts. This Agreement may be executed in
-------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 17.05. Amendment; Waiver. This Agreement may not be amended
------------------
except in a written instrument signed by each of the parties hereto and
expressly stating it is an amendment to this Agreement. Any failure or delay on
the part of any party hereto in exercising any power or right hereunder shall
not operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power preclude any other or further exercise thereof or the
exercise of any other right or power hereunder or otherwise available at law or
in equity.
SECTION 17.06. Severability. If any term, provision, covenant, or
-------------
restriction of this Agreement or the application thereof to any Person or
circumstance, at any time or to any extent, is held by a court of competent
jurisdiction or other Governmental Authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement (or the application of such provision in other
jurisdictions or to Persons or circumstances other than those to which it was
held invalid or unenforceable) shall in no way be affected, impaired or
invalidated, and to the extent permitted by Applicable Law, any such term,
provision, covenant or
<PAGE>
114
restriction shall be restricted in applicability or reformed to the minimum
extent required for such to be enforceable. This provision shall be interpreted
and enforced to give effect to the original written intent of the parties hereto
prior to the determination of such invalidity or unenforceability.
SECTION 17.07. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
--------------
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT
GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF. ANY RIGHT TO TRIAL
BY JURY WITH RESPECT TO ANY CLAIM OR PROCEEDING RELATED TO OR ARISING OUT OF
THIS AGREEMENT, OR ANY TRANSACTION OR CONDUCT IN CONNECTION HEREWITH, IS WAIVED.
SECTION 17.08. Enforcement. The parties hereto agree that
------------
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties hereto shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement in the
Delaware Chancery Court; provided that if the Delaware Chancery Court does not
--------
have jurisdiction with respect to such matter, the parties hereto shall be
entitled to enforce specifically the terms and provisions of this Agreement in
any court of the United States located in the State of Delaware or in Delaware
state court, this being in addition to any other remedy to which they are
entitled at law or in equity. In addition, each of the parties hereto (i)
consents to submit itself to the personal jurisdiction of the Delaware Chancery
Court in the event that any dispute arises out of this Agreement or any of the
transactions contemplated by this Agreement; provided that if the Delaware
--------
Chancery Court does not have jurisdiction with respect to any such dispute, such
party consents to submit itself to the personal jurisdiction of any Federal
court located in the State of Delaware or any Delaware state court, (ii) agrees
to appoint and maintain an agent in the State of Delaware for service of legal
process, (iii) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, (iv)
agrees that it will not plead or claim in any such court that any action
relating to this Agreement or any of the transactions contemplated by this
Agreement in any such court has been brought in an inconvenient forum and (v)
agrees that it will not initiate
<PAGE>
115
any action relating to this Agreement or any of the transactions contemplated by
this Agreement in any court other than (1) the Delaware Chancery Court, or (2)
if the Delaware Chancery Court does not have jurisdiction with respect to such
action, a Federal court sitting in the State of Delaware or a Delaware state
court.
SECTION 17.09. Table of Contents, Headings and Titles. The table of
---------------------------------------
contents and section headings of this Agreement and titles given to Schedules
and Appendices to this Agreement are for reference purposes only and are to be
given no effect in the construction or interpretation of this Agreement.
SECTION 17.10. Use of Certain Terms; Rules of Construction. As used
--------------------------------------------
in this Agreement, the words "herein", "hereof" and "hereunder" and other words
------ ------ ---------
of similar import refer to this Agreement as a whole and not to any particular
paragraph, subparagraph, section, subsection or other subdivision. Whenever the
context may require, any pronoun used in this Agreement shall include the
corresponding masculine, feminine or neuter forms, and the singular form of
nouns, pronouns and verbs shall include the plural and vice versa. Each party
hereto agrees that any rule of construction to the effect that any ambiguities
are to be resolved against the drafting party shall not be employed in the
interpretation or construction of this Agreement or any Transaction Document.
SECTION 17.11. Holidays. Notwithstanding any deadline for payment,
---------
performance, notice or election under this Agreement, if such deadline falls on
a date that is not a Business Day, then the deadline for such payment,
performance, notice or election will be extended to the next succeeding Business
Day.
SECTION 17.12. Third Parties. Nothing herein expressed or implied is
--------------
intended or shall be construed to confer upon or give any person and their
respective successors, legal representatives and permitted assigns any rights,
remedies or basis for reliance upon, under or by reason of this Agreement.
