EXHIBIT 2.3
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ASSIGNMENT AND ASSUMPTION AGREEMENT
(VIOC CENTERS)
Dated as of March 18, 2004,
Between
ASHLAND INC.
And
ATB HOLDINGS INC.
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TABLE OF CONTENTS
Page
ARTICLE I
VIOC Assignment and Assumption
SECTION 1.01. VIOC Assignment and Assumption...................1
SECTION 1.02. Transferred Assets and Excluded Assets...........1
SECTION 1.03. Assumption of Certain Liabilities................6
SECTION 1.04. Consents of Third Parties.......................10
SECTION 1.05. Tax Matters.....................................12
ARTICLE II
The Closing
SECTION 2.01. Closing Date....................................12
SECTION 2.02. Transactions To Be Effected at the Closing......12
ARTICLE III
Representations and Warranties of Ashland
SECTION 3.01. Financial Statements............................13
SECTION 3.02. Assets Other than Real Property Interests.......13
SECTION 3.03. Real Property...................................13
SECTION 3.04. [Intentionally Omitted].........................14
SECTION 3.05. Contracts.......................................14
SECTION 3.06. Permits.........................................17
SECTION 3.07. Condition of Transferred Assets.................17
SECTION 3.08. Claims..........................................18
SECTION 3.09. Benefit Plans...................................18
SECTION 3.10. Absence of Changes or Events....................19
SECTION 3.11. Compliance with Laws............................19
SECTION 3.12. Employee and Labor Matters......................21
SECTION 3.13. Sufficiency of Transferred Assets...............21
SECTION 3.14. Inventory.......................................22
ARTICLE IV
Covenants
SECTION 4.01. Covenants of Ashland Relating to Conduct of
VIOC Centers..................................22
SECTION 4.02. Refunds and Remittances.........................24
SECTION 4.03. Employee Matters................................25
SECTION 4.04. Post-Closing Information........................29
SECTION 4.05. Records.........................................29
SECTION 4.06. [Intentionally Omitted].........................29
SECTION 4.07. Bulk Transfer Laws..............................29
SECTION 4.08. Supplies........................................29
SECTION 4.09. Mail............................................30
SECTION 4.10. Further Assurances..............................30
SECTION 4.11. Review of Contracts.............................30
SECTION 4.12. List of Permits.................................31
ARTICLE V
Termination
SECTION 5.01. Termination.....................................32
SECTION 5.02. Effect of Termination...........................32
ARTICLE VI
General Provisions
SECTION 6.01. Interpretation; VIOC Centers Disclosure Letter;
Certain Definitions...........................32
SECTION 6.02. Counterparts....................................35
SECTION 6.03. Severability....................................35
SECTION 6.04. Governing Law...................................35
SECTION 6.05. No Third-Party Beneficiaries....................35
SECTION 6.06. Amendment.......................................35
Exhibit A-1 Form of Deed (VIOC Centers) (Ohio)
Exhibit A-2 Form of Deed (VIOC Centers) (Michigan)
Exhibit B Form of Assignment and Assumption (VIOC Centers)
Exhibit C Form of Blanket License Agreement
ii
INDEX OF DEFINED TERMS
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Term Section
Active VIOC Centers Employee...................................... 4.03(a)
Agreement......................................................... Preamble
Ashland........................................................... Preamble
Ashland Insurance Policies........................................ 4.01(c)
Ashland Joint Contracts........................................... 4.11
Assigned Contracts................................................ 1.02(a)(v)
Assigned Permits.................................................. 1.02(a)(iv)
Assumed Liabilities............................................... 1.03(a)
Balance Sheet..................................................... 3.01
Blanket License Agreement......................................... 6.01(b)
Claim............................................................. 1.03(b)(iv)
COBRA............................................................. 4.03(b)(ii)
Contracts......................................................... 1.02(a)(v)
Employee Benefits Liability....................................... 3.09(b)
Environmental Claim............................................... 3.11(b)
Environmental Laws................................................ 3.11(b)
Environmental Liability........................................... 6.01(b)
Environmental Tests............................................... 1.03(b)(ix)
ERISA............................................................. 3.09(a)
Excluded Assets................................................... 1.02(b)
Financial Statements.............................................. 3.01
Hazardous Materials............................................... 3.11(b)
HoldCo............................................................ Preamble
HoldCo Retirement Plan............................................ 4.03(d)
HoldCo VIOC Welfare Plans......................................... 4.03(b)(i)
Intellectual Property............................................. 6.01(b)
Inventory......................................................... 1.02(a)(ii)
Leased Property................................................... 3.03(a)
Master Agreement.................................................. Recitals
Owned Property.................................................... 3.03(a)
Permits........................................................... 4.12
Permitted Liens................................................... 6.01(b)
Premises.......................................................... 1.02(a)(i)
Receivables.......................................................1.02(b)(xvi)
Records...........................................................1.02(a)(vii)
Release........................................................... 3.11(b)
Retained Liabilities.............................................. 1.03(b)
Rev. Proc. 96-60.................................................. 4.03(f)
Technology........................................................1.02(b)(xii)
Transferred Assets................................................ 1.02(a)
Transferred VIOC Centers Employee................................. 4.03(a)
VIOC Assignment and Assumption.................................... 1.01
VIOC Benefit Plans................................................ 3.09(a)
VIOC Centers...................................................... 6.01(b)
Term Section
VIOC Centers Disclosure Letter.................................... Article III
VIOC Centers Employee............................................. 3.09(a)
VIOC Centers Material Adverse Effect.............................. 6.01(b)
VIOC Pension Plans................................................ 3.09(a)
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ASSIGNMENT AND ASSUMPTION AGREEMENT (VIOC CENTERS)
(this "Agreement") dated as of March 18, 2004, between
Ashland Inc., a Kentucky corporation ("Ashland"), and ATB
Holdings Inc., a Delaware corporation and a wholly owned
subsidiary of Ashland ("HoldCo").
WHEREAS, simultaneously with the execution and delivery of this
Agreement, the parties hereto and certain other parties are entering into a
Master Agreement (the "Master Agreement"; terms used but not otherwise defined
herein have the meanings assigned to them in the Master Agreement); and
WHEREAS, in accordance with the terms and conditions of the Master
Agreement, Ashland wishes to transfer to HoldCo, and HoldCo wishes to acquire
and assume, certain assets and liabilities of the VIOC Centers (as defined in
Section 6.01(b)) pursuant to the terms and conditions of this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
VIOC Assignment and Assumption
SECTION 1.01. VIOC Assignment and Assumption. On the terms and
subject to the conditions of this Agreement and the Master Agreement, at the
Closing, Ashland shall contribute, assign, transfer, convey and deliver to
HoldCo, and HoldCo shall acquire from Ashland, all the right, title and
interest as of the Closing of Ashland in, to and under the Transferred Assets
(as defined in Section 1.02(a)), and HoldCo shall assume the Assumed
Liabilities (as defined in Section 1.03(a)). The contribution, assignment,
transfer, conveyance and delivery of the Transferred Assets and the assumption
of the Assumed Liabilities and the other Transactions contemplated by this
Agreement are referred to in this Agreement as the "VIOC Assignment and
Assumption".
