EX-10.(P) 8 dex10p.htm AMENDMENT NO. 1 TO PUT/CALL AGREEMENT Amendment No. 1 to Put/Call Agreement

EXHIBIT 10(p)

 

EXECUTION COPY

 

AMENDMENT NO. 1, dated as of December 31, 1998 (this “Amendment”) to the PUT/CALL, REGISTRATION RIGHTS AND STANDSTILL AGREEMENT dated as of January 1, 1998 (the “Agreement”) among MARATHON OIL COMPANY, an Ohio corporation, USX CORPORATION, a Delaware corporation, ASHLAND INC., a Kentucky corporation and MARATHON ASHLAND PETROLEUM LLC, a Delaware limited liability company (collectively, the “Parties”).

 

WHEREAS, the Parties have heretofore entered into the Agreement (capitalized terms used in this Amendment and not defined herein shall have the meanings given such terms in the Agreement); and

 

WHEREAS, the Parties wish to amend the Agreement to reflect certain changes to the prices set forth therein.

 

NOW, THEREFORE, in consideration of the mutual agreements herein contained and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the Parties agree as follows:

 

Section 1. Amendments:

 

(a) Section 1.01 of the Agreement is amended to insert the following definition after the definition of “Price Index” and prior to the definition of “Private Label Packaged Motor Oil Business”:

 

“‘Price Reduction’ shall have the meaning set forth in Section 2.02(b) of the Put/Call, Registration Rights and Standstill Agreement.”

 

(b) Section 2.02(a) of the Agreement is amended to read in its entirety as follows:

 

“(a) Amount. The Special Termination Price shall be an amount equal to (i) the product of (x) 100% of the Appraised Value of the Company multiplied by (y) the Terminating Member’s Percentage Interest, less (ii) if the Terminating Member is Ashland, the Price Reduction.”

 

(c) Sections 2.02(b) and 2.02(c) as numbered in the Agreement are numbered Sections 2.02(c) and 2.02(d) respectively and a new Section 2.02(b) of the Agreement is added to read in its entirety as follows:

 

“(b) Price Reduction. Price Reduction means an amount equal to the excess of (i) $14,139,519, which is the agreed present value at January 1, 1998, of the tax cost to Ashland (“Present Value Tax Cost”) of allocating to it depreciation deductions as shown in Chart A in Schedule 2.02(b)(1) (“Chart A Depreciation”), as compared to allocating to Ashland depreciation deductions as shown in Chart B in Schedule 2.02(b)(1) (“Chart B Depreciation”), over (ii) the present value at January 1, 1998, of the tax cost to Ashland of allocating to it Chart A Depreciation as compared to Chart B Depreciation, taking into account Ashland’s decreased taxable gain or increased taxable loss on the sale of all of its Membership Interest in the Company when Chart A Depreciation as compared to Chart B Depreciation is allocated to it (“Present Value Tax Cost on Sale”).

 

“Chart A Depreciation represents the agreed depreciation deductions with respect to property contributed by Ashland on the Closing of the Asset Transfer and Contribution Agreement allocated to it through the depreciable life of such property as set forth in Section 6.03 of the LLC Agreement as amended and restated as of December 31, 1998. Chart B Depreciation represents the agreed depreciation deductions with respect to property contributed by Ashland on the Closing of the Asset Transfer and Contribution Agreement allocated to it through the depreciable life of such property as set forth in Sections 6.03, 6.12 and 4.01(c) of such agreement as in effect prior to such restatement as if it were in effect through such depreciable life, but treating the assets comprising the Merrill Lynch Master Lease Program as Subleased Property listed on Schedule 4.01(c) for purposes of Sections 4.01(c) and 6.12. Chart A Depreciation and Chart B Depreciation shall not be


revised to reflect the actual amount of depreciation deductions with respect to property contributed by Ashland on the Closing of the Asset Transfer and Contribution Agreement allocated to Ashland, or to take into account the sale or other disposition by the Company of any of the property contributed by Ashland on the Closing of the Asset Transfer and Contribution Agreement.

