SPECIAL METALS CORPORATION
0000 XXXXXX XXXXXXXXXX XXXX
XXX XXXXXXXX, XX 00000
October 28, 1998
To: Inco Limited Inco Europe Limited
000 Xxxx Xxxxxx Xxxx 0xx Xxxxx
Suite 0000 Xxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx X0X 0X0 00 Xxxxxxxx Xxxxxx
Xxxxxx Xxxxxx 0X0X 0XX
Xxxxxxx
Inco United States, Inc.
Park 80 West-Plaza Two Inco S.A.
Xxxxxx Xxxxx, XX 00000 00 Xxx xx Xxxxxxxx
00000 Xxxxx
Xxxxxx
Ladies and Gentlemen:
Reference is made to the Stock Purchase Agreement, dated as of July 8,
1998 (the "Stock Purchase Agreement") between Inco Limited, Inco United States,
Inc., Inco Europe Limited, and Inco S.A. (collectively, the "Sellers") and
Special Metals Corporation (the "Purchaser").
The purpose of this letter agreement is to confirm certain
understandings of the parties hereto relating to the Stock Purchase Agreement
and the transactions contemplated thereby. Capitalized terms used herein and not
otherwise defined shall have the respective meanings ascribed thereto in the
Stock Purchase Agreement. For good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereby agree as follows:
1. Definitions.
(a) The definition in Section 1.1 of the Stock Purchase
Agreement of "Ancillary Agreements" shall be amended and restated in its
entirety as follows:
"Ancillary Agreements" means the Noncompetition Agreement, the
Tradename and Trademark License Agreement, the Transitional Services Agreement,
the Quitclaim Assignment, the Merger Agreement (including the Certificate of
Merger
attached thereto), and the Inco Investment Agreement attached hereto as Exhibits
A, B, C, D, E and F, respectively.
(b) Section 1.1 of the Stock Purchase Agreement shall be
amended to include the following definitions:
"Canadian Holdco" means IACL Acquisition Inc., a Canadian corporation
and a wholly-owned subsidiary of Purchaser.
"Delaware Merger Sub" means IAII Acquisition Co., a Delaware
corporation and a wholly-owned subsidiary of Purchaser.
"French Holdco" means Special Metals S.A.R.L., a French limited
liability company and a wholly-owned subsidiary of UK Holdco.
"Inco Investment Agreement" means the Investment Agreement, to be dated
as of the Closing Date, between Inco and Purchaser, the form of which is
attached hereto as Exhibit F.
"Merger" shall have the meaning ascribed thereto in the Merger
Agreement.
"Merger Agreement" means the Agreement and Plan of Merger, to be dated
as of the Closing Date, among Inco U.S., IAII, Purchaser and Delaware Merger
Sub, the form of which is attached hereto as Exhibit E.
"Preferred Shares" means the shares of Series A Senior Convertible
Preferred Stock, having an aggregate liquidation value of $17 million, to be
issued to Inco at Closing pursuant to the Inco Investment Agreement.
"Purchased Shares" means all Shares other than the IAII Shares.
"UK Holdco" means IAL Holdings Limited, a corporation organized in
England and Wales and a wholly-owned subsidiary of Purchaser.
2. Acquisition of IAII through Merger.
(a) Section 2.1 of the Stock Purchase Agreement is hereby
amended and restated in its entirety as follows:
Section 2.1 Purchase and Sale of the Shares; Non-competition
Payment. On the terms and subject to the conditions set forth herein,
at the Closing:
(a) the Merger shall be consummated, the Sellers shall cause
Inco U.S. and IAII to perform their obligations under the
Merger Agreement and Purchaser shall cause Delaware Merger
Sub to perform its obligations under the Merger Agreement,
including the payment to Inco U.S. of $196 million (the
"Merger Price") pursuant to the Merger Agreement;
(b) Inco shall sell and transfer to Canadian Holdco, and
Canadian Holdco shall, and Purchaser shall cause Canadian
Holdco to, purchase from Inco all of the IACL Shares for
$6.5 million (the "IACL Purchase Price");
(c) Inco shall, immediately following the consummation of the
Merger, sell and transfer to IAII, and IAII shall, and
Purchaser shall cause IAII to, purchase from Inco all of
the DIAL Shares for a purchase price of $7.0 million (the
"DIAL Purchase Price");
(d) Inco Europe shall, and the Sellers shall cause Inco Europe
to, sell and transfer to UK Holdco, and UK Holdco shall,
Purchaser shall cause UK Holdco to, purchase from Inco
Europe the IAIL Shares, the IAL Shares and the Incotherm
Share for an aggregate purchase price of $112 million (the
"IAIL/IAL Purchase Price");
(e) Inco S.A. shall, and Sellers shall cause Inco S.A. to,
sell and transfer to French Holdco, and French Holdco
shall, and Purchaser shall cause French Holdco to,
purchase from Inco S.A. the Rescal Shares for a purchase
price of $6.5 million (the "Rescal Purchase Price" and,
collectively with the IACL Purchase Price, the DIAL
Purchase Price, the IAIL/IAL Purchase Price, the Rescal
Purchase Price and the Merger Price, the "Purchase
Price"); and
(f) Purchaser agrees to pay Inco $20 million in cash and issue
to Inco the Preferred Shares in accordance with the Inco
Investment Agreement as consideration for Inco entering
into the Noncompetition Agreement (such cash payment and
share issuance being collectively referred to as the
"Noncompetition Payment").
