x
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Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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¨
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Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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VIRGINIA
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54-1692118
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Title of each class
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Name of each exchange on which registered
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COMMON STOCK, $.01 Par Value
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NEW YORK STOCK EXCHANGE
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Large accelerated filer
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x
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Accelerated filer
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¨
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Non-accelerated filer
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¨
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Smaller reporting company
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¨
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Emerging growth company
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¨
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Albemarle Corporation and Subsidiaries
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Albemarle Corporation and Subsidiaries
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Item 1.
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Business.
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Albemarle Corporation and Subsidiaries
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Albemarle Corporation and Subsidiaries
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Albemarle Corporation and Subsidiaries
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Albemarle Corporation and Subsidiaries
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Albemarle Corporation and Subsidiaries
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Albemarle Corporation and Subsidiaries
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Item 1A.
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Risk Factors.
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•
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fluctuations in foreign currency exchange rates may affect product demand and may adversely affect the profitability in U.S. dollars of products and services we provide in international markets where payment for our products and services is made in the local currency;
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•
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transportation and other shipping costs may increase, or transportation may be inhibited;
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•
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increased cost or decreased availability of raw materials;
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•
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changes in foreign laws and tax rates or U.S. laws and tax rates with respect to foreign income may unexpectedly increase the rate at which our income is taxed, impose new and additional taxes on remittances, repatriation or other payments by subsidiaries, or cause the loss of previously recorded tax benefits;
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•
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foreign countries in which we do business may adopt other restrictions on foreign trade or investment, including currency exchange controls;
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•
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trade sanctions by or against these countries could result in our losing access to customers and suppliers in those countries;
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•
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unexpected adverse changes in foreign laws or regulatory requirements may occur;
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•
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our agreements with counterparties in foreign countries may be difficult for us to enforce and related receivables may be difficult for us to collect;
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•
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compliance with the variety of foreign laws and regulations may be unduly burdensome;
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•
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compliance with anti-bribery and anti-corruption laws (such as the Foreign Corrupt Practices Act) as well as anti-money-laundering laws may be costly;
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•
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unexpected adverse changes in export duties, quotas and tariffs and difficulties in obtaining export licenses may occur;
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•
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general economic conditions in the countries in which we operate could have an adverse effect on our earnings from operations in those countries;
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•
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our foreign operations may experience staffing difficulties and labor disputes;
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•
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termination or substantial modification of international trade agreements may adversely affect our access to raw materials and to markets for our products outside the U.S.;
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Albemarle Corporation and Subsidiaries
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||
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•
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foreign governments may nationalize or expropriate private enterprises;
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•
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increased sovereign risk (such as default by or deterioration in the economies and credit worthiness of local governments) may occur; and
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•
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political or economic repercussions from terrorist activities, including the possibility of hyperinflationary conditions and political instability, may occur in certain countries in which we do business.
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Albemarle Corporation and Subsidiaries
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Albemarle Corporation and Subsidiaries
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Albemarle Corporation and Subsidiaries
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Albemarle Corporation and Subsidiaries
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Albemarle Corporation and Subsidiaries
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Albemarle Corporation and Subsidiaries
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Albemarle Corporation and Subsidiaries
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Albemarle Corporation and Subsidiaries
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Albemarle Corporation and Subsidiaries
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Albemarle Corporation and Subsidiaries
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Albemarle Corporation and Subsidiaries
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•
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potential disruption of our ongoing business and distraction of management;
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•
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unforeseen claims and liabilities, including unexpected environmental exposures;
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•
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unforeseen adjustments, charges and write-offs;
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•
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problems enforcing the indemnification obligations of sellers of businesses or joint venture partners for claims and liabilities;
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•
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unexpected losses of customers of, or suppliers to, the acquired business;
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•
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difficulty in conforming the acquired businesses’ standards, processes, procedures and controls with our operations;
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•
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in the case of foreign acquisitions, the need to integrate operations across different cultures and languages and to address the particular economic, currency, political and regulatory risks associated with specific countries;
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•
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variability in financial information arising from the implementation of purchase price accounting;
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•
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inability to coordinate new product and process development;
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Albemarle Corporation and Subsidiaries
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•
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loss of senior managers and other critical personnel and problems with new labor unions and cultural challenges associated with integrating employees from the acquired company into our organization; and
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•
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challenges arising from the increased scope, geographic diversity and complexity of our operations.
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•
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reducing flexibility in planning for, or reacting to, changes in our businesses, the competitive environment and the industries in which we operate, and to technological and other changes;
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•
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lowering credit ratings;
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•
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reducing access to capital and increasing borrowing costs generally or for any additional indebtedness to finance future operating and capital expenses and for general corporate purposes;
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•
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reducing funds available for operations, capital expenditures, share repurchases, dividends and other activities; and
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•
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creating competitive disadvantages relative to other companies with lower debt levels.
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Item 1B.
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Unresolved Staff Comments.
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Item 2.
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Properties.
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Location
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Business Segment
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Principal Use
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Owned/Leased
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Amsterdam, the Netherlands
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Catalysts
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Production of refinery catalysts, research and product development activities
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Owned
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Baton Rouge, Louisiana
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Bromine Specialties
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Research and product development activities, and production of flame retardants
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Leased
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Albemarle Corporation and Subsidiaries
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Location
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Business Segment
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Principal Use
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Owned/Leased
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Bitterfeld, Germany
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Catalysts
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Refinery catalyst regeneration, rejuvenation, and sulfiding
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Owned by Eurecat S.A., a joint venture owned 50% by each of Axens Group and us
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Greenbushes, Australia
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Lithium
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Production of lithium spodumene minerals and lithium concentrate
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Owned by Windfield Holdings Pty Ltd, a joint venture in which we own 49%, and Sichuan Tianqi Lithium Industries Inc. which owns the remaining interest
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Jubail, Saudi Arabia
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Catalysts
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Manufacturing and marketing of organometallics
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Owned by Saudi Organometallic Chemicals Company LLC, a joint venture owned 50% by each of Saudi Specialty Chemicals Company (a SABIC affiliate) and us
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Kings Mountain, North Carolina
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Lithium
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Production of technical and battery grade lithium hydroxide, lithium salts and battery grade lithium metal products
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Owned
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La Negra, Chile
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Lithium
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Production of lithium carbonate and lithium chloride
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Owned
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Langelsheim, Germany
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Lithium
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Production of butyllithium, lithium chloride, specialty products, lithium hydrides, cesium and special metals
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Owned
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Louvain-la-Neuve, Belgium
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Lithium; Bromine Specialties; Catalysts; All Other
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Regional offices and research and customer technical service activities
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Owned
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La Voulte, France
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Catalysts
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Refinery catalysts regeneration and treatment, research and development activities
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Owned by Eurecat S.A., a joint venture owned 50% by each of Axens Group and us
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Magnolia, Arkansas
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Bromine Specialties
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Production of flame retardants, bromine, inorganic bromides, agricultural intermediates and tertiary amines
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Owned
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McAlester, Oklahoma
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Catalysts
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Refinery catalyst regeneration, rejuvenation, pre-reclaim burn off, as well as specialty zeolites and additives marketing activities
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Owned by Eurecat S.A., a joint venture owned 50% by each of Axens Group and us
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Meishan, China
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Lithium
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Production of lithium carbonate and lithium hydroxide
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Owned
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Mobile, Alabama
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Catalysts
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Production of tin stabilizers
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Owned by PMC Group, Inc. which operates the plant for Stannica LLC, a joint venture owned 50% by each of PMC Group Inc. and us
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New Johnsonville, Tennessee
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Lithium
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Production of specialty products
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Owned
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Niihama, Japan
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Catalysts
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Production of refinery catalysts
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Leased by Nippon Ketjen Company Limited, a joint venture owned 50% by each of Sumitomo Metal Mining Company Limited and us
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Pasadena, Texas
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Catalysts; All Other
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Production of aluminum alkyls, alkenyl succinic anhydride, orthoalkylated anilines, and other specialty chemicals
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Owned
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Pasadena, Texas
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Catalysts
|
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Production of refinery catalysts, research and development activities
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Owned
|
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Albemarle Corporation and Subsidiaries
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||
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Location
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Business Segment
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Principal Use
|
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Owned/Leased
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Pasadena, Texas
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Catalysts
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Refinery catalysts regeneration services
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Owned by Eurecat U.S. Incorporated, a joint venture in which we own a 57.5% interest and a consortium of entities in various proportions owns the remaining interest
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Safi, Jordan
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Bromine Specialties
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Production of bromine and derivatives and flame retardants
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Owned and leased by JBC, a joint venture owned 50% by each of Arab Potash Company Limited and us
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Salar de Atacama, Chile
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Lithium
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Production of lithium brine and potash
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Owned; however ownership will revert to the Chilean government once we have sold all remaining amounts under our contract with the Chilean government pursuant to which we obtain lithium brine in Chile
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Santa Cruz, Brazil
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Catalysts
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Production of catalysts, research and product development activities
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Owned by Fábrica Carioca de Catalisadores S.A, a joint venture owned 50% by each of Petrobras Química S.A.—PETROQUISA and us
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Silver Peak, Nevada
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Lithium
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Production of lithium brine and lithium carbonate
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Owned
|
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South Haven, Michigan
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All Other
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Production of custom fine chemistry products including pharmaceutical actives
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Owned
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Taichung, Taiwan
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|
Lithium
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Production of butyllithium
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Owned
|
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Takaishi City, Osaka, Japan
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|
Catalysts
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Production of aluminum alkyls
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Owned by Nippon Aluminum Alkys, a joint venture owned 50% by each of Mitsui Chemicals, Inc. and us
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Twinsburg, Ohio
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Bromine Specialties
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Production of bromine-activated carbon
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Leased
|
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Tyrone, Pennsylvania
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All Other
|
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Production of custom fine chemistry products, agricultural intermediates, performance polymer products and research and development activities
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Owned
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Xinyu, China
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Lithium
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Production of lithium carbonate and lithium hydroxide
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Owned
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Item 3.
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Legal Proceedings.
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Albemarle Corporation and Subsidiaries
|
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Item 4.
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Mine Safety Disclosures.
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Name
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Age
|
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Position
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Luther C. Kissam IV
|
|
54
|
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Chairman, President and Chief Executive Officer
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Karen G. Narwold
|
|
59
|
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Executive Vice President, Chief Administrative Officer, Corporate Secretary
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Scott A. Tozier
|
|
53
|
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Executive Vice President, Chief Financial Officer
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Donald J. LaBauve, Jr.
|
|
52
|
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Vice President, Corporate Controller, Chief Accounting Officer
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Albemarle Corporation and Subsidiaries
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Item 5.
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Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
|
Period
|
|
Total Number of Shares Repurchased
|
|
Average Price Paid Per Share
|
|
Total Number of Shares Repurchased as Part of Publicly Announced Plans or Programs
(a)
|
|
Maximum Number of Shares that May Yet Be Repurchased Under the Plans or Programs
|
|||||
October 1, 2018 to October 31, 2018
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
7,993,299
|
|
November 1, 2018 to November 30, 2018
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,993,299
|
|
|
December 1, 2018 to December 31, 2018
(b)
|
|
597,036
|
|
|
96.83
|
|
|
597,036
|
|
|
7,396,263
|
|
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Total
|
|
597,036
|
|
|
|
|
597,036
|
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|
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(a)
|
Our stock repurchase plan, which was authorized by our Board of Directors, permits the Company to repurchase up to a maximum of 15,000,000 shares. The stock repurchase plan will expire when we have repurchased all shares authorized for repurchase thereunder, unless the stock repurchase plan is earlier terminated by action of our Board of Directors or further shares are authorized for repurchase.
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(b)
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In the third quarter of 2018, we paid $250 million under the accelerated share repurchase (“ASR”) agreement. Under the terms of the agreement, in December 2018, the ASR agreement was completed and we received and retired a final settlement of
597,036
shares. The Average Price Paid Per Share was calculated using the daily Rule 10b-18 volume-weighted average prices of our common stock over the term of the ASR agreement, less an agreed discount. See Note 5, “Earnings Per Share,” to our consolidated financial statements included in Part II, Item 8 of this report.
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Albemarle Corporation and Subsidiaries
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Item 6.
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Selected Financial Data.
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Item 7.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
•
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changes in economic and business conditions;
|
•
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changes in financial and operating performance of our major customers and industries and markets served by us;
|
•
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the timing of orders received from customers;
|
•
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the gain or loss of significant customers;
|
•
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competition from other manufacturers;
|
•
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changes in the demand for our products or the end-user markets in which our products are sold;
|
•
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limitations or prohibitions on the manufacture and sale of our products;
|
•
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availability of raw materials;
|
•
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increases in the cost of raw materials and energy, and our ability to pass through such increases to our customers;
|
•
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changes in our markets in general;
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Albemarle Corporation and Subsidiaries
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|
•
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fluctuations in foreign currencies;
|
•
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changes in laws and government regulation impacting our operations or our products;
|
•
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the occurrence of regulatory actions, proceedings, claims or litigation;
|
•
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the occurrence of cyber-security breaches, terrorist attacks, industrial accidents, natural disasters or climate change;
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•
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hazards associated with chemicals manufacturing;
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•
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the inability to maintain current levels of product or premises liability insurance or the denial of such coverage;
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•
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political unrest affecting the global economy, including adverse effects from terrorism or hostilities;
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•
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political instability affecting our manufacturing operations or joint ventures;
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•
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changes in accounting standards;
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•
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the inability to achieve results from our global manufacturing cost reduction initiatives as well as our ongoing continuous improvement and rationalization programs;
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•
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changes in the jurisdictional mix of our earnings and changes in tax laws and rates;
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•
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changes in monetary policies, inflation or interest rates that may impact our ability to raise capital or increase our cost of funds, impact the performance of our pension fund investments and increase our pension expense and funding obligations;
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•
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volatility and uncertainties in the debt and equity markets;
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•
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technology or intellectual property infringement, including through cyber-security breaches, and other innovation risks;
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•
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decisions we may make in the future;
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•
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the ability to successfully execute, operate and integrate acquisitions and divestitures; and
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•
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the other factors detailed from time to time in the reports we file with the SEC.
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•
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In the first quarter, we increased our quarterly dividend for the 24th consecutive year, to $0.335 per share.
|
•
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We received approval from CORFO for an increase in our lithium quota to sustainably increase lithium production in Chile to as much as 145,000 metric tons of lithium carbonate equivalent annually through 2043.
|
•
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On April 3, 2018, we completed the Polyolefin Catalysts Divestiture to W.R. Grace & Co. for net cash proceeds of approximately
$413.6 million
and recorded a gain of
$210.4 million
before income taxes related to the sale of this business.
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Albemarle Corporation and Subsidiaries
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•
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In June 2018, we entered into a revolving, unsecured credit agreement that provides for borrowings of up to $1.0 billion and matures on June 21, 2023 (the “2018 Credit Agreement”) to replace our existing revolving, unsecured credit agreement.
|
•
|
We announced our exclusive collaboration with DuPont as the primary hydroprocessing catalyst manufacturer for the DuPont™ IsoTherming® hydroprocessing technology, making clean fuels production more cost efficient for refiners. IsoTherming® is an innovative hydroprocessing technology that can lower capital and operational costs.
|
•
|
We launched XPLORE™, a new platform for the clean transportation fuels market. The XPLORE catalyst platform is the result of breakthrough research in hyrdroprocessing catalyst technology allowing refineries to produce clean transportation fuels in a more efficient way. The new PULSAR family, with KF 787 PULSAR™ as its first grade product, is a cutting-edge, premium catalyst line, designed for the production of clean diesel.
|
•
|
We entered into two separate $250 million ASR agreements in May and August 2018, respectively. We completed these ASR agreements in September and December 2018, respectively, receiving and retiring a total of
5,262,654
shares.
|
•
|
We successfully completed the commissioning of our La Negra facility in Chile (“La Negra II”), which has a nameplate capacity of 20,000 metric tons of lithium carbonate. Upon completion of the ramp-up of La Negra II, the total capacity of our facilities in La Negra, Chile will be 44,000 metric tons.
|
•
|
We completed pre-commissioning activities related to our new facility in Xinyu, China and began start-up activities. This expansion will result in an additional 20,000 metric tons of lithium hydroxide, bringing total site capacity to 30,000 metric tons, with significant volumes expected from the new unit in 2019.
|
•
|
We entered into a definitive agreement to acquire a 50% interest in Mineral Resources Limited's Wodgina Project in Western Australia and form a joint venture with Mineral Resources Limited to own and operate the Wodgina Project to produce spodumene concentrate and battery grade lithium hydroxide, for a purchase price of $1.15 billion. The joint venture will ultimately construct a battery grade lithium hydroxide plant at the resource site. This transaction is subject to regulatory approvals and other customary closing conditions, and is expected to close in the second half of 2019.
|
•
|
We received the required environmental approvals from Australian federal and state government for the Company’s proposed Kemerton lithium hydroxide conversion site in Western Australia. This plant will have an initial capacity of 60,000 metric tons of lithium hydroxide with an ability to expand to 100,000 metric tons over time. The commissioning of this site is expected to start in stages during the course of 2021.
|
•
|
In December 2018, we exercised an $18 million option to purchase undeveloped land with access to a lithium resource in Antofalla, within the Catamarca Province of Argentina from Bolland Minera S.A. We believe this asset could be certified as the largest lithium resource in Argentina.
|
•
|
We achieved earnings of
$693.6 million
during
2018
as compared to
$54.9 million
for
2017
. Cash flows from operations in
2018
were
$546.2 million
. Earnings for 2018 included a
$169.9 million
after-tax gain from the Polyolefin Catalysts Divestiture, while earnings for 2017 were negatively impacted by the
$366.9 million
net income tax expense resulting from the enactment of the TCJA. In addition, earnings for
2018
includes pension and other postretirement benefit (“OPEB”) actuarial
losses
of
$10.6 million
after income taxes, compared to pension and OPEB actuarial
gains
of
$7.3 million
after income taxes in
2017
.