 

“Solely for purposes of determining the Present Value Tax Cost and the Present Value Tax Cost on Sale, the following factors and assumptions have been and will be used: (i) discount rate of 9% per annum, (ii) combined Federal/State income tax rate of 39%, (iii) the cash flow impact of a reduction in Ashland’s income taxes for a year as the result of Chart A or Chart B Depreciation is realized on the last day of that year and (iv) the cash flow impact of Ashland’s income tax expense or benefit arising from a sale of all of its membership interest in the Company is incurred or realized on the last day of the year of sale.

 

“Schedule 2.02(b)(2) reflects, for purposes of illustration, the Present Value Tax Cost on Sale if Ashland sells all of its 38% membership interest in the Company on January 1, 2005. The Present Value Tax Cost on Sale with respect to Ashland’s sale of all of its interest in the Company at a date different than January 1, 2005, shall be computed in the same manner as the Present Value Tax Cost on Sale illustrated in Schedule 2.02(b)(2).

 

“Consistent with the foregoing principle, if Ashland sells all or part of its Membership Interest to Marathon in a transaction not otherwise described in this Agreement, the price paid by or on behalf of Marathon for such interest shall be appropriately reduced.”

 

(d) Attached new Schedules 2.02(b)(1) and 2.02(b)(2) are inserted between Schedule 1.03(d) and Schedule 14.01(a).

 

(e) Section 3.02(a) of the Agreement is amended to read in its entirety as follows:

 

“(a) Amount. The Marathon Call Price shall be an amount equal to (i) the product of (x) 115% of the Appraised Value of the Company multiplied by (y) Ashland’s Percentage Interest, less (ii) the Price Reduction.”

 

(f) Section 4.02(a) of the Agreement is amended to read in its entirety as follows:

 

“(a) Amount. The Ashland Put Price shall be an amount equal to the sum of (i) for that portion of the Ashland Put Price to be paid to Ashland in Cash or in Marathon Debt Securities, an amount equal to the product of (1) the excess of (x) the product of (A) 85% of the Appraised Value of the Company multiplied by (B) Ashland’s Percentage Interest over (y) the Price Reduction, multiplied by (2) the percentage of the Ashland Put Price to be paid to Ashland in Cash and/or in Marathon Debt Securities, plus (ii) for that portion of the Ashland Put Price to be paid to Ashland in Marathon Equity Securities the same as above but substituting 90% for 85% in Clause (A) and substituting Marathon Equity Securities for Cash and/or Marathon Debt Securities in clause (2).”

 

Section 2. Parties in Interest. This Amendment shall inure to the benefit of, and be binding upon, the Parties hereto and their respective successors, legal representatives and permitted assigns.

 

Section 3. Counterparts. This Amendment may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

Section 4. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF. ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY CLAIM OR PROCEEDING RELATED TO OR ARISING OUT OF THIS AMENDMENT, OR ANY TRANSACTION OR CONDUCT IN CONNECTION HEREWITH, IS WAIVED.


IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the day and year first above written.

 

MARATHON OIL COMPANY

   ASHLAND INC.

By:/s/ V. G. Beghini

   By:/s/Paul W. Chellgren

Name: V. G. Beghini

   Name: Paul W. Chellgren

Title: President

  

Title:   Chairman of the Board and Chief Executive Officer

USX CORPORATION

   MARATHON ASHLAND PETROLEUM, LLC

By:/s/ Thomas J. Usher

   By:/s/ J. L. Frank

Name: Thomas J. Usher

   Name: J. L. Frank

Title: Chairman of the Board and Chief Executive Officer

   Title: President


Put/Call, Registration Rights and Standstill Agreement Schedule 2.02(b)(1) Chart A and Chart B Depreciation

 

Chart A

 

