Exhibit 10(h)
1EXECUTION COPY
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
of
MARATHON ASHLAND PETROLEUM LLC
Dated as of December 31, 1998
AMENDED AND RESTATED LIMITED
LIABILITY COMPANY AGREEMENT dated as of
December 31, 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
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 entered into this Agreement on
January 1, 1998 to set forth the rights and responsibilities
of each of them with respect to the governance, financing
and operation of the Company;
WHEREAS, the Members have executed Amendment No. 1
to this Agreement as of August 21, 1998, and have executed
Amendment No. 2 to this Agreement as of September 1, 1998;
and
WHEREAS, the Members wish to make certain
additional amendments to this Agreement, and to restate this
Agreement incorporating such additional amendments as well
as the amendments contained in Amendment No. 1 and Amendment
No. 2.
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
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,
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
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.
"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
(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
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).
"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 Xxxxxxxx X-
0, X-0, X-0 xxx X-0 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).
"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.
"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 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.
"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).
"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
Capital Projects/Acquisitions, minus
(e) if the notional repayment of principal for
Special Project Indebtedness or Permitted Capital
Project/Acquisition 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 Capital
Project/Acquisition 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 Capital Project/Acquisition Indebtedness
during such Fiscal Quarter was more than the notional
repayment of principal for such Special Project
Indebtedness or Permitted Capital Project/Acquisition
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,
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,
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" 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.
"Make-Up Expense" has the meaning set forth in
Section 6.02(d).
"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).
"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
Debt shall not include any Permitted Intercompany Debt, any
Special Project Indebtedness or any Permitted 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 Capital Project/Acquisition
Indebtedness" 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.
"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. Book depreciation (as that term is used in
Treasury Regulation Section 1.704-(b)(2)(iv)(g)(3)) for any
asset contributed to the Company that was fully depreciated
for federal income tax purposes as of the date of its
contribution shall be based on the applicable recovery
period (as determined in Code Section 168(c)) for new assets
of the same type;
(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), "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).
"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.
"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).
"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 January 1,
1998, 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 January 1, 1998 ("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 January 1, 1998 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
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 XV 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
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,
0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000. 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.
(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 amend
ments 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
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
percentage interests in the Company ("Percentage Interests")
are as follows:
Percentage
Members Interests
Marathon Oil Company 62%
0000 Xxx Xxxxxx
X.X. Xxx 0000
Xxxxxxx, XX 00000-0000
Ashland Inc. 38%
00 Xxxx XxxxxXxxxxx Xxxxxxxxx
X.X. Xxx 000
Xxxxxxxxx, XX 00000-0000
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
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 January 1, 1998 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 January 1, 1998 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 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 (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
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 during each Fiscal
Year, the Company shall 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 the portion of such Fiscal Year ending on the last
day of 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
have received distributions under this clause and
subsection (b) below for such portion of such Fiscal
Year in an amount less than its Tax Liability for such
portion of such Fiscal Year.
(iii) 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
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.
(iv) 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 (iii) 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 clauses (ii) and (iii) 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.
(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 less than the amount determined by the
Company pursuant to clause (iii) 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
provided, however, that the distribution of
(i) Distributable Cash pursuant to this paragraph 5.01(b) or
(ii) cash pursuant to Section 5.01(a) above, in each case
with respect to any Fiscal Quarter may be made in such other
manner and in such other amount as the Members shall agree
with respect to such Fiscal Quarter; provided, further,
however, that any agreement by any Member with respect to
the distribution of either Distributable Cash pursuant to
this paragraph 5.01(b) or cash pursuant to Section 5.01(a)
for any Fiscal Quarter pursuant to the preceding proviso
shall not alter or waive any of the rights of either Member
under this Agreement with respect to distributions of
Distributable Cash pursuant to this paragraph 5.01(b) or
cash pursuant to Section 5.01(a) with respect to any
subsequent Fiscal Quarter. Subject to Section 5.02(b), each
such distribution shall be allocated between the Members
pro rata based upon their respective Percentage Interests.
(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.