|
Albemarle Corporation and Subsidiaries
|
||
|
Albemarle Corporation and Subsidiaries
|
||
|
Albemarle Corporation and Subsidiaries
|
||
|
Albemarle Corporation and Subsidiaries
|
||
|
Albemarle Corporation and Subsidiaries
|
||
|
Albemarle Corporation and Subsidiaries
|
||
|
Albemarle Corporation and Subsidiaries
|
||
|
|
|
Year Ended December 31,
|
|
Percentage Change
|
|||||||||||||
|
|
2018
|
|
%
|
|
2017
|
|
%
|
|
2018 vs. 2017
|
|||||||
|
|
(In thousands, except percentages)
|
|||||||||||||||
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|||||||
Lithium
|
|
$
|
1,228,171
|
|
|
36.4
|
%
|
|
$
|
1,018,885
|
|
|
33.2
|
%
|
|
21
|
%
|
Bromine Specialties
|
|
917,880
|
|
|
27.2
|
%
|
|
855,143
|
|
|
27.8
|
%
|
|
7
|
%
|
||
Catalysts
|
|
1,101,554
|
|
|
32.6
|
%
|
|
1,067,572
|
|
|
34.7
|
%
|
|
3
|
%
|
||
All Other
|
|
127,186
|
|
|
3.8
|
%
|
|
128,914
|
|
|
4.2
|
%
|
|
(1
|
)%
|
||
Corporate
|
|
159
|
|
|
—
|
%
|
|
1,462
|
|
|
0.1
|
%
|
|
(89
|
)%
|
||
Total net sales
|
|
$
|
3,374,950
|
|
|
100.0
|
%
|
|
$
|
3,071,976
|
|
|
100.0
|
%
|
|
10
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|||||||
Lithium
|
|
$
|
530,773
|
|
|
52.7
|
%
|
|
$
|
446,652
|
|
|
50.4
|
%
|
|
19
|
%
|
Bromine Specialties
|
|
288,116
|
|
|
28.6
|
%
|
|
258,901
|
|
|
29.2
|
%
|
|
11
|
%
|
||
Catalysts
|
|
284,307
|
|
|
28.3
|
%
|
|
283,883
|
|
|
32.1
|
%
|
|
—
|
%
|
||
All Other
|
|
14,091
|
|
|
1.4
|
%
|
|
13,878
|
|
|
1.6
|
%
|
|
2
|
%
|
||
Corporate
|
|
(110,623
|
)
|
|
(11.0
|
)%
|
|
(117,834
|
)
|
|
(13.3
|
)%
|
|
(6
|
)%
|
||
Total adjusted EBITDA
|
|
$
|
1,006,664
|
|
|
100.0
|
%
|
|
$
|
885,480
|
|
|
100.0
|
%
|
|
14
|
%
|
Albemarle Corporation and Subsidiaries
|
||
|
|
Lithium
|
|
Bromine Specialties
|
|
Catalysts
|
|
Reportable Segments Total
|
|
All Other
|
|
Corporate
|
|
Consolidated Total
|
||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net income (loss) attributable to Albemarle Corporation
|
$
|
428,212
|
|
|
$
|
246,509
|
|
|
$
|
445,604
|
|
|
$
|
1,120,325
|
|
|
$
|
6,018
|
|
|
$
|
(432,781
|
)
|
|
$
|
693,562
|
|
Depreciation and amortization
|
95,193
|
|
|
41,607
|
|
|
49,131
|
|
|
185,931
|
|
|
8,073
|
|
|
6,694
|
|
|
200,698
|
|
|||||||
Restructuring and other
(a)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,838
|
|
|
3,838
|
|
|||||||
Gain on sale of business
(b)
|
—
|
|
|
—
|
|
|
(210,428
|
)
|
|
(210,428
|
)
|
|
—
|
|
|
—
|
|
|
(210,428
|
)
|
|||||||
Acquisition and integration related costs
(c)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19,377
|
|
|
19,377
|
|
|||||||
Interest and financing expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
52,405
|
|
|
52,405
|
|
|||||||
Income tax expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
144,826
|
|
|
144,826
|
|
|||||||
Non-operating pension and OPEB items
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,285
|
|
|
5,285
|
|
|||||||
Legal accrual
(d)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27,027
|
|
|
27,027
|
|
|||||||
Environmental accrual
(e)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,597
|
|
|
15,597
|
|
|||||||
Albemarle Foundation contribution
(f)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,000
|
|
|
15,000
|
|
|||||||
Indemnification adjustments
(g)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25,240
|
|
|
25,240
|
|
|||||||
Other
(h)
|
7,368
|
|
|
—
|
|
|
—
|
|
|
7,368
|
|
|
—
|
|
|
6,869
|
|
|
14,237
|
|
|||||||
Adjusted EBITDA
|
$
|
530,773
|
|
|
$
|
288,116
|
|
|
$
|
284,307
|
|
|
$
|
1,103,196
|
|
|
$
|
14,091
|
|
|
$
|
(110,623
|
)
|
|
$
|
1,006,664
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net income (loss) attributable to Albemarle Corporation
|
$
|
342,992
|
|
|
$
|
218,839
|
|
|
$
|
230,665
|
|
|
$
|
792,496
|
|
|
$
|
5,521
|
|
|
$
|
(743,167
|
)
|
|
$
|
54,850
|
|
Depreciation and amortization
|
87,879
|
|
|
40,062
|
|
|
54,468
|
|
|
182,409
|
|
|
8,357
|
|
|
6,162
|
|
|
196,928
|
|
|||||||
Utilization of inventory markup
(i)
|
23,095
|
|
|
—
|
|
|
—
|
|
|
23,095
|
|
|
—
|
|
|
—
|
|
|
23,095
|
|
|||||||
Restructuring and other
(j)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,056
|
|
|
17,056
|
|
|||||||
Gain on acquisition
(k)
|
(6,221
|
)
|
|
—
|
|
|
—
|
|
|
(6,221
|
)
|
|
—
|
|
|
—
|
|
|
(6,221
|
)
|
|||||||
Acquisition and integration related costs
(c)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
33,954
|
|
|
33,954
|
|
|||||||
Interest and financing expenses
(l)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
115,350
|
|
|
115,350
|
|
|||||||
Income tax expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
431,817
|
|
|
431,817
|
|
|||||||
Non-operating pension and OPEB items
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16,125
|
)
|
|
(16,125
|
)
|
|||||||
Note receivable reserve
(m)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28,730
|
|
|
28,730
|
|
|||||||
Other
(n)
|
(1,093
|
)
|
|
—
|
|
|
(1,250
|
)
|
|
(2,343
|
)
|
|
—
|
|
|
8,389
|
|
|
6,046
|
|
|||||||
Adjusted EBITDA
|
$
|
446,652
|
|
|
$
|
258,901
|
|
|
$
|
283,883
|
|
|
$
|
989,436
|
|
|
$
|
13,878
|
|
|
$
|
(117,834
|
)
|
|
$
|
885,480
|
|
(a)
|
Expected severance payments as part of a business reorganization plan,
$0.1 million
recorded in Cost of goods sold and
$3.7 million
recorded in Selling, general and administrative expenses. These severance payments have been made during the year ended December 31, 2018.
|
(b)
|
See “
Gain on Sale of Businesses, Net
” on page 33 for a description of this gain.
|
(c)
|
Included amounts for the years ended December 31, 2018 and 2017 recorded in (1) Cost of goods sold of
$3.7 million
and
$14.3 million
, respectively; and (2) Selling, general and administrative expenses of
$15.7 million
and
$19.6 million
, respectively, relating to various significant projects.
|
(d)
|
Included in Other expenses, net is a $16.2 million expense resulting from a jury rendered verdict against Albemarle related to certain business concluded under a 2014 sales agreement for products that Albemarle no longer manufactures and a $10.8 million expense resulting from a settlement of a legal matter related to guarantees from a previously disposed business.
|
(e)
|
Increase in environmental reserve to indemnify the buyer of a formerly owned site recorded in Other expenses, net. As defined in the agreement of sale, this indemnification has a set cutoff date in 2024, at which point we will no longer be required to provide financial coverage.
|
(f)
|
Included in Selling, general and administrative expenses is a charitable contribution, using a portion of the proceeds received from the Polyolefin Catalysts Divestiture, to the Albemarle Foundation, a non-profit organization that sponsors grants, health and social projects, educational initiatives, disaster relief, matching gift programs, scholarships and other charitable initiatives in locations where our employees live and operate. This contribution is in addition to the ordinary annual contribution made to the Albemarle Foundation by the
|
Albemarle Corporation and Subsidiaries
|
||
|
(g)
|
Included in Other expenses, net is
$19.7 million
related to the proposed settlement of an ongoing audit of a previously disposed business in Germany, and
$5.5 million
related to the revision of indemnifications previously recorded from disposed businesses.
|
(h)
|
Included amounts for the year ended December 31, 2018 recorded in:
|
•
|
Cost of goods sold -
$4.9 million
for the write-off of fixed assets related to a major capacity expansion in our Jordanian joint venture and
$8.8 million
related to non-routine labor and compensation related costs in Chile that are outside normal compensation arrangements.
|
•
|
Selling, general and administrative expenses -
$2.3 million
of shortfall contributions for our multiemployer plan financial improvement plan and a
$1.2 million
contribution, using a portion of the proceeds received from the Polyolefin Catalysts Divestiture, to schools in the state of Louisiana for qualified tuition purposes. This contribution is significant in size and is intended to provide long-term benefits for families in the Louisiana community. This was partially offset by a
$1.5 million
gain related to a refund from Chilean authorities due to an overpayment made in a prior year.
|
•
|
Other expenses, net -
$1.5 million
gain related to the reversal of previously recorded liabilities of disposed businesses.
|
(i)
|
In connection with the acquisition of Jiangli New Materials, the Company valued inventory purchased from Jiangli New Materials at fair value, which resulted in a markup of the underlying net book value of the inventory totaling approximately
$23.1 million
. The utilization of this inventory markup was included in Cost of goods sold during the year ended December 31, 2017, the estimated remaining selling period.
|
(j)
|
During 2017, we initiated action to reduce costs in each of our reportable segments at several locations, primarily at our Lithium sites in Germany. Based on the restructuring plans, we have recorded expenses of
$2.9 million
in Cost of goods sold,
$8.4 million
in Selling, general and administrative expenses, and
$5.7 million
in Research and development expenses, primarily related to expected severance payments. The unpaid balance is recorded in Accrued expenses at December 31, 2018, with the expectation that the remaining balance will be paid by the end of 2019.
|
(k)
|
Gain recorded in Other expenses, net related to the acquisition of the remaining
50%
interest in Salmag. See Note 2, “Acquisitions,” to our consolidated financial statements included in Part II, Item 8 of this report for additional information.
|
(l)
|
Included in Interest and financing expenses is a loss on early extinguishment of debt of
$52.8 million
. See Note 14, “Long-Term Debt,” to our consolidated financial statements included in Part II, Item 8 of this report for additional information.
|
(m)
|
Reserve recorded in Other expenses, net against a note receivable on one of our European entities no longer deemed probable of collection.
|
(n)
|
Included amounts for the year ended December 31, 2017 recorded in:
|
•
|
Cost of goods sold -
$1.3 million
reversal of deferred income related to an abandoned project at an unconsolidated investment.
|
•
|
Selling, general and administrative expenses -
$3.3 million
of shortfall contributions for our multiemployer plan financial improvement plan, partially offset by
$1.0 million
related to a reversal of an accrual recorded as part of purchase accounting from a previous acquisition.
|
•
|
Other expenses, net -
$3.2 million
of asset retirement obligation charges related to the revision of an estimate at a site formerly owned by Albemarle, losses of
$8.7 million
related to adjustments of settlements and indemnifications of previously disposed businesses, the revision of tax indemnification expenses of
$3.7 million
primarily related to the filing of tax returns and a competent authority agreement for a previously disposed business and
$1.0 million
related to the settlement of a legal claim. This is partially offset by gains of
$10.6 million
and
$1.1 million
related to the reversal of liabilities recorded as part of purchase accounting from a previous acquisition and the previous disposal of a property, respectively.
|
Albemarle Corporation and Subsidiaries
|
||
|
Albemarle Corporation and Subsidiaries
|
||
|
Albemarle Corporation and Subsidiaries
|
||
|
Albemarle Corporation and Subsidiaries
|
||
|
Albemarle Corporation and Subsidiaries
|
||
|
|
Lithium
|
|
Bromine Specialties
|
|
Catalysts
|
|
Reportable Segments Total
|
|
All Other
|
|
Corporate
|
|
Consolidated Total
|
||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net income (loss) attributable to Albemarle Corporation
|
$
|
342,992
|
|
|
$
|
218,839
|
|
|
$
|
230,665
|
|
|
$
|
792,496
|
|
|
$
|
5,521
|
|
|
$
|
(743,167
|
)
|
|
$
|
54,850
|
|
Depreciation and amortization
|
87,879
|
|
|
40,062
|
|
|
54,468
|
|
|
182,409
|
|
|
8,357
|
|
|
6,162
|
|
|
196,928
|
|
|||||||
Utilization of inventory markup
(a)
|
23,095
|
|
|
—
|
|
|
—
|
|
|
23,095
|
|
|
—
|
|
|
—
|
|
|
23,095
|
|
|||||||
Restructuring and other
(b)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,056
|
|
|
17,056
|
|
|||||||
Gain on acquisition
(c)
|
(6,221
|
)
|
|
—
|
|
|
—
|
|
|
(6,221
|
)
|
|
—
|
|
|
—
|
|
|
(6,221
|
)
|
|||||||
Acquisition and integration related costs
(d)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
33,954
|
|
|
33,954
|
|
|||||||
Interest and financing expenses
(e)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
115,350
|
|
|
115,350
|
|
|||||||
Income tax expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
431,817
|
|
|
431,817
|
|
|||||||
Non-operating pension and OPEB items
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16,125
|
)
|
|
(16,125
|
)
|
|||||||
Note receivable reserve
(f)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28,730
|
|
|
28,730
|
|
|||||||
Other
(g)
|
(1,093
|
)
|
|
—
|
|
|
(1,250
|
)
|
|
(2,343
|
)
|
|
—
|
|
|
8,389
|
|
|
6,046
|
|
|||||||
Adjusted EBITDA
|
$
|
446,652
|
|
|
$
|
258,901
|
|
|
$
|
283,883
|
|
|
$
|
989,436
|
|
|
$
|
13,878
|
|
|
$
|
(117,834
|
)
|
|
$
|
885,480
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net income (loss) attributable to Albemarle Corporation
|
$
|
198,852
|
|
|
$
|
187,364
|
|
|
$
|
265,416
|
|
|
$
|
651,632
|
|
|
$
|
131,301
|
|
|
$
|
(139,258
|
)
|
|
$
|
643,675
|
|
Depreciation and amortization
|
86,862
|
|
|
39,562
|
|
|
51,193
|
|
|
177,617
|
|
|
7,302
|
|
|
6,056
|
|
|
190,975
|
|
|||||||
(Gain) loss on sales of businesses, net
(h)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(123,831
|
)
|
|
1,533
|
|
|
(122,298
|
)
|
|||||||
Acquisition and integration related costs
(i)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
57,384
|
|
|
57,384
|
|
|||||||
Interest and financing expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
65,181
|
|
|
65,181
|
|
|||||||
Income tax expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
96,263
|
|
|
96,263
|
|
|||||||
Income from discontinued operations (net of tax)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(202,131
|
)
|
|
(202,131
|
)
|
|||||||
Non-operating pension and OPEB items
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25,589
|
|
|
25,589
|
|
|||||||
Other
(j)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,579
|
|
|
3,579
|
|
|||||||
Adjusted EBITDA
|
$
|
285,714
|
|
|
$
|
226,926
|
|
|
$
|
316,609
|
|
|
$
|
829,249
|
|
|
$
|
14,772
|
|
|
$
|
(85,804
|
)
|
|
$
|
758,217
|
|
(a)
|
In connection with the acquisition of Jiangli New Materials, the Company valued inventory purchased from Jiangli New Materials at fair value, which resulted in a markup of the underlying net book value of the inventory totaling approximately
$23.1 million
. The utilization of this inventory markup was included in Cost of goods sold during the year ended December 31, 2017, the estimated remaining selling period.
|
(b)
|
During 2017, we initiated action to reduce costs in each of our reportable segments at several locations, primarily at our Lithium sites in Germany. Based on the restructuring plans, we have recorded expenses of
$2.9 million
in Cost of goods sold,
$8.4 million
in Selling, general and administrative expenses, and
$5.7 million
in Research and development expenses, primarily related to expected severance payments. The unpaid balance is recorded in Accrued expenses at December 31, 2018, with the expectation that the remaining balance will be paid by the end of 2019.
|
(c)
|
Gain recorded in Other expenses, net related to the acquisition of the remaining 50% interest in Salmag. See Note 2, “Acquisitions,” to our consolidated financial statements included in Part II, Item 8 of this report for additional information.
|
(d)
|
Acquisition and integration related costs of
$14.3 million
and
$19.6 million
were included in Cost of goods sold and Selling, general and administrative expenses, respectively, for the year ended December 31, 2017 primarily resulting from the Jiangli New Materials acquisition, including non-routine compensation related costs negotiated specifically as a result of this acquisition that are outside the Company’s normal compensation arrangements.
|
(e)
|
Included in Interest and financing expenses is a loss on early extinguishment of debt of
$52.8 million
. See Note 14, “Long-Term Debt,” to our consolidated financial statements included in Part II, Item 8 of this report for additional information.
|
(f)
|
Reserve recorded in Other expenses, net against a note receivable on one of our European entities no longer deemed probable of collection.
|
(g)
|
Included amounts for the year ended December 31, 2017 recorded in:
|
•
|
Cost of goods sold -
$1.3 million
reversal of deferred income related to an abandoned project at an unconsolidated investment.
|
Albemarle Corporation and Subsidiaries
|
||
|
•
|
Selling, general and administrative expenses -
$3.3 million
of shortfall contributions for our multiemployer plan financial improvement plan, partially offset by
$1.0 million
related to a reversal of an accrual recorded as part of purchase accounting from a previous acquisition.
|
•
|
Other expenses, net -
$3.2 million
of asset retirement obligation charges related to the revision of an estimate at a site formerly owned by Albemarle, losses of
$8.7 million
related to adjustments of settlements and indemnifications of previously disposed businesses, the revision of tax indemnification expenses of
$3.7 million
primarily related to the filing of tax returns and a competent authority agreement for a previously disposed business and
$1.0 million
related to the settlement of a legal claim. This is partially offset by gains of
$10.6 million
and
$1.1 million
related to the reversal of liabilities recorded as part of purchase accounting from a previous acquisition and the previous disposal of a property, respectively.
|
(h)
|
See “
Gain on Sales of Businesses, Net
” on page 40 for a description of these items.
|
(i)
|
See “
Acquisition and Integration Related Costs
” on page 40 for a description of these items.
|
(j)
|
Included amounts for the year ended December 31, 2016 recorded in:
|
•
|
Selling, general and administrative expenses -
$0.9 million
related to the net loss on the sales of properties.
|
•
|
Research and development expenses -
$1.4 million
related to the write-off of fixed assets in China.
|
•
|
Other expenses, net -
$2.4 million
related to environmental charges related to a site formerly owned by Albemarle, partially offset by a gain related to a previously disposed of site in China of
$1.1 million
.
|
Albemarle Corporation and Subsidiaries
|
||
|
Albemarle Corporation and Subsidiaries
|
||
|
•
|
All sales and other pass-through taxes are excluded from contract value;
|
•
|
In utilizing the modified retrospective transition method, no adjustment was necessary for contracts that did not cross over the reporting year;
|
•
|
We will not consider the possibility of a contract having a significant financing component (which would effectively attribute a portion of the sales price to interest income) unless, if at contract inception, the expected payment terms (from time of delivery or other relevant criterion) are more than one year;
|
•
|
If our right to customer payment is directly related to the value of our completed performance, we recognize revenue consistent with the invoicing right; and
|
•
|
We expense as incurred all costs of obtaining a contract incremental to any costs/compensation attributable to individual product sales/shipments for contracts where the amortization period for such costs would otherwise be one year or less.
