EXHIBIT 2.(b)
SUPPLEMENTAL AGREEMENT
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This SUPPLEMENTAL AGREEMENT entered into this 13 day of October, 1998 by
and among the parties listed on the signature page hereto (the "Parties").
WHEREAS, the Parties have entered into a Stock Purchase and Sale Agreement
as of April 25, 1998 (the "Stock Purchase Agreement") and a Tax Sharing
Agreement and Indemnification Agreement as of October 13, 1998 (the "Tax
Sharing and Indemnification Agreement"); and
WHEREAS, the Parties wish to amend certain provisions thereof;
NOW, THEREFORE, the Parties hereby agree as follows:
1. (A) THE FOLLOWING DEFINITIONS CONTAINED IN SECTION 1.1 OF THE STOCK
PURCHASE AGREEMENT SHALL BE AMENDED AND RESTATED AS FOLLOWS:
"Book Value" shall mean the assets less the liabilities of the Company
as of the Financial Closing Date, computed in a manner consistent with the 1997
Balance Sheet and the principles on Annex B (which principles shall take
precedence over any other principles employed in the 1997 Balance Sheet).
"Chilean Partnership" means Sociedad Chilena de Litio Limitada, a
limited liability partnership organized under the laws of Chile and, unless the
context otherwise requires, shall also include Minera Cyprus Amax Chile Limitada
(until its disposition by the Company pursuant to the Chilean Restructuring) and
Xxxxx Xxxxxx Inversiones Ltda., and Xxxxx Chile Holding Company, upon their
direct or indirect ownership by the Company pursuant to the Chilean
Restructuring.
"Working Capital Value" shall mean the sum of certain current assets
less the sum of certain current liabilities of the Company as of the Financial
Closing Date, computed in a manner consistent with the 1997 Balance Sheet and
the principles contained on Annex B (which principles shall take precedence over
any other principles employed in the 1997 Balance Sheet).
(B) THE FOLLOWING DEFINITION SHALL BE ADDED TO SECTION 1.1 OF THE STOCK
PURCHASE AGREEMENT:
"Financial Closing Date" shall mean as of 12:01 a.m. Eastern Standard
Time on October 1, 1998.
2. SECTION 2.1 OF THE STOCK PURCHASE AGREEMENT SHALL BE AMENDED:
to delete the phrase "by wire transfer" and to insert in its place the
phrase "by intrabank transfer".
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3. SECTIONS 2.2.1 AND 2.2.3 OF THE STOCK PURCHASE AGREEMENT SHALL BE AMENDED
AND RESTATED AS FOLLOWS:
2.2.1 Within sixty (60) days following the Financial Closing Date,
Cyprus Amax shall prepare and deliver to Buyer, a consolidated balance sheet of
the Company as of the Financial Closing Date (the "Closing Balance Sheet")
prepared in a manner consistent with the 1997 Balance Sheet (but subject to the
principles set forth on Annex B), together with a computation of the Working
Capital Value as of the Financial Closing Date (the "Working Capital Value
Computation") and Book Value as of the Financial Closing Date (the "Book Value
Computation"). The Closing Balance Sheet shall be accompanied by the Report of
Price Waterhouse LLP (at the cost of Cyprus Amax), stating that the accounting
principles reflected in the Closing Balance Sheet conform, in all material
respects, to the requirements of this Section. Buyer and the Company shall
provide Cyprus Amax's representatives reasonable access to the books and records
of the Company and shall cause the Company's employees to provide reasonable
assistance to Cyprus Amax, both in connection with the preparation of the
Closing Balance Sheet, as well as any dispute with respect thereto. Cyprus Amax
shall cause Price Waterhouse LLP to coordinate with Buyer's accountants, if
requested by Buyer, in connection therewith.
2.2.3 (a) In the event that the actual Working Capital Value as so
determined is greater or less than $31,984,000 then:
(i) if greater (such amount being the "Working Capital
Excess"), Buyer shall pay to Specialty the amount of such
excess, and
(ii) if less (such amount being the "Working Capital
Deficiency"), Cyprus Amax shall cause Specialty to pay to
Buyer the amount of such deficiency.