(d) Notwithstanding anything to the contrary in
this Agreement, any agreement reached between the Members to
distribute any amount of cash different from the amounts
which would be calculated in accordance with the methodology
set forth in Section 5.01(a) and Section 5.01(b) above shall
not alter or waive in any manner the obligations of the
Company to prepare and deliver the Distributions Calculation
Statement as set forth in Section 5.01(c) above, and after
any such agreement has been reached the Company shall
continue to prepare and deliver such Distribution
Calculation Statement with respect to each Fiscal Quarter as
if no such agreement had been reached.
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
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 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. Allocations. (a) Except as
provided in Section 6.02(b), 6.02(c), 6.02(d) and 6.02(e),
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, 6.14,
6.15 and 6.16 the associated Profit and Loss shall be
allocated to the same Member.
(c) Depreciation and amortization with respect to
any asset contributed by a Member to the Company shall be
allocated solely to such Member.
(d) If any asset contributed by a Member is sold
or otherwise disposed of prior to the time such asset has
been completely depreciated or amortized for Federal income
tax purposes, the Member contributing such property shall be
allocated an expense ("Make-Up Expense") equal to (i) the
remaining tax basis of the asset at the time of the sale or
other disposition, multiplied by (ii) the other Member's
Percentage Interest at the time of such sale or other
disposition. The contributing Member shall be allocated
Make-Up Expense over the remaining tax life of the asset at
the time of sale or other disposition at the same rate as
depreciation or amortization would have been allocated to
such Member if the sale or other disposition had not
occurred. Make-Up Expense allocated to a Member shall be
taken from and reduce the amount of expenses allocated to
the other Member. The purpose for this provision is to
allocate to a Member, with respect to depreciable or
amortizable assets contributed by such Member, a total
amount of deductions and cost recovery allowances equal to
100% of the basis of such assets at the time of
contribution.
(e) In the event that the Company sells or
otherwise disposes of all or substantially all its assets or
engages in any other transaction that will lead to a
liquidation of the Company, then, notwithstanding the
foregoing provisions of this Section 6.02, (i) any Profit or
Loss realized by the Company in such transaction and (ii),
to the extent necessary, any other Profit or Loss in the
Fiscal Year such transaction occurs or thereafter (and, in
each case, to the extent necessary, constituent items of
income, gain, loss, deduction and credit) shall be specially
allocated as between the Members as required so as to cause
in so far as possible each Member's Capital Account balance
to be proportionate to its Percentage Interest.
SECTION 6.03. Tax Allocations. (a) For income
tax purposes only, each item of income, gain, loss,
deduction and credit of the Company as determined for income
tax purposes shall be allocated between the Members in
accordance with the corresponding allocation in
Section 6.02, subject to the requirements of Section 704(c)
of the Code.
(b) The Members acknowledge and agree that
Section 704(c) shall be applied using the so-called
"traditional method with curative allocations" set forth in
Treasury Regulation Section 1.704-3(c). Curative
allocations of income, gain, loss or deduction shall, to the
extent possible, have substantially the same effect on each
Member's Federal income tax liability as the item of income,
gain, loss or deduction for which allocation is limited.
(c) By reason of the special allocation of book
depreciation and amortization with respect to the assets
contributed by the Members pursuant to Section 6.02(c), tax
depreciation and amortization with respect to each such
asset shall be allocated solely to the contributing Member.
(d) Items described in this Section 6.03 shall
neither be credited nor charged to the Members' Capital
Accounts.
SECTION 6.04. Tax Elections. (a) 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.
(b) Any elections or other decisions relating to
tax matters that are not expressly provided for herein,
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.
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
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"
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
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 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.
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.
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.
SECTION 6.15. Allocation of Income, Gains, Losses
and Other Items from LOOP LLC and LOCAP, Inc. (a) Income,
gains, losses, deductions, credits, adjustments, tax
preferences and other distributive share items with respect
to the Company's interest in LOOP LLC, a tax partnership,
for periods beginning on or after the Closing, shall be
allocated between the Members in such a manner so that, when
such items are included with the same items allocated to
Ashland with respect to the Ashland LOOP/LOCAP Interest,
each Member is allocated all such items in proportion to its
respective Percentage Interest in the Company.