Calendar Year


   Depreciation
Allocated to
Ashland


   Combined
Fed. & State
Inc. Tax @ 39%


   Present Value
Tax Effect @
9%


1998

   $ 116,601,400    $ 45,474,546    $ 41,719,767

1999

     209,882,520      81,854,183      68,895,028

2000

     167,906,016      65,483,346      50,565,158

2001

     134,324,816      52,386,678      37,112,044

2002

     107,506,491      41,927,531      27,250,019

2003

     85,935,232      33,514,740      19,983,745

2004

     76,373,917      29,785,828      16,293,868

2005

     76,373,917      29,785,828      14,948,502

2006

     76,373,917      29,785,828      13,714,222

2007

     76,373,917      29,785,828      12,581,855

2008

     38,361,861      14,961,126      5,797,928

Totals

   $ 1,166,014,004    $ 454,745,462    $ 308,862,136

 

Chart B

 

Calendar Year


   Depreciation
Allocated to
Ashland


   Combined
Fed. & State
Inc. Tax @ 39%


  

Present Value
Tax Effect

@ 9%


1998

   $ 134,434,575    $ 52,429,484    $ 48,100,444

1999

     213,507,942      83,268,097      70,085,092

2000

     171,643,459      66,940,949      51,690,695

2001

     138,302,064      53,937,805      38,210,901

2002

     111,275,746      43,397,541      28,205,424

2003

     89,884,379      35,054,908      20,902,096

2004

     77,757,082      30,325,262      16,588,957

2005

     77,057,057      30,052,252      15,082,212

2006

     77,057,057      30,052,252      13,836,892

2007

     77,057,057      30,052,252      12,694,396

2008

     50,315,315      19,622,973      7,604,547

Totals

   $ 1,218,291,733    $ 475,133,776    $ 323,001,655

Present Value tax cost

                 $ 14,139,519


Put/Call, Registration Rights and Standstill Agreement

Schedule 2.02(b)(2)

 

Present Value Tax Cost on Sale Illustration

 

Sale of 100% Interest 1/1/2005

 

Calendar Year


   Depreciation Allocated to
Ashland


   Difference

   Decr. Gain/
Incr. Loss


 
     Chart A

   Chart B

      Chart A vs. B

 

1998

   $ 116,601,400    $ 134,434,575    $ 17,833,175         

1999

     209,882,520      213,507,942      3,625,422         

2000

     167,906,016      171,643,459      3,737,443         

2001

     134,324,816      138,302,064      3,977,248         

2002

     107,506,491      111,275,746      3,769,255         

2003

     85,935,232      89,884,379      3,949,147         

2004

     76,373,917      77,757,082      1,383,165         

-2005

     —        —        —        (38,274,855 )(1)

2006

     —        —        —           

2007

     —        —        —           

2008

     —        —        —           

Totals

   $ 898,530,392    $ 936,805,247    $ 38,274,855    $ (38,274,855 )

 

Calendar Year


   Increase
(Decrease)
Taxable
Income Chart
A vs. B


   

Combined
Federal/State
Income Tax

@ 39%


    Present
Value Tax
Cost on Sale


 

1998

   $ 17,833,175     $ 6,954,938     $ 6,380,677  

1999

     3,625,422       1,413,915       1,190,064  

2000

     3,737,443       1,457,603       1,125,537  

2001

     3,977,248       1,551,127       1,098,857  

2002

     3,769,255       1,470,009       955,405  

2003

     3,949,147       1,540,167       918,351  

2004

     1,383,165       539,434       295,089  

2005

     (38,274,855 )     (14,927,193 )     (7,491,455 )

2006

     —         —         —    

2007

     —         —         —    

2008

     —         —         —    

Totals

   $ —       $ —       $ 4,472,526  

Present Value Tax Cost

                        

(Schedule 2.02 (b)(1))

                   $ 14,139,519  

Price Reduction

                   $ 9,666,993  

 

(1)   100% of cumulative difference between Chart A and Chart B depreciation through 2004.