SECTION 1.02. Transferred Assets and Excluded Assets. (a) The term
"Transferred Assets" means all of
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Ashland's right, title and interest in, to and under the following assets,
other than the Excluded Assets (as defined in Section 1.02(b)):
(i) all real property, leaseholds and other interests
(including interests in surface rights and mineral interests) in the
real property listed in Section 3.03 of the VIOC Centers Disclosure
Letter (as defined in Article III), in each case together with
Ashland's right, title and interest in all buildings, structures,
improvements, paved parking lots and fixtures thereon and all other
appurtenances thereto (collectively, the "Premises");
(ii) all salable lube oils, greases, automotive fluids,
automotive accessories (including filters), supplies, parts, spare
parts and other inventories of Ashland that on the Closing Date are
located on or are in transit to the Premises (collectively, the
"Inventory");
(iii) all other tangible personal property and interests
therein, including all machinery, equipment, tools, appliances,
telephones, telecommunications equipment, copy machines, fax
machines, computers, hardware that accesses point-of-sale systems,
cash registers, implements, furniture, furnishings and fixtures, of
Ashland that on the Closing Date are located on or are in transit to
the Premises (other than signs and other identification items and
materials, including all exterior pylon, monument, ground and
building signs and all interior signs, banners and reading boards,
in each case that customarily are owned by Ashland (and not by the
franchisee) at its franchised Valvoline Instant Oil Change (VIOC)
quick-lube service centers), in each case together with any rights
or claims of Ashland arising out of the breach of any express or
implied warranty by the manufacturers or sellers of such assets;
(iv) to the extent that such Permits (as defined in Section
4.12) are transferable, all Permits of Ashland that are used, held
for use or intended to be used exclusively in the operation or
conduct of the VIOC Centers (the "Assigned Permits");
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(v) (A) all contracts, leases, subleases, licenses, indentures,
agreements, commitments and all other legally binding arrangements
("Contracts"), whether oral or written, to which Ashland is a party
or by which Ashland is bound as of the date of this Agreement that
are (1) listed in Sections 3.03 or 3.05 of the VIOC Centers
Disclosure Letter or (2) of the type specified in any of clauses (i)
through (xi) of Section 3.05 but, as a result of the application of
any applicable thresholds set forth therein, are not required to be
listed in Section 3.05 of the VIOC Centers Disclosure Letter, (B)
all other written Contracts (including purchase orders and sales
orders) to which Ashland is a party or by which Ashland is bound, in
the case of this clause (B) that are entered into after the date of
this Agreement, but not in violation or breach of any provision of
this Agreement, and that exclusively relate to, or that arise
exclusively out of, the operation or conduct of the VIOC Centers in
the ordinary course of business and (C) all Contracts to which
Ashland is a party or by which Ashland is bound, in the case of this
clause (C) that are entered into after the date of this Agreement
and that are to be treated as Assigned Contracts pursuant to Section
4.11 (the "Assigned Contracts");
(vi) all credits, prepaid expenses, deferred charges, advance
payments, security deposits and prepaid items of Ashland, in each
case to the extent used, held for use or intended to be used in, or
to the extent arising out of, the operation or conduct of the VIOC
Centers;
(vii) all books of account, ledgers, general, financial,
accounting and personnel records, files, invoices, suppliers' lists,
billing records, sales and promotional literature, supplier
correspondence, sales records, credit data and other information
relating to present or past customers, cost and pricing information,
equipment maintenance data, purchasing records and information,
business plans, payroll and personnel records, purchase orders,
sales forms, artwork, photography, log books, environmental, health
and safety schedules, reports, protocols and findings pertaining to
the VIOC Centers or the Transferred Assets (including records of
spills or other releases
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or discharges into the atmosphere, records of environmental, safety
or health reports to or from Governmental Entities regarding the
VIOC Centers or the Transferred Assets (including notices of
violation), and correspondence, notices and orders of an
environmental, safety or health nature regarding the VIOC Centers or
the Transferred Assets) and other similar property, rights and
information of Ashland, in each case that are used, held for use or
intended to be used exclusively in, or that arise exclusively out
of, the operation or conduct of the VIOC Centers (the "Records");
provided, however, that the Records shall not include any property,
rights or information of Ashland that will be licensed to Merger Sub
pursuant to the Blanket License Agreement (as defined in Section
6.01(b));
(viii) all goodwill and going concern value of Ashland
generated exclusively by, or associated exclusively with, the VIOC
Centers; and
(ix) all rights, claims and credits of Ashland to the extent
relating to any other Transferred Asset or any Assumed Liability
(other than any such items arising under insurance policies),
including any such items arising under any guarantee, warranty,
indemnity or similar right in favor of Ashland in respect of any
other Transferred Asset or any Assumed Liability.
(b) The term "Excluded Assets" means:
(i) all assets identified in Section 1.02(b) of the VIOC
Centers Disclosure Letter;
(ii) all cash and cash equivalents of Ashland;
(iii) all rights, claims and credits of Ashland to the extent
relating to any other Excluded Asset or any Retained Liability (as
defined in Section 1.03(b)), including any such items arising under
insurance policies and any guarantee, warranty, indemnity or similar
right in favor of Ashland in respect of any other Excluded Asset or
any Retained Liability;
(iv) all collective bargaining agreements and other Contracts
with any labor union that cover one or more Active VIOC Centers
Employees (as defined in Section 4.03(a)) and all Contracts relating
to
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compensation, bonus or severance to which any Active VIOC Centers
Employee or any person hired to become a VIOC Centers Employee (as
defined in Section 3.09(a)) is a party;
(v) all the assets of the VIOC Pension Plans (as defined in
Section 3.09(a)) and all the assets of Ashland and its affiliates
under any other VIOC Benefit Plan (as defined in Section 3.09(a));
(vi) all rights of Ashland under the Transaction Agreements and
the Ancillary Agreements;
(vii) all assets relating to corporate-level services of the
type currently provided to the VIOC Centers by Ashland or any of its
affiliates;
(viii) any shares of capital stock of any affiliate of Ashland;
(ix) the names and marks "Ashland", "V Valvoline Instant Oil
Change(R) and design", "Valvoline(R)", "V(R)", "Valvoline Instant
Oil Change(R)", "Instant Oil(R)", "MVP(R) and Design" and "MVP
Maximum Vehicle Performance(R) and Design" (in any style or design),
and any other name or xxxx either derived from or including any
portion of the foregoing or otherwise used in the operation or
conduct of the VIOC Centers;
(x) all records of Ashland prepared in connection with the
Transactions;
(xi) all financial and tax records relating to the VIOC Centers
to the extent they form part of Ashland's general ledger;
(xii) all trade secrets, confidential information and
inventions, and all proprietary formulae, processes, procedures,
research records, records of inventions, test information, operating
systems, operating manuals, market surveys and marketing know-how of
Ashland that are used, held for use or intended to be used in the
operation or conduct of the VIOC Centers, including the System (as
defined in the form of License Agreement attached to the Blanket
License Agreement and incorporated by reference therein) (the
"Technology");
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(xiii) all Intellectual Property (as defined in Section
6.01(b)) of Ashland that is used, held for use or intended to be
used in the operation or conduct of the VIOC Centers;
(xiv) all signs and other identification items and materials,
including exterior pylon, monument, ground and building signs and
all interior signs, banners and reading boards, in each case that
customarily are owned by Ashland (and not by the franchisee) at its
franchised Valvoline Instant Oil Change (VIOC) quick-lube service
centers;
(xv) prepaid insurance premiums; and
(xvi) all accounts receivable of Ashland as of the close of
business on the Closing Date that arise out of the operation or
conduct of the VIOC Centers (the "Receivables").
SECTION 1.03. Assumption of Certain Liabilities. (a) Upon the terms
and subject to the conditions of this Agreement, HoldCo shall assume,
effective as of the Closing, and from and after the Closing, HoldCo shall pay,
perform and discharge when due, and indemnify Ashland and its affiliates and
each of their respective Representatives against, and defend and hold them
harmless from, all of the following liabilities, obligations and commitments
of any nature, whether known or unknown, express or implied, primary or
secondary, direct or indirect, liquidated, absolute, accrued, contingent or
otherwise and whether due or to become due, of Ashland (collectively, the
"Assumed Liabilities"), other than any Retained Liabilities:
(i) all liabilities, obligations and commitments of Ashland
under the Assigned Contracts to the extent such liabilities,
obligations and commitments relate to the period from and after the
Closing;
(ii) all liabilities, obligations and commitments of Ashland to
the extent expressly assumed by HoldCo in accordance with Section
4.03;
(iii) all Environmental Liabilities (as defined in Section
6.01(b)) of Ashland to the extent they arise out of both (A) the
operation of any of the Transferred Assets or the operation or
conduct of the VIOC Centers and (B) either (x) events occurring or
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circumstances or conditions arising from and after the Closing, or
(y) events occurring or circumstances or conditions arising prior to
the Closing, but only, in the case of this clause (B)(y), to the
extent set forth in the table below (provided, however, that to the
extent the same Environmental Liability is described in both clauses
(x) and (y) of this Section 1.03(a)(iv)(B), such Environmental
Liability will be apportioned between HoldCo and Ashland in
proportion to the extent to which the activities of each party
contributed to the cause of the Environmental Liability, taking into
account all pertinent factors, including the length of ownership by
HoldCo and Ashland of the relevant property during the time of the
event or occurrence, or the development of the circumstance or
condition, giving rise to the Environmental Liability and the use
made of such property by the parties hereto):
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If written notice (in Percentage of Environmental
reasonable detail) of such Liability described in clause
Environmental Liability is (B)(y) above that will be an
first received by Ashland Assumed Liability:
during the twelve-month
period ending on the
following anniversary of the
Closing Date (provided,
however, that with respect to
any Environmental Liability
arising from any matter
referred to in Section 3.11(b)
of the VIOC Centers Disclosure
Letter, Ashland shall be
deemed to have received
written notice (in reasonable
detail) of such Environmental
Liability prior to the first
anniversary of the Closing Date):
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First through Fifth 0%
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Sixth 20%
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Seventh 40%
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Eighth 60%
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Ninth 80%
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If such notice is not 100%
received by Ashland on or
prior to the ninth
anniversary of the Closing Date
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; and
(iv) all other liabilities, obligations and commitments of
Ashland to the extent such liabilities, obligations and commitments
relate to or arise out of the operation of any of the Transferred
Assets or the operation or conduct of the VIOC Centers, in each case
from and after the Closing.
