EXHIBIT 2.4
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ASSIGNMENT AND ASSUMPTION AGREEMENT
(MALEIC BUSINESS)
Dated as of March 18, 2004,
Between
ASHLAND INC.
And
ATB HOLDINGS INC.
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TABLE OF CONTENTS
PAGE
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ARTICLE I
Maleic Assignment and Assumption
SECTION 1.01. Maleic 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..........................11
SECTION 1.05. Closing Current Assets Adjustment..................12
SECTION 1.06. Tax Matters........................................15
SECTION 1.07. Neville Island Maleic Assets Provisions............15
ARTICLE II
The Closing
SECTION 2.01. Closing Date.......................................18
SECTION 2.02. Transactions To Be Effected at the Closing.........19
ARTICLE III
Representations and Warranties of Ashland
SECTION 3.01. Financial Statements...............................19
SECTION 3.02. Assets Other than Real Property Interests..........20
SECTION 3.03. Real Property......................................20
SECTION 3.04. Intellectual Property; Technology..................21
SECTION 3.05. Contracts..........................................21
SECTION 3.06. Permits............................................24
SECTION 3.07. Condition of Transferred Assets....................25
SECTION 3.08. Claims.............................................25
SECTION 3.09. Benefit Plans......................................25
SECTION 3.10. Absence of Changes or Events.......................26
SECTION 3.11. Compliance with Laws...............................27
SECTION 3.12. Employee and Labor Matters.........................28
SECTION 3.13. Sufficiency of Transferred Assets..................29
SECTION 3.14. Inventory..........................................29
SECTION 3.15. Receivables........................................29
ARTICLE IV
Covenants
SECTION 4.01. Covenants of Ashland Relating to Conduct of
Maleic Business....................................30
SECTION 4.02. Refunds and Remittances............................32
SECTION 4.03. Employee Matters...................................33
SECTION 4.04. Post-Closing Information...........................38
SECTION 4.05. Records............................................38
SECTION 4.06. Agreement Not To Compete...........................39
SECTION 4.07. Bulk Transfer Laws.................................40
SECTION 4.08. Supplies...........................................41
SECTION 4.09. Mail...............................................41
SECTION 4.10. Further Assurances.................................41
SECTION 4.11. Review of Contracts................................41
ARTICLE V
Termination
SECTION 5.01. Termination........................................43
SECTION 5.02. Effect of Termination..............................43
ARTICLE VI
General Provisions
SECTION 6.01. Interpretation; Maleic Business Disclosure
Letter; Certain Definitions........................43
SECTION 6.02. Counterparts.......................................45
SECTION 6.03. Severability.......................................45
SECTION 6.04. Governing Law......................................46
SECTION 6.05. No Third-Party Beneficiaries.......................46
SECTION 6.06. Amendment..........................................46
Exhibit A Form of Deed (Maleic Business)
Exhibit B Form of Assignment and Assumption (Maleic Business)
Exhibit C Form of Maleic Supply Agreement
Exhibit D Form of Transition Services Agreement
ii
INDEX OF DEFINED TERMS
TERM SECTION
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Accounting Firm................................................... 1.05(b)
Active Maleic Business Employee................................... 4.03(a)
Agreement......................................................... Preamble
Ashland........................................................... Preamble
Ashland Insurance Policies........................................ 4.01(c)
Ashland Joint Contracts........................................... 4.11
Ashland Pension Plan.............................................. 4.03(e)
Assigned Contracts................................................ 1.02(a)(vi)
Assigned Permits.................................................. 1.02(a)(v)
Assumed Liabilities............................................... 1.03(a)
Assigned Technology............................................... 1.02(a)(iv)
Balance Sheet..................................................... 3.01
Balance Sheet Principles.......................................... 1.05(d)
Claim............................................................. 1.03(b)(iv)
Closing Current Assets............................................ 1.05(a)
COBRA............................................................. 4.03(b)(ii)
Competitive Activities............................................ 4.06(a)
Contracts......................................................... 1.02(a)(vi)
Current Assets.................................................... 1.05(d)
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)(x)
ERISA............................................................. 3.09(a)
Excluded Assets................................................... 1.02(b)
Exercise Notice................................................... 1.07(b)
Financial Statements.............................................. 3.01
Hazardous Materials............................................... 3.11(b)
HoldCo............................................................ Preamble
HoldCo Maleic Welfare Plans....................................... 4.03(b)(i)
HoldCo Retiree Medical Plan....................................... 4.03(f)
HoldCo Retirement Plan............................................ 4.03(e)
Intellectual Property............................................. 6.01(b)
Inventory......................................................... 1.02(a)(ii)
Leased Property................................................... 3.03(a)
Maleic Assignment and Assumption.................................. 1.01
Maleic Benefit Plans.............................................. 3.09(a)
Maleic Business................................................... 6.01(b)
Maleic Business Disclosure Letter................................. Article III
Maleic Business Employee.......................................... 3.09(a)
Maleic Business Material Adverse Effect........................... 6.01(b)
Maleic Pension Plans.............................................. 3.09(a)
Maleic Supply Agreement........................................... 2.02(c)
TERM SECTION
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Master Agreement.................................................. Recitals
Neville Island Maleic Assets...................................... 1.07(a)
Neville Island Maleic Facility.................................... 1.07(a)
Notice of Disagreement............................................ 1.05(b)
Option Notice..................................................... 1.07(a)
Option Period..................................................... 1.07(a)
Owned Property.................................................... 3.03(a)
Permits........................................................... 3.06
Permitted Liens................................................... 6.01(b)
Plant............................................................. 1.03(b)(x)
Premises.......................................................... 1.02(a)(i)
Proposed Sale Notice.............................................. 1.07(b)
Receivables....................................................... 1.02(a)(x)
Records........................................................... 1.02(a)(ix)
Release........................................................... 3.11(b)
Retained Liabilities.............................................. 1.03(b)
Rev. Proc. 96-60.................................................. 4.03(i)
Statement......................................................... 1.05(a)
Target Current Assets............................................. 1.05(c)
Technology........................................................ 1.02(a)(iv)
Transferred Assets................................................ 1.02(a)
Transferred Maleic Business Employee.............................. 4.03(a)
Transition Services Agreement..................................... 2.02(d)
WARN Act.......................................................... 4.03(g)
ii
ASSIGNMENT AND ASSUMPTION AGREEMENT (MALEIC BUSINESS)
(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 Maleic Business (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
Maleic Assignment and Assumption
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SECTION 1.01. MALEIC 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 "Maleic Assignment and
Assumption".
