EXHIBIT 2.(c)
TAX SHARING AND INDEMNIFICATION AGREEMENT
This Tax Sharing and Indemnification Agreement (this "Agreement"), is made
as of the 13th day of October, 1998 by and between Cyprus Amax Minerals Company,
a Delaware corporation ("Cyprus Amax"), Cyprus Specialty Metals Company, a
Delaware corporation ("Specialty") (Cyprus Amax and Specialty together referred
to herein as "Seller"), Cyprus ▇▇▇▇▇ Mineral Company, a Pennsylvania corporation
("Company") and ▇▇▇▇▇ Acquisition Corporation a Delaware corporation ("Buyer")
(Cyprus Amax, Specialty, Company and Buyer are sometimes individually referred
to herein as a "party" and sometimes collectively as "parties").
WHEREAS, Seller, Buyer, and the Company have entered into the Stock
Purchase and Sale Agreement, dated as of April 25, 1998 (the "Stock Purchase and
Sale Agreement"), for the sale by Specialty of all the outstanding capital stock
of the Company to Buyer, and
WHEREAS, Cyprus Amax desires to make certain representations, warranties
and covenants and agreements regarding tax matters as an inducement to Buyer,
and
WHEREAS, Seller, Buyer and the Company wish to set forth their agreement
with respect to certain Tax matters as set forth below.
NOW THEREFORE, it is hereby agreed as follows:
1. Definitions. Capitalized terms used in this Agreement and not
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otherwise defined herein have the respective meanings given those terms in the
Stock Purchase and Sale Agreement. Capitalized terms defined both in this
Agreement and the Stock Purchase and Sale Agreement have the respective meanings
given those terms in this Agreement. For purposes of this Agreement, the
following terms, when capitalized, have the following meanings:
"Accountant" means Deloitte & Touche LLP, or such other
internationally recognized accounting firm as Buyer and Cyprus Amax may mutually
agree. In no event shall a firm serve as an Accountant if, at the time of its
election, it has a material relationship with any party.
"Tax Affiliate" or "Tax Affiliates" means, with respect to any Person,
any other Person who, directly or indirectly, controls, is controlled by, or is
under common control with, such Person (including the Chilean Partnership);
provided, however, that for the purposes of this Agreement, the Seller and the
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Company will
not be Tax Affiliates with respect to any period in which the Seller and the
Company are not members of the same affiliated group (as such term is defined in
Section 1504(c) of the Code).
"Book Value Computation" shall have the meaning set forth in Section
2.2.1 of the Stock Purchase and Sale Agreement.
"Chilean Income Taxes" means any Income Taxes imposed by the
Government of Chile or any other governmental authority within Chile.
"Chilean Refunds" means individually and collectively the refunds of
the following not included on the Closing Balance Sheet: (1) Impuesto al Valor
Agregada ("IVA") Taxes paid by the Chilean Partnership and claimed as a refund
for the month of November, 1997; (2) the refund of an overpayment of Chilean
Income Taxes paid by the Chilean Partnership with respect to its tax year ending
December 31, 1997; (3) IVA Tax refunds available as of the Closing Date; (4)
Chilean customs duty Tax refunds available as of the Closing Date.
"Code" means the Internal Revenue Code of 1986, as amended, and the
regulations and interpretations thereunder.
"Final Determination" means with respect to any Tax for any period the
later of (i) the date on which the statute of limitations for instituting a
claim for refund of such Tax has expired, or if such claim was filed, the
expiration of the time for instituting suit with respect thereto; and (ii) the
date on which all administrative and judicial proceedings with respect to any
such assessments or refunds of such Tax have been finally settled through
agreement of the parties to the proceeding or by an administrative or judicial
decision from which no appeal can be taken or the time for taking any such
appeal has expired.
"Financial Closing Date" shall mean as of 12:01 a.m. Eastern Standard
Time on October 1, 1998.
"Income Taxes" means any Tax based on or measured by or with respect
to gross or net income (including, without limitation, capital gains taxes,
minimum taxes, income taxes collected by withholding and Taxes on Tax
preferences items) or receipts (together with any interest, penalties or
additions imposed with respect thereto).
"Income Tax Return" means any Tax Return with respect to Income Taxes.
"Knowledge", "known", "belief", "believe" or variances thereof
(whether or not capitalized) mean, when applied to the Company (at or before
Closing) or Cyprus Amax, the actual knowledge of those Persons listed on Annex
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A-1 to the Stock Purchase and Sale Agreement and, when applied to the Company
(after Closing) or Buyer, the actual knowledge of those persons listed on Annex
A-2 to the Stock Purchase and Sale Agreement.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
association, a governmental entity (or any department, agency, or political
subdivision thereof), or any other entity.
"Seller Consolidated Return" means any consolidated, combined or
unitary Tax Return that includes Seller or its Tax Affiliates as the common
parent.
"Subsidiary" means any corporation, association, joint venture,
partnership or other business entity with respect to which a specified Person
(or a Subsidiary thereof) owns a majority of the common stock (or equity
interests) or has the power to vote or direct the voting of sufficient
securities to elect a majority of the directors (or the equivalent).
"Working Capital Value" shall mean the sum of certain current assets
less the sum of certain current liabilities of the Company as of the Closing,
computed in a manner consistent with the 1997 Balance Sheet and the principles
contained on Annex B to the Stock Purchase and Sale Agreement (which principles
shall take precedence over any other principles employed in the 1997 Balance
Sheet.)
"Tax" or "Taxes" means any federal, state, local, foreign (including
all taxes imposed by the government of Chile or any other authority within
Chile), or other tax of any kind whatsoever (together with any interest,
penalties, or additions imposed with respect thereto), including, without
limitation, income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, service, premium, windfall profits, environmental,
customs duties, capital stock, franchise, profits, branch profits, withholding,
social security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, rental, lease, ad valorem, or other tax.
"Tax Returns" means all returns, declarations, reports, claims for
refunds, information returns, statements, and other forms required to be filed
with respect to any Taxes, including any schedule or attachment thereto, and
including any amendments or supplements thereof.
2. Taxes Allocated to Seller. Seller will be responsible for, will pay or
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cause to be paid, and will indemnify and hold harmless the Company, Buyer, and
their Tax Affiliates from and against any and all of the following Taxes:
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i. all Taxes imposed on Seller, the Company or any of their
Tax Affiliates or Subsidiaries with respect to all taxable
periods of Seller, the Company or any of their Tax
Affiliates or Subsidiaries that end on or prior to the
Closing Date;
ii. all Taxes imposed on the Company arising out of the
inclusion of the Company in a Seller Consolidated Return;
iii. all Taxes imposed upon the Company, the Chilean
Partnership, Buyer or any of their Tax Affiliates or
Subsidiaries arising from the separation of the non-
lithium assets from the Company, the Chilean Partnership
or any of their Tax Affiliates whether occurring before,
on, or after the Closing Date (the "Separation
Transactions"), or arising from any transfers of interests
undertaken as part of the Separation Transactions in any
Chilean Partnership to the Company or any of its Tax
Affiliates or Subsidiaries;
iv. all Taxes allocated to Seller pursuant to Section 3
hereof; and
v. all Income Taxes and all other Taxes (including any
subsequent assessments and any interest or penalties)
imposed on the transfers consummated under the Stock
Purchase and Sale Agreement;
vi. all Taxes arising as a result of the Section 338(h)(10)
Election made pursuant to Section 19 hereof;
provided, however, that the Taxes set forth in clauses (i) through (vi) above
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will not include any Taxes arising as a result of actions taken by the Company,
or by Buyer or any of their Tax Affiliates with respect to the Company, on the
Closing Date but after the Closing that are not in the ordinary course of
business.