(b) Notwithstanding Section 1.03(a), or any other provision of this
Agreement, HoldCo shall not assume, and Ashland shall pay, perform and
discharge when due, and indemnify HoldCo and its affiliates and each of their
respective Representatives against, and defend and hold them harmless from,
any liability, obligation or commitment of Ashland or the VIOC Centers of any
nature, whether known or unknown, express or implied, primary or secondary,
direct or indirect, liquidated, absolute, accrued, contingent or otherwise,
and whether due or to become due, except the Assumed Liabilities
(collectively, the "Retained Liabilities"). Without limiting the generality of
the foregoing, the Retained Liabilities include:
(i) any liability, obligation or commitment of Ashland to the extent
arising out of the operation or conduct by Ashland or any of its
affiliates of any business other than the VIOC Centers;
(ii) all accounts payable of Ashland to the extent arising out of
the operation or conduct of the VIOC Centers prior to the Closing;
(iii) any liability, obligation or commitment of Ashland (A) to the
extent arising out of any actual or alleged breach by Ashland of, or
nonperformance by Ashland under, any Contract (including any Assigned
Contract) prior to the Closing or (B) under any Assigned Contract to the
extent such liability,
9
obligation or commitment relates to the period prior to the Closing;
(iv) any liability, obligation or commitment of Ashland arising out
of any warranty claim, suit, action, proceeding, investigation,
governmental action or other cause of action or claim associated with or
relating to the VIOC Centers or the Transferred Assets (a "Claim") to the
extent arising out of actions, omissions or conditions occurring or
existing on or prior to the Closing Date;
(v) any liability, obligation or commitment of Ashland to the extent
such liability, obligation or commitment relates to, or arises out of,
any Excluded Asset, or arises out of the ownership or operation by
Ashland of any of the Excluded Assets;
(vi) except as otherwise expressly provided in Section 4.03, any
liability, obligation or commitment of Ashland arising under any VIOC
Benefit Plan;
(vii) any liability, obligation or commitment of Ashland to any of
its divisions, subsidiaries or affiliates;
(viii) any liability, obligation or commitment of Ashland or any of
its affiliates under any of the Transaction Agreements or any of the
Ancillary Agreements; and
(ix) any Environmental Liability arising out of events occurring or
circumstances or conditions arising prior to the Closing except for
Environmental Liabilities that are Assumed Liabilities pursuant to
Section 1.03(a)(iii); provided, however, an Environmental Liability that
otherwise would be considered a Retained Liability under this Section
1.03(b)(ix) shall be an Assumed Liability and shall not be a Retained
Liability if the event, circumstance or condition that gave rise to such
Environmental Liability (A) is the result of a change in use after the
Closing Date of any of the Premises to a use other than a commercial use
of such Premises similar to its current use, or (B) was discovered as a
result of a Phase II or other intrusive sampling, testing or
investigation conducted after the Closing Date (collectively,
"Environmental Tests") except for
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Environmental Tests undertaken (x) to respond to, investigate, or
otherwise remediate environmental conditions or contamination that are on
the Closing Date in violation of the standards imposed by applicable
Environmental Laws (as defined in Section 3.11(b)), (y) as required by
Environmental Laws, pursuant to the terms of any lease with respect to
any of the Premises or in response to an inquiry, request, claim or
demand by a Governmental Entity or as a reasonable response to any claim
or demand by any other person that is not an affiliate of HoldCo or (z)
in connection with a condition first discovered as a result of
construction activities, excluding construction activities relating to
the installation of underground storage tanks, commencing after the
Closing Date at, on or beneath any of the Premises, so long as such
construction activities are undertaken in connection with a commercial
use of such Premises similar to its current use.
(c) HoldCo shall acquire the Transferred Assets free and clear of
all liabilities, obligations and commitments of Ashland, other than the
Assumed Liabilities, and free and clear of all Liens, other than Permitted
Liens (as defined in Section 6.01(b)) and other than any Lien pursuant to the
HoldCo Borrowing arrangements or arising from actions or inactions of any of
the Marathon Parties or their affiliates (and not of any of the Ashland
Parties or their affiliates).
SECTION 1.04 Consents of Third Parties. (a) Notwithstanding anything
to the contrary in this Agreement, this Agreement shall not constitute an
agreement to assign any asset or any claim or right or any benefit arising
under or resulting from such asset, or to assume any liability, obligation or
commitment, if an attempted assignment or assumption thereof, without the
Consent of a third party, would constitute a breach or other contravention of
the rights of such third party, would be ineffective with respect to any party
to an agreement concerning such asset, liability, obligation or commitment, or
would in any way adversely affect the rights of Ashland or, upon transfer,
HoldCo with respect to such asset, liability, obligation or commitment. If any
transfer or assignment by Ashland, or any assumption by HoldCo, of any
interest in, or liability, obligation or commitment under, any asset requires
the Consent of a third party, then such
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transfer or assignment or assumption shall be made subject to such Consent
being obtained. Except as set forth in Section 1.04(b), Ashland shall not have
any liability or obligation under this Agreement arising out of or relating to
the failure to obtain any such Consent that may be required in connection with
the Transactions contemplated by this Agreement or because of any
circumstances resulting therefrom, in each case so long as Ashland shall have
complied with its obligation under Section 9.11 of the Master Agreement to use
its reasonable best efforts to obtain such Consents. Subject to Section
1.04(b), no representation, warranty or covenant of Ashland herein shall be
breached or deemed breached, and no condition shall be deemed not satisfied,
as a result of (i) the failure to obtain any such Consent, (ii) any
circumstances resulting therefrom or (iii) any Claim or investigation
commenced or threatened by or on behalf of any person arising out of or
relating to the failure to obtain any such Consent or any circumstances
resulting therefrom, in each case so long as Ashland shall have complied with
its obligation under Section 9.11 of the Master Agreement to use its
reasonable best efforts to obtain such Consents.
(b) If any such Consent is not obtained prior to the Closing, the
Closing shall nonetheless take place on the terms set forth herein and,
thereafter, Ashland and HoldCo shall cooperate (at their own expense) in any
lawful and reasonable arrangement proposed by HoldCo under which HoldCo shall
obtain the economic claims, rights and benefits under the asset, claim or
right with respect to which the Consent has not been obtained in accordance
with this Agreement. Such reasonable arrangement may include (i) the
subcontracting, sublicensing or subleasing to HoldCo of any and all rights of
Ashland against the other party to such third-party agreement arising out of a
breach or cancellation thereof by the other party and (ii) the enforcement by
Ashland of such rights. With respect to the Assigned Contracts listed in
Section 1.04(b) of the VIOC Centers Disclosure Letter, if the provision of
such economic claims, rights and benefits to HoldCo shall violate the rights
of such other party, Ashland shall otherwise compensate HoldCo for the
reasonable value, if any, of such economic claims, rights and benefits, so
long as HoldCo shall have complied with its obligations under the first
sentence of this Section 1.04(b).
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SECTION 1.05. Tax Matters. Notwithstanding anything to the contrary
in this Agreement, the rights, responsibilities and obligations of the parties
with respect to any Taxes or Tax Items (in each case as defined in the Tax
Matters Agreement) related to or arising from the ownership or operation of
the VIOC Centers shall be determined pursuant to the Tax Matters Agreement.
ARTICLE II
The Closing
SECTION 2.01. Closing Date. The closing of the VIOC Assignment and
Assumption will occur at the Closing, subject only to the satisfaction or
waiver of the conditions to Closing in accordance with the terms of the Master
Agreement.
SECTION 2.02. Transactions To Be Effected at the Closing. At the
Closing, in accordance with Section 1.01(a) of the Master Agreement:
(a) Ashland shall deliver to HoldCo an executed deed (in recordable
form) with respect to each of the Owned Properties (as defined in Section
3.03(a)) located in Ohio, substantially in the form attached hereto as
Exhibit A-1, and an executed deed (in recordable form) with respect to
each of the Owned Properties located in Michigan, substantially in the
form attached hereto as Exhibit A-2;
(b) Ashland and HoldCo shall enter into an assignment and assumption
document, in the form attached hereto as Exhibit B, providing for the
assignment of the Transferred Assets and the assumption of the Assumed
Liabilities; and
(c) The parties thereto shall enter into the Blanket License
Agreement.
ARTICLE III
Representations and Warranties of Ashland
Ashland hereby represents and warrants to HoldCo that, as of the
date of this Agreement and as of the Closing Date as if made on the Closing
Date (except to the extent any such representations and warranties expressly
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relate to an earlier date, in which case as of such earlier date), except as
set forth in the letter referencing this Agreement, dated as of the date of
this Agreement, from Ashland to HoldCo (the "VIOC Centers Disclosure Letter"):
SECTION 3.01. Financial Statements. Section 3.01 of the VIOC Centers
Disclosure Letter sets forth the unaudited combined statement of tangible
assets to be sold as of September 30, 2003 (the "Balance Sheet"), the
unaudited combined statement of tangible assets to be sold as of December 31,
2003, the unaudited combined statement of income before taxes for the year
ended September 30, 2003 and the unaudited combined statement of income before
taxes for the three months ended December 31, 2003, together with the notes to
such financial statements, in each case of the VIOC Centers (such financial
statements and the notes thereto, the "Financial Statements"). The Financial
Statements present fairly, in all material respects, the tangible assets to be
sold and income before taxes of the VIOC Centers as of the dates and for the
periods indicated, in conformity with GAAP (subject, in the case of the
interim financial statements as of and for the period ended December 31, 2003,
to normal, recurring year-end adjustments).