SECTION 1.02. TRANSFERRED ASSETS AND EXCLUDED ASSETS. (a) The term
"Transferred Assets" means all of Ashland's right, title and interest in, to
and under the
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following assets, other than the Excluded Assets (as defined in Section
1.02(b)):
(i) (A) 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 Maleic Business 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 caverns thereunder, and all
other appurtenances thereto (collectively, the "Premises"), and all
bridges leading to or from the Premises (and all easements relating
thereto) and (B) Ashland's right, title and interest, if any, in, to and
under all railroad sidings on the Premises and all pipelines, cabling,
wiring and other conduit leading to or from the Premises (and all
easements, licenses and permits (to the extent transferable) relating
thereto);
(ii) (A) all raw materials, work-in-process, finished goods,
supplies, parts, spare parts and other inventories of Ashland that on
the Closing Date are located on the Premises and (B) all other raw
materials, work-in-process, finished goods, supplies, parts, spare parts
and other inventories of Ashland (including in transit, on consignment
or in the possession of any third party) on the Closing Date, in the
case of this clause (B) that are used, held for use or intended to be
used exclusively in the operation or conduct of the Maleic Business
(collectively, the "Inventory"), including any Inventory to be sold to
Ashland or any of its affiliates after the Closing pursuant to the
Maleic Supply Agreement (as defined in Section 2.02(c)) or otherwise;
(iii) (A) all other tangible personal property and interests
therein, including all machinery, equipment, tools, appliances,
telephones, telecommunications equipment, copy machines, fax machines,
computers, implements, furniture, furnishings and vehicles, of Ashland
that on the Closing Date are located on the Premises and (B) all other
tangible personal property and interests therein, including all
machinery, equipment, tools, appliances, telephones, telecommunications
equipment, copy machines, fax
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machines, computers, implements, furniture, furnishings and vehicles,
of Ashland (including in transit, on consignment or in the possession
of any third party) on the Closing Date, in the case of this clause (B)
that are used, held for use or intended to be used exclusively in the
operation or conduct of the Maleic Business, in each case under
clause (A) or (B) 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) all trade secrets, confidential information, inventions,
know-how, formulae, proprietary processes, proprietary procedures,
research records, records of inventions, test information, market
surveys and marketing know-how (collectively, "Technology") of Ashland,
in each case that are used, held for use or intended to be used
exclusively in the operation or conduct of the Maleic Business (the
"Assigned Technology");
(v) to the extent that such Permits (as defined in Section 3.06)
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
Maleic Business (the "Assigned Permits");
(vi) (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 Maleic Business 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 Maleic Business 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 Maleic Business in the ordinary course of business and
(C) all Contracts to which Ashland is a party or
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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");
(vii) all rights of Ashland in and to products sold or leased
(including products returned after the Closing and rights of rescission,
replevin and reclamation) to the extent arising in the operation or
conduct of the Maleic Business;
(viii) 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 Maleic Business;
(ix) all books of account, ledgers, general, financial, accounting
and personnel records, files, invoices, customers' and suppliers' lists,
other distribution lists, billing records, sales and promotional
literature, manuals, customer and 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 audit procedures, schedules,
reports, protocols and findings pertaining to the Maleic Business or the
Transferred Assets (including records of spills or other releases or
discharges into the atmosphere, records of environmental, safety or
health reports to or from Governmental Entities regarding the Maleic
Business or the Transferred Assets (including notices of violation), and
correspondence, notices and orders of an environmental, safety or health
nature regarding the Maleic Business 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 Maleic
Business (the "Records");
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(x) all accounts receivable of Ashland as of the close of business
on the Closing Date to the extent arising out of the operation or
conduct of the Maleic Business (the "Receivables");
(xi) all goodwill and going concern value of Ashland generated
exclusively by, or associated exclusively with, the Maleic Business;
(xii) 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; and
(xiii) all other or additional privileges, rights, interests,
properties and assets of Ashland of every kind and description and
wherever located, 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 Maleic Business.
(b) The term "Excluded Assets" means:
(i) all assets identified in Section 1.02(b) of the Maleic
Business 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 Maleic Business Employees
(as defined in Section 4.03(a)) and all Contracts relating to
compensation, bonus or severance to which any Active Maleic Business
Employee or any person hired to become a Maleic Business Employee (as
defined in Section 3.09(a)) is a party;
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(v) all the assets of the Maleic Pension Plans (as defined in
Section 3.09(a)) and all the assets of Ashland and its affiliates under
any other Maleic 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 Maleic Business by Ashland or any of its
affiliates;
(viii) any shares of capital stock of any affiliate of Ashland;
(ix) the name and mark "Ashland" (in any style or design), and any
name or mark derived from or including the foregoing;
(x) all records of Ashland prepared in connection with the
Transactions; and
(xi) all financial and tax records relating to the Maleic Business
to the extent they form part of Ashland's general ledger.