|
Albemarle Corporation and Subsidiaries
|
||
|
•
|
Discount Rate—The discount rate is used in calculating the present value of benefits, which is based on projections of benefit payments to be made in the future.
|
•
|
Expected Return on Plan Assets—We project the future return on plan assets based on prior performance and future expectations for the types of investments held by the plans as well as the expected long-term allocation of plan assets for these investments. These projected returns reduce the net benefit costs recorded currently.
|
•
|
Rate of Compensation Increase—For salary-related plans, we project employees’ annual pay increases, which are used to project employees’ pension benefits at retirement.
|
•
|
Mortality Assumptions—Assumptions about life expectancy of plan participants are used in the measurement of related plan obligations.
|
Albemarle Corporation and Subsidiaries
|
||
|
Albemarle Corporation and Subsidiaries
|
||
|
|
(Favorable) Unfavorable
|
||||||||||||||
|
1% Increase
|
|
1% Decrease
|
||||||||||||
|
Increase (Decrease)
in Benefit Obligation
|
|
Increase (Decrease)
in Benefit Cost
|
|
Increase (Decrease)
in Benefit Obligation
|
|
Increase (Decrease)
in Benefit Cost
|
||||||||
Actuarial Assumptions
|
|
|
|
|
|
|
|
||||||||
Discount Rate:
|
|
|
|
|
|
|
|
||||||||
Pension
|
$
|
(94,999
|
)
|
|
$
|
3,492
|
|
|
$
|
116,592
|
|
|
$
|
(5,024
|
)
|
Other postretirement benefits
|
$
|
(4,403
|
)
|
|
$
|
239
|
|
|
$
|
5,226
|
|
|
$
|
(298
|
)
|
Expected return on plan assets:
|
|
|
|
|
|
|
|
||||||||
Pension
|
*
|
|
|
$
|
(5,595
|
)
|
|
*
|
|
|
$
|
5,595
|
|
||
Other postretirement benefits
|
*
|
|
|
$
|
—
|
|
|
*
|
|
|
$
|
—
|
|
Albemarle Corporation and Subsidiaries
|
||
|
Albemarle Corporation and Subsidiaries
|
||
|
Albemarle Corporation and Subsidiaries
|
||
|
Issue Month/Year
|
|
Principal (in millions)
|
|
Interest Rate
|
|
Interest Payment Dates
|
|
Maturity Date
|
|
December 2014
|
|
€393.0
|
|
1.875%
|
|
December 8
|
|
December 8, 2021
|
|
November 2014
|
|
$425.0
|
|
4.15%
|
|
June 1
|
December 1
|
|
December 1, 2024
|
November 2014
|
|
$350.0
|
|
5.45%
|
|
June 1
|
December 1
|
|
December 1, 2044
|
December 2010
|
|
$175.3
|
|
4.50%
|
|
June 15
|
December 15
|
|
December 15, 2020
|
Albemarle Corporation and Subsidiaries
|
||
|
Albemarle Corporation and Subsidiaries
|
||
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Thereafter
|
||||||||||||
Long-term debt obligations
(a)
|
$
|
307,294
|
|
|
$
|
175,302
|
|
|
$
|
446,996
|
|
|
$
|
—
|
|
|
$
|
7,216
|
|
|
$
|
778,720
|
|
Expected interest payments on long-term debt obligations
(b)
|
53,004
|
|
|
53,004
|
|
|
45,119
|
|
|
36,738
|
|
|
36,738
|
|
|
418,213
|
|
||||||
Operating lease obligations (rental)
|
25,608
|
|
|
17,918
|
|
|
12,478
|
|
|
10,794
|
|
|
10,109
|
|
|
87,085
|
|
||||||
Take or pay / throughput agreements
(c)
|
26,570
|
|
|
17,293
|
|
|
9,018
|
|
|
7,541
|
|
|
5,595
|
|
|
15,737
|
|
||||||
Letters of credit and guarantees
|
45,342
|
|
|
12,924
|
|
|
1,883
|
|
|
1,277
|
|
|
—
|
|
|
10,389
|
|
||||||
Transition tax on foreign earnings
(d)
|
14,379
|
|
|
14,379
|
|
|
30,230
|
|
|
30,442
|
|
|
44,497
|
|
|
198,197
|
|
||||||
Capital projects
|
256,165
|
|
|
89
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
$
|
728,362
|
|
|
$
|
290,909
|
|
|
$
|
545,724
|
|
|
$
|
86,792
|
|
|
$
|
104,155
|
|
|
$
|
1,508,341
|
|
(a)
|
Amounts represent the expected principal payments of our long-term debt and do not include any fair value adjustments, premiums or discounts. Obligations in 2019 include our outstanding Commercial Paper Notes of
$306.6 million
with a weighted average maturity of
38 days
.
|
(b)
|
Interest on our fixed rate borrowings was calculated based on the stated rates of such borrowings. A weighted average interest rate of approximately 0.35% was used for our remaining long-term debt obligations.
|
(c)
|
These amounts primarily relate to contracts entered into with certain third party vendors in the normal course of business to secure raw materials for our production processes. In order to secure materials, sometimes for long durations, these contracts mandate a minimum amount of product to be purchased at predetermined rates over a set timeframe.
|
(d)
|
In December 2017, the TCJA was signed into law imposing a one-time transition tax on foreign earnings, payable over an eight-year period. The one-time transition tax imposed by the TCJA is based on our total post-1986 earnings and profits that we previously deferred from U.S. income taxes.
|
Albemarle Corporation and Subsidiaries
|
||
|
Albemarle Corporation and Subsidiaries
|
||
|
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk.
|
Albemarle Corporation and Subsidiaries
|
||
|
Albemarle Corporation and Subsidiaries
|
||
|
/
S
/ L
UTHER
C. K
ISSAM
IV
|
|
Luther C. Kissam IV
|
Chairman, President and Chief Executive Officer
|
(principal executive officer)
|
February 27, 2019
|
Albemarle Corporation and Subsidiaries
|
||
|
Albemarle Corporation and Subsidiaries
|
||
|
/s/ PricewaterhouseCoopers LLP
|
Charlotte, North Carolina
|
February 27, 2019
|
Albemarle Corporation and Subsidiaries
|
||
CONSOLIDATED STATEMENTS OF INCOME
|
(In Thousands, Except Per Share Amounts)
|
|||||||||||
Year Ended December 31
|
2018
|
|
2017
|
|
2016
|
||||||
Net sales
|
$
|
3,374,950
|
|
|
$
|
3,071,976
|
|
|
$
|
2,677,203
|
|
Cost of goods sold
|
2,157,694
|
|
|
1,965,700
|
|
|
1,706,897
|
|
|||
Gross profit
|
1,217,256
|
|
|
1,106,276
|
|
|
970,306
|
|
|||
Selling, general and administrative expenses
|
446,090
|
|
|
450,286
|
|
|
353,765
|
|
|||
Research and development expenses
|
70,054
|
|
|
84,330
|
|
|
80,475
|
|
|||
Gain on sales of businesses, net
|
(210,428
|
)
|
|
—
|
|
|
(122,298
|
)
|
|||
Acquisition and integration related costs
|
—
|
|
|
—
|
|
|
57,384
|
|
|||
Operating profit
|
911,540
|
|
|
571,660
|
|
|
600,980
|
|
|||
Interest and financing expenses
|
(52,405
|
)
|
|
(115,350
|
)
|
|
(65,181
|
)
|
|||
Other expenses, net
|
(64,434
|
)
|
|
(9,512
|
)
|
|
(20,535
|
)
|
|||
Income from continuing operations before income taxes and equity in net income of unconsolidated investments
|
794,701
|
|
|
446,798
|
|
|
515,264
|
|
|||
Income tax expense
|
144,826
|
|
|
431,817
|
|
|
96,263
|
|
|||
Income from continuing operations before equity in net income of unconsolidated investments
|
649,875
|
|
|
14,981
|
|
|
419,001
|
|
|||
Equity in net income of unconsolidated investments (net of tax)
|
89,264
|
|
|
84,487
|
|
|
59,637
|
|
|||
Net income from continuing operations
|
739,139
|
|
|
99,468
|
|
|
478,638
|
|
|||
Income from discontinued operations (net of tax)
|
—
|
|
|
—
|
|
|
202,131
|
|
|||
Net income
|
739,139
|
|
|
99,468
|
|
|
680,769
|
|
|||
Net income attributable to noncontrolling interests
|
(45,577
|
)
|
|
(44,618
|
)
|
|
(37,094
|
)
|
|||
Net income attributable to Albemarle Corporation
|
$
|
693,562
|
|
|
$
|
54,850
|
|
|
$
|
643,675
|
|
Basic earnings per share:
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
6.40
|
|
|
$
|
0.49
|
|
|
$
|
3.93
|
|
Discontinued operations
|
—
|
|
|
—
|
|
|
1.80
|
|
|||
|
$
|
6.40
|
|
|
$
|
0.49
|
|
|
$
|
5.73
|
|
Diluted earnings per share:
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
6.34
|
|
|
$
|
0.49
|
|
|
$
|
3.90
|
|
Discontinued operations
|
—
|
|
|
—
|
|
|
1.78
|
|
|||
|
$
|
6.34
|
|
|
$
|
0.49
|
|
|
$
|
5.68
|
|
Weighted-average common shares outstanding—basic
|
108,427
|
|
|
110,914
|
|
|
112,379
|
|
|||
Weighted-average common shares outstanding—diluted
|
109,458
|
|
|
112,380
|
|
|
113,239
|
|
Albemarle Corporation and Subsidiaries
|
||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
(In Thousands)
|
|||||||||||
Year Ended December 31
|
2018
|
|
2017
|
|
2016
|
||||||
Net income
|
$
|
739,139
|
|
|
$
|
99,468
|
|
|
$
|
680,769
|
|
Other comprehensive (loss) income, net of tax:
|
|
|
|
|
|
||||||
Foreign currency translation
|
(150,258
|
)
|
|
227,439
|
|
|
(20,825
|
)
|
|||
Pension and postretirement benefits
|
(138
|
)
|
|
(97
|
)
|
|
834
|
|
|||
Net investment hedge
|
25,786
|
|
|
(41,827
|
)
|
|
26,133
|
|
|||
Interest rate swap
|
(585
|
)
|
|
2,116
|
|
|
2,116
|
|
|||
Total other comprehensive (loss) income, net of tax
|
(125,195
|
)
|
|
187,631
|
|
|
8,258
|
|
|||
Comprehensive income
|
613,944
|
|
|
287,099
|
|
|
689,027
|
|
|||
Comprehensive income attributable to noncontrolling interests
|
(45,396
|
)
|
|
(45,505
|
)
|
|
(36,477
|
)
|
|||
Comprehensive income attributable to Albemarle Corporation
|
$
|
568,548
|
|
|
$
|
241,594
|
|
|
$
|
652,550
|
|
Albemarle Corporation and Subsidiaries
|
||
CONSOLIDATED BALANCE SHEETS
|
(In Thousands)
|
|||||||
December 31
|
2018
|
|
2017
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
555,320
|
|
|
$
|
1,137,303
|
|
Trade accounts receivable, less allowance for doubtful accounts (2018—$4,460; 2017—$10,425)
|
605,712
|
|
|
534,326
|
|
||
Other accounts receivable
|
52,059
|
|
|
37,937
|
|
||
Inventories
|
700,540
|
|
|
592,781
|
|
||
Other current assets
|
84,790
|
|
|
136,064
|
|
||
Assets held for sale
|
—
|
|
|
39,152
|
|
||
Total current assets
|
1,998,421
|
|
|
2,477,563
|
|
||
Property, plant and equipment, at cost
|
4,799,063
|
|
|
4,124,335
|
|
||
Less accumulated depreciation and amortization
|
1,777,979
|
|
|
1,631,025
|
|
||
Net property, plant and equipment
|
3,021,084
|
|
|
2,493,310
|
|
||
Investments
|
528,722
|
|
|
534,064
|
|
||
Noncurrent assets held for sale
|
—
|
|
|
139,813
|
|
||
Other assets
|
80,135
|
|
|
74,164
|
|
||
Goodwill
|
1,567,169
|
|
|
1,610,355
|
|
||
Other intangibles, net of amortization
|
386,143
|
|
|
421,503
|
|
||
Total assets
|
$
|
7,581,674
|
|
|
$
|
7,750,772
|
|
Liabilities and Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
522,516
|
|
|
$
|
418,537
|
|
Accrued expenses
|
257,323
|
|
|
268,336
|
|
||
Current portion of long-term debt
|
307,294
|
|
|
422,012
|
|
||
Dividends payable
|
35,169
|
|
|
35,165
|
|
||
Liabilities held for sale
|
—
|
|
|
1,938
|
|
||
Income taxes payable
|
60,871
|
|
|
54,937
|
|
||
Total current liabilities
|
1,183,173
|
|
|
1,200,925
|
|
||
Long-term debt
|
1,397,916
|
|
|
1,415,360
|
|
||
Postretirement benefits
|
46,157
|
|
|
52,003
|
|
||
Pension benefits
|
285,396
|
|
|
294,611
|
|
||
Noncurrent liabilities held for sale
|
—
|
|
|
614
|
|
||
Other noncurrent liabilities
|
526,942
|
|
|
599,174
|
|
||
Deferred income taxes
|
382,982
|
|
|
370,389
|
|
||
Commitments and contingencies (Note 17)
|
|
|
|
||||
Equity:
|
|
|
|
||||
Albemarle Corporation shareholders’ equity:
|
|
|
|
||||
Common stock, $.01 par value (authorized 150,000 shares), issued and outstanding — 105,616 in 2018 and 110,547 in 2017
|
1,056
|
|
|
1,105
|
|
||
Additional paid-in capital
|
1,368,897
|
|
|
1,863,949
|
|
||
Accumulated other comprehensive loss
|
(350,682
|
)
|
|
(225,668
|
)
|
||
Retained earnings
|
2,566,050
|
|
|
2,035,163
|
|
||
Total Albemarle Corporation shareholders’ equity
|
3,585,321
|
|
|
3,674,549
|
|
||
Noncontrolling interests
|
173,787
|
|
|
143,147
|
|
||
Total equity
|
3,759,108
|
|
|
3,817,696
|
|
||
Total liabilities and equity
|
$
|
7,581,674
|
|
|
$
|
7,750,772
|
|
Albemarle Corporation and Subsidiaries
|
||
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
|
(In Thousands, Except Share Data)
|
|||||||||||||||||||||||||||||||
|
|
Common Stock
|
|
Additional Paid-in Capital
|
|
Accumulated Other Comprehensive (Loss) Income
|
|
Retained Earnings
|
|
Total Albemarle
Shareholders’ Equity
|
|
Noncontrolling Interests
|
|
Total Equity
|
|||||||||||||||||
Shares
|
|
Amounts
|
|
||||||||||||||||||||||||||||
Balance at January 1, 2016
|
|
112,219,351
|
|
|
$
|
1,122
|
|
|
$
|
2,059,151
|
|
|
$
|
(421,288
|
)
|
|
$
|
1,615,407
|
|
|
$
|
3,254,392
|
|
|
$
|
146,921
|
|
|
$
|
3,401,313
|
|
Net income
|
|
|
|
|
|
|
|
|
|
643,675
|
|
|
643,675
|
|
|
37,094
|
|
|
680,769
|
|
|||||||||||
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
8,876
|
|
|
|
|
8,876
|
|
|
(618
|
)
|
|
8,258
|
|
|||||||||||
Cash dividends declared, $1.22 per common share
|
|
|
|
|
|
|
|
|
|
(137,151
|
)
|
|
(137,151
|
)
|
|
(35,855
|
)
|
|
(173,006
|
)
|
|||||||||||
Stock-based compensation and other
|
|
|
|
|
|
16,251
|
|
|
|
|
|
|
16,251
|
|
|
|
|
16,251
|
|
||||||||||||
Exercise of stock options
|
|
212,343
|
|
|
2
|
|
|
9,400
|
|
|
|
|
|
|
9,402
|
|
|
|
|
9,402
|
|
||||||||||
Tax benefit related to stock plans
|
|
|
|
|
|
1,811
|
|
|
|
|
|
|
1,811
|
|
|
|
|
1,811
|
|
||||||||||||
Issuance of common stock, net
|
|
131,596
|
|
|
1
|
|
|
(1
|
)
|
|
|
|
|
|
—
|
|
|
|
|
—
|
|
||||||||||
Shares withheld for withholding taxes associated with common stock issuances
|
|
(39,500
|
)
|
|
—
|
|
|
(2,194
|
)
|
|
|
|
|
|
(2,194
|
)
|
|
|
|
(2,194
|
)
|
||||||||||
Balance at December 31, 2016
|
|
112,523,790
|
|
|
$
|
1,125
|
|
|
$
|
2,084,418
|
|
|
$
|
(412,412
|
)
|
|
$
|
2,121,931
|
|
|
$
|
3,795,062
|
|
|
$
|
147,542
|
|
|
$
|
3,942,604
|
|
Balance at January 1, 2017
|
|
112,523,790
|
|
|
$
|
1,125
|
|
|
$
|
2,084,418
|
|
|
$
|
(412,412
|
)
|
|
$
|
2,121,931
|
|
|
$
|
3,795,062
|
|
|
$
|
147,542
|
|
|
$
|
3,942,604
|
|
Net income
|
|
|
|
|
|
|
|
|
|
54,850
|
|
|
54,850
|
|
|
44,618
|
|
|
99,468
|
|
|||||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
186,744
|
|
|
|
|
186,744
|
|
|
887
|
|
|
187,631
|
|
|||||||||||
Cash dividends declared, $1.28 per common share
|
|
|
|
|
|
|
|
|
|
(141,618
|
)
|
|
(141,618
|
)
|
|
(36,756
|
)
|
|
(178,374
|
)
|
|||||||||||
Stock-based compensation and other
|
|
|
|
|
|
16,505
|
|
|
|
|
|
|
16,505
|
|
|
|
|
16,505
|
|
||||||||||||
Exercise of stock options
|
|
210,432
|
|
|
2
|
|
|
8,236
|
|
|
|
|
|
|
8,238
|
|
|
|
|
8,238
|
|
||||||||||
Shares repurchased
|
|
(2,341,083
|
)
|
|
(23
|
)
|
|
(249,977
|
)
|
|
|
|
|
|
|
(250,000
|
)
|
|
|
|
(250,000
|
)
|
|||||||||
Issuance of common stock, net
|
|
243,024
|
|
|
2
|
|
|
(2
|
)
|
|
|
|
|
|
—
|
|
|
|
|
—
|
|
||||||||||
Termination of Tianqi Lithium Corporation option agreement
|
|
|
|
|
|
13,144
|
|
|
|
|
|
|
13,144
|
|
|
(13,144
|
)
|
|
—
|
|
|||||||||||
Shares withheld for withholding taxes associated with common stock issuances
|
|
(89,489
|
)
|
|
(1
|
)
|
|
(8,375
|
)
|
|
|
|
|
|
(8,376
|
)
|
|
|
|
(8,376
|
)
|
||||||||||
Balance at December 31, 2017
|
|
110,546,674
|
|
|
$
|
1,105
|
|
|
$
|
1,863,949
|
|
|
$
|
(225,668
|
)
|
|
$
|
2,035,163
|
|
|
$
|
3,674,549
|
|
|
$
|
143,147
|
|
|
$
|
3,817,696
|
|
Balance at January 1, 2018
|
|
110,546,674
|
|
|
$
|
1,105
|
|
|
$
|
1,863,949
|
|
|
$
|
(225,668
|
)
|
|
$
|
2,035,163
|
|
|
$
|
3,674,549
|
|
|
$
|
143,147
|
|
|
$
|
3,817,696
|
|
Net income
|
|
|
|
|
|
|
|
|
|
693,562
|
|
|
693,562
|
|
|
45,577
|
|
|
739,139
|
|
|||||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
(125,014
|
)
|
|
|
|
(125,014
|
)
|
|
(181
|
)
|
|
(125,195
|
)
|
|||||||||||
Cash dividends declared, $1.34 per common share
|
|
|
|
|
|
|
|
|
|
(144,601
|
)
|
|
(144,601
|
)
|
|
(14,756
|
)
|
|
(159,357
|
)
|
|||||||||||
Cumulative adjustments from adoption of income tax standard updates (Note 1)
|
|
|
|
|
|
|
|
|
|
(18,074
|
)
|
|
(18,074
|
)
|
|
|
|
(18,074
|
)
|
||||||||||||
Stock-based compensation and other
|
|
|
|
|
|
18,506
|
|
|
|
|
|
|
18,506
|
|
|
|
|
18,506
|
|
||||||||||||
Exercise of stock options
|
|
94,031
|
|
|
1
|
|
|
3,632
|
|
|
|
|
|
|
3,633
|
|
|
|
|
3,633
|
|
||||||||||
Shares repurchased
|
|
(5,262,654
|
)
|
|
(53
|
)
|
|
(499,947
|
)
|
|
|
|
|
|
|
(500,000
|
)
|
|
|
|
(500,000
|
)
|
|||||||||