SECTION 3.02. Assets Other than Real Property Interests. Ashland
has, or as of the Closing Date will have, and at the Closing Ashland will
transfer (subject to the consummation of the Closing on the Closing Date in
accordance with the terms of Article I of the Master Agreement) to HoldCo,
good and valid title to all Transferred Assets in each case free and clear of
all Liens (other than any Lien pursuant to the HoldCo Borrowing arrangements
or arising from actions or inactions of any of the Marathon Parties or their
affiliates (and not of any of the Ashland Parties or their affiliates)),
except Permitted Liens. This Section 3.02 does not relate to real property or
interests in real property, such items being the subject of Section 3.03.
SECTION 3.03. Real Property. (a) Section 3.03 of the VIOC Centers
Disclosure Letter sets forth a complete list of all real property and
interests in real property owned in fee by Ashland and any of the other
Ashland Parties and used, held for use or intended to be used exclusively in
the operation or conduct of the VIOC Centers, other than any such property or
interest constituting an Excluded Asset (individually, an
14
"Owned Property"). Section 3.03 of the VIOC Centers Disclosure Letter sets
forth a complete list of all real property and interests in real property
leased by Ashland and used, held for use or intended to be used exclusively in
the operation or conduct of the VIOC Centers, other than any such property or
interest constituting an Excluded Asset (individually, a "Leased Property").
(b) Ashland has, or as of the Closing Date will have, and at the
Closing Ashland will transfer (subject to the consummation of the Closing on
the Closing Date in accordance with the terms of Article I of the Master
Agreement) to HoldCo, good and marketable fee title to all Owned Property and
good and valid title to the leasehold estates in all Leased Property, in each
case free and clear of all Liens (other than any Lien pursuant to the HoldCo
Borrowing arrangements or arising from actions or inactions of any of the
Marathon Parties or their affiliates (and not of any of the Ashland Parties or
their affiliates)), except Permitted Liens.
SECTION 3.04. [Intentionally Omitted].
SECTION 3.05. Contracts. (a) Except for Contracts that will not be
binding on the Transferred Assets or any of the VIOC Centers after the
Closing, Ashland is not a party to or bound by any Contract that is used, held
for use or intended to be used exclusively in, or that arises exclusively out
of, the operation or conduct of the VIOC Centers (other than (x) the
Transaction Agreements and the Ancillary Agreements and (y) Assigned Contracts
entered into after the date of this Agreement in the ordinary course of
business and not otherwise in violation of this Agreement) that is:
(i) a covenant not to compete (other than pursuant to the radius
restrictions contained in the agreements listed in Section 3.05(a)(i) of
the VIOC Centers Disclosure Letter) that limits the conduct of business
at any of the VIOC Centers as presently conducted;
(ii) a Contract with (A) Ashland or any affiliate of Ashland or (B)
any officer, director or employee of Ashland or any of its affiliates, in
each case other than Contracts that will be terminated as of the Closing;
15
(iii) a lease, sublease or similar Contract with any person under
which Ashland is a lessor or sublessor of, or makes available for use to
any person, all or any portion of the Premises in any such case that has
an aggregate future receivable in excess of $50,000 and is not terminable
by Ashland by notice of not more than 30 days without payment or penalty
of any kind;
(iv) a lease, sublease or similar Contract with any person under
which (A) Ashland is lessee of, or holds or uses, any machinery,
equipment, vehicle or other tangible personal property owned by any
person or (B) Ashland is a lessor or sublessor of, or makes available for
use by any person, any tangible personal property owned or leased by
Ashland, in any such case that has an aggregate future liability or
receivable, as the case may be, in excess of $100,000 and is not
terminable by Ashland by notice of not more than 30 days without payment
or penalty of any kind;
(v) (A) a continuing Contract for the future purchase of materials,
supplies or equipment (other than purchase orders for inventory in the
ordinary course of business consistent with past practice), (B) a
management, service, consulting or other similar Contract or (C) an
advertising agreement or arrangement, in any such case that has an
aggregate future liability to any person in excess of $100,000 and is not
terminable by Ashland by notice of not more than 30 days without payment
or penalty of any kind;
(vi) a Contract (including a sales order) involving the obligation
of Ashland to deliver products or services for payment of more than
$100,000 or extending for a term more than 90 days from the date of this
Agreement (unless terminable without payment or penalty of any kind upon
no more than 30 days' notice);
(vii) (A) a Contract under which Ashland has borrowed any money
from, or issued any note, bond, debenture or other evidence of
indebtedness to, any person or (B) any other note, bond, debenture,
letter of credit, financial assurance requirement or other evidence of
indebtedness issued to any person;
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(viii) a Contract (including any so-called take-or-pay or keepwell
agreement) under which (A) any person has directly or indirectly
guaranteed indebtedness, liabilities or obligations of Ashland or (B)
Ashland has directly or indirectly guaranteed indebtedness, liabilities
or obligations of any other person (in each case other than endorsements
for the purpose of collection in the ordinary course of business);
(ix) a Contract under which Ashland has, directly or indirectly,
made any advance, loan, extension of credit or capital contribution to,
or other investment in, any person (other than extensions of trade credit
in the ordinary course of business of the VIOC Centers), in any such case
that, individually, is in excess of $100,000;
(x) a Contract granting a Lien (other than Permitted Liens) upon the
Premises; or
(xi) any other Contract that has an aggregate future liability to
any person (other than Ashland) in excess of $100,000 and is not
terminable by Ashland by notice of not more than 30 days without payment
or penalty of any kind (other than purchase orders and sales orders).
As of the date of this Agreement, neither the Transferred Assets nor the VIOC
Centers are bound by or subject to any Contract of any of the types referred
to in clauses (i) through (xi) of this Section 3.05(a), applying the
thresholds set forth therein, that will be binding on any of the Transferred
Assets or the VIOC Centers after the Closing Date.
(b) All Contracts listed in the VIOC Centers Disclosure Letter are
valid, binding and in full force and effect and are enforceable by Ashland in
accordance with their terms subject, as to enforcement, to applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws affecting
creditors' rights generally and to equitable principles of general
applicability, except for such failures to be valid, binding, in full force
and effect or enforceable that have not had and would not reasonably be
expected to have a VIOC Centers Material Adverse Effect (as defined in Section
6.01(b)). Ashland has performed all obligations required to be performed by
17
it to date under the Assigned Contracts, and it is not in breach or default
thereunder and, to the knowledge of Ashland, no other party to any Assigned
Contract is in breach or default thereunder, in each case except for such
noncompliance, breaches and defaults that have not had and would not
reasonably be expected to have a VIOC Centers Material Adverse Effect. Ashland
has not received any notice of the intention of any party to terminate any
Assigned Contract listed in any section of the VIOC Centers Disclosure Letter.
(c) Section 3.05(c) of the VIOC Centers Disclosure Letter sets forth
each Assigned Contract with respect to which the Consent of the other party or
parties thereto must be obtained by virtue of the execution and delivery of
this Agreement or the consummation of the VIOC Assignment and Assumption to
avoid the invalidity of the transfer of such Contract, the termination
thereof, a breach, violation or default thereunder or any other change or
modification to the terms thereof, other than any such invalidity,
termination, breach, violation, default, change or modification that would not
reasonably be expected to have a VIOC Centers Material Adverse Effect.
SECTION 3.06. Permits. All Assigned Permits are validly held by
Ashland, and Ashland has complied with the terms and conditions thereof,
except for any such invalidity or non-compliance that would not reasonably be
expected to have a VIOC Centers Material Adverse Effect. Ashland has not
received written notice of any Claims relating to the revocation or
modification of any Assigned Permits except for any such Claims that would not
reasonably be expected to have a VIOC Centers Material Adverse Effect. None of
the Assigned Permits is subject to suspension, modification, revocation or
nonrenewal as a result of the execution and delivery of this Agreement or the
consummation of the VIOC Assignment and Assumption, except for any such
suspensions, modifications, revocations or nonrenewals that would not
reasonably be expected to have a VIOC Centers Material Adverse Effect. This
Section 3.06 does not relate to environmental matters, such items being the
subject of Section 3.11(b).
SECTION 3.07. Condition of Transferred Assets. The Transferred
Assets are in good operating condition and repair (ordinary wear and tear
excepted) and are suitable for their current uses, except where the failure of
the Transferred Assets to be in good operating condition or
18
repair or to be suitable for such uses would not reasonably be expected to
have a VIOC Centers Material Adverse Effect.