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 under
any maleic anhydride product exchange agreements that are reflected in
the Statement (as
7
defined in Section 1.05(a)) in accordance with Section 1.05;
(iii) all liabilities, obligations and commitments of Ashland to
the extent expressly assumed by HoldCo in accordance with Section 4.03;
(iv) 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 Maleic
Business and (B) either (x) events occurring or 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 Maleic Business
Disclosure Liability Letter,
Ashland shall be deemed to
have received written notice
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8
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(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
(v) 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 Maleic Business, 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 Maleic Business 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
9
conduct by Ashland or any of its affiliates of any business other than
the Maleic Business;
(ii) all accounts payable of Ashland to the extent arising out of
the operation or conduct of the Maleic Business 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, 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 Maleic Business 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 Maleic
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;
(ix) the amount, if any, equal to the aggregate book value (as of
the Closing Date) of all Receivables that are not collected after the
Closing Date and remain outstanding for a period of more than 60 days
10
after their respective due dates (as reflected in the books and records
of the Maleic Business) notwithstanding that HoldCo has made reasonable
efforts to collect such Receivables, which amount shall be promptly paid
by Ashland to HoldCo and, until paid, shall be deemed for all purposes
of this Agreement to be a Retained Liability; provided, however, in the
event any one or more of the Receivables become Retained Liabilities
under this clause (ix), promptly following Ashland's payment to HoldCo
with respect to such Receivables under this clause (ix), HoldCo shall
assign all of its rights, title and interests in, to and under such
Receivables and, to the extent HoldCo thereafter receives any payments
from the relevant customers on account of such Receivables, HoldCo shall
promptly forward such payments to Ashland; and
(x) 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)(iv); provided, however, an Environmental Liability that
otherwise would be considered a Retained Liability under this Section
1.03(b)(x) 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 (x) any portion of the Premises consisting of the
parcels of real property on which the maleic anhydride plant located in
Neal, West Virginia (the "Plant") is located (which parcels are
identified as such in Section 3.03 of the Maleic Business Disclosure
Letter) to a use substantially unrelated to the use of such Premises as
of the Closing Date or (y) any other portion of the Premises to a use
other than an industrial 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
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
11
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 commencing after the Closing Date at, on or
beneath the Premises, so long as such construction activities are
undertaken in connection with (1) with respect to any portion of the
Premises consisting of the parcels of real property on which the Plant
is located, a use substantially related to the use of such Premises as
of the Closing Date or (2) with respect to any other portion of the
Premises, an industrial use of such Premises.
(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
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
12
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 Maleic Business 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).
SECTION 1.05. CLOSING CURRENT ASSETS ADJUSTMENT. (a) Within 60 days
after the Closing Date, Ashland shall prepare and deliver to HoldCo a
statement (the "Statement"), setting forth Current Assets (as defined in
Section 1.05(d)) as of the close of business on the Closing Date ("Closing
Current Assets"). A physical inventory
13
shall be conducted jointly by Ashland and Marathon on or prior to the Closing
Date, in accordance with Section 1.05(a) of the Maleic Business Disclosure
Letter, for the purpose of preparing the Statement.
(b) During the 30-day period following HoldCo's receipt of the
Statement, HoldCo and its Representatives shall be permitted to review the
working papers relating to the Statement. The Statement shall become final and
binding upon the parties on the 15th day following delivery thereof, unless
HoldCo gives written notice of its disagreement with the Statement (a "Notice
of Disagreement") to Ashland prior to such date. Any Notice of Disagreement
shall (i) specify in reasonable detail the nature of any disagreement so
asserted and (ii) only include disagreements based on mathematical errors or
based on Closing Current Assets not being calculated in accordance with this
Section 1.05. If a Notice of Disagreement is received by Ashland in a timely
manner, then the Statement (as revised in accordance with this sentence) shall
become final and binding upon Ashland and HoldCo on the earlier of (A) the
date Ashland and HoldCo resolve in writing any differences they have with
respect to the matters specified in the Notice of Disagreement or (B) the date
any disputed matters are finally resolved in writing by the Accounting Firm
(as defined below). During the 30-day period following the delivery of a
Notice of Disagreement, Ashland and HoldCo shall seek in good faith to resolve
in writing any differences that they may have with respect to the matters
specified in the Notice of Disagreement. At the end of such 30-day period,
Ashland and HoldCo shall submit to an independent accounting firm (the
"Accounting Firm") for arbitration any and all matters that remain in dispute
and were properly included in the Notice of Disagreement, in the form of a
written brief. The Accounting Firm shall be KPMG LLP or, if such firm is
unable or unwilling to act, such other nationally recognized independent
public accounting firm as shall be agreed upon by the parties hereto in
writing. Ashland and HoldCo shall instruct the Accounting Firm to render a
decision resolving the matters submitted to the Accounting Firm within 30 days
following submission. Judgment may be entered upon the determination of the
Accounting Firm in any court having jurisdiction over the party against which
such determination is to be enforced. The cost of any arbitration (including
the fees and expenses of the Accounting Firm and reasonable attorney fees and
expenses
14
of the parties) pursuant to this Section 1.05 shall be borne by HoldCo and
Ashland in inverse proportion as they may prevail on matters resolved by the
Accounting Firm, which proportionate allocations shall also be determined by
the Accounting Firm at the time the determination of the Accounting Firm is
rendered on the merits of the matters submitted. The fees and disbursements of
Ashland's Representatives incurred in connection with their preparation of the
Statement and their review of any Notice of Disagreement shall be borne by
Ashland, and the fees and disbursements of HoldCo's Representatives incurred
in connection with its review of the Statement shall be borne by HoldCo.
(c) If Closing Current Assets is less than the line item comprising
Current Assets on the Balance Sheet (as defined in Section 3.01) ("Target
Current Assets"), Ashland shall, and if Closing Current Assets is more than
Target Current Assets, HoldCo shall, within 10 business days after the
Statement becomes final and binding on the parties, make payment by wire
transfer in immediately available funds of the amount of such difference,
together with interest thereon at a rate equal to the rate of interest from
time to time announced publicly by Citibank, N.A., as its prime rate,
calculated on the basis of the actual number of days elapsed divided by 365,
from the Closing Date to the date of payment.
(d) The term "Current Assets" means the current assets of the Maleic
Business, calculated in the same way, using the same methods, as the line item
comprising current assets on the Balance Sheet, other than any current assets
relating to any Tax (as defined in the Tax Matters Agreement); provided,
however, that any liabilities, obligations or commitments of Ashland under any
maleic anhydride product exchange agreements in effect as of the Closing Date
shall be deducted, on a dollar for dollar basis, from current assets for
purposes of determining Closing Current Assets under this Section 1.05. The
foregoing principles are referred to in this Agreement as the "Balance Sheet
Principles". The parties acknowledge that the adjustment contemplated by this
Section 1.05 is intended solely to show the change in Current Assets from the
date of the Balance Sheet to the Closing Date, and that such change can only
be measured if the calculation is done in the same way, using the same
methods, for both dates. The scope of the disputes to be resolved by the
Accounting
15
Firm shall be limited to whether Closing Current Assets was calculated in
accordance with the Balance Sheet Principles, and whether there were
mathematical errors in the Statement, and the Accounting Firm is not to make
any other determination, including any determination as to whether GAAP was
followed for the Balance Sheet or the Statement. Any items on or omissions
from the Balance Sheet that are based upon errors of fact or mathematical
errors or that are not in accordance with GAAP shall be retained for purposes
of calculating Closing Current Assets.