Any reference in this Agreement to the Company will be deemed to include a
reference to any Subsidiaries of the Company immediately prior to the Closing.
3. Straddle Periods.
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(a) With respect to any taxable period of the Company or any of its Tax
Affiliates that would (absent an election) include, but not end until after, the
Closing Date (a "Straddle Period"), Buyer and Seller will, to the extent
permitted by applicable law, elect with the relevant Tax authority to close such
Straddle Period as of the close of the Closing Date. As a result of such
election, Taxes will be allocated to Seller and Buyer pursuant to the provisions
of Sections 2 and 4, respectfully; provided, however, that notwithstanding any
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provision to the contrary
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contained in this Agreement, Seller will not be responsible for any Taxes to the
extent accrued as a liability of the Company or any of its Tax Affiliates in the
determination of the Working Capital Value and Book Value.
(b) Except as provided in Section 3(c), in any case where applicable law
does not permit the Company or any of its Tax Affiliates to close a Straddle
Period as of the close of the Closing Date, Seller will be allocated any Income
Taxes imposed on the Company or such Tax Affiliates for the portion of the
Straddle Period up to and including the Closing Date. For purposes of this
Section 3(b), Income Taxes for the portion of a Straddle Period up to and
including the Closing Date will be determined based upon an interim closing of
the books of the Company or such Tax Affiliates as of the Closing Date based
upon tax accounting practices and procedures used by the Company or such Tax
Affiliates in preparing its Tax Returns; provided, however, that such Income
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Taxes will not include any Income Taxes arising as a result of actions taken by
the Company, or by Buyer or any of their Tax Affiliates with respect to the
Company, on the Closing Date but after the Closing that are not in the ordinary
course of business of the Company.
(c) With respect to any Straddle Period, Chilean Income Taxes initially
will be allocated to Seller based upon Seller's preparation of a pro forma Tax
Return for the portion of the Straddle Period up to and including the Financial
Closing Date (the "Chilean Pro forma Tax Return"). Within one hundred and
twenty (120) days following the Closing, Seller shall prepare and deliver to
Buyer, the Chilean Pro forma Tax Return prepared in a manner consistent with
past Tax accounting practices. Buyer shall provide Seller's representatives
reasonable access to the books and records of the Company and shall cause the
Company's employees to provide reasonable assistance to Seller, both in
connection with the preparation of the Chilean Pro forma Tax Return, as well as
any dispute with respect thereto. Buyer shall have the right within sixty (60)
days following the delivery of the Chilean Pro forma Tax Return to object in
writing to the allocation of Chilean Income Tax based thereon, specifying in
reasonable detail the basis for such objection(s). Buyer shall be deemed to
have agreed to file Chilean Income Tax Returns with all items and amounts
contained in the Chilean Pro forma Tax Return, except as specifically objected
to in such notice. If Buyer does so object, Seller and Buyer shall cooperate
with each other to attempt to reach a mutual agreement thereon, or, failing such
agreement within twenty (20) days, the determination shall be made by the
Accountant pursuant to the dispute resolution provisions contained in Section
16. Nothing contained in this Section 3(c) shall be deemed to limit the rights
of the Company, Buyer or their Tax Affiliates to obtain indemnification from
Seller with respect to Chilean Income Taxes, including, without limitation,
their right to indemnification under Section 2 hereof.
(d) As to any Tax other than an Income Tax (a "Non-Income Tax"), for any
Straddle Period, Seller will be allocated (i) for any Non-Income Tax that is
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determined based upon specific transactions (including, but not limited to,
value added, sales and use Taxes), all Non-Income Taxes applicable to
transactions which have occurred during the period through the Financial Closing
Date and (ii) for any Non-Income Tax that is not based upon specific
transactions (including, but not limited to, license, real property, personal
property, franchise and doing business Taxes), any Non-Income Tax equal to the
full amount of such Non-Income Tax for the entire Straddle Period multiplied by
a fraction, the numerator of which is the number of days in the Straddle Period
ending on the Financial Closing Date and the denominator of which is the number
of days in the entire Straddle Period.
4. Taxes Allocated to Buyer and the Company. Buyer and the Company will be
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responsible for, will pay or cause to be paid, and will indemnify and hold
harmless Seller and its Tax Affiliates from and against any and all Taxes other
than those for which Seller is responsible pursuant to Sections 2 and 3 hereof,
including, without limitation, Taxes attributable to periods ending after the
Closing Date (other than any Taxes allocated to Seller pursuant to Sections 2 or
3 hereof).
5. Refunds of Indemnified Taxes.
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(a) Buyer will remit (and will cause the Company and its Tax Affiliates to
remit) to Seller within five business days of receipt an amount equal to all
refunds (including interest thereon and any amounts applied against a Tax
liability for other taxable periods) of any Taxes for which Buyer is indemnified
pursuant to this Agreement ("Seller's Refunds") (including but not limited to
the Chilean Refunds) net of any net Tax liability that is imposed on the Company
or any of its Tax Affiliates in connection with the receipt and remittance of
Seller's Refunds therewith.
Seller will remit (and will cause its Tax Affiliates to remit) to Buyer
within five business days of receipt all refunds (including interest thereon and
any amounts applied against a Tax liability for other taxable periods) of any
Taxes for which Seller is indemnified pursuant to this Agreement ("Buyer's
Refunds") net of any net Tax liability that is imposed on the Seller or any of
its Tax Affiliates in connection with the receipt and remittance of Buyer's
Refunds therewith.
(b) Upon the reasonable request of Seller, Buyer will file, or cause the
Company or its Tax Affiliates to file, claims for Seller's Refunds, in such form
as Seller may reasonably request; provided that Buyer shall not be required to
file or prosecute any such claim if it would be inconsistent with, or
detrimental to, Tax positions previously or currently adopted by the Company, in
filing its Tax Returns (in the sole reasonable judgment of Buyer). If permitted
pursuant to the preceding sentences, Seller will have the right to prosecute any
claims for Seller's Refunds (by suit or otherwise) at Seller's expenses and with
counsel of Seller's choice (if such Counsel is reasonably satisfactory to
Buyer). Buyer will cooperate, and cause
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the Company and their Tax Affiliates to cooperate, fully with Seller and its
counsel in connection therewith.