For the avoidance of doubt, the allocation of the Purchase Price is set
forth on Schedule 2.1. The Purchase Price shall be subject to adjustment in
accordance with Sections 2.4 and 5.4(a)(iv). Unless the context otherwise
requires, the term "Purchaser" shall include French Holdco, UK Holdco, Canadian
Holdco and Delaware Merger Sub for all purposes under this Agreement. For
purposes of this Agreement, the terms "IACL Shares", "DIAL Shares", "IAIL
Shares", "IAL Shares" and "Rescal Shares" shall be deemed to include any
additional shares of IACL, DIAL, IAIL, IAL or Rescal, respectively, that may be
issued to any Seller pursuant to Quitclaim Assignment, in accordance with
Section 5.13(d)(iv) or otherwise.
(b) Section 2.2(b) of the Stock Purchase Agreement is hereby
amended by deleting all words after the word "Closing" first appears in clause
(iv) of Section 2.2(b) and inserting in lieu thereof the following:
"pay to the appropriate Seller its allocable share of the
Purchase Price (as allocated among the Purchased Shares and
the IAII
Shares pursuant to Section 2.1 of this Agreement and the
Merger Agreement, as applicable) by wire transfer of
immediately available funds to an account designated by such
Seller not less than two Business Days prior to the Closing,
net of any and all applicable withholding taxes calculated on
the assumption that the actual purchaser of any Shares is a
U.S. corporation, and Purchaser shall deliver to the Sellers
the instruments and opinions required to be delivered pursuant
to Section 6.3."
(c) Section 2.4(f) of the Stock Purchase Agreement is hereby
amended by deleting the words following "pro rata basis" and inserting in lieu
thereof the following:
"between the Merger Price and the IAIL/IAL Purchase Price".
(d) Section 3.2 of the Stock Purchase Agreement is hereby
amended by deleting the word "Supply" in the second line thereof and by
replacing it with the word "Ancillary."
(e) Article III of the Stock Purchase Agreement is amended by
adding the following at the end thereof:
"Section 3.27 No Breach as a Result of Merger. Notwithstanding
anything herein to the contrary, the Sellers shall not be
deemed to have breached any of the representations or
warranties set forth in this Article III solely as a result of
IAII and/or Inco U.S. entering into the Merger Agreement
and/or the consummation of the transactions contemplated
thereby, if such representation or warranty would not have
been breached had Purchaser, or a wholly-owned U.S. subsidiary
of Purchaser, purchased the IAII Shares from Inco U.S."
(f) Section 5.13 of the Stock Purchase Agreement is hereby
amended by inserting the following after clause (e) thereof:
"(f) On or prior to Closing, Inco U.S., IAII, Purchaser and
Delaware Merger Sub shall enter into the Merger Agreement in
the form attached hereto as Exhibit E."
(g) Section 6.2(j) of the Stock Purchase Agreement shall be
amended by adding "or Delaware Merger Sub" immediately following "Purchaser."
(h) Section 7.2 of the Stock Purchase Agreement shall be
amended by deleting the word "and" immediately preceding clause (e) thereof and
adding after clause (e) and before the parenthetical following clause (e)
thereof the following:
"and (f) IAII or Inco U.S. entering into the Merger Agreement
and/or the consummation of the transactions contemplated
thereby, to the extent such Loss would not have been suffered
had Purchaser, or a wholly-owned U.S. subsidiary of Purchaser,
purchased the IAII Shares from Inco U.S."
(i) Section 9.1 of the Stock Purchase Agreement shall be
amended by deleting the following under "To the Seller:":
"Xxxxxxx X. Xxxxx
President
Inco United States, Inc.