(e) Following the Closing, HoldCo shall not modify the accounting
books and records of the Maleic Business on which the Statement is to be based
that would in any way affect the Balance Sheet or the Statement. Without
limiting the generality of the foregoing, no changes shall be made in any
reserve or other account existing as of the date of the Balance Sheet that
would in any way affect the Balance Sheet or the Statement except, in the case
of the Statement, as a result of events occurring after the date of the
Balance Sheet and, in such event, only in a manner consistent with past
practices of the Maleic Business. HoldCo shall cooperate in the preparation of
the Statement. HoldCo acknowledges that Ashland shall have the primary
responsibility and authority for preparing the Statement. During the period of
time from and after the Closing Date through the resolution of any adjustment
with respect to Closing Current Assets contemplated by this Section 1.05,
HoldCo shall afford to Ashland and its Representatives reasonable access
during normal business hours to all the properties, books, contracts,
personnel and records of the Maleic Business relevant to the preparation of
the Statement and the adjustment contemplated by this Section 1.05.
SECTION 1.06. 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 Maleic Business shall be determined pursuant to the Tax Matters Agreement.
SECTION 1.07. NEVILLE ISLAND MALEIC ASSETS PROVISIONS.
(a) During the Option Period (as defined below), HoldCo shall be
entitled to elect to purchase from Ashland
16
all of Ashland's right, title and interest in, to and under the assets of the
maleic anhydride portion of the plant (the "Neville Island Maleic Facility")
located at Neville Island, Pennsylvania and the assets that are used, held for
use or intended to be used exclusively in the maintenance or operation of the
Neville Island Maleic Facility (collectively, the "Neville Island Maleic
Assets") by providing written notice to Ashland of such election (the "Option
Notice"). For the avoidance of doubt, the Neville Island Maleic Assets shall
not include any of the assets that are used, held for use or intended to be
used in the unsaturated polyester resin portion of the plant located at
Neville Island, Pennsylvania. If HoldCo exercises its right to purchase
hereunder, (i) the purchase price for the Neville Island Maleic Assets shall
be equal to the fair market value of the Neville Island Maleic Assets,
determined, as of the date on which HoldCo delivers the Option Notice to
Ashland, by Morgan Joseph & Co. Inc. (or such other independent investment
banking or appraisal firm as may be agreed upon by Ashland and HoldCo after
the Closing Date), using the same valuation methodology used by Morgan Joseph
& Co. Inc. for purposes of establishing the value of the Maleic Business in
connection with the Transactions being effected on the Closing Date under the
Master Agreement, (ii) Ashland and HoldCo shall use their reasonable best
efforts to cause the closing of the purchase and sale of the Neville Island
Maleic Assets to occur within 60 days of the date on which HoldCo delivers the
Option Notice to Ashland and (iii) the other terms of the purchase and sale
transaction shall be negotiated in good faith between Ashland and HoldCo,
provided that such terms and conditions shall be substantially consistent with
the terms and conditions applicable to the Transactions effected pursuant to
this Agreement. Ashland shall provide HoldCo at least two months' prior
written notice of the commencement of permanent demolition or disassembly of
the Neville Island Maleic Facility. "Option Period" means the period beginning
on the Closing Date and terminating and expiring upon the earliest to occur of
(i) 60 days after the date of a prior written notice to HoldCo by Ashland of
the commencement of permanent demolition or disassembly of the Neville Island
Maleic Facility (provided that commencement of such permanent demolition or
disassembly of the Neville Island Maleic Facility occurs promptly thereafter),
(ii) the sale of the Neville Island Maleic Assets to HoldCo or a third party
(provided that, in the case of a sale to a third party, Ashland shall have
complied with Section 1.07(b))or (iii) the fifth anniversary of the Closing
Date.
17
(b) Ashland shall be free to negotiate with any third party to sell,
transfer or otherwise dispose of all or any portion of the Neville Island
Maleic Assets. Not fewer than 30 days nor more than 90 days prior to any
proposed sale, transfer or other disposition of all or substantially all of
the Neville Island Maleic Assets to a third party prior to the expiration of
the Option Period, Ashland shall provide HoldCo a written notice (the
"Proposed Sale Notice"), which shall (i) set forth the name of the proposed
purchaser and the principal terms and conditions of the proposed transaction,
including the consideration proposed to be received by Ashland in such
transaction and the proposed date for the closing of such transaction, and
(ii) offer to sell the Neville Island Maleic Assets to HoldCo on the same
terms and conditions described in the Proposed Sale Notice (provided, however,
that if any part of the consideration to be received by Ashland described in
the Proposed Sale Notice is in a form other than cash, HoldCo shall be
entitled to pay cash in an amount equal to the fair market value of such
consideration, as determined by an independent investment banking or appraisal
firm agreed upon by HoldCo and Ashland). If HoldCo desires to purchase the
Neville Island Maleic Assets on such terms and conditions, it shall provide
written notice of its election to do so (the "Exercise Notice") to Ashland on
or before the 30th day after the date HoldCo receives the Proposed Sale
Notice, and thereafter Ashland and HoldCo shall use their reasonable best
efforts to cause the closing of HoldCo's purchase on such terms and conditions
to occur on the proposed date for the closing of the transaction set forth in
the Proposed Sale Notice. In the event HoldCo does not give Ashland the
Exercise Notice or an Option Notice on or prior to the 30th day after the date
HoldCo receives the Proposed Sale Notice, then, during the immediately
following 60-day period, Ashland may sell all or substantially all of the
Neville Island Maleic Assets to the proposed purchaser named in the Proposed
Sale Notice on terms and conditions which are not materially less favorable,
taken as a whole, to such proposed purchaser than the terms and conditions set
forth in the Proposed Sale Notice. In the event that Ashland shall not have
consummated the sale of all or substantially all of the Neville Island Maleic
Assets to such proposed purchaser
18
within such 60-day period, any subsequent proposed sale of all or
substantially all of the Neville Island Maleic Assets shall once again be
subject to the terms of this Section 1.07(b).