Upon the reasonable request of Buyer, Seller will file, or cause its Tax
Affiliates to file, claims for Buyer's Refunds, in such form as Buyer may
reasonably request; provided that Seller shall not be required to file or
prosecute any such claim if it would be inconsistent with, or detrimental to,
Tax positions previously or currently adopted by the Company, in filing its Tax
Returns (in the sole reasonable judgment of Seller). If permitted pursuant to
the preceding sentences, Buyer will have the sole right to prosecute any claims
for Buyer's Refunds (by suit or otherwise) at Buyer's expense and with counsel
of Buyer's choice (if such counsel is reasonably satisfactory to Seller).
Seller will cooperate, and cause its Tax Affiliates to cooperate, fully with
Buyer and its counsel in connection therewith.
(c) For the avoidance of doubt (and except as provided in Section 6(b)
hereof), any refunds of Taxes other than Seller's Refunds and Buyer's Refunds
will be the property of the payee of such refunds and no other party to this
Agreement or its Tax Affiliates will have any right to such refunds.
6. Tax Benefits.
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(a) Buyer will remit (or cause the Company to remit) to Seller within five
business days the amount of any Tax Benefit recognized by Buyer, the Company, or
any of their Tax Affiliates resulting from any Adjustment for which Buyer, the
Company, or any of their Tax Affiliates has been indemnified pursuant to this
Agreement. Seller will remit to Buyer within five business days the amount of
any Tax Benefit recognized by Seller or any of its Tax Affiliates resulting from
any Adjustment for which Seller or any of its Tax Affiliates has been
indemnified pursuant to this Agreement. For purposes of this Agreement:
i. "Tax Benefit" means a reduction in the amount of Taxes
that would otherwise be payable (net of any additional
Taxes that may in the future be payable), whether
resulting from a deduction, credit, reduced gain or
increased loss from the disposition of an asset, or
otherwise, all as determined in the reasonable judgment of
the "remittor" (as defined below);
ii. a person will be deemed to have "recognized" a Tax Benefit
at the time the amount of Taxes such person otherwise
would pay is reduced; and
iii. an "Adjustment" is any adjustment to (A) any individual
item of income, gain, loss, or deduction, or (B) any
individual item of credit.
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(b) If either Buyer or Seller (the "remittor") makes a remittance to the
other party (the "remittee") under Section 6(a) or Section 7(b) hereof of any
Tax Benefit and all or part of such Tax Benefit is subsequently disallowed, the
remittee will pay to the remittor within five business days that portion of such
remittance equal to the portion of the Tax Benefit that is disallowed and, in
addition thereto, any other costs or expenses incurred by the remittor in
respect to the disallowed portion of the Tax Benefit (it being agreed that the
remittor shall not suffer any cost or expense by reason of the disallowed
portion of the Tax Benefit).
7. Buyer to Forgo Carrybacks
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(a) Unless Seller otherwise consents, Buyer will cause the Company to
forego any carryback for Tax purposes to any taxable period of the Company
ending on or before the Closing Date of any net operating loss, net capital
loss, or other deduction or credit incurred by the Company in any taxable period
ending after the Closing Date (a "Post-Closing Carryback").
(b) If Seller consents to a Post-Closing Carryback under Section 7(a)
hereof, (i) Seller will cooperate with Buyer and the Company in filing an
appropriate refund claim or amended Tax Return, and (ii) Seller will assign and
remit to Buyer within five business days the amount of any refund of Tax
received by, or Tax Benefit recognized by, Seller or any of its Tax Affiliates
as a result of such Post-Closing Carryback.
(c) If Seller makes any remittance to Buyer under Section 7(b) hereof and
all or part of such Post-Closing Carryback is subsequently disallowed, then
Buyer shall pay to Seller within five business days that portion of the
remittance that relates to the portion of the Post-Closing Carryback that is
disallowed and, in addition thereto, any other costs or expenses incurred by
Seller in respect to the disallowed portion of the Post-Closing Carryback (it
being agreed that Seller shall not suffer any expense or other cost by reason of
agreeing to such Post-Closing Carryback or any adjustment thereto).
8. No Obligation to File Amended Tax Returns. Except as otherwise
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specifically provided in this Agreement, neither Seller nor Buyer, nor any of
their respective Tax Affiliates will be obligated to file any amended Tax Return
or other Tax refund claim.
9. Preparation and Filing of Tax Returns.
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(a) Seller will prepare or cause to be prepared, and, to the extent
permitted by law, file or cause to be filed, (i) all consolidated, combined, or
unitary Income Tax Returns (including Chilean Income Tax Returns) of Seller or
any of its Tax Affiliates or former Tax Affiliates that include the Company and
which are listed on Schedule 9(a)(i) hereto, (ii) all Income Tax Returns
(including Chilean
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Income Tax Returns) required to be filed by or on behalf of the Company or the
Chilean Partnership for taxable periods ending (including by reason of any
election under Section 3 hereof) on or before the Closing Date and which are
listed on Schedule 9(a)(ii) hereto and all Chilean Income Tax Returns for any
such periods, and (iii) all other Tax Returns (including Chilean Income Tax
Returns) required to be filed by or on behalf of the Company or the Chilean
Partnership on or before the Closing Date in a manner consistent with the
Company's and the Chilean Partnership's past Tax accounting practices.
(b) Buyer will prepare or cause to be prepared, and file or cause to be
filed, all Tax Returns of the Company other than those set forth in Section 9(a)
hereof. Buyer will prepare all Tax Returns of the Company for Straddle Periods
including, but ending after, the Closing Date ("Straddle Period Returns") in a
manner consistent with the Company's past Tax accounting practice, to the extent
permitted by law, and, in the absence thereof, reasonable Tax accounting
practices selected by Buyer; provided, however, that any Tax Returns prepared by
Buyer in respect to the Company shall be prepared consistent with the Chilean
Pro forma Tax Return described in Section 3(c). If Buyer files Straddle Period
Returns for such Straddle Periods inconsistently with such Tax accounting
practices in violation of this provision, then, any provision of this Agreement
to the contrary notwithstanding, in addition to any other remedies available,
Seller and its Tax Affiliates shall only be liable for the amount of Taxes that
would be owed by them had such Straddle Period Returns been filed consistently
with such past Tax accounting practices.
(c) Neither Seller, nor Buyer, nor any of their Tax Affiliates will
exercise any election available under Treasury regulation (S)1.1502-76(b)(2) or
any corresponding provisions of other Tax laws for any Straddle Period.
(d) Buyer and the Company will assist Seller in timely obtaining any
required signatures or other filing requirements in respect to Tax Returns
prepared by Seller for the Company pursuant to Section 9(a).