(b) In the event that the Book Value as so determined is less
than: (i) $132,765,000 less (ii) the amount of any Working Capital Deficiency,
or plus (iii) the amount of any Working Capital Excess,
then Specialty shall pay to Buyer and Cyprus Amax shall cause Specialty to pay
to Buyer the amount of such deficiency. Buyer may offset any amount payable by
Specialty under (b) against any amount payable by Buyer under (a)(i).
(c) Such payments shall be made by check or wire transfer
within forty-five (45) days after delivery by Cyprus Amax to Buyer of the
Closing Balance Sheet, or five (5) business days after the resolution of any
objection pursuant to Section 2.2.2, whichever is later, with such payment
accompanied by interest at seven percent (7%) per annum from the Financial
Closing Date.
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4. SECTION 4.2 OF THE STOCK PURCHASE AGREEMENT SHALL BE AMENDED AND RESTATED
AS FOLLOWS:
4.2.4 Intercompany Accounts; Cash Accounts.
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(a) All intercompany accounts, including any intercompany
promissory notes, providing for the payment of any amounts between the Company
(including the Chilean Partnership) on the one hand, and Cyprus Amax and its
Affiliates (other than the Company and the Chilean Partnership) on the other
hand, shall be settled via dividend to the extent of retained earnings and then
a return of capital if the amount is a receivable on the Company books as of the
Financial Closing Date, or as an increase of paid-in capital if the amount is a
payable on the Company books as of the Financial Closing Date, with no cash or
other payments being made. Notwithstanding the foregoing sentence, intercompany
transactions resulting from the Chilean Restructuring shall be settled without
cash based on intercompany balances through the Closing Date, in lieu of the
Financial Closing Date. Nothing in this Section 4.2.4(a) shall limit the
provisions of Section 2.2 hereof.
(b) Except as otherwise contemplated by this Agreement, all
agreements between the Company (including the Chilean Partnership) on one hand,
and Cyprus Amax and its Affiliates (other than the Company or the Chilean
Partnership) on the other hand, each of which are set forth on Schedule
4.2.4(b), shall be terminated and of no further force and effect, as of the
Closing Date.
(c) At or before the Closing, all cash and cash equivalents of
the Company (including the Chilean Partnership) as of the Financial Closing Date
will be transferred to Cyprus Amax or its Affiliates for no consideration (the
"Financial Cash Transfer"); provided, however, that approximately $207,500 of
cash and cash equivalents of the Company (including the Chilean Partnership)
(the "Retained Cash") will not be transferred to Cyprus Amax or its Affiliates
to enable the Company to maintain certain cash balances during the ownership
transition. An amount equal to the Retained Cash shall be paid by the Buyer or
the Company to Specialty no more than thirty (30) days following the Closing
Date, with such payment accompanied by interest at seven percent (7%) per annum
from the Closing Date. Nothing in this Section 4.2.4(c) shall limit the
provisions of Section 2.2 hereof. For purposes of clarity, the Financial Cash
Transfer shall reflect earnings through the Financial Closing Date and shall not
reflect earnings from the Financial Closing Date through the Closing Date which
shall accrue to the benefit of Buyer (although cash generated during this period
may be used to fund such transfer but not in the aggregate in excess of the
amount as of the Financial Closing Date).
5. SECTION 6.1.5 AND SCHEDULE 3.2.13 OF THE STOCK PURCHASE AGREEMENT SHALL
REFLECT THE FOLLOWING CHANGE:
Pursuant to Section 6.1.5, Cyprus Amax is hereby providing notice to Buyer
that it is deleting from Schedule 3.2.13 the asterisk and the exception that the
possible consent of the Chilean Central Bank may be required with respect to
change of control of the Company under the Sales Agency Agreement.
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Except as expressly provided herein, the Stock Purchase Agreement shall remain
in effect in accordance with its terms.