SECTION 3.08. Claims. Section 3.08 of the VIOC Centers Disclosure
Letter sets forth a list of each Claim pending or, to the knowledge of
Ashland, threatened against, or as to which a notice has been received as of
the date of this Agreement by, Ashland (and, as to complaints, which have been
served on Ashland) and that involves an amount in controversy of more than
$100,000. This Section 3.08 does not relate to environmental matters, such
items being the subject of Section 3.11(b), or to employee or labor matters,
such items being the subject of Section 3.12.
SECTION 3.09. Benefit Plans. (a) Section 3.09 of the VIOC Centers
Disclosure Letter contains a list of all "employee pension benefit plans" (as
defined in Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")), maintained or contributed to by Ashland for the
benefit of any officers or employees of the VIOC Centers ("VIOC Pension
Plans") and all "employee welfare benefit plans" (as defined in Section 3(1)
of ERISA), bonus, stock option, stock purchase, deferred compensation plans or
arrangements and other employee fringe benefit plans maintained, or
contributed to, by Ashland or any of its affiliates for the benefit of one or
more current or former employees of the VIOC Centers (other than any former
employee of the VIOC Centers who became employed by MAP or any of its
subsidiaries following termination of employment with Ashland or any of its
affiliates) (each, a "VIOC Centers Employee") (all the foregoing, including
VIOC Pension Plans, being herein called "VIOC Benefit Plans"). Ashland has
provided to Marathon true, complete and correct copies of (i) each VIOC
Benefit Plan (or, in the case of any unwritten VIOC Benefit Plans, fair and
accurate summary descriptions thereof), (ii) the two most recent annual
reports on Form 5500 filed with the Internal Revenue Service with respect to
each VIOC Benefit Plan (if any such report was required), (iii) the most
recent summary plan description for each VIOC Benefit Plan for which such a
summary plan description is required and (iv) each trust agreement, group
annuity contract or other funding and financing arrangement relating to any
VIOC Benefit Plan.
(b) There does not exist as of the date of this Agreement, nor do
any circumstances exist as of the date of
19
this Agreement that would reasonably be expected to result in, any Employee
Benefits Liability (as defined below), whether under any VIOC Benefit Plan or
otherwise, that would reasonably be expected to become a liability of HoldCo
or any of its affiliates at or after the Closing. "Employee Benefits
Liability" means any liability of Ashland or any entity required to be treated
as a single employer under Section 414(b), (c), (m) or (o) of the Code with
Ashland prior to the Closing under (i) Sections 302, 405, 409 or Title IV of
ERISA, (ii) Section 412, 4971 or 4975 of the Code or (iii) Sections 601 et.
seq. and 701 et seq. of ERISA and Section 4980B and Sections 9801 et seq. of
the Code.
SECTION 3.10. Absence of Changes or Events. From the date of the
Balance Sheet to the date of this Agreement, there has not been any event,
change, effect or development (i) that, individually or in the aggregate, has
had or would reasonably be expected to have a VIOC Centers Material Adverse
Effect or (ii) that would have been prohibited by Section 4.01 if the terms of
such section had been in effect as of and after the date of the Balance Sheet.
SECTION 3.11. Compliance with Laws. (a) The VIOC Centers are in
compliance with all applicable Laws, including those relating to occupational
health and safety, except for instances of noncompliance that would not
reasonably be expected to have a VIOC Centers Material Adverse Effect. To the
knowledge of Ashland, Ashland has not received any written communication from
a Governmental Entity that alleges that the VIOC Centers are not in compliance
in any material respect with any applicable Law that has not been finally
resolved with such Governmental Entity. This Section 3.11(a) does not relate
to matters with respect to Taxes, which are the subject of the Tax Matters
Agreement, or to environmental matters, which are the subject of Section
3.11(b).
(b) There are no underground storage tanks for the storage of
Hazardous Materials (as defined below) in use at any of the VIOC Centers, and
to Ashland's knowledge there are no such tanks located under the Premises.
Except for such matters that would not reasonably be expected to have a VIOC
Centers Material Adverse Effect, (i) to the knowledge of Ashland, Ashland has
not received any written communication from a Governmental Entity that alleges
that the VIOC Centers are in violation of any Environmental Law
20
that has not been finally resolved with such Governmental Entity, (ii) Ashland
holds all Permits required to conduct the VIOC Centers under any applicable
Environmental Law, and is and at all times has been in compliance with all
Environmental Laws and the terms and conditions of such Permits, (iii) there
are no Environmental Claims (as defined below) pending, or to the knowledge of
Ashland, threatened against Ashland and (iv) there have been no Releases (as
defined below) of any Hazardous Material at or originating from the Premises,
and no Hazardous Materials have been handled, generated, stored, transported
or disposed of by the VIOC Centers, in each case that would reasonably be
expected to form the basis of an Environmental Claim against Ashland. The term
"Environmental Claim" means any and all administrative, regulatory or judicial
actions, suits, orders, demands, directives, claims, liens, investigations,
proceedings or written notices of noncompliance or violation by or from any
person alleging liability of whatever kind or nature arising out of, based on
or resulting from (x) the presence or Release of, or exposure to, any
Hazardous Materials; or (y) the failure to comply with any Environmental Law.
The term "Environmental Laws" means all applicable federal, state, local and
foreign laws, rules, regulations, orders, decrees, judgments, legally binding
agreements or environmental Permits issued, promulgated or entered into by or
with any Governmental Entity, relating to the protection of the environment,
the protection of the public welfare from actual or potential exposure, or the
effects from exposure, to any actual or potential release, discharge, disposal
or emission (whether past or present) of any Hazardous Materials or the
manufacture, processing, distribution, use, treatment, labeling, storage,
disposal, transport or handling of any Hazardous Materials. The term
"Hazardous Materials" means all explosive or regulated radioactive materials
or substances, hazardous or toxic substances, wastes or chemicals, petroleum
(including crude oil or any fraction thereof) or petroleum distillates,
asbestos or asbestos containing materials, and any other material, chemical
substance or waste that in relevant form or concentration is prohibited,
limited or regulated (or the cleanup of which can be required) pursuant to any
Environmental Law and all substances that require special handling, storage or
disposal procedures or whose handling, storage or disposal procedures is in
any way regulated, in any case under any applicable Law for the protection of
the health, safety and environment. The term "Release" means
21
any spill, emission, leaking, dumping, injection, deposit, disposal,
discharge, dispersal, leaching, emanation or migration of any Hazardous
Materials into or through the environment (including ambient air, surface
water, ground water, soils, land surface, subsurface strata or workplace).
SECTION 3.12. Employee and Labor Matters. Except as would not
reasonably be expected to have a VIOC Centers Material Adverse Effect (i)
there is not any, and during the past three years there has not been any,
labor strike, dispute, work stoppage or lockout pending against the VIOC
Centers; (ii) to the knowledge of Ashland, no union organizational campaign is
in progress with respect to the VIOC Centers Employees and no question
concerning representation of such employees exists; (iii) Ashland is not
engaged in any unfair labor practice in connection with the conduct of the
VIOC Centers; (iv) there are not any unfair labor practice charges or
complaints against Ashland pending before the National Labor Relations Board
in connection with the conduct of the VIOC Centers; (v) there are not any
pending union grievances against Ashland in connection with the conduct of the
VIOC Centers as to which there is a reasonable possibility of adverse
determination; (vi) there are not any pending charges in connection with the
conduct of the VIOC Centers against Ashland or any VIOC Centers Employee
before the Equal Employment Opportunity Commission or any state or local
agency responsible for the prevention of unlawful employment practices; and
(vii) Ashland has not received written notice during the past three years of
the intent of any Governmental Entity responsible for the enforcement of labor
or employment laws to conduct an investigation of the VIOC Centers.
SECTION 3.13. Sufficiency of Transferred Assets. Except for the
exclusion of the Excluded Assets and assuming that HoldCo has the ability to
provide to the VIOC Centers all corporate-level services of the type that are
currently provided to the VIOC Centers by Ashland or any of its affiliates,
the Transferred Assets, together with the Blanket License Agreement, are
sufficient for the operation and conduct of the business of the VIOC Centers
immediately following the Closing in substantially the same manner as
currently operated and conducted, other than any insufficiency that would not
reasonably be expected to have a VIOC Centers Material Adverse Effect.
22
SECTION 3.14. Inventory. Except as would not reasonably be expected
to have a VIOC Centers Material Adverse Effect, the Inventory is generally of
a quality usable or salable in the ordinary course of business of the VIOC
Centers.