(c) Notwithstanding anything to the contrary in this Agreement,
HoldCo agrees that the provisions of this Section 1.07 shall be subject in all
respects (i) to the provisions of any Contract relating to the Neville Island
Maleic Assets entered into prior to the date of this Agreement, including each
of the Asset Purchase Agreement, the Services Agreement, the Irrevocable
Easement Agreement and the Confidentiality Agreement (as such Contracts may be
amended, modified or supplemented from time to time) in each case dated as of
April 28, 1995, between Aristech Chemical Corporation and Ashland, (ii) to the
rights, responsibilities and obligations of the parties to each such agreement
and their respective successors and assigns and (iii) to the receipt of all
Consents that must be obtained by virtue of the consummation of the sale,
transfer or other disposition of any of the Neville Island Maleic Assets.
HoldCo acknowledges that the Consent of Sunoco, Inc. shall be required in
order to consummate the sale, transfer or other disposition of any of the
Neville Island Maleic Assets by Ashland to HoldCo. Ashland makes no
representations or warranties of any kind, express or implied, relating to the
receipt of such Consent. Ashland and HoldCo shall each use their reasonable
best efforts to obtain such Consent; provided, however, that they shall not be
required to make any payment to any person in order to obtain such Consent.
Ashland shall not have any liability or obligation whatsoever arising out of
or relating to any failure to obtain such Consent, so long as Ashland shall
have used its reasonable best efforts to obtain such Consent.
ARTICLE II
The Closing
SECTION 2.01. CLOSING DATE. The closing of the Maleic 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.
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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) in the form attached hereto as Exhibit A;
(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;
(c) The parties thereto shall enter into a supply
agreement in the form attached hereto as Exhibit C (the "Maleic
Supply Agreement"); and
(d) The parties thereto shall enter into a transition
services agreement in the form attached hereto as Exhibit D (the
"Transition Services 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
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 "Maleic Business Disclosure
Letter"):
SECTION 3.01. FINANCIAL STATEMENTS. Section 3.01 of the Maleic
Business 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 Maleic Business (such financial
statements
20
and the notes thereto, the "Financial Statements"). The Financial Statements
present fairly, in all material respects, the tangible assets to be sold (in
each case with Ashland's aggregate liabilities, obligations and commitments
under maleic anhydride product exchange agreements outstanding as of the
applicable balance sheet date being reflected as an offset to Ashland's
aggregate accounts receivable relating to maleic anhydride product exchange
agreements outstanding as of the applicable balance sheet date) and income
before taxes of the Maleic Business 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 Maleic Business
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 Maleic Business, other than any such property
or interest constituting an Excluded Asset (individually, an "Owned
Property"). Section 3.03 of the Maleic Business 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 Maleic Business, other than any such property or
interest constituting an Excluded Asset (individually, a "Leased Property").
21
(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. INTELLECTUAL PROPERTY; TECHNOLOGY. (a) The conduct of
the Maleic Business as presently conducted does not violate, conflict with or
infringe the Intellectual Property (as defined in Section 6.01(b)) of any
other person, except for such violations, conflicts or infringements that have
not had and would not reasonably be expected to have a Maleic Business
Material Adverse Effect (as defined in Section 6.01(b)). During the past 12
months Ashland has not received any written communication alleging that
Ashland has in the conduct of the Maleic Business violated any rights relating
to Intellectual Property of any other person. Except for the Assigned
Technology, there is no material Technology or Intellectual Property of
Ashland that is used, held for use or intended to be used in the operation or
conduct of the Maleic Business.
(b) Except as would not reasonably be expected to have a Maleic
Business Material Adverse Effect, (i) all confidential Assigned Technology has
been maintained in confidence in accordance with protection procedures
customarily used by Ashland to protect rights of like importance; (ii) Ashland
has not granted any license of any kind relating to any Assigned Technology,
except non-exclusive licenses to end-users in the ordinary course of business;
(iii) no Claim against or involving Ashland regarding the ownership, validity,
enforceability, effectiveness or use of any Assigned Technology is pending or,
to the knowledge of Ashland, threatened; and (iv) no Consent of any person
will be required for the use of the Assigned Technology by HoldCo in
connection with the operation or conduct of the Maleic Business immediately
following the Closing as presently conducted by Ashland.
SECTION 3.05. CONTRACTS. (a) Except for Contracts that will not be
binding on the Transferred
22
Assets or the Maleic Business 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 Maleic Business (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 that limits the conduct of the
Maleic Business 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;
(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;
(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;
23
(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;
(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 the Maleic Business), 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 Maleic
Business is 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
24
of the Transferred Assets or the Maleic Business after the Closing Date.
(b) All Contracts listed in the Maleic Business 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 Maleic Business Material Adverse Effect. Ashland has
performed all obligations required to be performed by 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
Maleic Business 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 Maleic Business Disclosure Letter.
(c) Section 3.05(c) of the Maleic Business 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 Maleic 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 Maleic Business Material Adverse Effect.
SECTION 3.6. PERMITS. Section 3.06 of the Maleic Business Disclosure
Letter sets forth all certificates, licenses, permits, authorizations,
Consents and approvals issued or granted to Ashland by, and all exemptions of,
or registrations or filings with, Governmental Entities ("Permits"), that are
used, held for use or intended to be used exclusively in the operation or
conduct of the Maleic Business, except for those Permits the absence of which
would not reasonably be expected to have a Maleic Business Material Adverse
Effect. All such Permits are transferable
25
by Ashland to HoldCo. 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 Maleic Business 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 Maleic Business 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 Maleic Assignment and Assumption, except for any such
suspensions, modifications, revocations or nonrenewals that would not
reasonably be expected to have a Maleic Business 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 repair or to be
suitable for such uses would not reasonably be expected to have a Maleic
Business Material Adverse Effect.
SECTION 3.08. CLAIMS. Section 3.08 of the Maleic Business 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 Maleic Business
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 Maleic Business ("Maleic Pension
Plans") and all "employee welfare benefit plans" (as defined in Section
26
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 Maleic Business (other than any former
employee of the Maleic Business who became employed by MAP or any of its
subsidiaries following termination of employment with Ashland or any of its
affiliates) (each, a "Maleic Business Employee") (all the foregoing, including
Maleic Pension Plans, being herein called "Maleic Benefit Plans"). Ashland has
provided to Marathon true, complete and correct copies of (i) each Maleic
Benefit Plan (or, in the case of any unwritten Maleic 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 Maleic Benefit Plan (if any such report was required), (iii) the most
recent summary plan description for each Maleic 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
Maleic Benefit Plan.