(b) In determining the Capital Account for each
Member, (i) Ashland shall be treated as contributing the
Ashland LOOP/LOCAP Interest to the Company, (ii) Profit and
Loss shall be treated as including taxable income, gain,
loss and distributions arising from Ashland's 4% interest in
LOOP LLC and (iii) dividends and distributions that Ashland
receives from LOOP LLC or LOCAP, Inc. in respect of the
Ashland LOOP/LOCAP Interest and paid to the Company pursuant
to Section 7.2(i) of the Asset Transfer and Contribution
Agreement shall be treated as being received directly by the
Company.
SECTION 6.16. Allocation of Income, Gain, Loss,
Deduction and Credits Attributable to Stock-Based
Compensation. Each item of income, gain, loss, deduction
(excluding deductions for administrative costs incurred by
the Company) and credit attributable to the grant to, or the
exercise by or on behalf of, an employee or retired employee
of the Company of a stock option, stock appreciation right,
or other stock-based incentive compensation involving the
stock of a Member or an Affiliate of a Member shall be
allocated to the Member whose stock or whose Affiliate's
stock is involved. Any exercise price paid by or on behalf
of the employee or retired employee to the Company shall be
paid over to the Member whose stock (or whose Affiliate's
stock) is involved. A Member's Capital Account shall be
(i) increased by the fair market value of its (or its
Affiliate's) stock delivered to or on behalf of an employee
or retired employee as aforesaid (without duplication to the
extent such stock is first contributed to the Company),
(ii) decreased (pursuant to Section 6.01(a)(iii) or
(b)(iii)) by the deduction allocated to such Member as
aforesaid and (iii) decreased by the amount of the exercise
price so paid over by the Company or deemed to be paid over
by the Company under principles analogous to those in
Treasury Regulation Section 1.83-6(d)(1).
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.
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
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. Unless otherwise agreed by the
Members, 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 accepted
auditing standards.
(iii) Final 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
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
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) eight Representatives, each of whom shall be entitled
to vote, five of whom shall be designated by Marathon and
three 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 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
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
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
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.
(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 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) (i) any reorganization, merger, consolidation
or similar transaction between the Company 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 assets to any
person (other than a direct or indirect Wholly Owned
Subsidiary of the Company);
(ii) any (A) reorganization, merger, consolidation
or similar transaction or series of transactions
between any of the Company's subsidiaries and any
person (other than the Company or a direct or indirect
Wholly Owned Subsidiary of the Company) or (B) sale or
lease of all or substantially all of any of the
Company's subsidiaries' assets to any person (other
than the Company or a direct or indirect Wholly Owned
Subsidiary of the Company) which in either case
involves an aggregate consideration of over
$50,000,000;
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 such other expenditures of the
type to be 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) Acquisition Expenditures or Capital Expenditures of
the Company and its subsidiaries directly associated
with Permitted Capital Projects/Acquisitions that are
funded with Permitted Capital Project/Acquisition
Indebtedness) that when taken together with (x) the
other expenditures already approved as part of the
Annual Capital Budget for such Fiscal Year and (y) all
other expenditures already made in such Fiscal Year,
would reasonably be expected to exceed the Normal
Annual Capital Budget Amount for such Fiscal Year; 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 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) Acquisition Expenditures
or Capital Expenditures of the Company and its
subsidiaries directly associated with Permitted Capital
Projects/Acquisitions that are funded with Permitted
Capital Project/Acquisition 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
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 any Transaction Document to which the
Company or any of its subsidiaries is a party and all
Members are not a party;
(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
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
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 "Draft
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 Draft Annual Capital Budget
shall be provided to each Member (at the same time) and to
the Board of Managers. No later than the last regular
meeting of the Board of Managers for a Fiscal Year, the
Executive Officers shall present to the Board of Managers
the Draft Annual Capital Budget for the following Fiscal
Year for the Board of Managers' review, consideration and
approval, with such additions, deletions and changes thereto
as the Board of Managers shall deem necessary. Upon its
approval by the Board of Managers (and taking into account
any additions, deletions or other changes deemed necessary
by the Board of Managers) the Draft Annual Capital Budget
for a Fiscal Year shall become the "Annual Capital Budget"
for such Fiscal Year.