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000"
3. Completion of Investment and Merger.
Sections 6.2(j) and 6.3(f) of the Stock Purchase Agreement shall each
be amended by adding the following: ",and the covenants and agreements required
therein to be performed on or before Closing shall have been duly performed in
all material respects," immediately after the word "delivered" therein.
4. Intercompany Debt. The parties acknowledge and agree that:
(a) The asterisk next to item (c) on Schedule 3.16(a)(ix) of
the Disclosure Schedule to the Stock Purchase Agreement (referencing a credit
agreement between A-1 Wire Tech and IAII) shall be deleted;
(b) The asterisk next to item (h) on Schedule 3.16(a)(ix) of
the Disclosure Schedule to the Stock Purchase Agreement (referencing a credit
agreement between Inco Limited and Spectech Alloys Limited) shall be deleted
and, in lieu thereof, the following words shall be added to the end of item (h):
", which indebtedness was assigned by Inco Limited to Inco Alloys Canada Limited
pursuant to the Debt Purchase Agreement dated October 1, 1998 between Inco
Limited and Inco Alloys Canada Limited;" and
(c) The asterisk next to item (i) on Schedule 3.16(a)(ix) of
the Disclosure Schedule to the Stock Purchase Agreement (referencing a credit
agreement between Inco Alloys Services SpA and Inco Europe Limited) shall be
deleted and, in lieu thereof, the following words shall be added to the end of
item (i): ", which indebtedness shall be repaid in full by Inco Alloys Services
SpA with the proceeds of a loan, equal to the outstanding amount of such
indebtedness and accrued interest, to be advanced by Inco Europe Limited to Inco
Alloys Limited, which loan proceeds shall, in turn, be loaned by Inco Alloys
Limited to Inco Alloys Services SpA."
5. Amendments to Ancillary Agreements. Every reference in the Ancillary
Agreements to the Stock Purchase Agreement shall be deemed to mean the Stock
Purchase Agreement as amended by this letter agreement.
6. Schedules/Exhibits
(a) Schedule 2.1 of the Stock Purchase Agreement shall be
replaced with Schedule 2.1 attached hereto.
(b) Exhibit A to the Stock Purchase Agreement shall be
replaced in its entirety with Exhibit A attached hereto.
(c) Exhibit E shall be added to the Stock Purchase Agreement,
the form of which is attached hereto as Exhibit E.
(d) Exhibit F shall be added to the Stock Purchase Agreement,
the form which is attached hereto as Exhibit F.
7. Collateral Assignment. Notwithstanding anything to the contrary
contained in the Stock Purchase Agreement, the Purchaser and its subsidiaries
may execute and deliver the Collateral Assignment of Purchase Agreement in the
form attached hereto as Exhibit B and Inco and Inco U.S. agree to execute and
deliver the Consent to Assignment attached thereto at Closing.
8. Governing Law. This letter agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely within such State, without regard
to choice of law principles thereof.
9. Counterparts. This letter agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
If the foregoing correctly sets forth the agreement reached between the
parties hereto with respect to the subject matter hereof, kindly execute a copy
of this letter agreement in the space below at which time this Letter Agreement
shall serve as a binding and enforceable agreement between the parties hereto
effective as of the date first above written.
Very truly yours,
SPECIAL METALS CORPORATION
By: _______________________________
Name
Title:
SPECIAL METALS S.A.R.L.
By: _______________________________
Name
Title:
IAII ACQUISITION CO.
By: _______________________________
Name
Title:
IAL HOLDINGS LIMITED
By: _______________________________
Name
Title:
IACL ACQUISITION INC.
By: _______________________________
Name
Title:
Accepted and Agreed to as of the date first written above:
INCO LIMITED
By: _______________________________
Name
Title:
INCO UNITED STATES, INC.
By: _______________________________
Name
Title:
INCO EUROPE LIMITED
By: _______________________________
Name
Title:
INCO S.A.
By: _______________________________
Name
Title:
INCO ALLOYS INTERNATIONAL, INC.
By: _______________________________
Name
Title:
Schedule 2.1
Purchase Price Allocation
Consideration for Noncompetition $20 million in
Agreement: cash, plus the
Preferred Shares
Merger Price: $196 million
Purchased Shares Price:
o IAL, IAIL (U.K.): $112 million
o IACL (Canada): $6.5 million
o Rescal (France): $6.5 million
o DIAL (Japan): $7.0 million
----------------
Total: $348 million
in cash, plus the
Preferred Shares