(b) There does not exist as of the date of this Agreement, nor do
any circumstances exist as of the date of this Agreement that would reasonably
be expected to result in, any Employee Benefits Liability (as defined below),
whether under any Maleic 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 Maleic Business Material Adverse
Effect or (ii) that would have been prohibited by Section 4.01 if the terms of
such
27
section had been in effect as of and after the date of the Balance Sheet.
SECTION 3.11. COMPLIANCE WITH LAWS. (a) The Maleic Business is 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 Maleic Business Material Adverse Effect. To
the knowledge of Ashland, Ashland has not received any written communication
from a Governmental Entity that alleges that the Maleic Business is 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) Except for such matters that would not reasonably be expected to
have a Maleic Business Material Adverse Effect, (i) to the knowledge of
Ashland, Ashland has not received any written communication from a
Governmental Entity that alleges that the Maleic Business is in violation of
any Environmental Law that has not been finally resolved with such
Governmental Entity, (ii) Ashland holds all Permits required to conduct the
Maleic Business 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 (as defined below) at or originating from the Premises, and
no Hazardous Materials have been handled, generated, stored, transported or
disposed of by the Maleic Business, 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,
28
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 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 Maleic Business 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 Maleic
Business; (ii) to the knowledge of Ashland, no union organizational campaign
is in progress with respect to the Maleic Business 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
Maleic Business; (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 Maleic Business; (v) there are not any
pending union grievances against Ashland in connection with the conduct of the
Maleic
29
Business 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 Maleic Business against Ashland or any Maleic Business 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 Maleic Business.
SECTION 3.13. SUFFICIENCY OF TRANSFERRED ASSETS. Except for the
exclusion of the Excluded Assets and assuming that (i) HoldCo has the ability
to provide to the Maleic Business all corporate-level services of the type
that are currently provided to the Maleic Business by Ashland or any of its
affiliates and (ii) the services to be provided by Ashland to HoldCo pursuant
to the Transition Services Agreement will be provided as contemplated therein,
the Transferred Assets are sufficient for the operation and conduct of the
Maleic Business 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 Maleic Business Material Adverse
Effect.
SECTION 3.14. INVENTORY. Except as would not reasonably be expected
to have a Maleic Business Material Adverse Effect, the Inventory is generally
of a quality usable or salable in the ordinary course of the Maleic Business.
SECTION 3.15. RECEIVABLES. Except as would not reasonably be
expected to have a Maleic Business Material Adverse Effect, the Receivables
have been collected, or are valid and enforceable claims arising in the
ordinary course of business and are, in the good faith belief of Ashland's
management, collectible, in the aggregate respective amounts so reflected on
the Balance Sheet, net of the applicable reserves (if any) reflected on the
Balance Sheet. Section 3.15 of the Maleic Business Disclosure Letter sets
forth, as of the date of this Agreement, all accounts receivable of Ashland
arising out of the operation or conduct of the Maleic Business which presently
remain unpaid and are owed by a debtor in any case under the Bankruptcy Code
or any other Law relating to bankruptcy or insolvency.
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ARTICLE IV
Covenants
---------
SECTION 4.01. COVENANTS OF ASHLAND RELATING TO CONDUCT OF MALEIC
BUSINESS. (a) Except for matters set forth in Section 4.01 of the Maleic
Business Disclosure Letter or otherwise contemplated by the Transaction
Agreements, from the date of this Agreement to the Closing, Ashland shall
conduct the Maleic Business in the usual, regular and ordinary course in
substantially the same manner as previously conducted, including completion of
the maintenance "turnaround" of the Plant currently scheduled for June 2004
and, to the extent not included in such turnaround, the item referred to in
Section 3.10 of the Maleic Business Disclosure Letter and items 1, 2, 3, 4
(except to the extent that work with respect to such item is projected to be
conducted during Ashland's 2005 fiscal year), 5, 6 and 7 in the capital
expenditure budget set forth in Section 4.01(a)(v) of the Maleic Business
Disclosure Letter. Without limiting the generality of the foregoing, Ashland
shall use its reasonable best efforts to (i) preserve the material business
relationships of the Maleic Business with customers, suppliers, distributors
and others with whom Ashland deals in connection with the conduct of the
Maleic Business in the ordinary course of business and retain its present
employees who are involved in the operation of the Maleic Business, (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 Maleic
Business 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 Maleic Business or any of the
Transferred Assets. In addition, except as set forth in Section 4.01 of the
Maleic Business Disclosure Letter or otherwise contemplated by the Transaction
Agreements, Ashland shall not do any of the following in connection with the
Maleic Business 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 Maleic
Benefit Plan (or any plan that would be a Maleic Benefit Plan if adopted
or established) in a manner affecting any Maleic Business
31
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;
(ii) grant to any Maleic Business 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 Maleic Business 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 Maleic Business 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 Maleic Business and that are not reflected in
the capital expenditure budget set forth in Section 4.01(a)(v) of the
Maleic Business 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 Maleic Business and is not
reflected in the capital expenditure budget set forth in Section
4.01(a)(v) of the Maleic Business 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
32
entered into in the ordinary course of business with aggregate annual
lease payments not in excess of $50,000;
(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 Maleic Business 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 Maleic Business). HoldCo
will not have any rights under the Ashland Insurance Policies from and after
the Closing Date.
(d) SURVEY. During the 90-day period following the date of this
Agreement, Ashland shall afford to HoldCo, Marathon and their respective
Representatives reasonable access during normal business hours to the Premises
for the purpose of conducting an ALTA land title survey (at Marathon's
expense) of the Premises and all appurtenant easements. Following the
completion of that survey, a proper legal description of the Premises shall be
prepared and shall be attached to the deed referred to in Section 2.02(a).