6. SCHEDULE 3.2.16 OF THE STOCK PURCHASE AGREEMENT SHALL BE AMENDED AND
RESTATED AS FOLLOWS:
By deleting the Chilean Restructuring Schedule attached to the Stock
Purchase Agreement and replacing it with Annex A.
7. SECTION 9.2 OF THE STOCK PURCHASE AGREEMENT SHALL BE AMENDED AS FOLLOWS:
By deleting the phrase which reads "or any certificates delivered to Cyprus
Amax" with the phrase "or any certificates delivered by Cyprus Amax"
8. SECTION 19(D) OF THE TAX SHARING AGREEMENT SHALL BE AMENDED TO INSERT THE
FOLLOWING SENTENCE:
Seller and Buyer agree that the purchase price allocated to the Chilean
Partnership shall not exceed $100,000,000.
9. SECTION 3.2.26 SHALL BE ADDED TO THE STOCK PURCHASE AGREEMENT AS FOLLOWS:
a. Attached hereto as Annex B is a list of all material documents
in connection with the Chilean Restructuring.
b. Neither Xxxxx Xxxxxx e Inversiones Limitada ("FMI") nor Xxxxx
Chile Holding Company ("Xxxxx Chile") has conducted any operations other
than the receipt and ownership of certain interests as provided on Annex A
in connection with the Chilean Restructuring and neither has assumed any
liabilities or obligations other than through the ownership of such
interests.
x. Xxxxx owns 100% of the equity interests of Xxxxx Chile and FMI
owns 45% of the equity interests of Sociedad Chilena de Litio Ltda ("SCL");
x. Xxxxx Chile and the Company, in the aggregate, own all of the
equity interests of FMI; and
e. There are no intercompany obligations arising between the
Financial Closing Date and the Closing Date, from the Company (including
the Chilean Partnership) on the one hand, to Cyprus Amax and its affiliates
(other than the Company and the Chilean Partnership) on the other hand,
other than (i) reimbursement for transition and administrative services and
other ordinary course charges consistent with past practice (excluding any
allocation of indirect selling,
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general or administrative costs), and (ii) in connection with the Chilean
Restructuring, which have been satisfied at or prior to Closing.
IN WITNESS WHEREOF, the parties have executed this Supplemental
Agreement as of the date first above written.
Attest: CYPRUS AMAX MINERALS COMPANY
/s/ X.X. Xxxxxxx By: /s/ P.C. Wolf
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Name: P.C. Wolf
Title: Sr. V.P.
Attest: CYPRUS XXXXX MINERAL COMPANY
/s/ X.X. Xxxxxxx By: /s/ P.C. Wolf
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Name: P.C. Wolf
Title: Sr. V.P.
Attest: CYPRUS SPECIALTY METALS COMPANY
/s/ X.X. Xxxxxxx By: /s/ P.C. Wolf
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Name: P.C. Wolf
Title: Sr. V.P.
Attest: XXXXX ACQUISITION CORPORATION
/s/ Xxxxxx X. Xxxxxx By: /s/ X. Xxxxxx
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Name: Xxxxxxx Xxxxxx
Title: Vice President
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ANNEX A
The Chilean Restructuring was modified as follows:
STEP 1 FORMATION OF CHILEAN NEWCO NON-LITHIUM
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Pursuant to a deed of division and related documents, the non-lithium
assets and liabilities of Sociedad Chilena de Litio Limitada (Chile)
("SCL") will be transferred to SCL Exploraciones Limitada, a Chilean
limitada owned by SCL's partners, (55%) Cyprus Xxxxx Mineral Company
(Pennsylvania) ("Company") and (45%) Minera Cyprus Amax Limitada
(Chile) ("MCA"), respectively.
STEP 2 FORMATION OF XXXXX XXXXXX E INVERSIONES LIMITADA
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Pursuant to a deed of division and related documents, the lithium
assets and liabilities of MCA will be transferred to Xxxxx Xxxxxx e
Inversiones Limitada owned equally by MCA's partners, (50%) Company
and (50%) Cyprus Specialty Metals Company (Delaware) ("Specialty").