Issuance of common stock, net
|
|
383,974
|
|
|
4
|
|
|
(4
|
)
|
|
|
|
|
|
—
|
|
|
|
|
—
|
|
||||||||||
Shares withheld for withholding taxes associated with common stock issuances
|
|
(145,997
|
)
|
|
(1
|
)
|
|
(17,239
|
)
|
|
|
|
|
|
(17,240
|
)
|
|
|
|
(17,240
|
)
|
||||||||||
Balance at December 31, 2018
|
|
105,616,028
|
|
|
$
|
1,056
|
|
|
$
|
1,368,897
|
|
|
$
|
(350,682
|
)
|
|
$
|
2,566,050
|
|
|
$
|
3,585,321
|
|
|
$
|
173,787
|
|
|
$
|
3,759,108
|
|
Albemarle Corporation and Subsidiaries
|
||
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In Thousands)
|
|||||||||||
Year Ended December 31
|
2018
|
|
2017
|
|
2016
|
||||||
Cash and cash equivalents at beginning of year
|
$
|
1,137,303
|
|
|
$
|
2,269,756
|
|
|
$
|
213,734
|
|
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
739,139
|
|
|
99,468
|
|
|
680,769
|
|
|||
Adjustments to reconcile net income to cash flows from operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
200,698
|
|
|
196,928
|
|
|
226,169
|
|
|||
Gain on acquisition
|
—
|
|
|
(6,221
|
)
|
|
—
|
|
|||
Gain on sales of businesses, net
|
(210,428
|
)
|
|
—
|
|
|
(510,278
|
)
|
|||
Stock-based compensation
|
15,228
|
|
|
19,404
|
|
|
17,031
|
|
|||
Equity in net income of unconsolidated investments (net of tax)
|
(89,264
|
)
|
|
(84,487
|
)
|
|
(61,534
|
)
|
|||
Dividends received from unconsolidated investments and nonmarketable securities
|
57,415
|
|
|
39,386
|
|
|
43,759
|
|
|||
Pension and postretirement expense (benefit)
|
10,410
|
|
|
(12,436
|
)
|
|
41,546
|
|
|||
Pension and postretirement contributions
|
(15,236
|
)
|
|
(13,341
|
)
|
|
(20,068
|
)
|
|||
Unrealized gain on investments in marketable securities
|
(527
|
)
|
|
(3,135
|
)
|
|
(3,655
|
)
|
|||
Loss on early extinguishment of debt
|
—
|
|
|
52,801
|
|
|
1,921
|
|
|||
Deferred income taxes
|
49,164
|
|
|
(41,941
|
)
|
|
21,121
|
|
|||
Changes in current assets and liabilities, net of effects of acquisitions and divestitures:
|
|
|
|
|
|
||||||
(Increase) in accounts receivable
|
(97,448
|
)
|
|
(74,545
|
)
|
|
(42,816
|
)
|
|||
(Increase) decrease in inventories
|
(124,067
|
)
|
|
(101,545
|
)
|
|
25,974
|
|
|||
(Increase) decrease in other current assets
|
(2,181
|
)
|
|
(213
|
)
|
|
1,808
|
|
|||
Increase in accounts payable
|
73,730
|
|
|
53,421
|
|
|
43,953
|
|
|||
(Decrease) increase in accrued expenses and income taxes payable
|
(1,999
|
)
|
|
(269,381
|
)
|
|
210,276
|
|
|||
Other, net
|
(58,469
|
)
|
|
449,816
|
|
|
59,548
|
|
|||
Net cash provided by operating activities
|
546,165
|
|
|
303,979
|
|
|
735,524
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Acquisitions, net of cash acquired
|
(11,403
|
)
|
|
(44,367
|
)
|
|
(126,747
|
)
|
|||
Cash payments related to acquisitions and other
|
—
|
|
|
—
|
|
|
(81,987
|
)
|
|||
Capital expenditures
|
(699,991
|
)
|
|
(317,703
|
)
|
|
(196,654
|
)
|
|||
Cash proceeds from divestitures, net
|
413,569
|
|
|
6,857
|
|
|
3,325,571
|
|
|||
(Investments in) sales of marketable securities, net
|
(270
|
)
|
|
(275
|
)
|
|
305
|
|
|||
Repayments from joint ventures
|
—
|
|
|
1,250
|
|
|
—
|
|
|||
Investments in equity and other corporate investments
|
(5,600
|
)
|
|
(3,565
|
)
|
|
—
|
|
|||
Net cash (used in) provided by investing activities
|
(303,695
|
)
|
|
(357,803
|
)
|
|
2,920,488
|
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Proceeds from borrowings of other long-term debt
|
—
|
|
|
27,000
|
|
|
—
|
|
|||
Repayments of long-term debt
|
—
|
|
|
(778,209
|
)
|
|
(1,252,302
|
)
|
|||
Other (repayments) borrowings, net
|
(113,567
|
)
|
|
138,751
|
|
|
(163,721
|
)
|
|||
Fees related to early extinguishment of debt
|
—
|
|
|
(46,959
|
)
|
|
—
|
|
|||
Dividends paid to shareholders
|
(144,596
|
)
|
|
(140,557
|
)
|
|
(135,353
|
)
|
|||
Dividends paid to noncontrolling interests
|
(14,756
|
)
|
|
(36,756
|
)
|
|
(35,855
|
)
|
|||
Repurchases of common stock
|
(500,000
|
)
|
|
(250,000
|
)
|
|
—
|
|
|||
Proceeds from exercise of stock options
|
3,633
|
|
|
8,238
|
|
|
9,401
|
|
|||
Withholding taxes paid on stock-based compensation award distributions
|
(17,240
|
)
|
|
(8,376
|
)
|
|
(2,194
|
)
|
|||
Net cash used in financing activities
|
(786,526
|
)
|
|
(1,086,868
|
)
|
|
(1,580,024
|
)
|
|||
Net effect of foreign exchange on cash and cash equivalents
|
(37,927
|
)
|
|
8,239
|
|
|
(19,966
|
)
|
|||
(Decrease) increase in cash and cash equivalents
|
(581,983
|
)
|
|
(1,132,453
|
)
|
|
2,056,022
|
|
|||
Cash and cash equivalents at end of year
|
$
|
555,320
|
|
|
$
|
1,137,303
|
|
|
$
|
2,269,756
|
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
•
|
All sales and other pass-through taxes are excluded from contract value;
|
•
|
In utilizing the modified retrospective transition method, no adjustment was necessary for contracts that did not cross over the reporting year;
|
•
|
We will not consider the possibility of a contract having a significant financing component (which would effectively attribute a portion of the sales price to interest income) unless, if at contract inception, the expected payment terms (from time of delivery or other relevant criterion) are more than one year;
|
•
|
If our right to customer payment is directly related to the value of our completed performance, we recognize revenue consistent with the invoicing right; and
|
•
|
We expense as incurred all costs of obtaining a contract incremental to any costs/compensation attributable to individual product sales/shipments for contracts where the amortization period for such costs would otherwise be one year or less.
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
•
|
Discount Rate—The discount rate is used in calculating the present value of benefits, which is based on projections of benefit payments to be made in the future.
|
•
|
Expected Return on Plan Assets—We project the future return on plan assets based on prior performance and future expectations for the types of investments held by the plans, as well as the expected long-term allocation of plan assets for these investments. These projected returns reduce the net benefit costs recorded currently.
|
•
|
Rate of Compensation Increase—For salary-related plans, we project employees’ annual pay increases, which are used to project employees’ pension benefits at retirement.
|
•
|
Mortality Assumptions—Assumptions about life expectancy of plan participants are used in the measurement of related plan obligations.
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
December 31, 2017
|
||
Assets
|
|
||
Current assets
|
$
|
39,152
|
|
Net property, plant and equipment
|
121,759
|
|
|
Goodwill
|
14,422
|
|
|
Other intangibles, net of amortization
|
3,632
|
|
|
Assets held for sale
|
$
|
178,965
|
|
Liabilities
|
|
||
Current liabilities
|
$
|
1,938
|
|
Noncurrent liabilities
|
614
|
|
|
Liabilities held for sale
|
$
|
2,552
|
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
Year Ended December 31, 2016
|
||
Net sales
|
$
|
813,285
|
|
Cost of goods sold
|
416,934
|
|
|
Operating expenses, net
(a)
|
268,402
|
|
|
Interest and financing expenses
(b)
|
38,227
|
|
|
Other income, net
|
(2,485
|
)
|
|
Gain on sale of discontinued operations
|
(387,980
|
)
|
|
Income before income taxes
|
480,187
|
|
|
Income tax expense
(c)
|
278,056
|
|
|
Income from discontinued operations (net of tax)
|
$
|
202,131
|
|
(a)
|
Operating expenses, net for discontinued operations includes mark-to market actuarial losses of
$8.5 million
during the year ended December 31, 2016.
|
(b)
|
Interest and financing expenses included the allocation of interest expense not directly attributab
le to other operations as well as interest expense related to debt to be assumed by the buyer. The allocation of interest expense to discontinued operations was based on the ratio of net assets held for sale to the sum of total net assets plus consolidated debt.
|
(c)
|
Income tax expense for the year ended December 31, 2016 included a charge of
$253.0 million
related to the gain on sale of discontinued operations.
|
|
Year Ended December 31, 2016
|
||
Depreciation and amortization
|
$
|
35,194
|
|
Capital expenditures
|
$
|
19,281
|
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Cash paid during the year for:
|
|
|
|
|
|
||||||
Income taxes (net of refunds of $21,459, $17,522 and $9,270 in 2018, 2017 and 2016, respectively)
(a)
|
$
|
157,758
|
|
|
$
|
320,222
|
|
|
$
|
143,404
|
|
Interest (net of capitalization)
|
$
|
49,762
|
|
|
$
|
61,243
|
|
|
$
|
96,948
|
|
|
|
|
|
|
|
||||||
Supplemental non-cash disclosures related to investing activities:
|
|
|
|
|
|
||||||
Capital expenditures included in Accounts payable
|
$
|
134,784
|
|
|
$
|
89,188
|
|
|
$
|
33,622
|
|
(a)
|
Includes approximately
$41 million
of income taxes paid in 2018 from the gain on sale of the Polyolefin Catalysts Divestiture, and
$257 million
of income taxes paid in 2017 from the gain on sale of the Chemetall Surface Treatment business.
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Basic earnings per share from continuing operations
|
|
|
|
|
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Net income from continuing operations
|
$
|
739,139
|
|
|
$
|
99,468
|
|
|
$
|
478,638
|
|
Net income from continuing operations attributable to noncontrolling interests
|
(45,577
|
)
|
|
(44,618
|
)
|
|
(37,094
|
)
|
|||
Net income from continuing operations attributable to Albemarle Corporation
|
$
|
693,562
|
|
|
$
|
54,850
|
|
|
$
|
441,544
|
|
Denominator:
|
|
|
|
|
|
||||||
Weighted-average common shares for basic earnings per share
|
108,427
|
|
|
110,914
|
|
|
112,379
|
|
|||
Basic earnings per share from continuing operations
|
$
|
6.40
|
|
|
$
|
0.49
|
|
|
$
|
3.93
|
|
Diluted earnings per share from continuing operations
|
|
|
|
|
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Net income from continuing operations
|
$
|
739,139
|
|
|
$
|
99,468
|
|
|
$
|
478,638
|
|
Net income from continuing operations attributable to noncontrolling interests
|
(45,577
|
)
|
|
(44,618
|
)
|
|
(37,094
|
)
|
|||
Net income from continuing operations attributable to Albemarle Corporation
|
$
|
693,562
|
|
|
$
|
54,850
|
|
|
$
|
441,544
|
|
Denominator:
|
|
|
|
|
|
||||||
Weighted-average common shares for basic earnings per share
|
108,427
|
|
|
110,914
|
|
|
112,379
|
|
|||
Incremental shares under stock compensation plans
|
1,031
|
|
|
1,466
|
|
|
860
|
|
|||
Weighted-average common shares for diluted earnings per share
|
109,458
|
|
|
112,380
|
|
|
113,239
|
|
|||
Diluted earnings per share from continuing operations
|
$
|
6.34
|
|
|
$
|
0.49
|
|
|
$
|
3.90
|
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Value added tax/consumption tax
|
$
|
40,480
|
|
|
$
|
23,158
|
|
Other
|
11,579
|
|
|
14,779
|
|
||
Total
|
$
|
52,059
|
|
|
$
|
37,937
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Finished goods
(a)
|
$
|
482,355
|
|
|
$
|
404,239
|
|
Raw materials and work in process
(b)
|
158,290
|
|
|
132,891
|
|
||
Stores, supplies and other
|
59,895
|
|
|
55,651
|
|
||
Total
(c)
|
$
|
700,540
|
|
|
$
|
592,781
|
|
(a)
|
Increase primarily due to the build-up of inventory in our Lithium segment for a forecasted increase in sales in 2019.
|
(b)
|
Included
$71.4 million
and
$59.6 million
at
December 31, 2018
and
2017
, respectively, of work in process related to lithium brine.
|
(c)
|
As of December 31, 2017,
$24.7 million
of Inventories were classified as Assets held for sale in the consolidated balance sheets. See Note 3, “Divestitures,” for additional information.
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Income tax receivables
|
$
|
40,116
|
|
|
$
|
47,130
|
|
Prepaid expenses
|
43,172
|
|
|
86,348
|
|
||
Other
|
1,502
|
|
|
2,586
|
|
||
Total
|
$
|
84,790
|
|
|
$
|
136,064
|
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
Useful
Lives
(Years)
|
|
December 31,
|
||||||
2018
|
|
2017
|
||||||||
Land
|
|
—
|
|
$
|
123,518
|
|
|
$
|
118,428
|
|
Land improvements
|
|
10 – 30
|
|
63,349
|
|
|
63,328
|
|
||
Buildings and improvements
|
|
10 – 45
|
|
251,980
|
|
|
245,482
|
|
||
Machinery and equipment
(a)
|
|
2 – 45
|
|
2,780,478
|
|
|
2,627,667
|
|
||
Long-term mineral rights and production equipment costs
|
|
7 – 60
|
|
696,033
|
|
|
675,832
|
|
||
Construction in progress
|
|
—
|
|
883,705
|
|
|
393,598
|
|
||
Total
(b)
|
|
|
|
$
|
4,799,063
|
|
|
$
|
4,124,335
|
|
(a)
|
Consists primarily of (1) short-lived production equipment components, office and building equipment and other equipment with estimated lives ranging 2 – 7 years, (2) production process equipment (intermediate components) with estimated lives ranging 8 – 19 years, (3) production process equipment (major unit components) with estimated lives ranging 20 – 29 years, and (4) production process equipment (infrastructure and other) with estimated lives ranging 30 – 45 years.
|
(b)
|
As of December 31, 2017,
$215.9 million
of Property, plant and equipment, at cost, was classified as Assets held for sale in the consolidated balance sheets. See Note 3, “Divestitures,” for additional information.
|
|
|
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Joint ventures
|
|
$
|
486,032
|
|
|
$
|
499,756
|
|
Nonmarketable securities
|
|
9,177
|
|
|
3,655
|
|
||
Marketable equity securities
|
|
33,513
|
|
|
30,653
|
|
||
Total
|
|
$
|
528,722
|
|
|
$
|
534,064
|
|
|
|
|
December 31,
|
|||||||
|
|
|
2018
|
|
2017
|
|
2016
|
|||
*
|
|
Windfield Holdings Pty. Ltd. - a joint venture with Sichuan Tianqi Lithium Industries, Inc., that mines lithium ore and produces lithium concentrate
|
49
|
%
|
|
49
|
%
|
|
49
|
%
|
*
|
|
Nippon Aluminum Alkyls - a joint venture with Mitsui Chemicals, Inc. that produces aluminum alkyls
|
50
|
%
|
|
50
|
%
|
|
50
|
%
|
*
|
|
Nippon Ketjen Company Limited - a joint venture with Sumitomo Metal Mining Company Limited that produces refinery catalysts
|
50
|
%
|
|
50
|
%
|
|
50
|
%
|
*
|
|
Eurecat S.A. - a joint venture with Axens Group for refinery catalysts regeneration services
|
50
|
%
|
|
50
|
%
|
|
50
|
%
|
*
|
|
Fábrica Carioca de Catalisadores S.A. - a joint venture with Petrobras Quimica S.A. - PETROQUISA that produces catalysts and includes catalysts research and product development activities
|
50
|
%
|
|
50
|
%
|
|
50
|
%
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Summary of Balance Sheet Information:
|
|
|
|
|
||||
Current assets
|
|
$
|
476,460
|
|
|
$
|
503,043
|
|
Noncurrent assets
|
|
1,159,866
|
|
|
1,041,519
|
|
||
Total assets
|
|
$
|
1,636,326
|
|
|
$
|
1,544,562
|
|
|
|
|
|
|
||||
Current liabilities
|
|
$
|
191,971
|
|
|
$
|
133,670
|
|
Noncurrent liabilities
|
|
422,769
|
|
|
405,662
|
|
||
Total liabilities
|
|
$
|
614,740
|
|
|
$
|
539,332
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Summary of Statements of Income Information:
|
|
|
|
|
|
|
||||||
Net sales
|
|
$
|
829,590
|
|
|
$
|
687,561
|
|
|
$
|
590,980
|
|
Gross profit
|
|
$
|
456,518
|
|
|
$
|
353,577
|
|
|
$
|
267,241
|
|
Income before income taxes
|
|
$
|
332,632
|
|
|
$
|
267,805
|
|
|
$
|
189,016
|
|
Net income
|
|
$
|
225,791
|
|
|
$
|
184,777
|
|
|
$
|
126,872
|
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Deferred income taxes
(a)
|
$
|
17,029
|
|
|
$
|
25,108
|
|
Assets related to unrecognized tax benefits
(a)
|
12,984
|
|
|
14,601
|
|
||
Other
(b)
|
50,122
|
|
|
34,455
|
|
||
Total
|
$
|
80,135
|
|
|
$
|
74,164
|
|
(a)
|
See Note 1, “Summary of Significant Accounting Policies” and Note 20, “Income Taxes.”