SECTION 4.02. REFUNDS AND REMITTANCES. After the Closing, if Ashland
or any of its affiliates receive any
33
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 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, subject
to Section 4.03(d), 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 Maleic Business Employees who on the
Closing Date are actively at work (each, an "Active Maleic Business
Employee"). For purposes of this Agreement, any Maleic Business 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 Maleic
Business Employee. Each Maleic Business
34
Employee who accepts such an offer of employment is referred to herein as a
"Transferred Maleic Business Employee". Immediately following the Closing,
HoldCo shall, or shall cause one or more of its affiliates to, provide each
Transferred Maleic Business Employee (i) with overall compensation that is at
least equivalent to such Transferred Maleic Business Employee's overall
compensation in effect immediately prior to the Closing and (ii) subject to
the provisions of this Section 4.03, with appropriate employee benefits as
determined by HoldCo or such affiliate.
(b) CERTAIN WELFARE BENEFITS MATTERS. (i) Immediately following the
Closing, HoldCo or one or more of its affiliates shall allow Transferred
Maleic Business Employees to participate in benefit plans that provide for
group welfare benefits including, for the avoidance of doubt, vacation and
severance benefits (the "HoldCo Maleic Welfare Plans"). HoldCo shall grant to
the Transferred Maleic Business Employees credit for service prior to the
Closing with Ashland and its affiliates for all purposes under the HoldCo
Maleic Welfare Plans (other than the HoldCo Retiree Medical Plan (as defined
in Section 4.03(f))). 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 Maleic Business Employees and their
dependents under the HoldCo Maleic Welfare Plans to the extent satisfied or
waived under the applicable corresponding Maleic Benefit Plan immediately
prior to the Closing and (B) provide each Transferred Maleic Business 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
Maleic Business Employees and their dependents commence participation in the
applicable HoldCo Maleic Welfare Plan) for purposes of satisfying any
applicable deductible or out-of-pocket requirements under any HoldCo Maleic
Welfare Plans in which the Transferred Maleic Business 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.
35
(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 Maleic Business Employees
and their dependents, except that HoldCo shall be responsible for such
claims to the extent such claims are reflected on the Statement 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 Maleic Business 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 Maleic Business 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
36
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 Maleic Business 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 Maleic Business
Employee as of the Closing. To the extent that a Transferred Maleic Business
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 Maleic Business Employee as of the Closing, HoldCo
shall discharge the liability for such vacation days.
(d) COLLECTIVELY BARGAINED EMPLOYEES. HoldCo shall comply with all
applicable Laws relating to negotiations with unions in respect of the
Transactions contemplated by this Agreement and shall bear all expenses of any
compensation resulting from such negotiations. HoldCo shall indemnify Ashland
from, and hold it harmless against, any liability arising out of, attributable
to or resulting from HoldCo's nonassumption of any collective bargaining
agreement that covers one or more Transferred Maleic Business Employees;
provided, however, that such indemnification shall not include benefits and
obligations accrued and payable under Ashland's pension plans and employment
practices prior to the Closing.
(e) PENSION BENEFIT. 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 Maleic Business Employees who immediately prior to
the Closing are salaried or non-union hourly employees. HoldCo shall grant
such Transferred Maleic Business Employees credit for service prior to the
Closing with Ashland and its affiliates for purposes of determining
eligibility to participate and vesting under the HoldCo Retirement Plan to the
same extent that such service is recognized for purposes of eligibility to
participate and vesting under the Ashland Inc. and Affiliates Pension Plan
(the "Ashland Pension Plan") as of the Closing Date.
(f) RETIREE MEDICAL BENEFIT. Immediately following the Closing,
HoldCo or one or more of its
37
affiliates shall have in effect a retiree medical plan or plans (as
applicable, the "HoldCo Retiree Medical Plan") that shall provide benefits to
Transferred Maleic Business Employees who immediately prior to the Closing are
salaried or non-union hourly employees that are the same as those offered by
MAP to its employees, subject to MAP's right to amend or modify its retiree
medical plan in the ordinary course of business in accordance with the
reservation of rights provisions of such plan. HoldCo shall grant such
Transferred Maleic Business Employees credit for service prior to the Closing
with Ashland and its affiliates for purposes of determining eligibility to
receive retiree medical subsidies and for purposes of determining level of
benefits and benefit accruals under the HoldCo Retiree Medical Plan to the
same extent that such service is recognized for purposes of eligibility to
participate and vesting under the Ashland Pension Plan as of the Closing Date.
(g) WARN ACT. HoldCo agrees to provide any required notice under the
Worker Adjustment and Retraining Notification Act, as amended (the "WARN
Act"), and any similar state Law that may be applicable to HoldCo, and to
otherwise comply with any such applicable Law with respect to any "plant
closing" or "mass layoff" (in each case as defined in the WARN Act) or group
termination or similar event affecting Maleic Business Employees (including as
a result of the consummation of the Transactions) and occurring on or after
the Closing Date. HoldCo shall notify Ashland after the Closing of any layoffs
of any Transferred Maleic Business Employees in the 90 day period after the
Closing.
(h) 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.
(i) 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
38
information relating to the Transferred Maleic Business Employees as HoldCo
may reasonably request with respect to Transferred Maleic Business 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 Maleic Business Employee that will include all remuneration earned
by such Transferred Maleic Business Employee from Ashland or HoldCo during
such calendar year.
(j) INTENT. It is HoldCo's intent that overall compensation and
benefits provided by HoldCo to the Transferred Maleic Business Employees will
have comparable value to those provided to them by Ashland immediately prior
to the Closing. It is HoldCo's intent to provide competitive compensation and
benefits to all employees (including collectively bargained employees) at the
Plant.
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 Maleic
Business (and, to the extent reasonably requested, copies of the portions
relating to the Maleic Business 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 Maleic Business (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 Maleic Business 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 Maleic Business, and shall provide copies of the relevant
portions thereof to HoldCo at the Closing.