ARTICLE IV
Covenants
SECTION 4.01. Covenants of Ashland Relating to Conduct of VIOC
Centers. (a) Except for matters set forth in Section 4.01 of the VIOC Centers
Disclosure Letter or otherwise contemplated by the Transaction Agreements,
from the date of this Agreement to the Closing, Ashland shall conduct the
business of the VIOC Centers in the usual, regular and ordinary course in
substantially the same manner as previously conducted. Without limiting the
generality of the foregoing, Ashland shall use its reasonable best efforts to
(i) preserve the material business relationships of the VIOC Centers with
customers, suppliers, distributors and others with whom Ashland deals in
connection with the conduct of the VIOC Centers in the ordinary course of
business and retain its present employees who are involved in the operation of
the VIOC Centers, (ii) maintain the Transferred Assets, including those held
under leases, in as good operating condition and repair (ordinary wear and
tear excepted) as at present, and maintain all Permits set forth in Section
3.06 of the VIOC Centers Disclosure Letter, (iii) perform in all material
respects its obligations under Assigned Contracts and (iv) comply in all
material respects with all applicable Laws relating to the VIOC Centers or any
of the Transferred Assets. In addition, except as set forth in Section 4.01 of
the VIOC Centers Disclosure Letter or otherwise contemplated by the
Transaction Agreements, Ashland shall not do any of the following in
connection with the VIOC Centers without the prior written consent of Marathon
(which consent shall not be unreasonably withheld or delayed):
(i) adopt, establish or amend in any material respect any VIOC
Benefit Plan (or any plan that would be a VIOC Benefit Plan if adopted or
established) in a manner affecting any VIOC Centers Employee, except as
required by applicable Law or as would relate to a substantial number of
other similarly situated employees of Ashland and its subsidiaries;
23
(ii) grant to any VIOC Centers Employee any increase in compensation
or benefits, except in the ordinary course of business and consistent
with past practice or as may be required under existing Contracts set
forth in Section 3.05 of the VIOC Centers Disclosure Letter and except
for any increases for which Ashland shall be solely obligated and which
will not result in any incremental compensation that will be payable by
HoldCo after the Closing Date pursuant to Section 4.03(a);
(iii) subject any Transferred Asset to any Lien of any nature
whatsoever that would have been required to be set forth in Sections 3.02
or 3.03 of the VIOC Centers Disclosure Letter if existing on the date of
this Agreement;
(iv) waive any claims or rights of substantial value to the extent
relating to any Transferred Asset;
(v) make or incur any capital expenditures (of a non-emergency
nature) that relate to the VIOC Centers and that are not reflected in the
capital expenditure budget set forth in Section 4.01(a)(v) of the VIOC
Centers Disclosure Letter and that, individually, are in excess of
$100,000 or that, in the aggregate, are in excess of $500,000, except for
any such capital expenditures for which Ashland shall be solely
obligated, provided, however, that if Ashland makes or incurs a capital
expenditure that relates exclusively to the VIOC Centers and is not
reflected in the capital expenditure budget set forth in Section
4.01(a)(v) of the VIOC Centers Disclosure Letter, and if Marathon agrees
in writing to cause HoldCo to reimburse Ashland for such capital
expenditure, then HoldCo shall, promptly after the Closing, reimburse
Ashland for such capital expenditure;
(vi) sell, lease, license or otherwise dispose of any Transferred
Assets, except (A) inventory, supplies and obsolete or excess equipment
sold or disposed of in the ordinary course of business and (B) leases
entered into in the ordinary course of business with aggregate annual
lease payments not in excess of $50,000;
24
(vii) enter into or amend any employee collective bargaining
agreement or other Contract with any labor union;
(viii) commit an intentional material breach of or waive any
material rights under any material Assigned Contract or any material
Permit, or amend or terminate any material Assigned Contract or any
material Permit if the result of any such amendment or termination would
be materially adverse to HoldCo; or
(ix) authorize, or commit or agree to take, any of the foregoing
actions.
(b) Advice of Changes. Ashland shall promptly advise Marathon in
writing of any change or event that has had or would reasonably be expected to
have a VIOC Centers Material Adverse Effect.
(c) Insurance. Ashland shall use its reasonable best efforts to
keep, or to cause to be kept, all insurance policies currently maintained with
respect to the Transferred Assets (the "Ashland Insurance Policies"), or
suitable replacements thereof, in full force and effect without interruption
through the close of business on the Closing Date; it being understood that
any and all Ashland Insurance Policies are owned and maintained by Ashland and
its affiliates (and do not exclusively relate to the VIOC Centers). HoldCo
will not have any rights under the Ashland Insurance Policies from and after
the Closing Date.
(d) Reimbursement of Media Expenditures. After the date of this
Agreement, if Ashland enters into a Contract that is a media placement
agreement that would be an Assigned Contract pursuant to Section
1.02(a)(v)(B), and if Marathon agrees in writing to cause HoldCo to reimburse
Ashland for expenditures made or incurred under such Assigned Contract prior
to the Closing, then HoldCo shall, promptly after the Closing, reimburse
Ashland for such expenditures.
SECTION 4.02. Refunds and Remittances. After the Closing, if Ashland
or any of its affiliates receive any refund or other amount which is a
Transferred Asset or is otherwise properly due and owing to HoldCo or any of
its affiliates in accordance with the terms of this Agreement, Ashland
promptly shall remit, or shall cause to be remitted, such amount to HoldCo.
After the Closing, if
25
HoldCo or any of its affiliates receive any refund or other amount which is an
Excluded Asset or is otherwise properly due and owing to Ashland or any of its
affiliates in accordance with the terms of this Agreement, HoldCo promptly
shall remit, or shall cause to be remitted, such amount to Ashland. After the
Closing, if HoldCo or any of its affiliates receive any refund or other amount
which is related to claims (including workers' compensation), litigation,
insurance or other matters for which Ashland or any of its affiliates is
responsible hereunder, and which amount is not a Transferred Asset, or is
otherwise properly due and owing to Ashland or any of its affiliates in
accordance with the terms of this Agreement, HoldCo promptly shall remit, or
cause to be remitted, such amount to Ashland. After the Closing, if Ashland or
any of its affiliates receive any refund or other amount which is related to
claims (including workers' compensation), litigation, insurance or other
matters for which HoldCo or any of its affiliates is responsible hereunder,
and which amount is not an Excluded Asset, or is otherwise properly due and
owing to HoldCo or any of its affiliates in accordance with the terms of this
Agreement, Ashland promptly shall remit, or cause to be remitted, such amount
to HoldCo.
SECTION 4.03. Employee Matters. (a) Continuation of Employment.
Effective as of the Closing, HoldCo or one or more of its affiliates shall
offer employment (which shall include HoldCo's compliance with its covenants
set forth in this Section 4.03) to all VIOC Centers Employees who on the
Closing Date are actively at work (each, an "Active VIOC Centers Employee").
For purposes of this Agreement, any VIOC Centers Employee who is not actively
at work on the Closing Date due solely to a leave of absence (including due to
vacation, holiday, sick leave, maternity or paternity leave, military leave,
jury duty, bereavement leave, injury or short-term disability), other than
long-term disability, in compliance with applicable policies of Ashland or its
affiliates shall be deemed an Active VIOC Centers Employee. Each VIOC Centers
Employee who accepts such an offer of employment is referred to herein as a
"Transferred VIOC Centers Employee". Immediately following the Closing, HoldCo
shall, or shall cause one or more of its affiliates to, provide each
Transferred VIOC Centers Employee (i) with overall compensation that is at
least equivalent to such Transferred VIOC Centers Employee's overall
compensation in effect immediately prior to the
26
Closing and (ii) subject to the provisions of this Section 4.03, with
appropriate employee benefits as determined by HoldCo or such affiliate.
Without limiting the generality of the foregoing, HoldCo shall maintain
employee benefit plans and programs for the Transferred VIOC Centers
Employees, which shall be competitive in the retail industry.
(b) Certain Welfare Benefits Matters. (i) Immediately following the
Closing, HoldCo or one or more of its affiliates shall allow Transferred VIOC
Centers Employees to participate in benefit plans that provide for group
welfare benefits including, for the avoidance of doubt, vacation and severance
benefits (the "HoldCo VIOC Welfare Plans"). HoldCo shall grant to the
Transferred VIOC Centers Employees credit under the HoldCo VIOC Welfare Plans
for service prior to the Closing with Ashland and its affiliates for all
purposes, other than for purposes of determining eligibility to receive
retiree medical subsidies and for purposes of determining level of benefits
and benefit accruals under any retiree medical plans maintained by HoldCo or
its affiliates. HoldCo or its applicable affiliate shall (A) waive all
limitations as to preexisting conditions, exclusions and waiting periods and
actively-at-work requirements with respect to participation and coverage
requirements applicable to the Transferred VIOC Centers Employees and their
dependents under the HoldCo VIOC Welfare Plans to the extent satisfied or
waived under the applicable corresponding VIOC Benefit Plan immediately prior
to the Closing and (B) provide each Transferred VIOC Centers Employee and his
or her eligible dependents with either pro-rated deductibles and co-payments
for the balance of the year or credit for any co-payments and deductibles paid
prior to the Closing in the calendar year in which the Closing Date occurs
(or, if later, in the calendar year in which Transferred VIOC Centers
Employees and their dependents commence participation in the applicable HoldCo
VIOC Welfare Plan) for purposes of satisfying any applicable deductible or
out-of-pocket requirements under any HoldCo VIOC Welfare Plans in which the
Transferred VIOC Centers Employees participate. If credit for deductibles and
co-payments is provided, Ashland shall provide or cause to be provided
adequate data to implement that credit as HoldCo may reasonably request.