|
(b)
|
As of December 31, 2018 and 2017, a
$28.7 million
reserve was recorded against a note receivable on one of our European entities no longer deemed probable of collection.
|
|
Lithium
|
|
Bromine Specialties
|
|
Catalysts
|
|
All Other
|
|
Total
|
||||||||||
Balance at December 31, 2016
(a)
|
$
|
1,326,980
|
|
|
$
|
20,319
|
|
|
$
|
186,147
|
|
|
$
|
6,586
|
|
|
$
|
1,540,032
|
|
Acquisitions
(b)
|
(26,151
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26,151
|
)
|
|||||
Reclass to assets held for sale
(c)
|
—
|
|
|
—
|
|
|
(14,422
|
)
|
|
—
|
|
|
(14,422
|
)
|
|||||
Foreign currency translation adjustments and other
|
88,260
|
|
|
—
|
|
|
22,636
|
|
|
—
|
|
|
110,896
|
|
|||||
Balance at December 31, 2017
(a)
|
1,389,089
|
|
|
20,319
|
|
|
194,361
|
|
|
6,586
|
|
|
1,610,355
|
|
|||||
Foreign currency translation adjustments and other
|
(34,310
|
)
|
|
—
|
|
|
(8,876
|
)
|
|
—
|
|
|
(43,186
|
)
|
|||||
Balance at December 31, 2018
|
$
|
1,354,779
|
|
|
$
|
20,319
|
|
|
$
|
185,485
|
|
|
$
|
6,586
|
|
|
$
|
1,567,169
|
|
(a)
|
The December 31, 2016 and 2017 balances have been recast to reflect a change in segments. See Note 24, “Segment and Geographic Area Information,” for additional information.
|
(b)
|
Primarily represents final purchase price adjustments for the Jiangli New Materials acquisition recorded for the year ended December 31, 2017. See Note 2, “Acquisitions,” for additional information.
|
(c)
|
Represents Goodwill of the Polyolefin Catalysts Divestiture. See Note 3, “Divestitures,” for additional information.
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
Customer Lists and Relationships
|
|
Trade Names and Trademarks
(a)
|
|
Patents and Technology
|
|
Other
|
|
Total
|
||||||||||
Gross Asset Value
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance at December 31, 2016
|
$
|
387,893
|
|
|
$
|
16,514
|
|
|
$
|
38,434
|
|
|
$
|
18,844
|
|
|
$
|
461,685
|
|
Acquisitions
(b)
|
19,225
|
|
|
1,429
|
|
|
20,381
|
|
|
18,847
|
|
|
$
|
59,882
|
|
||||
Reclass to assets held for sale
(c)
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,228
|
)
|
|
(4,228
|
)
|
|||||
Foreign currency translation adjustments and other
|
32,194
|
|
|
1,038
|
|
|
2,803
|
|
|
3,793
|
|
|
39,828
|
|
|||||
Balance at December 31, 2017
|
439,312
|
|
|
18,981
|
|
|
61,618
|
|
|
37,256
|
|
|
557,167
|
|
|||||
Foreign currency translation adjustments and other
|
(10,940
|
)
|
|
(528
|
)
|
|
(5,817
|
)
|
|
6,452
|
|
|
(10,833
|
)
|
|||||
Balance at December 31, 2018
|
$
|
428,372
|
|
|
$
|
18,453
|
|
|
$
|
55,801
|
|
|
$
|
43,708
|
|
|
$
|
546,334
|
|
Accumulated Amortization
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance at December 31, 2016
|
$
|
(49,165
|
)
|
|
$
|
(7,952
|
)
|
|
$
|
(31,683
|
)
|
|
$
|
(18,321
|
)
|
|
$
|
(107,121
|
)
|
Amortization
|
(21,288
|
)
|
|
—
|
|
|
(1,412
|
)
|
|
(2,379
|
)
|
|
(25,079
|
)
|
|||||
Reclass to assets held for sale
(c)
|
—
|
|
|
—
|
|
|
—
|
|
|
596
|
|
|
596
|
|
|||||
Foreign currency translation adjustments and other
|
(4,251
|
)
|
|
(343
|
)
|
|
(2,108
|
)
|
|
2,642
|
|
|
(4,060
|
)
|
|||||
Balance at December 31, 2017
|
(74,704
|
)
|
|
(8,295
|
)
|
|
(35,203
|
)
|
|
(17,462
|
)
|
|
(135,664
|
)
|
|||||
Amortization
|
(23,402
|
)
|
|
—
|
|
|
(1,450
|
)
|
|
(3,127
|
)
|
|
(27,979
|
)
|
|||||
Foreign currency translation adjustments and other
|
2,309
|
|
|
119
|
|
|
1,405
|
|
|
(381
|
)
|
|
3,452
|
|
|||||
Balance at December 31, 2018
|
$
|
(95,797
|
)
|
|
$
|
(8,176
|
)
|
|
$
|
(35,248
|
)
|
|
$
|
(20,970
|
)
|
|
$
|
(160,191
|
)
|
Net Book Value at December 31, 2017
|
$
|
364,608
|
|
|
$
|
10,686
|
|
|
$
|
26,415
|
|
|
$
|
19,794
|
|
|
$
|
421,503
|
|
Net Book Value at December 31, 2018
|
$
|
332,575
|
|
|
$
|
10,277
|
|
|
$
|
20,553
|
|
|
$
|
22,738
|
|
|
$
|
386,143
|
|
(a)
|
Includes only indefinite-lived intangible assets.
|
(b)
|
Represents final purchase price adjustments for the Jiangli New Materials acquisition and the acquisition of the remaining equity interest in Salmag. See Note 2, “Acquisitions,” for additional information.
|
(c)
|
Represents Other intangibles and related amortization of the Polyolefin Catalysts Divestiture. See Note 3, “Divestitures,” for additional information.
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Employee benefits, payroll and related taxes
|
$
|
77,814
|
|
|
$
|
93,393
|
|
Other
(a)
|
179,509
|
|
|
174,943
|
|
||
Total
|
$
|
257,323
|
|
|
$
|
268,336
|
|
(a)
|
No individual component exceeds
5%
of total current liabilities.
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
1.875% Senior notes, net of unamortized discount and debt issuance costs of $2,841 at December 31, 2018 and $3,971 at December 31, 2017
|
444,155
|
|
|
463,575
|
|
||
4.15% Senior notes, net of unamortized discount and debt issuance costs of $2,884 at December 31, 2018 and $3,372 at December 31, 2017
|
422,116
|
|
|
421,628
|
|
||
4.50% Senior notes, net of unamortized discount and debt issuance costs of $589 at December 31, 2018 and $891 at December 31, 2017
|
174,626
|
|
|
174,325
|
|
||
5.45% Senior notes, net of unamortized discount and debt issuance costs of $4,004 at December 31, 2018 and $4,159 at December 31, 2017
|
345,996
|
|
|
345,841
|
|
||
Commercial paper notes
|
306,606
|
|
|
421,321
|
|
||
Variable-rate foreign bank loans
|
7,216
|
|
|
5,298
|
|
||
Other
|
4,495
|
|
|
5,384
|
|
||
Total long-term debt
|
1,705,210
|
|
|
1,837,372
|
|
||
Less amounts due within one year
|
307,294
|
|
|
422,012
|
|
||
Long-term debt, less current portion
|
$
|
1,397,916
|
|
|
$
|
1,415,360
|
|
•
|
€700.0 million
aggregate principal amount of senior notes, issued on December 8, 2014, bearing interest at a rate of
1.875%
payable annually on December 8 of each year, beginning in 2015. The effective interest rate on these senior notes is approximately
2.10%
. These senior notes mature on December 8, 2021.
|
•
|
$250.0 million
aggregate principal amount of senior notes, issued on November 24, 2014, bearing interest at a rate of
3.00%
payable semi-annually on June 1 and December 1 of each year, beginning June 1, 2015. The effective interest rate on these senior notes is approximately
3.18%
. These senior notes mature on December 1, 2019.
|
•
|
$425.0 million
aggregate principal amount of senior notes, issued on November 24, 2014, bearing interest at a rate of
4.15%
payable semi-annually on June 1 and December 1 of each year, beginning June 1, 2015. The effective interest rate on these senior notes is approximately
5.06%
. These senior notes mature on December 1, 2024.
|
•
|
$350.0 million
aggregate principal amount of senior notes, issued on November 24, 2014, bearing interest at a rate of
5.45%
payable semi-annually on June 1 and December 1 of each year, beginning June 1, 2015. The effective interest rate on these senior notes is approximately
5.50%
. These senior notes mature on December 1, 2044.
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
Year Ended December 31, 2018
|
|
Year Ended December 31, 2017
|
||||||||||||
|
U.S. Pension Plans
|
|
Foreign Pension Plans
|
|
U.S. Pension Plans
|
|
Foreign Pension Plans
|
||||||||
Change in benefit obligations:
|
|
|
|
|
|
|
|
||||||||
Benefit obligation at January 1
|
$
|
685,963
|
|
|
$
|
275,006
|
|
|
$
|
665,688
|
|
|
$
|
246,280
|
|
Service cost
|
1,043
|
|
|
3,919
|
|
|
985
|
|
|
2,547
|
|
||||
Interest cost
|
26,804
|
|
|
5,144
|
|
|
28,614
|
|
|
5,128
|
|
||||
Plan amendments
|
—
|
|
|
233
|
|
|
—
|
|
|
—
|
|
||||
Actuarial (gain) loss
|
(36,844
|
)
|
|
(17,885
|
)
|
|
30,539
|
|
|
2,783
|
|
||||
Benefits paid
|
(41,100
|
)
|
|
(9,974
|
)
|
|
(39,863
|
)
|
|
(9,524
|
)
|
||||
Employee contributions
|
—
|
|
|
182
|
|
|
—
|
|
|
215
|
|
||||
Foreign exchange (gain) loss
|
—
|
|
|
(12,632
|
)
|
|
—
|
|
|
30,711
|
|
||||
Settlements/curtailments
|
—
|
|
|
(3,628
|
)
|
|
—
|
|
|
(3,065
|
)
|
||||
Other
|
—
|
|
|
(62
|
)
|
|
—
|
|
|
(69
|
)
|
||||
Benefit obligation at December 31
|
$
|
635,866
|
|
|
$
|
240,303
|
|
|
$
|
685,963
|
|
|
$
|
275,006
|
|
|
|
|
|
|
|
|
|
||||||||
Change in plan assets:
|
|
|
|
|
|
|
|
||||||||
Fair value of plan assets at January 1
|
$
|
580,396
|
|
|
$
|
79,478
|
|
|
$
|
538,082
|
|
|
$
|
68,875
|
|
Actual return on plan assets
|
(28,457
|
)
|
|
(1,593
|
)
|
|
80,613
|
|
|
6,260
|
|
||||
Employer contributions
|
2,236
|
|
|
10,700
|
|
|
1,564
|
|
|
9,316
|
|
||||
Benefits paid
|
(41,100
|
)
|
|
(9,974
|
)
|
|
(39,863
|
)
|
|
(9,524
|
)
|
||||
Employee contributions
|
—
|
|
|
182
|
|
|
—
|
|
|
215
|
|
||||
Foreign exchange (loss) gain
|
—
|
|
|
(4,519
|
)
|
|
—
|
|
|
7,470
|
|
||||
Settlements/curtailments
|
—
|
|
|
(3,628
|
)
|
|
—
|
|
|
(3,065
|
)
|
||||
Other
|
—
|
|
|
(62
|
)
|
|
—
|
|
|
(69
|
)
|
||||
Fair value of plan assets at December 31
|
$
|
513,075
|
|
|
$
|
70,584
|
|
|
$
|
580,396
|
|
|
$
|
79,478
|
|
|
|
|
|
|
|
|
|
||||||||
Funded status at December 31
|
$
|
(122,791
|
)
|
|
$
|
(169,719
|
)
|
|
$
|
(105,567
|
)
|
|
$
|
(195,528
|
)
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||
|
U.S. Pension Plans
|
|
Foreign Pension Plans
|
|
U.S. Pension Plans
|
|
Foreign Pension Plans
|
||||||||
Amounts recognized in consolidated balance sheets:
|
|
|
|
|
|
|
|
||||||||
Current liabilities (accrued expenses)
|
$
|
(1,342
|
)
|
|
$
|
(5,772
|
)
|
|
$
|
(1,267
|
)
|
|
$
|
(5,217
|
)
|
Noncurrent liabilities (pension benefits)
|
(121,449
|
)
|
|
(163,947
|
)
|
|
(104,300
|
)
|
|
(190,311
|
)
|
||||
Net pension liability
|
$
|
(122,791
|
)
|
|
$
|
(169,719
|
)
|
|
$
|
(105,567
|
)
|
|
$
|
(195,528
|
)
|
|
|
|
|
|
|
|
|
||||||||
Amounts recognized in accumulated other comprehensive (loss) income:
|
|
|
|
|
|
|
|
||||||||
Prior service benefit
|
$
|
—
|
|
|
$
|
(409
|
)
|
|
$
|
(60
|
)
|
|
$
|
(269
|
)
|
Net amount recognized
|
$
|
—
|
|
|
$
|
(409
|
)
|
|
$
|
(60
|
)
|
|
$
|
(269
|
)
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average assumptions used to determine benefit obligations at December 31:
|
|
|
|
|
|
|
|
||||||||
Discount rate
|
4.59
|
%
|
|
2.15
|
%
|
|
4.03
|
%
|
|
1.94
|
%
|
||||
Rate of compensation increase
|
—
|
%
|
|
3.63
|
%
|
|
—
|
%
|
|
3.18
|
%
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
Other Postretirement Benefits
|
|
Other Postretirement Benefits
|
||||
Change in benefit obligations:
|
|
|
|
||||
Benefit obligation at January 1
|
$
|
56,647
|
|
|
$
|
56,141
|
|
Service cost
|
117
|
|
|
121
|
|
||
Interest cost
|
2,168
|
|
|
2,340
|
|
||
Actuarial (gain) loss
|
(5,661
|
)
|
|
2,008
|
|
||
Benefits paid
|
(2,881
|
)
|
|
(3,963
|
)
|
||
Benefit obligation at December 31
|
$
|
50,390
|
|
|
$
|
56,647
|
|
|
|
|
|
||||
Change in plan assets:
|
|
|
|
||||
Fair value of plan assets at January 1
|
$
|
834
|
|
|
$
|
2,232
|
|
Actual return on plan assets
|
(253
|
)
|
|
104
|
|
||
Employer contributions
|
2,300
|
|
|
2,461
|
|
||
Benefits paid
|
(2,881
|
)
|
|
(3,963
|
)
|
||
Fair value of plan assets at December 31
|
$
|
—
|
|
|
$
|
834
|
|
|
|
|
|
||||
Funded status at December 31
|
$
|
(50,390
|
)
|
|
$
|
(55,813
|
)
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
Other Postretirement Benefits
|
|
Other Postretirement Benefits
|
||||
Amounts recognized in consolidated balance sheets:
|
|
|
|
||||
Current liabilities (accrued expenses)
|
$
|
(4,233
|
)
|
|
$
|
(3,810
|
)
|
Noncurrent liabilities (postretirement benefits)
|
(46,157
|
)
|
|
(52,003
|
)
|
||
Net postretirement liability
|
$
|
(50,390
|
)
|
|
$
|
(55,813
|
)
|
|
|
|
|
||||
Amounts recognized in accumulated other comprehensive (loss) income:
|
|
|
|
||||
Prior service benefit
|
$
|
—
|
|
|
$
|
48
|
|
Net amount recognized
|
$
|
—
|
|
|
$
|
48
|
|
|
|
|
|
||||
Weighted-average assumptions used to determine benefit obligations at December 31:
|
|
|
|
||||
Discount rate
|
4.55
|
%
|
|
3.99
|
%
|
||
Rate of compensation increase
|
3.50
|
%
|
|
3.50
|
%
|
|
Year Ended
|
|
Year Ended
|
|
Year Ended
|
||||||||||||||||||
|
December 31, 2018
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||
|
U.S. Pension Plans
|
|
Foreign Pension Plans
|
|
U.S. Pension Plans
|
|
Foreign Pension Plans
|
|
U.S. Pension Plans
|
|
Foreign Pension Plans
|
||||||||||||
Service cost
|
$
|
1,043
|
|
|
$
|
3,919
|
|
|
$
|
985
|
|
|
$
|
2,547
|
|
|
$
|
1,028
|
|
|
$
|
3,133
|
|
Interest cost
|
26,804
|
|
|
5,144
|
|
|
28,614
|
|
|
5,128
|
|
|
30,514
|
|
|
6,570
|
|
||||||
Expected return on assets
|
(38,621
|
)
|
|
(4,204
|
)
|
|
(36,243
|
)
|
|
(4,441
|
)
|
|
(36,445
|
)
|
|
(4,027
|
)
|
||||||
Actuarial loss (gain)
|
30,234
|
|
|
(10,833
|
)
|
|
(13,910
|
)
|
|
483
|
|
|
5,988
|
|
|
19,418
|
|
||||||
Amortization of prior service benefit
|
60
|
|
|
34
|
|
|
75
|
|
|
56
|
|
|
75
|
|
|
859
|
|
||||||
Total net pension benefits cost (credit)
(a)
|
$
|
19,520
|
|
|
$
|
(5,940
|
)
|
|
$
|
(20,479
|
)
|
|
$
|
3,773
|
|
|
$
|
1,160
|
|
|
$
|
25,953
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Weighted-average assumption percentages:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Discount rate
|
4.03
|
%
|
|
1.94
|
%
|
|
4.43
|
%
|
|
2.00
|
%
|
|
4.67
|
%
|
|
2.76
|
%
|
||||||
Expected return on plan assets
|
6.89
|
%
|
|
5.52
|
%
|
|
6.89
|
%
|
|
6.16
|
%
|
|
6.89
|
%
|
|
6.66
|
%
|
||||||
Rate of compensation increase
|
—
|
%
|
|
3.18
|
%
|
|
—
|
%
|
|
3.18
|
%
|
|
—
|
%
|
|
3.16
|
%
|
(a)
|
For the year ended December 31, 2016,
$10.8 million
of net pension benefits credit is included in Income from discontinued operations (net of tax) in the consolidated statements of income. See Note 3, “Divestitures,” for additional information.