(e) Upon the reasonable request, and at the expense, of either party, the
other party shall make available prior to filing (and after filing) for
inspection and copying all Tax Returns and related workpapers with respect to
Taxes to the extent that (i) such Tax Return relates to Taxes for which the
requesting party may be liable, (ii) such Tax Return relates to Taxes for which
the requesting party may be liable in whole or in part for any additional Taxes
owing as a result of adjustments to the amount of Taxes reported on such Tax
Return, (iii) such Tax Return relates to Taxes for which the requesting party
may have a claim for Tax Benefits under this Agreement, or (iv) the requesting
party reasonably determines that it must inspect such Tax Return to confirm
compliance with the terms of this Agreement.
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10. Settlement of Actual Tax Allocations.
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(a) This Section 10(a) shall govern the settlement as between Seller, Buyer
and the Company of all Straddle Period Tax allocations for Taxes that are
reported on a Straddle Period Return.
With respect to each Straddle Period Return that involves Taxes subject to
allocation pursuant to Section 3(b) hereof, Buyer will, at least thirty (30)
days prior to the final due date (including extensions) of such Straddle Period
Return, provide to Seller (i) a copy of such Straddle Period Return (including
supporting schedules and workpapers) and (ii) a statement (including supporting
schedules and workpapers) certifying the amount of Tax shown on such Straddle
Period Return that is allocable to Seller pursuant to Section 3(b) hereof
reduced by any payments made by the Company on or prior to the Closing Date, and
by Seller and its Tax Affiliates at any time, in respect of such Taxes (whether
as estimated Taxes or otherwise) (the "Statement"). Seller and its authorized
representatives will have the right to review the Statement for ten (10) days
following Seller's receipt of the Statement (the "10-Day Review Period"). If
Seller disagrees with the allocation in the Statement, Seller will notify Buyer
in writing of such disagreement prior to close of the 10-Day Review Period, and
Seller and Buyer will consult and attempt to resolve in good faith the
disagreement. In the event Seller and Buyer are unable to resolve the
disagreement within ten (10) days following the end of the 10-Day Review Period,
Seller and Buyer will jointly request the Accountant to resolve the disagreement
pursuant to Section 16. Not later than five (5) days after the later of (i) the
end of the 10-Day Review Period, or (ii) if there is a disagreement, the date
notice of the resolution of the disagreement by the Accountant is provided to
Buyer and Seller, Seller will pay to Buyer or Buyer will pay to Seller, as the
case may be, an amount equal to the difference between (i) the Taxes shown on
the Statement or in such notice (as the case may be) as being allocable to
Seller pursuant to Section 3(b) hereof, and (ii) any payments made by the
Company on or prior to the Closing Date, and by Seller and its Tax Affiliates at
any time, in respect of such Taxes (whether as estimated Taxes or otherwise).
With respect to the Chilean Income Taxes subject to allocation pursuant to
Section 3(c), not later than five (5) days after the later of (i) the end of the
Buyer's review period in Section 3(c), or (ii) if there is a disagreement, the
date notice is provided to Buyer and Seller regarding the resolution of the
disagreement by the Accountant, Seller will pay to Buyer or Buyer will pay to
Seller, as the case may be, an amount equal to the difference between (i) the
Taxes shown on the Chilean Pro forma Tax Return as being allocable to Seller
pursuant to Section 3(c) hereof, and (ii) any payments made by the Company on or
prior to the Closing Date, and by Seller and its Tax Affiliates at any time, in
respect of such Taxes (whether as estimated Taxes or otherwise).
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(b) This Section 10(b) shall govern the settlement as between Seller, Buyer
and the Company of all Straddle Period Tax allocations for Taxes that are not
required to be reported on a Straddle Period Return (e.g., Taxes which are
assessed without the filing of a Tax Return). With respect to each such Tax
subject to allocation pursuant to Section 3(b) hereof, Buyer will, at least
thirty (30) days prior to the final due date of such Tax, provide to Seller (i)
a copy of the Tax assessment or other supporting schedules and workpapers and
(ii) a statement (including supporting schedules and workpapers) certifying the
amount of Tax that is allocable to Seller pursuant to Section 3(b) hereof
reduced by any payments made by the Company on or prior to the Closing Date, and
by Seller and its Tax Affiliates at any time, in respect of such Taxes (whether
as estimated Taxes or otherwise) (the "Statement"). Seller and its authorized
representatives will have the right to review the Statement for ten (10) days
following Seller's receipt of the Statement (the "10-Day Review Period"). If
Seller disagrees with the allocation in the Statement, Seller will notify Buyer
in writing of such disagreement prior to close of the 10-Day Review Period, and
Seller and Buyer will consult and attempt to resolve in good faith the
disagreement. In the event Seller and Buyer are unable to resolve the
disagreement within ten (10) days following the end of the 10-Day Review Period,
Seller and Buyer will jointly request the Accountant to resolve the disagreement
pursuant to Section 16. Not later than five (5) days after the later of (i) the
end of the 10-Day Review Period, or (ii) if there is a disagreement, the date
notice of the resolution of the disagreement by the Accountant is provided to
Buyer and Seller, Seller will pay to Buyer or Buyer will pay to Seller, as the
case may be, an amount equal to the difference between (i) the Taxes shown on
the Statement or in such notice (as the case may be) as being allocable to
Seller pursuant to Section 3(b) hereof, and (ii) any payments made by the
Company on or prior to the Closing Date, and by Seller and its Tax Affiliates at
any time, in respect of such Taxes (whether as estimated Taxes or otherwise).
(c) Nothing contained in Section 10(a) or 10(b) shall be deemed to limit
the rights of the Company, Buyer or their Tax Affiliates to obtain
indemnification from Seller with respect to Chilean Income Taxes or other Taxes,
including, without limitation, their right to indemnification under Section 2
hereof.
11. Cooperation; Access to Information; Tax Records.
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(a) Buyer, Seller and the Company will cooperate with each other with
respect to, and will make available to each other such Tax data and other
information relating to the Company as may be reasonably required for, (i) the
preparation by Buyer or Seller of any Tax Returns required to be prepared by
Buyer or Seller under this Agreement, (ii) determining the liability for and
amount of any Taxes due or the right to and amount of any refund of Taxes, (iii)
examinations or documentation of Tax Returns and Tax filing positions, and (iv)
any administrative or judicial proceeding in respect of Taxes assessed or
proposed to be assessed.
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Such cooperation shall include making all information and documents in their
possession related to the Company available to the other as provided in Section
11(b) hereof. Seller and Buyer shall also make available to the other, as
reasonably requested and available, personnel (including officers, directors,
employees and agents of Seller and Buyer and their Subsidiaries) responsible for
preparing, maintaining and interpreting information and documents relevant to
Taxes, and personnel reasonably required as witnesses or for purposes of
providing information or documents in connection with any administrative or
judicial proceedings relating to Taxes. Any information or documents provided
under this Section 11, shall be kept confidential by the party receiving the
information or documents, except as may otherwise be necessary in connection
with the filing of Tax Returns or in connection with any administrative or
judicial proceedings relating to Taxes. If requested by Seller, Buyer will
provide Seller, within ninety (90) days after the Closing Date, a completed tax
compliance manual (in a form prepared based on the Seller's and Company's past
practices) and Seller shall, if requested by Buyer, provide the Buyer, Company
and its Tax Affiliates with assistance in the preparation of such documentation,
data and other information necessary to meet such requirements (it being
mutually understood that such documentation, data and other information is
necessary in order for Seller and Buyer to satisfy their obligations to file Tax
Returns as provided in Section 9). In each case, the party requesting the
cooperation described herein shall reimburse the cooperating party for any
reasonable out-of-pocket expenses incurred in providing such cooperation.