SECTION 17.13. Liability for Affiliates. Except where and to the
-------------------------
extent that a contrary intention otherwise appears, where any party hereto
undertakes to cause its Affiliates to take or abstain from taking any action,
such
<PAGE>
116
undertaking shall mean (i) in the case of an Affiliate that is controlled by
such party, that such party shall cause such Affiliate to take or abstain from
taking such action and (ii) in the case of an Affiliate that controls or is
under common control with such party, that such party shall use its commercially
reasonable best efforts to cause such Affiliates to take or abstain from taking
such action; provided, however, that such party shall not be required to
-------- -------
violate, or cause any director of an Affiliate to violate, any fiduciary duty to
minority shareholders of such Affiliate.
SECTION 17.14. Schedules. No representation or warranty hereunder
----------
shall be deemed to be inaccurate if the actual situation is disclosed pursuant
to another representation or warranty herein or in a schedule to a Put/Call,
Registration Rights and Standstill Agreement Disclosure Letter or in any other
Transaction Document or any exhibit, schedule or appendix thereto, whether or
not an explicit cross-reference appears. Neither the specification of any
dollar amount in any representation, warranty or covenant contained in this
Agreement nor the inclusion of any specific item in a schedule to a Put/Call,
Registration Rights and Standstill Agreement Disclosure Letter is intended to
imply that such amount, or higher or lower amounts, or the item so included or
other items, are or are not material, and neither party shall use the fact of
the setting forth of any such amount or the inclusion of any such item in any
dispute or controversy involving the parties as to whether any obligation, item
or matter not described herein or included in a schedule to a Put/Call,
<PAGE>
117
Registration Rights and Standstill Agreement Disclosure Letter is or is not
material for purposes of this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties as of the day and year first above written.
MARATHON OIL COMPANY
by /s/ Victor G. Beghini
__________________________
Name: Victor G. Beghini
Title: President
USX CORPORATION
by /s/ Thomas J. Usher
__________________________
Name: Thomas J. Usher
Title: Chairman of the Board
and Chief Executive
Officer
ASHLAND INC.
by /s/ Paul W. Chellgren
__________________________
Name: Paul W. Chellgren
Title: Chairman of the Board
and Chief Executive
Officer
MARATHON ASHLAND PETROLEUM LLC
by /s/ J. L. Frank
__________________________
Name: J. L. Frank
Title: President
<PAGE>
EXHIBIT 99.1
FOR FURTHER INFORMATION:
USX Ashland Inc.
William E. Keslar Dan Lacy
(412) 433-6870 (606) 329-3148
FOR IMMEDIATE RELEASE
- ---------------------
MARATHON AND ASHLAND CLOSE JOINT VENTURE TRANSACTION
FINDLAY, Ohio, Jan. 2, 1998 -- USX Corporation's Marathon Oil Company and
Ashland Inc. today jointly announced that they have closed the transaction that
officially creates the refining and marketing company, Marathon Ashland
Petroleum LLC. The close of the transaction was effective Jan. 1, 1998.
Marathon has a 62 percent interest in the new company and Ashland holds a
38 percent interest.
USX, Marathon and Ashland officials signed definitive agreements to create
the venture Dec. 12. Plans to pursue the combination were first announced May
15 when a letter of intent to seek a combination of the major elements of the
two firms' downstream operations was signed.
Marathon Ashland Petroleum will operate seven refineries with a combined
capacity of 935,000 barrels per day, or six percent of the total U.S. refining
capacity. The refineries are located at Garyville, La., (255,000 b/d);
Catlettsburg, Ky., (220,000 b/d), Robinson, Ill., (180,000 b/d); St. Paul Park,
Minn., (70,000 b/d); Texas City, Texas (70,000 b/d); Detroit, Mich., (70,000
b/d); and Canton, Ohio (70,000 b/d). The new company will have 84 light
products and asphalt terminals in the Midwest and Southeast United States, 5,400
retail marketing outlets in 20 states, and significant pipeline holdings.
Marathon Oil Company is a part of the USX-Marathon Group (NYSE:MRO).
Ashland Inc. (NYSE:ASH) is a large energy and chemical company engaged in
petroleum refining and marketing; coal and highway construction.
-o0o-
1998-1-2
For more information on Marathon see www.marathon.com or www.usx.com
For more information on Ashland see www.ashland.com