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
Other Postretirement Benefits
|
|
Other Postretirement Benefits
|
|
Other Postretirement Benefits
|
||||||
Service cost
|
$
|
117
|
|
|
$
|
121
|
|
|
$
|
115
|
|
Interest cost
|
2,168
|
|
|
2,340
|
|
|
2,483
|
|
|||
Expected return on assets
|
(7
|
)
|
|
(110
|
)
|
|
(187
|
)
|
|||
Actuarial (gain) loss
|
(5,400
|
)
|
|
2,014
|
|
|
1,275
|
|
|||
Amortization of prior service benefit
|
(48
|
)
|
|
(95
|
)
|
|
(95
|
)
|
|||
Total net postretirement benefits (credit) cost
|
$
|
(3,170
|
)
|
|
$
|
4,270
|
|
|
$
|
3,591
|
|
|
|
|
|
|
|
||||||
Weighted-average assumption percentages:
|
|
|
|
|
|
||||||
Discount rate
|
3.99
|
%
|
|
4.35
|
%
|
|
4.59
|
%
|
|||
Expected return on plan assets
|
7.00
|
%
|
|
7.00
|
%
|
|
7.00
|
%
|
|||
Rate of compensation increase
|
3.50
|
%
|
|
3.50
|
%
|
|
3.50
|
%
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
Level 1
|
Unadjusted quoted prices in active markets for identical assets or liabilities
|
|
|
Level 2
|
Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability
|
|
|
Level 3
|
Unobservable inputs for the asset or liability
|
|
December 31, 2018
|
|
Quoted Prices in Active Markets for Identical Items (Level 1)
|
|
Quoted Prices in Active Markets for Similar Items (Level 2)
|
|
Unobservable Inputs (Level 3)
|
||||||||
Pension Assets:
|
|
|
|
|
|
|
|
||||||||
Domestic Equity
(a)
|
$
|
113,355
|
|
|
$
|
111,665
|
|
|
$
|
1,690
|
|
|
$
|
—
|
|
International Equity
(b)
|
114,554
|
|
|
90,651
|
|
|
23,903
|
|
|
—
|
|
||||
Fixed Income
(c)
|
254,437
|
|
|
219,124
|
|
|
35,313
|
|
|
—
|
|
||||
Absolute Return Measured at Net Asset Value
(d)
|
71,987
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Cash
|
29,326
|
|
|
29,326
|
|
|
—
|
|
|
—
|
|
||||
Total Pension Assets
|
$
|
583,659
|
|
|
$
|
450,766
|
|
|
$
|
60,906
|
|
|
$
|
—
|
|
|
December 31, 2017
|
|
Quoted Prices in Active Markets for Identical Items (Level 1)
|
|
Quoted Prices in Active Markets for Similar Items (Level 2)
|
|
Unobservable Inputs (Level 3)
|
||||||||
Pension Assets:
|
|
|
|
|
|
|
|
||||||||
Domestic Equity
(a)
|
$
|
163,160
|
|
|
$
|
160,976
|
|
|
$
|
2,184
|
|
|
$
|
—
|
|
International Equity
(b)
|
130,935
|
|
|
101,366
|
|
|
29,569
|
|
|
—
|
|
||||
Fixed Income
(c)
|
269,365
|
|
|
231,506
|
|
|
37,859
|
|
|
—
|
|
||||
Absolute Return Measured at Net Asset Value
(d)
|
96,414
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total Pension Assets
|
$
|
659,874
|
|
|
$
|
493,848
|
|
|
$
|
69,612
|
|
|
$
|
—
|
|
Postretirement Assets:
|
|
|
|
|
|
|
|
||||||||
Fixed Income
(c)
|
$
|
834
|
|
|
$
|
—
|
|
|
$
|
834
|
|
|
$
|
—
|
|
(a)
|
Consists primarily of U.S. stock funds that track or are actively managed and measured against the S&P 500 index.
|
(b)
|
Consists primarily of international equity funds which invest in common stocks and other securities whose value is based on an international equity index or an underlying equity security or basket of equity securities.
|
(c)
|
Consists primarily of debt obligations issued by governments, corporations, municipalities and other borrowers. Also includes insurance policies.
|
(d)
|
Consists primarily of funds with holdings in private investment companies. See additional information about the Absolute Return investments below. Holdings in private investment companies are measured at fair value using the net asset value per share as a practical expedient and have not been categorized in the fair value hierarchy. The fair value amounts of
$72.0 million
and
$96.4 million
as of
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
U.S. Pension Plans
|
|
Foreign Pension Plans
|
|
Other Postretirement Benefits
|
||||||
2019
|
$
|
42.0
|
|
|
$
|
12.9
|
|
|
$
|
4.2
|
|
2020
|
$
|
43.0
|
|
|
$
|
9.4
|
|
|
$
|
4.0
|
|
2021
|
$
|
43.5
|
|
|
$
|
9.7
|
|
|
$
|
3.8
|
|
2022
|
$
|
43.9
|
|
|
$
|
9.2
|
|
|
$
|
3.8
|
|
2023
|
$
|
44.3
|
|
|
$
|
12.1
|
|
|
$
|
3.7
|
|
2024-2028
|
$
|
220.6
|
|
|
$
|
52.1
|
|
|
$
|
17.4
|
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Transition tax on foreign earnings
(a)
|
$
|
317,745
|
|
|
$
|
394,878
|
|
Liabilities related to uncertain tax positions
(b)
|
22,877
|
|
|
24,369
|
|
||
Executive deferred compensation plan obligation
|
26,292
|
|
|
25,494
|
|
||
Environmental liabilities
(c)
|
40,376
|
|
|
37,518
|
|
||
Asset retirement obligations
(c)
|
41,489
|
|
|
40,450
|
|
||
Tax indemnification liability
(d)
|
45,347
|
|
|
42,707
|
|
||
Other
(e)
|
32,816
|
|
|
33,758
|
|
||
Total
|
$
|
526,942
|
|
|
$
|
599,174
|
|
(a)
|
Noncurrent portion of one-time transition tax on foreign earnings. See Note 20, “Income Taxes,” for additional information.
|
(b)
|
See Note 20, “Income Taxes.”
|
(c)
|
See Note 17, “Commitments and Contingencies.”
|
(d)
|
Indemnification of certain income and non-income tax liabilities associated with the Chemetall Surface Treatment entities sold, as well as the proposed settlement of an ongoing audit of a previously disposed business in Germany.
|
(e)
|
No individual component exceeds
5%
of total liabilities.
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Balance, beginning of year
|
$
|
39,808
|
|
|
$
|
34,919
|
|
|
$
|
31,436
|
|
Expenditures
|
(6,885
|
)
|
|
(1,818
|
)
|
|
(2,667
|
)
|
|||
Accretion of discount
|
1,283
|
|
|
896
|
|
|
793
|
|
|||
Additions and changes in estimates
(a)
|
17,039
|
|
|
3,344
|
|
|
4,004
|
|
|||
Foreign currency translation adjustments and other
|
(1,676
|
)
|
|
2,467
|
|
|
1,353
|
|
|||
Balance, end of year
|
49,569
|
|
|
39,808
|
|
|
34,919
|
|
|||
Less amounts reported in Accrued expenses
|
9,193
|
|
|
2,290
|
|
|
2,324
|
|
|||
Amounts reported in Other noncurrent liabilities
|
$
|
40,376
|
|
|
$
|
37,518
|
|
|
$
|
32,595
|
|
(a)
|
Increase in additions primarily related to the indemnification of the buyer of a formerly owned site. As defined in the agreement of sale, this indemnification has a set cutoff date in 2024, at which point we will no longer be required to provide financial coverage.
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2017
|
||||
Balance, beginning of year
|
$
|
40,450
|
|
|
$
|
36,296
|
|
Additions and changes in estimates
|
740
|
|
|
3,859
|
|
||
Accretion of discount
|
1,500
|
|
|
1,532
|
|
||
Liabilities settled
|
(786
|
)
|
|
(789
|
)
|
||
Foreign currency translation adjustments and other
|
(415
|
)
|
|
(448
|
)
|
||
Balance, end of year
|
$
|
41,489
|
|
|
$
|
40,450
|
|
|
Operating Leases
|
||
2019
|
$
|
25,608
|
|
2020
|
$
|
17,918
|
|
2021
|
$
|
12,478
|
|
2022
|
$
|
10,794
|
|
2023
|
$
|
10,109
|
|
Thereafter
|
$
|
87,085
|
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Thereafter
|
||||||||||||
Letters of credit and other guarantees
|
$
|
45,342
|
|
|
$
|
12,924
|
|
|
$
|
1,883
|
|
|
$
|
1,277
|
|
|
$
|
—
|
|
|
$
|
10,389
|
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
Shares
|
|
Weighted-Average Exercise Price
|
|
Weighted-Average Remaining Contractual Term (Years)
|
|
Aggregate Intrinsic Value
(in thousands)
|
|||||
Outstanding at December 31, 2017
|
1,401,718
|
|
|
$
|
56.10
|
|
|
5.1
|
|
$
|
100,632
|
|
Granted
|
63,259
|
|
|
118.75
|
|
|
|
|
|
|||
Exercised
|
(94,031
|
)
|
|
38.64
|
|
|
|
|
|
|||
Forfeited
|
(54,213
|
)
|
|
75.72
|
|
|
|
|
|
|||
Outstanding at December 31, 2018
|
1,316,733
|
|
|
$
|
59.55
|
|
|
4.3
|
|
$
|
26,438
|
|
Exercisable at December 31, 2018
|
911,011
|
|
|
$
|
54.28
|
|
|
3.2
|
|
$
|
20,872
|
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Dividend yield
|
1.44
|
%
|
|
1.56
|
%
|
|
1.84
|
%
|
|||
Volatility
|
32.48
|
%
|
|
32.70
|
%
|
|
33.08
|
%
|
|||
Average expected life (years)
|
6
|
|
|
6
|
|
|
6
|
|
|||
Risk-free interest rate
|
3.06
|
%
|
|
2.51
|
%
|
|
1.96
|
%
|
|||
Fair value of options granted
|
$
|
37.35
|
|
|
$
|
27.99
|
|
|
$
|
16.06
|
|
|
Shares
|
|
Weighted-Average Grant Date Fair Value Per Share
|
|||
Nonvested, beginning of period
|
433,003
|
|
|
$
|
75.55
|
|
Granted
|
70,274
|
|
|
155.65
|
|
|
Vested
|
(164,303
|
)
|
|
61.72
|
|
|
Forfeited
|
(21,537
|
)
|
|
120.49
|
|
|
Nonvested, end of period
|
317,437
|
|
|
97.39
|
|
|
Year Ended December 31,
|
|||||||
|
2018
|
|
2017
|
|
2016
|
|||
Volatility
|
29.92
|
%
|
|
30.34
|
%
|
|
27.69
|
%
|
Risk-free interest rate
|
2.36
|
%
|
|
1.34
|
%
|
|
0.91
|
%
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
Shares
|
|
Weighted-Average Grant Date Fair Value Per Share
|
|||
Nonvested, beginning of period
|
223,338
|
|
|
$
|
71.95
|
|
Granted
|
104,513
|
|
|
104.36
|
|
|
Vested
|
(48,178
|
)
|
|
66.93
|
|
|
Forfeited
|
(22,155
|
)
|
|
78.98
|
|
|
Nonvested, end of period
|
257,518
|
|
|
85.44
|
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
Foreign
Currency Translation
(a)
|
|
Pension and Post-Retirement Benefits
(b)
|
|
Net Investment Hedge
|
|
Interest Rate Swap
(c)
|
|
Total
|
||||||||||
Accumulated other comprehensive (loss) income - balance at December 31, 2015
|
$
|
(463,914
|
)
|
|
$
|
(758
|
)
|
|
$
|
62,245
|
|
|
$
|
(18,861
|
)
|
|
$
|
(421,288
|
)
|
Other comprehensive (loss) income before reclassifications
|
(102,246
|
)
|
|
—
|
|
|
26,133
|
|
|
—
|
|
|
(76,113
|
)
|
|||||
Amounts reclassified from accumulated other comprehensive loss
|
81,421
|
|
|
834
|
|
|
—
|
|
|
2,116
|
|
|
84,371
|
|
|||||
Other comprehensive (loss) income, net of tax
|
(20,825
|
)
|
|
834
|
|
|
26,133
|
|
|
2,116
|
|
|
8,258
|
|
|||||
Other comprehensive loss attributable to noncontrolling interests
|
618
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
618
|
|
|||||
Accumulated other comprehensive (loss) income - balance at December 31, 2016
|
$
|
(484,121
|
)
|
|
$
|
76
|
|
|
$
|
88,378
|
|
|
$
|
(16,745
|
)
|
|
$
|
(412,412
|
)
|
Other comprehensive income (loss) before reclassifications
|
227,439
|
|
|
—
|
|
|
(41,827
|
)
|
|
—
|
|
|
185,612
|
|
|||||
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
|
(97
|
)
|
|
—
|
|
|
2,116
|
|
|
2,019
|
|
|||||
Other comprehensive income (loss), net of tax
|
227,439
|
|
|
(97
|
)
|
|
(41,827
|
)
|
|
2,116
|
|
|
187,631
|
|
|||||
Other comprehensive income attributable to noncontrolling interests
|
(887
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(887
|
)
|
|||||
Accumulated other comprehensive (loss) income - balance at December 31, 2017
|
$
|
(257,569
|
)
|
|
$
|
(21
|
)
|
|
$
|
46,551
|
|
|
$
|
(14,629
|
)
|
|
$
|
(225,668
|
)
|
Other comprehensive (loss) income before reclassifications
|
(150,258
|
)
|
|
—
|
|
|
15,695
|
|
|
—
|
|
|
(134,563
|
)
|
|||||
Amounts reclassified from accumulated other comprehensive loss
(d)
|
—
|
|
|
(138
|
)
|
|
10,091
|
|
|
(585
|
)
|
|
9,368
|
|
|||||
Other comprehensive (loss) income, net of tax
|
(150,258
|
)
|
|
(138
|
)
|
|
25,786
|
|
|
(585
|
)
|
|
(125,195
|
)
|
|||||
Other comprehensive loss attributable to noncontrolling interests
|
181
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
181
|
|
|||||
Accumulated other comprehensive (loss) income - balance at December 31, 2018
|
$
|
(407,646
|
)
|
|
$
|
(159
|
)
|
|
$
|
72,337
|
|
|
$
|
(15,214
|
)
|
|
$
|
(350,682
|
)
|
(a)
|
Amount reclassified from accumulated other comprehensive loss for the year ended December 31, 2016 is included in Income from discontinued operations (net of tax) for the year ended December 31, 2016 and resulted from the release of cumulative foreign currency translation adjustments into earnings upon the sale of our Chemetall Surface Treatment business which closed on December 14, 2016. See Note 3, “Divestitures,” for additional information.
|
(b)
|
The pre-tax portion of amounts reclassified from accumulated other comprehensive loss consists of amortization of prior service benefit, which is a component of pension and postretirement benefits cost (credit). See Note 15, “Pension Plans and Other Postretirement Benefits,” for additional information.
|
(c)
|
The pre-tax portion of amounts reclassified from accumulated other comprehensive loss is included in interest expense.
|
(d)
|
Amounts reclassified from accumulated other comprehensive loss include a net benefit of
$6.9 million
, which was reclassified to Retained earnings for stranded tax effects caused by the TCJA. See “Recently Issued Accounting Pronouncements,” included in Note 1, “Summary of Significant Accounting Policies,” for additional information.
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
Foreign Currency Translation
|
|
Pension and Postretirement Benefits
|
|
Net Investment Hedge
|
|
Interest Rate Swap
|
||||||||
2018
|
|
|
|
|
|
|
|
||||||||
Other comprehensive (loss) income, before tax
|
$
|
(150,262
|
)
|
|
$
|
(128
|
)
|
|
$
|
20,424
|
|
|
$
|
3,336
|
|
Income tax benefit (expense)
|
4
|
|
|
(10
|
)
|
|
5,362
|
|
|
(3,921
|
)
|
||||
Other comprehensive (loss) income, net of tax
|
$
|
(150,258
|
)
|
|
$
|
(138
|
)
|
|
$
|
25,786
|
|
|
$
|
(585
|
)
|
|
|
|
|
|
|
|
|
||||||||
2017
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income (loss), before tax
|
$
|
228,508
|
|
|
$
|
(96
|
)
|
|
$
|
(65,958
|
)
|
|
$
|
3,336
|
|
Income tax (expense) benefit
|
(1,069
|
)
|
|
(1
|
)
|
|
24,131
|
|
|
(1,220
|
)
|
||||
Other comprehensive income (loss), net of tax
|
$
|
227,439
|
|
|
$
|
(97
|
)
|
|
$
|
(41,827
|
)
|
|
$
|
2,116
|
|
|
|
|
|
|
|
|
|
||||||||
2016
|
|
|
|
|
|
|
|
||||||||
Other comprehensive (loss) income, before tax
|
$
|
(20,849
|
)
|
|
$
|
839
|
|
|
$
|
41,209
|
|
|
$
|
3,336
|
|
Income tax benefit (expense)
|
24
|
|
|
(5
|
)
|
|
(15,076
|
)
|
|
(1,220
|
)
|
||||
Other comprehensive (loss) income, net of tax
|
$
|
(20,825
|
)
|
|
$
|
834
|
|
|
$
|
26,133
|
|
|
$
|
2,116
|
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Income from continuing operations before income taxes and equity in net income of unconsolidated investments:
|
|
|
|
|
|
||||||
Domestic
|
$
|
223,702
|
|
|
$
|
(8,293
|
)
|
|
$
|
49,630
|
|
Foreign
|
570,999
|
|
|
455,091
|
|
|
465,634
|
|
|||
Total
|
$
|
794,701
|
|
|
$
|
446,798
|
|
|
$
|
515,264
|
|
|
|
|
|
|
|
||||||
Current income tax expense (benefit):
|
|
|
|
|
|
||||||
Federal
|
$
|
(2,712
|
)
|
|
$
|
394,747
|
|
|
$
|
7,717
|
|
State
|
6,793
|
|
|
323
|
|
|
1,407
|
|
|||
Foreign
|
91,581
|
|
|
78,688
|
|
|
63,957
|
|
|||
Total
|
$
|
95,662
|
|
|
$
|
473,758
|
|
|
$
|
73,081
|
|
|
|
|
|
|
|
||||||
Deferred income tax (benefit) expense:
|
|
|
|
|
|
||||||
Federal
|
$
|
15,573
|
|
|
$
|
(58,640
|
)
|
|
$
|
12,230
|
|
State
|
1,614
|
|
|
(2,288
|
)
|
|
(1,715
|
)
|
|||
Foreign
|
31,977
|
|
|
18,987
|
|
|
12,667
|
|
|||
Total
|
$
|
49,164
|
|
|
$
|
(41,941
|
)
|
|
$
|
23,182
|
|
|
|
|
|
|
|
||||||
Total income tax expense
|
$
|
144,826
|
|
|
$
|
431,817
|
|
|
$
|
96,263
|
|
|
% of Income Before Income Taxes
|
|||||||
|
2018
|
|
2017
|
|
2016
|
|||
Federal statutory rate
|
21.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
State taxes, net of federal tax benefit
|
0.9
|
|
|
(0.5
|
)
|
|
(0.1
|
)
|
Change in valuation allowance
(a)
|
0.7
|
|
|
(1.4
|
)
|
|
3.7
|
|
Impact of foreign earnings, net
(b)
|
(0.3
|
)
|
|
(13.5
|
)
|
|
(19.3
|
)
|
Global intangible low tax inclusion
|
0.8
|
|
|
—
|
|
|
—
|
|
Change in U.S. federal statutory rate
(c)
|
0.1
|
|
|
(14.0
|
)
|
|
—
|
|
Transition tax on deferred foreign earnings
(d)
|
(5.3
|
)
|
|
96.1
|
|
|
—
|
|
Subpart F income
|
0.9
|
|
|
2.0
|
|
|
0.2
|
|
Undistributed earnings of foreign subsidiaries
|
—
|
|
|
(2.2
|
)
|
|
0.1
|
|
Stock-based compensation
|
(0.7
|
)
|
|
(1.9
|
)
|
|
—
|
|
Depletion
|
(0.6
|
)
|
|
(1.4
|
)
|
|
(1.0
|
)
|
Revaluation of unrecognized tax benefits/reserve requirements
|
—
|
|
|
(0.7
|
)
|
|
(0.4
|
)
|
Domestic manufacturing tax deduction
|
—
|
|
|
—
|
|
|
(0.9
|
)
|
Other items, net
|
0.7
|
|
|
(0.9
|
)
|
|
1.4
|
|
Effective income tax rate
|
18.2
|
%
|
|
96.6
|
%
|
|
18.7
|
%
|
(a)
|
The year ended December 31, 2018 includes an
$8.2 million
expense due to the establishment of a valuation allowance due to a foreign restructuring plan and a
$1.5 million
benefit due to the release of a foreign valuation allowance due to changes in expected profitability. 2017 includes a
$10.9 million
benefit from the release of valuation allowances due to a foreign restructuring plan.