STEP 3 TRANSFER BY COMPANY OF (55%) SCL EXPLORACIONES LIMITADA TO MCA
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The Company will transfer its interest in SCL Exploraciones Limitada
to MCA in return for additional capital in MCA. The Company's entire
interest in the non-lithium assets and liabilities which were owned by
SCL will now be owned by MCA. As a result of this transfer, SCL
Exploraciones Limitada will be absorbed into MCA.
STEP 4 TRANSFER BY THE COMPANY OF ITS NON-LITHIUM INTEREST IN MCA
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The Company will transfer its interest in MCA and its interest in
Minera Cyprus Chile Limitada to Cyprus Amax Chile Holdings, Inc.
(Delaware) owned by a Cyprus Amax affiliate. After this step, the
Company will no longer own non-lithium assets.
STEP 5 TRANSFER BY SPECIALTY OF ITS INDIRECT OWNERSHIP IN LITHIUM ASSETS TO
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THE COMPANY
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The remaining interest in SCL (45%) owned indirectly by Specialty will
be transferred to the Company by Specialty through the transfer of
Specialty's 50% interest in Xxxxx Xxxxxx e Inversiones Limitada to
Xxxxx Chile Holding Company. Xxxxx Chile Holding Company will then
be transferred
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to the Company. After this step, all lithium assets will be owned
indirectly by the Company.
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ANNEX B
Cyprus Amax Minerals Company
1998 Lithium Restructuring
Document List
1. May 29, 1998 deed dividing SCL and creating SCL Exploraciones Limitada
2. June 30, 1998 deed dividing Minera Cyprus Amax Chile Limitada ("MCAC") and
creating Xxxxx Xxxxxx e Inversiones Limitada ("(Inversiones")
3. July 16, 1998 Articles of Incorporation Xxxxx Chile Holding Company
4. September 30, 0000 Xxxxxx Amax officer's certificate funding Xxxxx Chile
Holding Company and Cyprus Amax Chile Holdings, Inc.
5. October 2, 1998 deed of sale Cyprus Xxxxx Mineral Company ("Xxxxx") sale
of 50% equity interest in MCAC to Cyprus Amax Chile Holdings, Inc.
6. October 2, 1998 deed of sale Xxxxx sale of 92% equity interest in Minera
Cyprus Chile Limitada to Cyprus Amax Chile Holdings, Inc.)
7. October 2, 1998 deed of sale Cyprus Specialty Metals Company ("Specialty
Metals") sale of a 50% interest in Inversiones to Xxxxx Chile Holding
Company
8. October 2, 1998 deed of sale Xxxxx, Specialty Metals and Guanaco Mining
Company, Inc. sale of equity interests in Compania Minera Amax Guanaco to
Guanaco Holdings, Inc.
9. October 1, 1998 deed of correction: a) July 5, 1998 division of MCAC, b)
the by-laws of Inversiones, c) the increase of capital in MCAC, and d) the
dissolution of SCL Exploraciones Limitada
10. October 9, 1998 Foreign Investment Committee Resolution 144
11. October 7, 1998 officer's certificate of Cyprus Amax, and resolutions of
Cyprus Metals Company, Specialty Metals, and Xxxxx contributing 100% of the
shares of Xxxxx Chile Holding Company to the capital of Xxxxx
12. October 12, 1998 Specialty Metals resolution contributing its accounts
receivable from Xxxxx and its subsidiaries to Xxxxx as a contribution to
capital surplus.
13. October 12, 1998 Xxxxx resolution declaring a dividend of $31,350,000 of
accounts receivable from Cyprus Amax
14. August 31, 1998 Letter Agreement regarding transfer of Guanaco interests
15. October 5, 1998 Xxxxx assignment of Harbor Maintenance Tax refund claim to
Specialty Metals
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