(b) Seller, Buyer, the Company and their respective Tax Affiliates shall
make available to each other, at such other's expenses, for inspection and
copying during normal business hours upon reasonable notice all Tax records in
their possession relating to the Company to the extent reasonably required by
the other party in connection with the preparation of Tax returns, audits,
litigation, or the resolution of items under this Agreement. Seller, Buyer and
their respective Tax Affiliates shall preserve and keep such Tax records in
their possession until the expiration of any applicable statutes of limitation
and as otherwise required by law, but in any event for a period not less than
eight (8) years after the Closing. Notwithstanding the foregoing, a party or
its Tax Affiliates may dispose of records sooner upon ninety (90) days prior
notice to the other party. Such notice shall include a list of the records to
be disposed of describing in reasonable detail each file, book or other record
accumulation being disposed. The notified party shall have the opportunity, at
its cost and expense, to copy or remove, within such ninety (90) day period, all
or any part of such Tax records. For purposes of this Section 11, Tax records
include Tax Returns, journal vouchers, cash vouchers, general ledgers, material
contracts, return workpapers, and any other records pertaining to or used in the
preparation of Tax Returns (including those books and records required to be
maintained and made available pursuant to Section 8.2 of the Stock Purchase and
Sale Agreement).
-12-
12. Audits.
------
(a) Buyer will promptly notify Seller in writing upon receipt by Buyer, the
Company, or their Tax Affiliates of notice of any pending Tax audits of or
written assessments against the Company, Buyer, or any of their Tax Affiliates
(i) relating to any taxable period of the Company ending on, prior to or
including the Closing Date, or (ii) that likely will affect the determination of
Taxes for which Seller is or may be obligated to indemnify Buyer pursuant to
this Agreement. The notice required under this Section 12(a) is referred to in
this Agreement as the "Audit Notification."
(b) Subject to Section 12(c) hereof, Seller will have the right, at its
election, (i) to represent the Company and to exclusively control the handling
of any Tax audit or assessment referred to in Section 12(a) hereof, including in
any administrative or court proceeding relating thereto, (ii) to employ counsel
of its choice at its expense and to control the conduct of such audit,
assessment, or proceeding, including settlement or other disposition thereof and
(iii) to settle the contest of any Tax or agree to an adjustment to any Tax
referred to in Section 12(a) (the rights under (i), (ii) and (iii) are referred
to in this Agreement collectively as the "Representation Right"); provided,
--------
however, that the Representation Right will apply only to any issues or items
-------
(x) relating to any taxable period of the Company ending on, prior to or
including the Closing Date, or (y) that may affect the determination of Taxes
for which Seller is or may be obligated to indemnify the Company, Buyer, or
their Tax Affiliates pursuant to this Agreement. As reasonably necessary, Buyer
will fully cooperate, and will cause the Company and its Tax Affiliates to fully
cooperate, at Seller's expense with Seller and its counsel in the defense
against or compromise of any claim in any said audit, assessment, or proceeding,
such cooperation to include (but not be limited to) the grant of any necessary
powers of attorney. Notwithstanding the preceding sentence, Seller shall
neither consent nor agree to the settlement of any dispute regarding Taxes
(other than Taxes for which Seller is obligated to indemnify the Company, Buyer
or any of their Tax Affiliates) which settlement may have a material adverse
impact on the Company and its Tax Affiliates without the prior written consent
of the Buyer, which consent shall not be unreasonably withheld or delayed.
(c) Seller shall be entitled to exercise the Representation Right, only if,
within a reasonable period following the receipt of the Audit Notification,
Seller shall have (i) notified Buyer in writing that Seller intends to exercise
the Representation Right, and (ii) delivered to Buyer a written statement
acknowledging Seller's obligation to indemnify the Company, Buyer, or their Tax
Affiliates in accordance with the terms of this Agreement with respect to the
Taxes as to which Seller exercises the Representation Right.
-13-
(d) Buyer's personnel shall have the right to participate in any
administrative or judicial proceedings for which the Seller exercises its
Representation Right (including assisting with field audits, administrative
appeals, and subsequent litigation) in so far as they relate to the Company, and
such participation shall be reflected by the grant of appropriate powers of
attorney.
(e) Buyer shall have exclusive control of all administrative and judicial
proceedings related to the Company's Taxes other than those described in Section
12(a).
(f) For so long as the Seller is exercising its Representation Right, the
Seller shall not be required to indemnify the Buyer pursuant to Section 14
hereof until there occurs a Final Determination of the liability of the Company,
the Buyer or its Tax Affiliates for the Tax.
13. Treatment of Indemnification. Unless otherwise required by law, on
----------------------------
their Tax Returns, Seller and Buyer will (and will cause their Tax Affiliates
to) treat any payment made or received under this Agreement, or the Stock
Purchase and Sale Agreement, as an adjustment to the Purchase Price.
14. Indemnification.
---------------
(a) If either Buyer or Seller (the "Indemnified Party") determines that it
or any of its Tax Affiliates is or may be entitled to indemnification by the
other party (the "Indemnifying Party") under this Agreement as a result of: (i)
the allocations of responsibility for Taxes set forth in Sections 2 through 4 or
(ii) the Seller's breach of a representation or warranty contained in Section
18, the Indemnified Party will promptly deliver to the Indemnifying Party a
written notice and demand therefor (the "Notice") specifying the basis for its
claim for indemnification, the nature of the claim, and, if known, the amount
for which the Indemnified Party reasonably believes it or any of its Tax
Affiliates is entitled to be indemnified. The Notice must be received by the
Indemnifying Party no later than thirty (30) days before the expiration of the
applicable Tax statute of limitations; provided, however, that if the
Indemnified Party does not receive notice from the applicable governmental
taxing authority ("Government Notice") that an item exists that could give rise
to a claim for indemnification hereunder more than thirty (30) days before the
expiration of the applicable Tax statute of limitations, then the Notice must be
received by the Indemnifying Party immediately after the Indemnified Party
receives the Government Notice. Unless the Indemnifying Party objects to the
claim for indemnification (in the manner set forth in Section 14(b) hereof), and
subject to Section 12(f), the Indemnifying Party will pay the Indemnified Party
the amount set forth in the Notice, in cash or other immediately available
funds, within thirty (30) days after receipt of the Notice; provided, however,
that if the amount for which the Indemnified Party reasonably believes it is
entitled to be indemnified
-14-
is not known at the time of the Notice, the Indemnified Party will deliver to
the Indemnifying Party a further notice specifying such amount as soon as
reasonably practicable after such amount is known and payment will then be made
as set forth above.