|
(b)
|
Our statutory rate is decreased by of our share of the income of JBC, a Free Zones company under the laws of the Hashemite Kingdom of Jordan. The applicable provisions of the Jordanian law, and applicable regulations thereunder, do not have a termination provision and
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
(c)
|
At December 31, 2017 we have made a reasonable estimate of the tax impact of the U.S. enacted tax law on our business and our consolidated financial statements and have recorded a provisional tax benefit of
$62.3 million
related to the remeasurement of our deferred tax assets and liabilities for the reduction in the Federal statutory tax rate from
35%
to
21%
. In 2018, the updates to our calculation of the remeasurement of deferred tax assets and liabilities resulted in income tax expense of
$0.4 million
.
|
(d)
|
At December 31, 2017 we made a reasonable estimate of the tax impact of the U.S. enacted tax law on our business and our consolidated financial statements and recognized a provisional tax expense of
$429.2 million
for the one-time transition tax. During 2018, the impact of the refined one-time transition tax calculation was an income tax benefit of
$42.3 million
.
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Deferred tax assets:
|
|
|
|
||||
Accrued employee benefits
|
$
|
18,462
|
|
|
$
|
21,463
|
|
Operating loss carryovers
(a)
|
1,210,377
|
|
|
459,644
|
|
||
Pensions
|
61,308
|
|
|
64,799
|
|
||
Tax credit carryovers
|
1,270
|
|
|
11,634
|
|
||
Other
|
35,895
|
|
|
44,714
|
|
||
Gross deferred tax assets
|
1,327,312
|
|
|
602,254
|
|
||
Valuation allowance
(a)
|
(1,213,750
|
)
|
|
(458,288
|
)
|
||
Deferred tax assets
|
113,562
|
|
|
143,966
|
|
||
|
|
|
|
||||
Deferred tax liabilities:
|
|
|
|
||||
Depreciation
|
(337,503
|
)
|
|
(334,162
|
)
|
||
Intangibles
|
(88,871
|
)
|
|
(113,792
|
)
|
||
Hedge of net investment of foreign subsidiary
|
(21,854
|
)
|
|
(17,028
|
)
|
||
Other
|
(31,287
|
)
|
|
(24,265
|
)
|
||
Deferred tax liabilities
|
(479,515
|
)
|
|
(489,247
|
)
|
||
|
|
|
|
||||
Net deferred tax liabilities
|
$
|
(365,953
|
)
|
|
$
|
(345,281
|
)
|
Classification in the consolidated balance sheets:
|
|
|
|
||||
Noncurrent deferred tax assets
|
$
|
17,029
|
|
|
$
|
25,108
|
|
Noncurrent deferred tax liabilities
|
(382,982
|
)
|
|
(370,389
|
)
|
||
Net deferred tax liabilities
|
$
|
(365,953
|
)
|
|
$
|
(345,281
|
)
|
(a)
|
During 2018, the Company recognized intercompany losses at a foreign entity related to international restructuring resulting in an increase to the deferred tax asset for net operating losses and an associated and equal valuation allowance of
$749.8 million
.
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Balance at January 1
|
$
|
(458,288
|
)
|
|
$
|
(69,900
|
)
|
|
$
|
(84,137
|
)
|
Additions
|
(766,012
|
)
|
|
(408,252
|
)
|
|
(20,568
|
)
|
|||
Deductions
|
10,550
|
|
|
19,864
|
|
|
34,805
|
|
|||
Balance at December 31
|
$
|
(1,213,750
|
)
|
|
$
|
(458,288
|
)
|
|
$
|
(69,900
|
)
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Balance at January 1
|
$
|
21,438
|
|
|
$
|
25,384
|
|
|
$
|
95,715
|
|
Divestitures
(a)
|
—
|
|
|
—
|
|
|
(55,881
|
)
|
|||
Additions for tax positions related to prior years
|
874
|
|
|
—
|
|
|
548
|
|
|||
Reductions for tax positions related to prior years
|
—
|
|
|
(1,933
|
)
|
|
(1,253
|
)
|
|||
Additions for tax positions related to current year
|
1,091
|
|
|
1,132
|
|
|
1,271
|
|
|||
Lapses in statutes of limitations/settlements
|
(3,578
|
)
|
|
(4,198
|
)
|
|
(12,591
|
)
|
|||
Foreign currency translation adjustment
|
(83
|
)
|
|
1,053
|
|
|
(2,425
|
)
|
|||
Balance at December 31
|
$
|
19,742
|
|
|
$
|
21,438
|
|
|
$
|
25,384
|
|
(a)
|
Reclassified to Other noncurrent liabilities as a result of the indemnification of certain income tax liabilities associated with the Chemetall Surface Treatment entities sold. See Note 16, “Other Noncurrent Liabilities.”
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
December 31,
|
||||||||||||||
|
2018
|
|
2017
|
||||||||||||
|
Recorded Amount
|
|
Fair Value
|
|
Recorded Amount
|
|
Fair Value
|
||||||||
|
(In thousands)
|
||||||||||||||
Long-term debt
|
$
|
1,712,003
|
|
|
$
|
1,731,271
|
|
|
$
|
1,845,309
|
|
|
$
|
1,949,638
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Foreign currency forward contracts - Other accounts receivable
|
$
|
431
|
|
|
$
|
—
|
|
Foreign currency forward contracts - Accrued expenses
|
$
|
—
|
|
|
$
|
4,954
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Foreign currency forward contracts (losses) gains
|
$
|
(19,851
|
)
|
|
$
|
4,588
|
|
|
$
|
16,095
|
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
Level 1
|
Unadjusted quoted prices in active markets for identical assets or liabilities
|
|
|
Level 2
|
Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability
|
|
|
Level 3
|
Unobservable inputs for the asset or liability
|
|
December 31, 2018
|
|
Quoted Prices in Active Markets for Identical Items (Level 1)
|
|
Quoted Prices in Active Markets for Similar Items (Level 2)
|
|
Unobservable Inputs (Level 3)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Investments under executive deferred compensation plan
(a)
|
$
|
26,292
|
|
|
$
|
26,292
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Private equity securities
(b)
|
$
|
26
|
|
|
$
|
26
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Private equity securities measured at net asset value
(b)(c)
|
$
|
7,195
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign currency forward contracts
(d)
|
$
|
431
|
|
|
$
|
—
|
|
|
$
|
431
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Obligations under executive deferred compensation plan
(a)
|
$
|
26,292
|
|
|
$
|
26,292
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
December 31, 2017
|
|
Quoted Prices in Active Markets for Identical Items (Level 1)
|
|
Quoted Prices in Active Markets for Similar Items (Level 2)
|
|
Unobservable Inputs (Level 3)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Investments under executive deferred compensation plan
(a)
|
$
|
25,494
|
|
|
$
|
25,494
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Private equity securities
(b)
|
$
|
38
|
|
|
$
|
38
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Private equity securities measured at net asset value
(b)(c)
|
$
|
5,121
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Obligations under executive deferred compensation plan
(a)
|
$
|
25,494
|
|
|
$
|
25,494
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign currency forward contracts
(d)
|
$
|
4,954
|
|
|
$
|
—
|
|
|
$
|
4,954
|
|
|
$
|
—
|
|
(a)
|
We maintain an EDCP that was adopted in 2001 and subsequently amended. The purpose of the EDCP is to provide current tax planning opportunities as well as supplemental funds upon the retirement or death of certain of our employees. The EDCP is intended to aid in attracting and retaining employees of exceptional ability by providing them with these benefits. We also maintain a Benefit Protection Trust (the “Trust”) that was created to provide a source of funds to assist in meeting the obligations of the EDCP, subject to the claims of our creditors in the event of our insolvency. Assets of the Trust are consolidated in accordance with authoritative guidance. The assets of the Trust consist primarily of mutual fund investments (which are accounted for as trading securities and are marked-to-market on a monthly basis through the consolidated statements of income) and cash and cash equivalents. As such, these assets and obligations are classified within Level 1.
|
(b)
|
Primarily consists of private equity securities classified as available-for-sale and are reported in Investments in the consolidated balance sheets. The changes in fair value are reported in Other expenses, net, in our consolidated statements of income.
|
(c)
|
Holdings in private equity securities are measured at fair value using the net asset value per share (or its equivalent) practical expedient and have not been categorized in the fair value hierarchy. The fair value amounts of
$7.2 million
and
$5.1 million
as of
December 31,
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
(d)
|
As a result of our global operating and financing activities, we are exposed to market risks from changes in foreign currency exchange rates, which may adversely affect our operating results and financial position. When deemed appropriate, we minimize our risks from foreign currency exchange rate fluctuations through the use of foreign currency forward contracts. Unless otherwise noted, these derivative financial instruments are not designated as hedging instruments under ASC 815,
Derivatives and Hedging
. The foreign currency forward contracts are valued using broker quotations or market transactions in either the listed or over-the-counter markets. As such, these derivative instruments are classified within Level 2.
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Sales to unconsolidated affiliates
|
$
|
35,094
|
|
|
$
|
29,514
|
|
|
$
|
29,651
|
|
Purchases from unconsolidated affiliates
(a)
|
$
|
256,701
|
|
|
$
|
209,266
|
|
|
$
|
130,287
|
|
(a)
|
Purchases from unconsolidated affiliates primarily relate to purchases from our Windfield joint venture.
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Receivables from related parties
(a)
|
$
|
14,348
|
|
|
$
|
2,406
|
|
Payables to related parties
|
$
|
68,357
|
|
|
$
|
55,801
|
|
(a)
|
Increase in receivables from related parties balance due to timing of payments in the normal course of business from one of our Catalysts joint ventures.
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(In thousands)
|
||||||||||
Net sales:
|
|
|
|
|
|
||||||
Lithium
|
$
|
1,228,171
|
|
|
$
|
1,018,885
|
|
|
$
|
668,852
|
|
Bromine Specialties
|
917,880
|
|
|
855,143
|
|
|
792,425
|
|
|||
Catalysts
|
1,101,554
|
|
|
1,067,572
|
|
|
1,031,501
|
|
|||
All Other
|
127,186
|
|
|
128,914
|
|
|
180,988
|
|
|||
Corporate
|
159
|
|
|
1,462
|
|
|
3,437
|
|
|||
Total net sales
|
$
|
3,374,950
|
|
|
$
|
3,071,976
|
|
|
$
|
2,677,203
|
|
|
|
|
|
|
|
||||||
Adjusted EBITDA:
|
|
|
|
|
|
||||||
Lithium
|
$
|
530,773
|
|
|
$
|
446,652
|
|
|
$
|
285,714
|
|
Bromine Specialties
|
288,116
|
|
|
258,901
|
|
|
226,926
|
|
|||
Catalysts
|
284,307
|
|
|
283,883
|
|
|
316,609
|
|
|||
All Other
|
14,091
|
|
|
13,878
|
|
|
14,772
|
|
|||
Corporate
|
(110,623
|
)
|
|
(117,834
|
)
|
|
(85,804
|
)
|
|||
Total adjusted EBITDA
|
$
|
1,006,664
|
|
|
$
|
885,480
|
|
|
$
|
758,217
|
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
Lithium
|
|
Bromine Specialties
|
|
Catalysts
|
|
Reportable Segments Total
|
|
All Other
|
|
Corporate
|
|
Consolidated Total
|
||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net income (loss) attributable to Albemarle Corporation
|
$
|
428,212
|
|
|
$
|
246,509
|
|
|
$
|
445,604
|
|
|
$
|
1,120,325
|
|
|
$
|
6,018
|
|
|
$
|
(432,781
|
)
|
|
$
|
693,562
|
|
Depreciation and amortization
|
95,193
|
|
|
41,607
|
|
|
49,131
|
|
|
185,931
|
|
|
8,073
|
|
|
6,694
|
|
|
200,698
|
|
|||||||
Restructuring and other
(a)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,838
|
|
|
3,838
|
|
|||||||
Gain on sale of business
(b)
|
—
|
|
|
—
|
|
|
(210,428
|
)
|
|
(210,428
|
)
|
|
—
|
|
|
—
|
|
|
(210,428
|
)
|
|||||||
Acquisition and integration related costs
(c)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19,377
|
|
|
19,377
|
|
|||||||
Interest and financing expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
52,405
|
|
|
52,405
|
|
|||||||
Income tax expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
144,826
|
|
|
144,826
|
|
|||||||
Non-operating pension and OPEB items
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,285
|
|
|
5,285
|
|
|||||||
Legal accrual
(d)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27,027
|
|
|
27,027
|
|
|||||||
Environmental accrual
(e)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,597
|
|
|
15,597
|
|
|||||||
Albemarle Foundation contribution
(f)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,000
|
|
|
15,000
|
|
|||||||
Indemnification adjustments
(g)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25,240
|
|
|
25,240
|
|
|||||||
Other
(h)
|
7,368
|
|
|
—
|
|
|
—
|
|
|
7,368
|
|
|
—
|
|
|
6,869
|
|
|
14,237
|
|
|||||||
Adjusted EBITDA
|
$
|
530,773
|
|
|
$
|
288,116
|
|
|
$
|
284,307
|
|
|
$
|
1,103,196
|
|
|
$
|
14,091
|
|
|
$
|
(110,623
|
)
|
|
$
|
1,006,664
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net income (loss) attributable to Albemarle Corporation
|
$
|
342,992
|
|
|
$
|
218,839
|
|
|
$
|
230,665
|
|
|
$
|
792,496
|
|
|
$
|
5,521
|
|
|
$
|
(743,167
|
)
|
|
$
|
54,850
|
|
Depreciation and amortization
|
87,879
|
|
|
40,062
|
|
|
54,468
|
|
|
182,409
|
|
|
8,357
|
|
|
6,162
|
|
|
196,928
|
|
|||||||
Utilization of inventory markup
(i)
|
23,095
|
|
|
—
|
|
|
—
|
|
|
23,095
|
|
|
—
|
|
|
—
|
|
|
23,095
|
|
|||||||
Restructuring and other
(j)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,056
|
|
|
17,056
|
|
|||||||
Gain on acquisition
(k)
|
(6,221
|
)
|
|
—
|
|
|
—
|
|
|
(6,221
|
)
|
|
—
|
|
|
—
|
|
|
(6,221
|
)
|
|||||||
Acquisition and integration related costs
(c)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
33,954
|
|
|
33,954
|
|
|||||||
Interest and financing expenses
(l)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
115,350
|
|
|
115,350
|
|
|||||||
Income tax expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
431,817
|
|
|
431,817
|
|
|||||||
Non-operating pension and OPEB items
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16,125
|
)
|
|
(16,125
|
)
|
|||||||
Note receivable reserve
(m)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28,730
|
|
|
28,730
|
|
|||||||
Other
(n)
|
(1,093
|
)
|
|
—
|
|
|
(1,250
|
)
|
|
(2,343
|
)
|
|
—
|
|
|
8,389
|
|
|
6,046
|
|
|||||||
Adjusted EBITDA
|
$
|
446,652
|
|
|
$
|
258,901
|
|
|
$
|
283,883
|
|
|
$
|
989,436
|
|
|
$
|
13,878
|
|
|
$
|
(117,834
|
)
|
|
$
|
885,480
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net income (loss) attributable to Albemarle Corporation
|
$
|
198,852
|
|
|
$
|
187,364
|
|
|
$
|
265,416
|
|
|
$
|
651,632
|
|
|
$
|
131,301
|
|
|
$
|
(139,258
|
)
|
|
$
|
643,675
|
|
Depreciation and amortization
|
86,862
|
|
|
39,562
|
|
|
51,193
|
|
|
177,617
|
|
|
7,302
|
|
|
6,056
|
|
|
190,975
|
|
|||||||
(Gain) loss on sales of businesses, net
(b)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(123,831
|
)
|
|
1,533
|
|
|
(122,298
|
)
|
|||||||
Acquisition and integration related costs
(c)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
57,384
|
|
|
57,384
|
|
|||||||
Interest and financing expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
65,181
|
|
|
65,181
|
|
|||||||
Income tax expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
96,263
|
|
|
96,263
|
|
|||||||
Income from discontinued operations (net of tax)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(202,131
|
)
|
|
(202,131
|
)
|
|||||||
Non-operating pension and OPEB items
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25,589
|
|
|
25,589
|
|
|||||||
Other
(o)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,579
|
|
|
3,579
|
|
|||||||
Adjusted EBITDA
|
$
|
285,714
|
|
|
$
|
226,926
|
|
|
$
|
316,609
|
|
|
$
|
829,249
|
|
|
$
|
14,772
|
|
|
$
|
(85,804
|
)
|
|
$
|
758,217
|
|
(a)
|
Expected severance payments as part of a business reorganization plan,
$0.1 million
recorded in Cost of goods sold and
$3.7 million
recorded in Selling, general and administrative expenses. These severance payments have been made during the year ended December 31, 2018.
|
(b)
|
See Note 3, “Divestitures,” for additional information.
|
(c)
|
See Note 2, “Acquisitions,” for additional information.
|
(d)
|
Included in Other expenses, net. See Note 17, “Commitments and Contingencies,” for additional information.