27
(ii) Ashland shall be responsible in accordance with its
applicable welfare plans (and the applicable welfare plans of its
affiliates) in effect prior to the Closing for all reimbursement
claims (such as medical and dental claims) for expenses incurred,
and for all non-reimbursement claims (such as life insurance claims)
incurred, under such plans prior to the Closing by Transferred VIOC
Centers Employees and their dependents, except that HoldCo shall be
responsible for such claims to the extent such claims are reflected
on the Balance Sheet or to the extent insured under an insurance
policy of which HoldCo or its affiliates becomes the beneficiary and
for which Ashland or its affiliates have paid the premium. HoldCo
shall be responsible in accordance with the applicable welfare plans
of HoldCo and its affiliates for all reimbursement claims (such as
medical and dental claims) for expenses incurred, and for all
non-reimbursement claims (such as life insurance claims) incurred,
from and after the Closing by Transferred VIOC Centers Employees and
their dependents. For purposes of this Section 4.03(b)(ii), a claim
shall be deemed to have been incurred on (A) the date of death or
dismemberment in the case of claims under life insurance and
accidental death and dismemberment policies or (B) the date on which
the charge or expense giving rise to such claim is incurred (without
regard to the date of inception of the related illness or injury or
the date of submission of a claim related thereto) in the case of
all other claims; provided, however, that in the event of a hospital
stay that commences prior to the close of business on the Closing
Date and ends after the close of business on the Closing Date, the
cost thereof shall be apportioned between HoldCo and Ashland with
Ashland responsible for that portion of the cost incurred prior to
the close of business on the Closing Date and HoldCo responsible for
the balance of such cost. Effective as of the Closing, HoldCo shall
assume all liabilities, obligations and commitments of Ashland and
its affiliates to Transferred VIOC Centers Employees and their
eligible dependents in respect of health insurance under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA"), the Health Insurance Portability and Accountability Act
of 1996 and applicable state Law; provided, however, that Ashland
and its affiliates shall remain obligated to
28
provide any applicable COBRA notices in respect of events occurring
on or prior to the Closing Date.
(c) Accrued Vacation. For purposes of determining the number of vacation
days to which each Transferred VIOC Centers Employee shall be entitled
following the Closing, HoldCo shall assume and honor all vacation days accrued
or earned but not yet taken by such Transferred VIOC Centers Employee as of
the Closing. To the extent that a Transferred VIOC Centers Employee is
entitled under any applicable Law or any policy of Ashland or its affiliates
to be paid for any vacation days accrued or earned but not yet taken by such
Transferred VIOC Centers Employee as of the Closing, HoldCo shall discharge
the liability for such vacation days.
(d) Retirement Plan. Immediately following the Closing, HoldCo or one or
more of its affiliates shall have in effect a retirement benefit plan or plans
(as applicable, the "HoldCo Retirement Plan") that shall provide benefits to
the Transferred VIOC Centers Employees. HoldCo or such affiliate shall have
sole discretion in establishing the provisions of the HoldCo Retirement Plan.
(e) Administration. Following the date of this Agreement, Ashland and
HoldCo shall reasonably cooperate in all matters reasonably necessary to
effect the transactions contemplated by this Section 4.03, including
exchanging information and data relating to workers' compensation, employee
benefits and employee benefit plan coverages (except to the extent prohibited
by applicable Law), and in obtaining any governmental approvals required
hereunder.
(f) Employment Tax Reporting Responsibility. HoldCo and Ashland hereby
agree to follow the alternate procedure for employment tax withholding as
provided in Section 5 of Rev. Proc. 96-60, 1996-53 I.R.B. 24 ("Rev. Proc.
96-60"). Ashland shall provide HoldCo with all necessary and accurate payroll
records and such other information relating to the Transferred VIOC Centers
Employees as HoldCo may reasonably request with respect to Transferred VIOC
Centers Employees in order to comply with the provisions of Rev. Proc. 96-60
with respect to the calendar year that includes the Closing Date. HoldCo shall
perform all employment tax reporting responsibilities for such employees from
the Closing Date forward and shall furnish a Form W-2 for such calendar year
to each Transferred VIOC Centers Employee that will include all
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remuneration earned by such Transferred VIOC Centers Employee from Ashland or
HoldCo during such calendar year.
(g) Intent. It is HoldCo's intent that the HoldCo Retirement Plan shall
provide retirement benefits that are competitive within the retail industry.
SECTION 4.04. Post-Closing Information. After the Closing, upon
reasonable written notice, Ashland and HoldCo shall furnish or cause to be
furnished to each other and their employees and Representatives, during normal
business hours, reasonable access to the personnel, properties, books,
Contracts, commitments, records and other information relating to the VIOC
Centers (and, to the extent reasonably requested, copies of the portions
relating to the VIOC Centers of any such books, Contracts, commitments,
records and other information, in each case to the extent they are available
in written form and they relate to the period prior to the Closing Date) and
assistance relating to the VIOC Centers (to the extent within the control of
such party), in each case for any reasonable business purpose, including in
respect of litigation, insurance matters, financial reporting and accounting
matters.
SECTION 4.05. Records. HoldCo recognizes that certain Records may
contain incidental information relating to subsidiaries, divisions or
businesses of Ashland other than the VIOC Centers and that Ashland may retain
copies thereof. Ashland recognizes that certain documents and information of a
type similar to the Records may be used, held for use or intended to be used
primarily in, or arise primarily out of, the operation or conduct of the VIOC
Centers, and shall provide copies of the relevant portions thereof to HoldCo
at the Closing.
SECTION 4.06. [Intentionally Omitted].
SECTION 4.07. Bulk Transfer Laws. HoldCo hereby waives
compliance by Ashland with the provisions of any so-called "bulk transfer law"
of any jurisdiction in connection with the VIOC Assignment and Assumption.
SECTION 4.08. Supplies. At any time after 20 days after the
Closing Date, HoldCo shall not use stationery, purchase order forms, labels,
material safety data sheets or other similar paper goods or supplies that
state or
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otherwise indicate thereon that the VIOC Centers are a division or
unit of Ashland.
SECTION 4.09. Mail. From and after the Closing, Ashland and
HoldCo shall cooperate with each other, and shall cause their Representatives
to cooperate with each other, to ensure that (i) HoldCo receives copies of all
mail (including mail sent by private delivery and electronic mail
correspondence) relating to the VIOC Centers or the Transferred Assets and
(ii) Ashland receives all mail addressed to Ashland delivered to the Premises
(which HoldCo is hereby authorized to receive and open) that contains
information relating to, or of importance to, Ashland (including for financial
reporting, accounting or tax purposes) or to subsidiaries, divisions or
businesses of Ashland other than the VIOC Centers.
SECTION 4.10. Further Assurances. From time to time after the
Closing, as and when requested by any party hereto, each party shall execute
and deliver, or cause to be executed and delivered, all such documents and
instruments and shall take, or cause to be taken, all such further or other
actions, as such other party may reasonably deem necessary or desirable to
consummate the Transactions contemplated by this Agreement, including, (i) in
the case of Ashland, executing and delivering to HoldCo such assignments,
deeds, Consents and other instruments as HoldCo may reasonably request as
necessary or desirable for such purpose and (ii) in the case of HoldCo,
executing and delivering to Ashland such assumptions and other instruments as
Ashland may reasonably request as necessary or desirable for such purpose.
From and after the Closing Date, Ashland will promptly refer all bona fide
written inquiries with respect to ownership of the Transferred Assets after
the Closing or the operation or conduct of the VIOC Centers after the Closing
to HoldCo or its designee.