(b) The Indemnifying Party may object to the claim for indemnification (or
the amount thereof) set forth in any Notice by giving the Indemnified Party,
within thirty (30) days following receipt of such Notice, written notice setting
forth the Indemnifying Party's grounds for so objecting (the "Objection
Notice"). If the Indemnifying Party does not give the Indemnified Party the
Objection Notice within such thirty (30)-day period, the Indemnifying Party may
exercise any and all of its rights under applicable law to collect such amount.
(c) If Buyer and Seller are unable to settle any dispute regarding a claim
for indemnification within thirty (30) days after receipt of the Objection
Notice, Buyer and Seller will, in accordance with Section 16, jointly request
the Accountant to resolve the dispute as promptly as possible.
(d) Failure by the Indemnified Party to promptly deliver to the
Indemnifying Party a Notice in accordance with Section 14(a) hereof will not
relieve the Indemnifying Party of any of its obligations under this Agreement
except to the extent the Indemnifying Party is prejudiced by such failure.
(e) The indemnification provisions of this Section 14 shall be the
exclusive remedy following the Closing for any breaches or alleged breaches of
any representation, warranty or other provision of this Agreement and for the
allocation of Taxes pursuant to this Agreement. Each of the parties hereto, on
behalf of itself and its officers, directors, employees, shareholders, partners,
affiliates, agents or representatives (collectively, such party's
"Representatives") agrees not to bring any actions or proceedings, at law,
equity or otherwise, against any other party or its Representatives, in respect
of any breaches or alleged breaches of any representation, warranty or other
provision of this Agreement, except pursuant to and subject to the express
provisions of this Section 14.
15. Termination of Existing Tax Sharing Agreements. Except as set forth on
----------------------------------------------
Schedule 15 hereto, as of the close of the Closing Date, any Tax sharing
agreement or arrangement that exists or may exist between the Company and Seller
or its Affiliates will terminate, and any obligations to make payments under any
such agreement or arrangement will be canceled.
16. Resolution of Disputes. If Seller and Buyer fail to mutually agree on
----------------------
the resolution of any of the matters in this Agreement which require the
agreement of the parties, then such matter shall be referred to the Accountant
for a binding determination. Seller and Buyer shall deliver to the Accountant
copies of any schedules or documentation which may be reasonably required by the
Accountant
-15-
to make its determination. Seller and Buyer shall be entitled to make
presentations to the Accountant in connection therewith. Seller and Buyer shall
use all reasonable efforts to cause the Accountant to promptly complete such
determination. The determination of the Accountant shall be final and binding on
all parties. The costs incurred in retaining the Accountant to make a
determination shall be shared equally by Seller and Buyer.
17. Payment. All currency amounts required to be paid to a party under
-------
this Agreement shall be paid in United States of America Dollars. If a party
(the "Payor") fails to make a payment due and owing under this Agreement to the
other party or any of its Tax Affiliates (the "Payee") reasonably within five
business days after the parties hereto agree (or there is a binding
determination) that such payment is due and owing, the Payor will pay to the
Payee interest on such payment from and including the date the parties reach
such agreement (or such binding determination is made) to but excluding the day
the Payor makes such payment, at a rate equal to seven percent (7%) per annum.
18. Seller's Representations and Warranties. Cyprus Amax and Specialty,
---------------------------------------
jointly and severally, hereby represent and warrant to Buyer as set forth below.
Disclosure of any items not otherwise required to be disclosed shall not create
any inference of materiality.
(a) Except as set forth on Schedule 18(a), all required Income Tax Returns
with respect to the Company and the Company's Tax Affiliates (including the
Chilean Partnership) have been duly filed and Seller will cause to be filed all
required Income Tax Returns that are due to be filed on or before the Closing
Date on a timely basis (or will have filed an accurate/complete appropriate
application for extension of time to file). All such Tax Returns were true,
correct and complete in all material respects when filed. Neither the Company
nor any of the Company's Tax Affiliates is delinquent in the payment of any Tax
or estimated Tax payable by or on behalf of the Company or any of the Company's
Tax Affiliates for any Taxes for any Tax periods covered by the Tax Returns
referred to in the preceding sentence (whether or not shown on such Tax Returns)
(other than any Income Taxes the amount or validity of which are being contested
in good faith by appropriate proceedings).
(b) The Company has delivered to Buyer true copies of the Company's and its
Subsidiaries' federal, state and foreign Income Tax Returns for the tax years
1994, 1995 and 1996.
(c) Except as set forth on Schedule 18(c), the Company is not a party to,
bound by, or subject to, any obligation under any Tax sharing, Tax
indemnification or similar agreement or has any liability for the Taxes of any
other Person as a transferee, successor or otherwise.
-16-
(d) The Company has not filed a consent pursuant to Section 341(f) of the
Code or agreed to have Section 341(f)(2) of the Code apply to any disposition of
a subsection (f) asset (as such term is defined in Section 341(f)(4) of the
Code) owned by it.
(e) No property owned by the Company is property that the Buyer, or the
Company or any of their Affiliates is or will be required to treat as being
owned by another person pursuant to the provisions of Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended and in effect immediately prior to the
enactment of the Tax Reform Act of 1986, is tax-exempt use property within the
meaning of Section 168(h)(1) of the Code or tax-exempt bond financed property
within the meaning of Section 168(g) of the Code.
(f) Except as set forth in Schedule 18(f), none of the Company nor any
Subsidiary of the Company has given or been requested to give waivers or
extensions (or is or would be subject to a waiver or extension given by any
other Person) of any statute of limitations relating to the payment of Taxes of
any of them.
(g) All Taxes that the Company or any Subsidiary of the Company is or was
required by Law to withhold or collect have been duly withheld and collected
and, to the extent required, have been paid to the proper Governmental Authority
or taxing authority.
(h) The Seller is not a foreign person subject to withholding under Section
1445 of the Code and the regulations promulgated thereunder, and, at the
Closing, Seller shall deliver to Buyer a certificate to that effect (a "FIRPTA
------
Certificate").
-----------
(i) There is no agreement, plan, arrangement or other contract covering any
employee or independent contractor of the Company or any of its Tax Affiliates
that could give rise to the payment of any amount that could not be deductible
pursuant to Section 280G of the Code.
(j) There are no pending, proposed, or, to the Knowledge of Seller,
threatened, audits, judicial proceedings, assessments or deficiencies with
respect to Taxes of the Company or any of its Subsidiaries. There is no
pending, proposed, or, to the Knowledge of Seller, threatened, claim by any
Governmental Authority in any jurisdiction in which any of the Seller, the
Company of any of its Tax Affiliates do not pay Taxes or file Tax Returns that
any such Person is required to pay Taxes or file Tax Returns.