(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 August 30 of each Fiscal Year,
the Board of Managers shall review the Annual Capital Budget
for such Fiscal Year and shall make such additions,
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 "Draft Business Plan") for the
next three Fiscal Years. Copies of the Draft Business Plan
shall be provided to each Member (at the same time) and to
the Board of Managers. No later than the last regular
meeting of the Board of Managers for a 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. Upon its
approval by the Board of Managers (and taking into account
any such additions, deletions or other changes deemed
necessary by the Board of Managers), the Draft Business Plan
for a Fiscal Year shall become the "Business Plan" for such
Fiscal Year.
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") 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.
(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 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
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
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
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
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.
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
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; provided, however, that Marathon and Ashland may
make additions or deletions to the positions which shall be
considered executive officers of the Company by mutual
agreement. 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 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
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 Representa
tives 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
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
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
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
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).
(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
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).
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.
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 cost, expense, loss, damage, claim or
liability incurred by reason of any act or omission
performed or omitted by such Covered Person in such
capacity, whether or not such person continues to be a
Covered Person at the time of such cost, expense, loss,
damage, claim or liability is incurred or imposed, if the
Covered Person acted in good faith and in a manner the
Covered Person reasonably believed to be in or not opposed
to the best interests of the Company, and if, with respect
to any criminal action or proceeding, such Covered Person
had no reasonable cause to believe its conduct was unlawful,
except that a Covered Person shall be liable for any such
cost, expense, loss, damage, claim or liability incurred by
reason of such Covered Person's 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. (a) To the
fullest extent permitted by Applicable Law, a Covered Person
shall be entitled to indemnification from the Company for
any reasonable cost and expense, loss, damage, claim or
liability incurred by such Covered Person in connection with
any pending, threatened or completed claim, action, suit or
proceeding by reason of being a Covered Person or by reason
of any act or omission performed or omitted by such Covered
Person in such capacity, whether or not such person
continues to be a Covered Person at the time such cost,
expense, loss, damage, claim or liability is incurred or
imposed, if the Covered Person (i) has been successful on
the merits or otherwise with respect to such claim, action,
suit or proceeding, or (ii) acted in good faith and in a
manner the Covered Person reasonably believed to be in or
not opposed to the best interests of the Company, and if,
with respect to any criminal action or proceeding, such
Covered Person had no reasonable cause to believe its
conduct was unlawful, except that no Covered Person shall be
entitled to be indemnified in respect of any such cost,
expense, loss, damage, claim or liability incurred by such
Covered Person by reason of such Covered Person's 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 of such indemnification of any other
Covered Person, and provided further that, in the case of
officers, employees and agents of the Company, such right to
indemnification shall be subject to any further limitations
or requirements that may be adopted by the Board of
Managers, provided such limitations or requirements were
adopted prior to the events that gave rise to the claim for
indemnification.
(b) Expenses incurred with respect to any claim,
action, suit or proceeding of the character described in
Section 11.03(a) shall be advanced to a Covered Person by
the Company prior to the final disposition thereof, but the
Covered Person shall be obligated to repay such advances if
it is ultimately determined that the Covered Person is not
entitled to indemnification under Section 11.03(a). As a
condition to advancing expenses hereunder, the Company may
require the Covered Person to sign a written instrument
acknowledging his obligation to repay any advances hereunder
if it is ultimately determined he is not entitled to such
indemnity.
(c) Notwithstanding anything in this Section
11.03 to the contrary, no Covered Person shall be
indemnified in respect of any claim, action, suit or
proceeding initiated by such Covered Person or his personal
or legal representative, or which involved the voluntary
solicitation or intervention of such person or his personal
or legal representative (other than an action to enforce
indemnification rights hereunder or any action initiated
with the approval of a majority of the Board of Managers).