SECTION 4.11. Review of Contracts. Prior to the Closing Date,
Ashland shall review the terms of each material Contract that relates in part
to the VIOC Centers and in part to any other business of Ashland or any of its
subsidiaries other than those Contracts identified in Section 4.11 of the VIOC
Centers Disclosure Letter (collectively, "Ashland Joint Contracts") in order
to determine whether such Contract should be terminated and replaced on or
prior to the Closing Date by a separate Contract relating to the VIOC Centers
on the one hand (any such separate Contract being an Assigned Contract, so
long
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as (i) entering into such Contract would not otherwise be in violation of this
Agreement and (ii) such Contract does not contain terms that, in the
aggregate, are materially less advantageous to the VIOC Centers than the terms
under the Contract being terminated and replaced), and a separate Contract
relating to such other business of Ashland or any of its subsidiaries on the
other hand (any such separate Contract not being an Assigned Contract). If
requested by HoldCo or Marathon within 90 days after Ashland notifies HoldCo
and Marathon in writing of the specific terms of the Ashland Joint Contracts,
Ashland shall continue in effect any Ashland Joint Contract not terminated and
replaced in accordance with the immediately preceding sentence, if not
prohibited by the terms of such Ashland Joint Contract, until the stated
expiration thereof (without regard to any available renewal options);
provided, however, that Ashland shall not be prohibited from terminating any
such Ashland Joint Contract that relates to a substantial number of Valvoline
Instant Oil Change (VIOC) quick-lube service centers owned or operated by
Ashland. Each of Ashland and HoldCo shall perform its respective obligations
under all such Ashland Joint Contracts so as not to create a default
thereunder, and Ashland shall provide HoldCo with rights thereunder consistent
with historical practice between the parties with respect thereto, subject to
obtaining any necessary Consents from third parties (which Ashland and HoldCo
mutually agree to use their reasonable best efforts to obtain) and subject to
HoldCo bearing the proportionate expense attributable to such rights
consistent with historical practice between the parties with respect thereto;
provided, however, that neither Ashland nor HoldCo shall be obligated to
extend credit to the other party.
SECTION 4.12. List of Permits. Within 90 days after the date of
this Agreement, Ashland shall provide to HoldCo and Marathon a list setting
forth all material certificates, licenses, permits, authorizations, Consents
and approvals issued or granted to Ashland by, and all material exemptions of,
or registrations or filings with, Governmental Entities ("Permits"), that are
used, held for use or intended to be used in the operation or conduct of the
VIOC Centers.
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ARTICLE V
Termination
SECTION 5.01. Termination. Notwithstanding anything to the contrary
in this Agreement, this Agreement shall automatically terminate, without
further action by any party, and the VIOC Assignment and Assumption abandoned
at any time prior to the Closing, upon termination of the Master Agreement in
accordance with the terms thereof.
SECTION 5.02. Effect of Termination. In the event of termination of
this Agreement in accordance with Section 5.01, this Agreement shall forthwith
become void and have no effect, without any liability or obligation on the
part of any party hereto, other than (i) Section 5.01 and this Section 5.02
and (ii) Article VI (General Provisions), which provisions shall survive such
termination, and except to the extent that such termination results from the
material breach by a party of its representations, warranties or covenants set
forth in the Transaction Agreements.
ARTICLE VI
General Provisions
SECTION 6.01. Interpretation; VIOC Centers Disclosure Letter;
Certain Definitions. (a) When a reference is made in this Agreement to an
Article, Section or Exhibit, such reference shall be to an Article of, a
Section of, or an Exhibit to, this Agreement unless otherwise indicated. The
table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include", "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation". No item contained in any section of the VIOC Centers
Disclosure Letter shall be deemed adequate to disclose an exception to a
representation or warranty made in this Agreement, unless (i) such item is
included (or expressly incorporated by reference) in a section of the VIOC
Centers Disclosure Letter that is numbered to correspond to the section number
assigned to such representation or warranty in this Agreement or (ii) it is
readily apparent from a reading of such item that it discloses an exception to
such representation or warranty.
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(b) For all purposes hereof:
"Blanket License Agreement" means the Blanket License Agreement
among the parties thereto in the form attached hereto as Exhibit C, together
with the forms of License Agreement, Licensee Sign and Equipment Lease
Agreement and Licensee Supply Agreement which are attached thereto and
incorporated by reference therein.
"Environmental Liability" means any liability, obligation or
commitment arising under any Environmental Law; provided, however, that
Environmental Liability specifically does not include any liability,
obligation or commitment relating to any Claim brought by any person other
than a Governmental Entity seeking damages, contribution, indemnification,
cost recovery, penalties, compensation or injunctive relief resulting from the
existence or release of, or exposure to, Hazardous Materials, except where
such Claim is brought as a citizen's suit in which no monetary damages are
sought for the account of such person. Anything in this Agreement to the
contrary notwithstanding, any liability, obligation or commitment under the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended, or any comparable state Environmental Law that arises out of, is
based on or is in connection with the disposal or Release by Ashland of
Hazardous Materials at a location other than the Premises shall be treated as
a Retained Liability and shall not be or become an Assumed Liability.
"Intellectual Property" means patents (including all reissues,
divisions, continuations and extensions thereof), patent applications,
trademarks, trademark registrations, trademark applications, servicemarks,
servicemark registrations, servicemark applications, trade names, business
names, brand names, copyrights, copyright registrations and proprietary
designs and design registrations.
"Permitted Liens" means (i) Liens for current Taxes, assessments,
governmental charges or levies not yet due, (ii) workers' or unemployment
compensation Liens arising in the ordinary course of business, (iii)
mechanic's, materialman's, supplier's, vendor's, garnishment or similar Liens
arising in the ordinary course of business for amounts not yet due, (iv) Liens
or other charges or encumbrances as may have arisen in the ordinary course of
business, none of which individually or in the
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aggregate are material to the ownership, use or operation of the Transferred
Assets, (v) any state of facts which an accurate survey would show which does
not materially detract from the value of or materially interfere with the use
and operation of the Transferred Assets, (vi) any Liens, easements,
rights-of-way, restrictions, rights, leases and other encumbrances affecting
title thereto, whether or not of record, which do not materially detract from
the value of or materially interfere with the use and operation of the
Transferred Assets, (vii) legal highways, zoning and building Laws, ordinances
or regulations, (viii) any Liens for real estate Taxes which are not yet due
and payable, (ix) Liens set forth in Section 3.02 of the VIOC Centers
Disclosure Letter and (x) Liens set forth in Section 3.03 of the VIOC Centers
Disclosure Letter.
"VIOC Centers" means the Valvoline Instant Oil Change (VIOC) service
center business operations (including the marketing and selling of quick
service engine oil change services, lubrication services, certain routine
maintenance check services, preventive automotive maintenance services, and
related products and services) conducted at the locations listed in Section
6.01(b) of the VIOC Centers Disclosure Letter by Ashland, and the supporting
office operations conducted at the locations listed in Section 6.01(b) of the
VIOC Centers Disclosure Letter by Ashland, in each case directly or indirectly
through certain of its subsidiaries, as of the date of this Agreement.
"VIOC Centers Material Adverse Effect" means a material adverse
effect (i) on the business, properties, assets, condition (financial or
otherwise), operations or results of operation of the VIOC Centers, taken as a
whole, (ii) on the ability of Ashland to perform its obligations under this
Agreement and the other agreements and instruments to be executed and
delivered in connection with this Agreement or (iii) on the ability of Ashland
to consummate the VIOC Assignment and Assumption. For purposes of this
Agreement, "VIOC Centers Material Adverse Effect" shall exclude any events,
changes, effects and developments to the extent relating to (A) the economy of
the United States or foreign economies in general, (B) industries in which the
VIOC Centers operate and not specifically relating to the VIOC Centers, (C)
any announcement by Ashland of the Transactions or of its intention to
transfer the VIOC Centers or (D) the execution
35
of the Transaction Agreements and the Ancillary Agreements and the
consummation of the Transactions.
SECTION 6.02. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other party.
SECTION 6.03. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule or
Law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the Transactions contemplated hereby is not affected in any
manner materially adverse to any party hereto. Upon such determination that
any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement (in accordance with the terms of Section 6.06) so as to effect the
original intent of the parties hereto as closely as possible to the end that
the Transactions contemplated hereby are fulfilled to the greatest extent
possible.
SECTION 6.04. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
SECTION 6.05. No Third-Party Beneficiaries. This Agreement is not
intended to confer any rights or remedies upon any person other than the
parties hereto and the Marathon Parties, whom the parties hereto expressly
agree are third-party beneficiaries entitled to enforce the provisions of this
Agreement. Ashland acknowledges that the rights, titles and interests provided
to HoldCo pursuant to this Agreement are a material part of the consideration
for the agreements of the Marathon Parties pursuant to the Master Agreement.
It is further understood that, subject to Section 14.09 of the Master
Agreement, the respective successors and assigns of Ashland and HoldCo shall
have all of the rights, interests and obligations of Ashland and HoldCo,
respectively, hereunder.
SECTION 6.06. Amendment. This Agreement may not be amended by
the parties except pursuant to an instrument
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in writing signed on behalf of Ashland and HoldCo with the written consent of
Marathon.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, all as of the date first written above.
ASHLAND INC.,
by /s/ Xxxxx X. X'Xxxxx
-----------------------------
Name: Xxxxx X. X'Xxxxx
Title: Chief Executive
Officer
ATB HOLDINGS INC.,
by /s/ Xxxxx X. X'Xxxxx
-----------------------------
Name: Xxxxx X. X'Xxxxx
Title: President