(k) Except as set forth in Schedule 18(k), neither the Company nor any of
its Subsidiaries has agreed or is required to make any adjustment under Section
481(a) of the Code or any comparable provision of state, local or foreign law.
-17-
(l) No liens for Taxes exist with respect to the assets, income or
operations of any of the Seller, the Company or any of its Subsidiaries other
than any lien for Taxes which are being contested in good faith and by
appropriate proceedings.
19. Section 338(h)(10) Election.
(a) Buyer (or one of its Tax Affiliates) and Seller will join in making,
and will take (and will cause its respective Tax Affiliates to take) any and all
action necessary to effect a timely election with respect to the sale of the
stock of the Company under Section 338(h)(10) of the Code (and the Treasury
Regulations and administrative pronouncements thereunder) and any comparable
provision of state or local Tax law (including any state or local tax law which
treats a Section 338(h)(10) Election as a Section 338 Election) (collectively a
"Section 338(h)(10) Election"). Seller and Buyer acknowledge that for Federal
Income Tax purposes (and for State Income Tax purposes in those states whose
Income Tax provisions follow the Federal Income Tax Treatment), the sale of the
stock of the Company combined with the Section 338(h)(10) Election will be
treated as a sale of assets by the Company to Buyer followed by a complete
liquidation of the Company into Seller. Buyer and Seller will report (and will
cause their respective Tax Affiliates to report) any transactions that occur
under the Stock Purchase and Sale Agreement or hereunder consistent with the
Section 338(h)(10) Election, and will take no position (nor allow their
respective Tax Affiliates to take a position) contrary thereto. Buyer and its
Tax Affiliates agree to make an election under Section 338 with respect to the
Chilean Partnership and its shareholder.
(b) Seller and the Buyer shall each provide to the other all necessary
information to permit the Section 338(h)(10) Election to be made.
(c) Within ninety (90) days after the Closing Date, Buyer shall:
i. determine, based upon the principles contained in the relevant
Treasury regulations, the modified adjusted deemed sales price
("MADSP") for the assets of the Company (within the meaning of
Treasury regulation (S)1.338(h)(10)-1(f)); and
ii. determine, based upon the principles contained in the relevant
Treasury regulations, the proper allocation of such MADSP among
the assets of the Company in accordance with Treasury
regulation (S)1.338(b)-2T (together (i) and (ii) are the
"Allocations").
In making the determinations under this subparagraph (c), Buyer shall consult in
good faith with the Seller and keep the Seller informed as to the methodology
and status of such determinations.
-18-
(d) Buyer shall prepare all forms (including, without limitation, Internal
Revenue Service Form 8023) and schedules (collectively, the "Forms") necessary
to effect the Section 338(h)(10) Election and will deliver a completed copy of
any such Forms to Seller for its review within sixty (60) days after the date
provided in Section 19(c). At the Closing, Seller and Buyer shall both execute
and deliver completed pro-forma Forms 8023.
(e) Seller shall have the right within thirty (30) days following the
delivery of the Allocations to object in writing to the Allocations specifying
in reasonable detail the basis for such objection(s). Seller shall be deemed to
have agreed with the Allocations, except as specifically objected to in such
notice. If Seller does so object, Seller and Buyer shall cooperate with each
other to attempt to reach a mutual agreement thereon, or, failing such agreement
within twenty (20) days, Seller and Buyer will, in accordance with Section 16
thereof, jointly request the Accountant to resolve the dispute as promptly as
possible.
(f) Seller shall calculate the gain or loss, if any, resulting from the
Section 338(h)(10) Election in a manner consistent with the determination of
MADSP and the Allocations and shall not take any position inconsistent with the
Section 338(h)(10) Election, the MADSP or the Allocations in connection with any
Tax Return or otherwise.
(g) Buyer shall determine its tax basis for the assets of the Company in a
manner consistent with the determination of MADSP and the Allocations and shall
not take any position inconsistent with the Section 338(h)(10) Election, the
MADSP or the Allocations in any Tax Return or otherwise.
(h) Buyer covenants that, during the period beginning immediately after the
Closing and ending at the close of the Closing Date, the Company will not engage
in any transaction that is not in the ordinary course of business of the
Company.
20. Survival of Representations, Warranties, Covenants, Agreements and
------------------------------------------------------------------
Indemnification. The representations and warranties contained in this Agreement
---------------
shall survive the Closing and be enforceable for a period of ninety (90) days
after the expiration of the applicable statute of limitations with respect to
the relevant item of Tax, but shall thereafter be of no force or effect, except
as they relate to a Notice filed under Section 14. All covenants and agreements
contained in this Agreement shall survive the Closing in accordance with their
terms.
21. Amendments. Any amendment, supplement, variation, alteration or
----------
modification to this Agreement must be made in writing and duly executed by an
authorized representative or agent of each of the parties hereto.
-19-
22. Assignment. This Agreement and all the rights and obligations granted
----------
hereby shall bind and inure to the benefit of the parties hereto and their
respective successors and assigns, it being expressly agreed that this Agreement
shall not be assigned nor shall any rights or obligations arising hereunder be
transferred by one party without the prior written consent of the other party,
provided that Buyer may assign its rights hereunder to any Affiliate of Buyer,
provided that Buyer, in an agreement reasonably satisfactory to Cyprus Amax,
agrees to remain fully responsible with respect to the liabilities and
obligations of Buyer hereunder.
23. Entire Agreement. This Agreement constitutes the entire agreement
----------------
between the parties and supersedes any and all other prior or contemporaneous
understandings, negotiations or agreements between the parties relating to the
transactions contemplated hereby or the subject matter of this Agreement, and
shall be binding upon and inure to the benefit of the parties hereto and their
respective legal representatives.
24. No Waiver. The failure in any one or more instances of a party to
---------
insist upon performance of any of the terms, covenants or conditions of this
Agreement, to exercise any right or privilege in this Agreement conferred, or to
waive any breach of any of the terms, covenants or conditions of this Agreement,
shall not be construed as a subsequent waiver of any such terms, covenants,
conditions, rights or privileges, but the same shall continue and remain in full
force and effect as if no such forbearance or waiver had occurred. No waiver
shall be effective unless it is in writing and signed by an authorized
representative of the waiving party.
25. No Double Recovery. No provision of this Agreement shall be construed
------------------
to provide an indemnity or other recovery for any Taxes, costs, damages, or
other amounts for which the damaged person has been fully compensated under any
other provision of this Agreement or under any other agreement or action at law
or equity.
26. Severability. Any provision of this Agreement which is prohibited or
------------
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
other jurisdiction shall not invalidate or render unenforceable such provision
in any other jurisdiction. To the extent permitted by applicable law, each
party hereby waives any law which renders any provision hereof prohibited or
unenforceable in any respect.