39
SECTION 4.06. AGREEMENT NOT TO COMPETE. (a) For a period of five
years from the Closing Date, Ashland shall not, and shall cause each of its
subsidiaries (other than Ashland-Suedchemie Kernfest GmbH and Ashland Avebene
S.A., in each case for so long as neither Ashland nor any of its subsidiaries
own, directly or indirectly and individually or collectively, more than 50% of
the equity interests of such entities) not to, directly or indirectly: (i)
engage in the business of manufacturing or marketing maleic anhydride
("Competitive Activities") within North America; provided, however, that this
clause (i) shall not apply to the marketing of briquette maleic anhydride
acquired from Marathon or any of its subsidiaries; (ii) solicit or recruit any
Transferred Maleic Business Employee; provided, however, that this clause (ii)
shall not apply to (A) a general advertisement or solicitation program that is
not specifically targeted at such persons or (B) any employee whose employment
by HoldCo has been terminated prior to such solicitation or recruitment; or
(iii) solicit any customer of the Maleic Business within North America or any
person who, within one year prior to the time of such solicitation, was a
customer of the Maleic Business within North America, for the purpose of
marketing maleic anhydride in competition with the Maleic Business in North
America with the knowledge of such customer relationship; provided, however,
that this clause (iii) shall not apply to the marketing of briquette maleic
anhydride acquired from Marathon or any of its subsidiaries. Notwithstanding
the foregoing, this Section 4.06(a) shall be deemed not breached as a result
of: (i) the ownership by Ashland or any of its subsidiaries of (A) less than
an aggregate of 10% of any class of stock of a person engaged, directly or
indirectly, in Competitive Activities or (B) less than 10% in value of any
instrument of indebtedness of a person engaged, directly or indirectly, in
Competitive Activities; or (ii) the acquisition by Ashland or any of its
subsidiaries of any person that, prior to the acquisition thereof, is not an
affiliate of Ashland and that engages, directly or indirectly, in Competitive
Activities within North America (A) if such Competitive Activities within
North America account for less than 20% of such person's consolidated annual
revenues for its most recently completed fiscal year or (B) if Ashland
disposes of or agrees to dispose of or discontinues such person's business
engaged in Competitive Activities within North America within one year after
the closing of such acquisition.
40
(b) Ashland hereby agrees that the geographic and business scope and
the duration of the covenants and restrictions in this Section 4.06 are fair
and reasonable. However, if any provision of this Agreement is held to be
invalid or unenforceable by reason of the geographic or business scope or
duration thereof, the court or other tribunal is hereby directed to construe
and enforce this Section 4.06 as if the geographic or business scope or the
duration of such provision has been more narrowly drawn as so not to be
invalid or unenforceable, and such invalidity or unenforceability shall not
affect or render invalid or unenforceable any other provision of this
Agreement.
(c) Ashland acknowledges that HoldCo will have no adequate remedy at
law if Ashland violates or breaches any term of this Section 4.06. In such
event, HoldCo shall have the right (upon compliance with any necessary
prerequisites imposed by law upon the availability of such remedies), in
addition to any other rights or remedies that it may have to obtain, in any
court of competent jurisdiction, injunctive relief to restrain any breach or
threatened breach of, or otherwise to specifically enforce the terms of, this
Section 4.06, and to exercise such remedies cumulatively or in conjunction
with all other rights and remedies provided by contract (hereunder or
otherwise, including the right to indemnity under Article XIII of the Master
Agreement), at law or in equity.
(d) All the covenants in this Section 4.06 are intended by each
party hereto to, and shall, be construed as an agreement independent of any
other provision in this Agreement, and the existence of any claim or cause of
action of Ashland against HoldCo, whether predicated on this Agreement or
otherwise (other than a claim or cause of action of Ashland against HoldCo for
a material breach of the Maleic Supply Agreement that is continuing after
written notice by Ashland thereof and the expiration of a reasonable cure
period in accordance with the terms of the Maleic Supply Agreement), shall not
constitute a defense to the enforcement by HoldCo of any covenant in this
Section 4.06.
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 Maleic Assignment and Assumption.
41
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
otherwise indicate thereon that the Maleic Business is 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 Maleic Business 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 Maleic Business.
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 Maleic Business 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 Maleic Business and in part to any other business of Ashland or any of
its subsidiaries (collectively, "Ashland Joint Contracts") in order to
determine whether such Contract
42
should be terminated and replaced on or prior to the Closing Date by a
separate Contract relating to the Maleic Business on the one hand (any such
separate Contract being an Assigned Contract, so long 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 Maleic Business 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
(other than the Car Service Contract dated as of April 16, 1990, between
Ashland and General American Transportation Corporation, the Car Leasing
Agreement dated as of January 3, 1984, between Ashland and General Electric
Railcar Leasing Services Corporation, the Car Service Agreement dated as of
April 1, 1989, between Ashland and Union Tank Car Company and the Master
Supplier Agreement dated as of January 1, 1990, between Ashland and Union Tank
Car Company) that relates to a substantial portion of the business of Ashland
and its subsidiaries. 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.
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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 Maleic 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; MALEIC BUSINESS 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 Maleic Business
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 Maleic
Business 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
44
that it discloses an exception to such representation or warranty.
(b) For all purposes hereof:
"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,
trade names, business names, brand names, copyrights, copyright registrations
and proprietary designs and design registrations.
"Maleic Business" means the business of (i) manufacturing maleic
anhydride at the Plant, (ii) acquiring maleic anhydride from parties not
affiliated with Ashland and (iii) marketing, distributing and selling the
foregoing, in each case as conducted by Ashland, directly or indirectly
through certain of its subsidiaries, as of the date of this Agreement.
"Maleic Business 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 Maleic Business, taken
as a whole, (ii) on the ability of Ashland to perform its obligations under
this Agreement and the other agreements
45
and instruments to be executed and delivered in connection with this Agreement
or (iii) on the ability of Ashland to consummate the Maleic Assignment and
Assumption. For purposes of this Agreement, "Maleic Business 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 Maleic Business operates and not
specifically relating to the Maleic Business, (C) any announcement by Ashland
of the Transactions or of its intention to transfer the Maleic Business or (D)
the execution of the Transaction Agreements and the Ancillary Agreements and
the consummation of the Transactions.
"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 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 Maleic Business Disclosure Letter and (x) Liens set forth in Section
3.03 of the Maleic Business Disclosure Letter.
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
46
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 in writing signed on behalf of
Ashland and HoldCo with the written consent of Marathon.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, all as of the date first written above.
ASHLAND INC.,
by /s/ James J. O'Brien
-------------------------------
Name: James J. O'Brien
Title: Chief Executive
Officer
ATB HOLDINGS INC.,
by /s/ James J. O'Brien
-------------------------------
Name: James J. O'Brien
Title: President