(d) The rights of indemnification provided in
this Section 11.03 shall be in addition to any other rights
to which any Covered Person may otherwise be entitled to by
contract or otherwise; and in the event of any Covered
Person's death, such rights shall extend to such Covered
Person's heirs and personal representatives.
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
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 January 1, 1998 (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
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
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.
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;
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
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 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 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
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.
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.
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.
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
000 Xxxxx Xxxx Xxxxxx
Xxxxxxx, Xxxx 00000
Attn: General Counsel
Phone: (000) 000-0000
Fax: (000) 000-0000
To Marathon:
Marathon Oil Company
0000 Xxx Xxxxxx
X.X. Xxx 0000
Xxxxxxx, XX 00000-0000
Attn: General Counsel
Phone: (000) 000-0000
Fax: (000) 000-0000
To Ashland:
Ashland Inc.
00 X. XxxxxXxxxxx Xxxxxxxxx
X.X. Xxx 000
Xxxxxxxxx, XX 00000-0000
Attn: General Counsel
Phone: (000) 000-0000
Fax: (000) 000-0000
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
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.
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.
SECTION 16.11. No Xxxx for Accounting. In no
event shall either Member have any right to file a xxxx 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 corres
ponding 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.
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/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: President
ASHLAND INC.
by /s/Xxxx X. Xxxxxxxxx
Name: Xxxx X. Xxxxxxxxx
Title: Chairman of the
Board and Chief
Executive Officer
TABLE OF CONTENTS
Page
ARTICLE I
Certain Definitions; Applicable GAAP
SECTION 1.01. Definitions 2
SECTION 1.02. Applicable GAAP 21
ARTICLE II
General Provisions
SECTION 2.01. Formation; Effectiveness 22
SECTION 2.02. Name 22
SECTION 2.03. Term 22
SECTION 2.04. Registered Agent and Office 23
SECTION 2.05. Purpose 23
SECTION 2.06. Powers 24
ARTICLE III
Members
SECTION 3.01. Members; Percentage Interests 25
SECTION 3.02. Adjustments in Percentage Interests 26
ARTICLE IV
Capital Contributions; Assumption of Assumed
Liabilities
SECTION 4.01. Contributions 26
SECTION 4.02. Additional Contributions 28
SECTION 4.03. Negative Balances; Withdrawal
of Capital; Interest 29
ARTICLE V
Distributions
SECTION 5.01. Distributions 29
SECTION 5.02. Certain General Limitations 32
SECTION 5.03. Distributions in Kind 32
SECTION 5.04. Distributions in the Event of an
Exercise of the Marathon Call Right,
Ashland Put Right or the Special
Termination Rights 33
ARTICLE VI
Allocations and Other Tax Matters
SECTION 6.01. Maintenance of Capital Accounts 33
SECTION 6.02. Allocations 34
SECTION 6.03. Tax Allocations 35
SECTION 6.04. Tax Elections 35
SECTION 6.05. Fiscal Year 36
SECTION 6.06. Tax Returns 36
SECTION 6.07. Tax Matters Partner 37
SECTION 6.08. Duties of Tax Matters Partner 37
SECTION 6.09. Survival of Provisions 39
SECTION 6.10. Section 754 Election 39
SECTION 6.11. Qualified Income Offset,
Minimum Gain Chargeback 39
SECTION 6.12. Tax Treatment of Designated Sublease
Agreements 39
SECTION 6.13. Tax Treatment of Reimbursed Liability
Payments 40
SECTION 6.14. Tax Treatment of Disproportionate
Payments 40
SECTION 6.15. Allocation of Income, Gains, Losses