27. Counterparts. This Agreement may be executed in counterparts, each of
------------
which shall be deemed to be an original, and all such counterparts shall be
deemed to constitute one and the same instrument.
-20-
28. Fees, Costs and Expenses. Except as otherwise provided herein, each
------------------------
party shall be responsible for its own fees, costs and expenses incurred by it
in connection with this Agreement.
29. Third-Party Beneficiaries. Nothing in this Agreement is intended to
-------------------------
create, nor shall anything in this Agreement be deemed to create or have
created, any third party beneficiary rights.
30. Construction. In this Agreement, (a) references to this Agreement
------------
shall include all attachments hereto, and (b) words importing the singular shall
include the plural and vice versa, and words importing a gender shall include
other genders. Regardless of whether or not expressly stated in each
circumstance, Buyer and the Company, jointly and severally, agree that upon
Closing, each shall be fully liable and responsible for any and all liabilities
and obligations of any nature of the other, arising under this Agreement,
including under the Related Agreements.
31. Headings. The descriptive section headings contained in this Agreement
--------
are for convenience of reference only and shall not control or effect the
meaning or construction of any provision of this Agreement.
32. Notices. All notices and other communications hereunder shall be in
-------
writing and shall be deemed to have been duly given when personally delivered,
five (5) business days after mailing when mailed by certified mail, return
receipt requested, or one (1) business day after sending via Federal Express or
similar overnight courier service, or when receipt is confirmed when sent by
facsimile. Such notices or other communications shall be sent to the following
addresses, unless other addresses are subsequently specified in writing:
Buyer (and the Company after the Closing):
-----------------------------------------
▇▇▇▇▇ Acquisition Corporation
c/o Dynamit Nobel Holdings, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Tel. No.: (▇▇▇) ▇▇▇-▇▇▇▇
-21-
With a copy to:
▇▇▇▇, Scholer, Fierman, ▇▇▇▇ & Handler, LLP
1999 Avenue of the Stars, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Tel. No.: (▇▇▇) ▇▇▇-▇▇▇▇
Cyprus Amax, Specialty (and the Company prior to the Closing):
-------------------------------------------------------------
c/o Cyprus Amax Minerals Company
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇, Senior Vice President
and General Counsel
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Tel. No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Tel. No.: (▇▇▇) ▇▇▇-▇▇▇▇
33. Governing Law; Jurisdiction
---------------------------
THIS AGREEMENT SHALL BE GOVERNED BY AND CONTROLLED AS TO ITS VALIDITY,
ENFORCEMENT, INTERPRETATION, CONSTRUCTION, EFFECT AND IN ALL OTHER RESPECTS BY
THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO ANY CHOICE OR
CONFLICT OF LAW PROVISION OR RULE THEREOF) APPLICABLE TO CONTRACTS MADE AND TO
BE PERFORMED IN THAT STATE. ALL DISPUTES, LEGAL ACTIONS, SUITS AND PROCEEDINGS
WHICH, IN WHOLE OR IN PART, ARISE OUT OF OR RELATE TO THIS AGREEMENT SHALL BE
BROUGHT IN A STATE OR FEDERAL DISTRICT COURT LOCATED IN NEW YORK, NEW YORK.
EACH PARTY HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND
FEDERAL DISTRICT COURTS IN NEW YORK, NEW YORK. EACH PARTY HEREBY IRREVOCABLY
WAIVES ALL CLAIMS OR DEFENSES OF LACK OF JURISDICTION OR OF IMMUNITY FROM
JURISDICTION, AND ANY RIGHT TO OBJECT ON THE BASIS THAT ANY DISPUTE, ACTION,
SUIT OR PROCEEDING BROUGHT IN THE STATE OR FEDERAL DISTRICT COURT OF NEW
-22-
YORK, NEW YORK HAS BEEN BROUGHT IN AN IMPROPER OR INCONVENIENT VENUE OR FORUM.
THIS PROVISION ON CHOICE OF LAW AND JURISDICTION SHALL NEITHER GOVERN NOR AFFECT
CHOICE OF LAW OR JURISDICTION PERTINENT TO CLAIMS AGAINST PERSONS NOT A PARTY TO
THIS AGREEMENT.
-23-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
Attest: CYPRUS AMAX MINERALS COMPANY
/s/ ▇. ▇. ▇▇▇▇▇▇▇ By: /s/ P. C. Wolf
----------------- ---------------
Name: P. C. Wolf
Title: Sr. V. P.
Attest: CYPRUS SPECIALTY METALS COMPANY
/s/ ▇. ▇. ▇▇▇▇▇▇▇ By: /s/ P. C. Wolf
----------------- ---------------
Name: P. C. Wolf
Title: Sr. V. P.
Attest: CYPRUS ▇▇▇▇▇ MINERAL COMPANY
/s/ ▇. ▇. ▇▇▇▇▇▇▇ By: /s/ P. C. Wolf
------------------ ---------------
Name: P. C. Wolf
Title: Sr. V. P.
Attest: BUYER
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇. ▇▇▇▇▇▇
--------------------- --------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
-24-
SCHEDULE 9(A)(I)
----------------
1997 and 1998 consolidated, combined or unitary Income Tax Returns of Seller
that include Cyprus ▇▇▇▇▇ Mineral Company:
Federal Consolidated Income Tax Return
Alaska Combined Corporation Net Income Tax Return
Arizona Consolidated Corporate Income Tax Return
California Combined Corporation Franchise or Income Tax Return
Colorado State Combined C Corporation Income Tax Return
Idaho Combined Corporation Income Tax Return
Illinois Combined Corporation Income and Replacement Tax Return
Kentucky Consolidated Corporation Income and License Tax Return
Maine Combined Corporate Income Tax Return
Minnesota Combined Corporation Franchise Tax Return
Montana Consolidated Corporation License Tax Return
Nebraska Combined Corporation Income Tax Return
New Mexico Combined Corporate Income and Franchise Tax Return
Utah Combined Corporation Franchise or Income Tax Return
-25-
SCHEDULE 9(A)(II)
-----------------
1997 and 1998 separate company state Income Tax Returns for Cyprus ▇▇▇▇▇ Mineral
Company:
Kansas
North Carolina
Ohio
Oklahoma
Pennsylvania
Tennessee
Virginia
Vermont
Texas
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SCHEDULE 15
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None
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SCHEDULE 18
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a) none
b) none
c) none
d) none
e) none
f) the statute of limitations relating to the payment of Taxes has been
extended for the following:
. 1994 and 1995 federal consolidated income tax return
. 1994 California combined return
. 1989-92 Colorado combined returns
. 1994-96 Illinois combined returns
g) none
h) none
i) none
j) 1994-1995 California combined return audit is scheduled to begin October
19, 1998
1994-1996 Illinois combined return audit is scheduled to begin November
2, 1998
1994-1996 Utah combined return audit is scheduled to begin February 15,
1999
k) there are no Section 481(a) adjustments that require adjustments in periods
subsequent to the Closing
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