and Other Items from LOOP LLC and
LOCAP, Inc 41
SECTION 6.16. Allocation of Income, Gain, Loss,
Deduction and Credits Attributable
to Stock-Based Compensation 41
ARTICLE VII
Books and Records
SECTION 7.01. Books and Records; Examination 42
SECTION 7.02. Financial Statements and Reports 42
SECTION 7.03. Notice of Affiliate Transactions;
Annual List 44
ARTICLE VIII
Management of the Company
SECTION 8.01. Managing Members 45
SECTION 8.02. Board of Managers 45
SECTION 8.03. Responsibility of the Board of
Managers 46
SECTION 8.04. Meetings 46
SECTION 8.05. Compensation 48
SECTION 8.06. Quorum 48
SECTION 8.07. Voting 49
SECTION 8.08. Matters Constituting Super Majority
Decisions 50
SECTION 8.09. Annual Capital Budget 56
SECTION 8.10. Business Plan 56
SECTION 8.11. Requirements as to Affiliate
Transactions 57
SECTION 8.12. Review of Certain Affiliate Transactions
Related to Crude Oil Purchases
and Shared Services 59
SECTION 8.13. Adjustable Amounts 61
SECTION 8.14. Company Leverage Policy 62
SECTION 8.15. Company's Investment Guidelines 62
SECTION 8.16. Requirements as to Operating Leases 63
SECTION 8.17. Limitations on Actions Relating to the
Calculation of Distributable Cash 63
SECTION 8.18. Reliance by Third Parties 63
SECTION 8.19. Integration of Retail Operations 63
ARTICLE IX
Officers
SECTION 9.01. Election, Appointment and Term
of Office 65
SECTION 9.02. Resignation, Removal and Vacancies 66
SECTION 9.03. Duties and Functions of Executive
Officers 67
ARTICLE X
Transfers of Membership Interests
SECTION 10.01. Restrictions on Transfers 67
SECTION 10.02. Conditions for Admission 71
SECTION 10.03. Allocations and Distributions 72
SECTION 10.04. Right of First Refusal 72
SECTION 10.05. Restriction on Resignation
or Withdrawal 73
ARTICLE XI
Liability, Exculpation and Indemnification
SECTION 11.01. Liability 73
SECTION 11.02. Exculpation 73
SECTION 11.03. Indemnification 74
ARTICLE XII
Fiduciary Duties
SECTION 12.01. Duties and Liabilities
of Covered Persons 75
SECTION 12.02. Fiduciary Duties of Members
of the Company and Members
of the Board of Managers 76
ARTICLE XIII
Dispute Resolution Procedures
SECTION 13.01. General 76
SECTION 13.02. Dispute Notice and Response 76
SECTION 13.03. Negotiation Between Senior
Managers 77
SECTION 13.04. Negotiation Between Chief Executive
Officer and President 77
SECTION 13.05. Right to Equitable Relief
Preserved 78
ARTICLE XIV
Rights and Remedies with Respect to Monetary Disputes
SECTION 14.01. Ability of Company to Borrow to Fund
Disputed Monetary Amounts 79
SECTION 14.02. Interim Payment of Disputed Monetary
Amount 80
SECTION 14.03. Liquidated Damages 80
SECTION 14.04. Right of Set-Off 82
SECTION 14.05. Security Interest 83
ARTICLE XV
Dissolution and Termination
SECTION 15.01. Dissolution 84
SECTION 15.02. Winding Up of Company 84
SECTION 15.03. Distribution of Property 85
SECTION 15.04. Time Limitation 85
SECTION 15.05. Termination of Company 85
ARTICLE XVI
Miscellaneous
SECTION 16.01. Notices 85
SECTION 16.02. Merger and Entire Agreement 86
SECTION 16.03. Assignment 87
SECTION 16.04. Parties in Interest 87
SECTION 16.05. Counterparts 87
SECTION 16.06. Amendment; Waiver 87
SECTION 16.07. Severability 87
SECTION 16.08. GOVERNING LAW 88
SECTION 16.09. Enforcement 88
SECTION 16.10. Creditors 89
SECTION 16.11. No Xxxx for Accounting 89
SECTION 16.12. Waiver of Partition 89
SECTION 16.13. Table of Contents, Headings and
Titles 89
SECTION 16.14. Use of Certain Terms;
Rules of Construction 89
SECTION 16.15. Holidays 89
SECTION 16.16. Third Parties 89
SECTION 16.17. Liability for Affiliates 89
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
_______________________________
1NOTE: THIS DOCUMENT (VERSION 5) HAS BEEN MARKED FOR
AUTOMATIC TABLE OF CONTENTS GENERATION