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
(e)
|
Increase in environmental reserve to indemnify the buyer of a formerly owned site recorded in Other expenses, net. As defined in the agreement of sale, this indemnification has a set cutoff date in 2024, at which point we will no longer be required to provide financial coverage.
|
(f)
|
Including in Selling, general and administrative expenses is a charitable contribution, using a portion of the proceeds received from the Polyolefin Catalysts Divestiture, to the Albemarle Foundation, a non-profit organization that sponsors grants, health and social projects, educational initiatives, disaster relief, matching gift programs, scholarships and other charitable initiatives in locations where our employees live and operate. This contribution is in addition to the normal annual contribution made to the Albemarle Foundation by the Company, and is significant in size and nature in that it is intended to provide more long-term benefits in the communities where we live and operate.
|
(g)
|
Included in Other expenses, net is
$19.7 million
related to the proposed settlement of an ongoing audit of a previously disposed business in Germany, and
$5.5 million
related to the revision of indemnifications previously recorded from disposed businesses.
|
(h)
|
Included amounts for the year ended December 31, 2018 recorded in:
|
•
|
Cost of goods sold -
$4.9 million
for the write-off of fixed assets related to a major capacity expansion in our Jordanian joint venture and
$8.8 million
related to non-routine labor and compensation related costs in Chile that are outside normal compensation arrangements.
|
•
|
Selling, general and administrative expenses -
$2.3 million
of shortfall contributions for our multiemployer plan financial improvement plan and a
$1.2 million
contribution, using a portion of the proceeds received from the Polyolefin Catalysts Divestiture, to schools in the state of Louisiana for qualified tuition purposes. This contribution is significant in size and is intended to provide long-term benefits for families in the Louisiana community. This was partially offset by a
$1.5 million
gain related to a refund from Chilean authorities due to an overpayment made in a prior year.
|
•
|
Other expenses, net -
$1.5 million
gain related to the reversal of previously recorded liabilities of disposed businesses.
|
(i)
|
In connection with the acquisition of Jiangli New Materials, the Company valued inventory purchased from Jiangli New Materials at fair value, which resulted in a markup of the underlying net book value of the inventory totaling approximately
$23.1 million
. The utilization of this inventory markup was included in Costs of goods sold during the year ended December 31, 2017, the estimated remaining selling period.
|
(j)
|
During 2017, we initiated action to reduce costs in each of our reportable segments at several locations, primarily at our Lithium sites in Germany. Based on the restructuring plans, we have recorded expenses of
$2.9 million
in Cost of goods sold,
$8.4 million
in Selling, general and administrative expenses, and
$5.7 million
in Research and development expenses, primarily related to expected severance payments. The unpaid balance is recorded in Accrued expenses at December 31, 2018, with the expectation that the remaining balance will be paid by the end of 2019.
|
(k)
|
Gain recorded in Other expenses, net related to the acquisition of the remaining
50%
interest in Salmag. See Note 2, “Acquisitions,” for additional information.
|
(l)
|
Included in Interest and financing expenses is a loss on early extinguishment of debt of
$52.8 million
. See Note 14, “Long-Term Debt,” for additional information.
|
(m)
|
Reserve recorded in Other expenses, net against a note receivable on one of our European entities no longer deemed probable of collection.
|
(n)
|
Included amounts for the year ended December 31, 2017 recorded in:
|
•
|
Cost of goods sold -
$1.3 million
reversal of deferred income related to an abandoned project at an unconsolidated investment.
|
•
|
Selling, general and administrative expenses -
$3.3 million
of shortfall contributions for our multiemployer plan financial improvement plan, partially offset by
$1.0 million
related to a reversal of an accrual recorded as part of purchase accounting from a previous acquisition.
|
•
|
Other expenses, net -
$3.2 million
of asset retirement obligation charges related to the revision of an estimate at a site formerly owned by Albemarle, losses of
$8.7 million
related to adjustments of settlements and indemnifications of previously disposed businesses, the revision of tax indemnification expenses of
$3.7 million
primarily related to the filing of tax returns and a competent authority agreement for a previously disposed business and
$1.0 million
related to the settlement of a legal claim. This is partially offset by gains of
$10.6 million
and
$1.1 million
related to the reversal of liabilities recorded as part of purchase accounting from a previous acquisition and the previous disposal of a property, respectively.
|
(o)
|
Included amounts for the year ended December 31, 2016 recorded in:
|
•
|
Selling, general and administrative expenses -
$0.9 million
related to the net loss on the sales of properties.
|
•
|
Research and development expenses -
$1.4 million
related to the write-off of fixed assets in China.
|
•
|
Other expenses, net -
$2.4 million
related to environmental charges related to a site formerly owned by Albemarle, partially offset by a gain related to a previously disposed of site in China of
$1.1 million
.
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
|
(In thousands)
|
|
|
||||||
Identifiable assets:
|
|
|
|
|
|
||||||
Lithium
(a)
|
$
|
4,605,070
|
|
|
$
|
3,979,615
|
|
|
$
|
3,499,302
|
|
Bromine Specialties
|
753,157
|
|
|
745,007
|
|
|
724,218
|
|
|||
Catalysts
|
1,134,975
|
|
|
1,332,599
|
|
|
1,224,504
|
|
|||
All Other
|
128,185
|
|
|
126,486
|
|
|
130,595
|
|
|||
Corporate
(a)(b)
|
960,287
|
|
|
1,567,065
|
|
|
2,582,588
|
|
|||
Total identifiable assets
|
$
|
7,581,674
|
|
|
$
|
7,750,772
|
|
|
$
|
8,161,207
|
|
Goodwill:
|
|
|
|
|
|
||||||
Lithium
|
$
|
1,354,779
|
|
|
$
|
1,389,089
|
|
|
$
|
1,326,980
|
|
Bromine Specialties
|
20,319
|
|
|
20,319
|
|
|
20,319
|
|
|||
Catalysts
|
185,485
|
|
|
194,361
|
|
|
186,147
|
|
|||
All Other
|
6,586
|
|
|
6,586
|
|
|
6,586
|
|
|||
Total goodwill
|
$
|
1,567,169
|
|
|
$
|
1,610,355
|
|
|
$
|
1,540,032
|
|
(a)
|
The identifiable assets at December 31, 2017, have been revised to correct an error in the previously reported amounts, which understated the Lithium segment and overstated the Corporate category by
$238.5 million
. There is no impact to the financial statements or total identifiable assets at December 31, 2017.
|
(b)
|
Decrease in Corporate identifiable assets at December 31, 2018 primarily due to the net use of cash and cash equivalents for items such as capital expenditures, share repurchases and commercial paper repayments. As of December 31, 2016, Corporate included the net proceeds received from the sale of the Chemetall Surface Treatment business completed on December 14, 2016, less the repayment of the term loans and commercial paper using those proceeds. See Note 3, “Divestitures,” and Note 14, “Long-Term Debt” for additional details about these transactions.
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
|
(In thousands)
|
|
|
||||||
Depreciation and amortization:
|
|
|
|
|
|
||||||
Lithium
|
$
|
95,193
|
|
|
$
|
87,879
|
|
|
$
|
86,862
|
|
Bromine Specialties
|
41,607
|
|
|
40,062
|
|
|
39,562
|
|
|||
Catalysts
|
49,131
|
|
|
54,468
|
|
|
51,193
|
|
|||
Discontinued Operations
|
—
|
|
|
—
|
|
|
35,194
|
|
|||
All Other
|
8,073
|
|
|
8,357
|
|
|
7,302
|
|
|||
Corporate
|
6,694
|
|
|
6,162
|
|
|
6,056
|
|
|||
Total depreciation and amortization
|
$
|
200,698
|
|
|
$
|
196,928
|
|
|
$
|
226,169
|
|
Capital expenditures:
|
|
|
|
|
|
||||||
Lithium
|
$
|
500,849
|
|
|
$
|
192,318
|
|
|
$
|
72,038
|
|
Bromine Specialties
|
79,357
|
|
|
46,427
|
|
|
46,414
|
|
|||
Catalysts
|
52,019
|
|
|
46,808
|
|
|
47,475
|
|
|||
Discontinued Operations
|
—
|
|
|
—
|
|
|
19,281
|
|
|||
All Other
|
5,232
|
|
|
3,657
|
|
|
9,251
|
|
|||
Corporate
|
62,534
|
|
|
28,493
|
|
|
2,195
|
|
|||
Total capital expenditures
|
$
|
699,991
|
|
|
$
|
317,703
|
|
|
$
|
196,654
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
|
(In thousands)
|
|
|
||||||
Net Sales
(a)
:
|
|
|
|
|
|
||||||
United States
|
$
|
887,416
|
|
|
$
|
840,589
|
|
|
$
|
797,267
|
|
Foreign
(b)
|
2,487,534
|
|
|
2,231,387
|
|
|
1,879,936
|
|
|||
Total
|
$
|
3,374,950
|
|
|
$
|
3,071,976
|
|
|
$
|
2,677,203
|
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
(a)
|
Net sales are attributed to countries based upon shipments to final destination.
|
(b)
|
In 2018, net sales to Korea, China and Japan represented
13%
,
12%
, and
10%
, respectively, of total net sales. In 2017 and 2016, net sales to China represented
15%
and
13%
, respectively, of total net sales. No net sales in any other foreign country exceed
10%
of total net sales.
|
|
As of December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
|
(In thousands)
|
|
|
||||||
Long-Lived Assets
(a)
:
|
|
|
|
|
|
||||||
United States
|
$
|
929,291
|
|
|
$
|
833,002
|
|
|
$
|
850,689
|
|
Chile
|
1,406,478
|
|
|
1,069,859
|
|
|
922,878
|
|
|||
Australia
|
407,141
|
|
|
364,624
|
|
|
288,553
|
|
|||
Jordan
|
254,800
|
|
|
242,626
|
|
|
227,222
|
|
|||
Netherlands
|
166,853
|
|
|
171,980
|
|
|
145,917
|
|
|||
Germany
|
101,168
|
|
|
115,305
|
|
|
117,027
|
|
|||
China
|
91,160
|
|
|
50,532
|
|
|
31,564
|
|
|||
France
|
43,698
|
|
|
40,852
|
|
|
39,470
|
|
|||
Brazil
|
40,464
|
|
|
47,255
|
|
|
46,380
|
|
|||
Korea
(b)
|
111
|
|
|
495
|
|
|
65,963
|
|
|||
Other foreign countries
|
65,826
|
|
|
60,131
|
|
|
57,936
|
|
|||
Total
|
$
|
3,506,990
|
|
|
$
|
2,996,661
|
|
|
$
|
2,793,599
|
|
(a)
|
Long-lived assets are comprised of the Company’s Property, plant and equipment and Investments.
|
(b)
|
The reduction as of December 31, 2017, relates to the assets of the Polyolefin Catalysts Divestiture that are included in Assets held for sale in the consolidated balance sheet.
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
|
(In thousands, except per share amounts)
|
||||||||||||||
2018
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
821,629
|
|
|
$
|
853,874
|
|
|
$
|
777,748
|
|
|
$
|
921,699
|
|
Gross profit
|
$
|
304,979
|
|
|
$
|
311,356
|
|
|
$
|
280,537
|
|
|
$
|
320,384
|
|
(Gain) loss on sales of businesses, net
(a)
|
$
|
—
|
|
|
$
|
(218,705
|
)
|
|
$
|
—
|
|
|
$
|
8,277
|
|
Net income
|
$
|
138,925
|
|
|
$
|
310,686
|
|
|
$
|
143,479
|
|
|
$
|
146,049
|
|
Net income attributable to noncontrolling interests
|
(7,165
|
)
|
|
(8,225
|
)
|
|
(13,734
|
)
|
|
(16,453
|
)
|
||||
Net income attributable to Albemarle Corporation
|
$
|
131,760
|
|
|
$
|
302,461
|
|
|
$
|
129,745
|
|
|
$
|
129,596
|
|
Basic earnings per share
|
$
|
1.19
|
|
|
$
|
2.76
|
|
|
$
|
1.21
|
|
|
$
|
1.22
|
|
Shares used to compute basic earnings per share
|
110,681
|
|
|
109,671
|
|
|
107,315
|
|
|
106,042
|
|
||||
Diluted earnings per share
|
$
|
1.18
|
|
|
$
|
2.73
|
|
|
$
|
1.20
|
|
|
$
|
1.21
|
|
Shares used to compute diluted earnings per share
|
111,867
|
|
|
110,659
|
|
|
108,302
|
|
|
107,005
|
|
Albemarle Corporation and Subsidiaries
|
||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
|
(In thousands, except per share amounts)
|
||||||||||||||
2017
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
722,063
|
|
|
$
|
737,258
|
|
|
$
|
754,866
|
|
|
$
|
857,789
|
|
Gross profit
|
$
|
254,956
|
|
|
$
|
271,960
|
|
|
$
|
275,657
|
|
|
$
|
303,703
|
|
Net income (loss)
|
$
|
62,657
|
|
|
$
|
113,689
|
|
|
$
|
130,193
|
|
|
$
|
(207,071
|
)
|
Net income attributable to noncontrolling interests
|
(11,444
|
)
|
|
(10,356
|
)
|
|
(11,523
|
)
|
|
(11,295
|
)
|
||||
Net income (loss) attributable to Albemarle Corporation
|
$
|
51,213
|
|
|
$
|
103,333
|
|
|
$
|
118,670
|
|
|
$
|
(218,366
|
)
|
Basic earnings (loss) per share
|
$
|
0.46
|
|
|
$
|
0.93
|
|
|
$
|
1.07
|
|
|
$
|
(1.98
|
)
|
Shares used to compute basic earnings per share
|
111,986
|
|
|
110,686
|
|
|
110,476
|
|
|
110,510
|
|
||||
Diluted earnings (loss) per share
|
$
|
0.45
|
|
|
$
|
0.92
|
|
|
$
|
1.06
|
|
|
$
|
(1.95
|
)
|
Shares used to compute diluted earnings per share
|
113,289
|
|
|
112,105
|
|
|
111,975
|
|
|
112,152
|
|
(a)
|
Represents the gain (loss) on the Polyolefin Catalysts Divestiture. See Note 3, “Divestitures,” for additional information.
|
Albemarle Corporation and Subsidiaries
|
||
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
|
Item 9A.
|
Controls and Procedures.
|
Item 9B.
|
Other Information.
|
Item 10.
|
Directors, Executive Officers and Corporate Governance.
|
Albemarle Corporation and Subsidiaries
|
||
|
Item 11.
|
Executive Compensation.
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence.
|
Item 14.
|
Principal Accountant Fees and Services.
|
Item 15.
|
Exhibits and Financial Statement Schedules.
|
(a)(3)
|
|
Exhibits
|
|
|
|
|
|
The following documents are filed as exhibits to this Annual Report on Form 10-K pursuant to Item 601 of Regulation S-K:
|
|
|
|
|
Albemarle Corporation and Subsidiaries
|
||
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
Albemarle Corporation and Subsidiaries
|
||
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
Albemarle Corporation and Subsidiaries
|
||
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
Albemarle Corporation and Subsidiaries
|
||
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
Albemarle Corporation and Subsidiaries
|
||
|
*101
|
|
Interactive Data Files (Annual Report on Form 10-K, for the fiscal year ended December 31, 2018, furnished in XBRL (eXtensible Business Reporting Language)).
|
|
|
|
|
|
Attached as Exhibit 101 to this report are the following documents formatted in XBRL: (i) the Consolidated Statements of Income for the fiscal years ended December 31, 2018, 2017 and 2016, (ii) the Consolidated Statements of Comprehensive Income for the fiscal years ended December 31, 2018, 2017 and 2016, (iii) the Consolidated Balance Sheets at December 31, 2018 and 2017, (iv) the Consolidated Statements of Changes in Equity for the fiscal years ended December 31, 2018, 2017 and 2016, (v) the Consolidated Statements of Cash Flows for the fiscal years ended December 31, 2018, 2017 and 2016 and (vi) the Notes to Consolidated Financial Statements.
|
#
|
Management contract or compensatory plan or arrangement.
|
*
|
Included with this filing.
|
Item 16.
|
Form 10-K Summary.
|
Albemarle Corporation and Subsidiaries
|
||
|
|
|
|
A
LBEMARLE
C
ORPORATION
(Registrant)
|
||
|
|
|
By:
|
|
/
S
/ L
UTHER
C. K
ISSAM
IV
|
|
|
(Luther C. Kissam IV)
|
|
|
Chairman, President and Chief Executive Officer
|
Signature
|
|
Title
|
|
|
|
/
S
/ L
UTHER
C. K
ISSAM
IV
|
|
Chairman, President and Chief Executive Officer (principal executive
|
(Luther C. Kissam IV)
|
|
officer)
|
|
|
|
/
S
/ S
COTT
A. T
OZIER
|
|
Executive Vice President, Chief Financial Officer (principal financial
|
(Scott A. Tozier)
|
|
officer)
|
|
|
|
/
S
/ D
ONALD
J. L
A
B
AUVE
, J
R
.
|
|
Vice President, Corporate Controller and Chief Accounting Officer (principal accounting officer)
|
(Donald J. LaBauve, Jr.)
|
|
|
|
|
|
/
S
/ L
AURIE
B
RLAS
|
|
Director
|
(Laurie Brlas)
|
|
|
|
|
|
/
S
/ W
ILLIAM
H. H
ERNANDEZ
|
|
Director
|
(William H. Hernandez)
|
|
|
|
|
|
/
S
/ D
OUGLAS
L. M
AINE
|
|
Director
|
(Douglas L. Maine)
|
|
|
|
|
|
/
S
/ J. K
ENT
M
ASTERS
|
|
Director
|
(J. Kent Masters)
|
|
|
|
|
|
/
S
/ J
AMES
J. O’B
RIEN
|
|
Director
|
(James J. O’Brien)
|
|
|
|
|
|
/
S
/ D
IARMUID
B. O’C
ONNELL
|
|
Director
|
(Diarmuid B. O’Connell)
|
|
|
|
|
|
/
S
/ D
EAN
L. S
EAVERS
|
|
Director
|
(Dean L. Seavers)
|
|
|
|
|
|
/
S
/ G
ERALD
A
.
S
TEINER
|
|
Director
|
(Gerald A. Steiner)
|
|
|
|
|
|
/
S
/ H
ARRIETT
T
EE
T
AGGART
|
|
Director
|
(Harriett Tee Taggart)
|
|
|
|
|
|
/
S
/ A
LEJANDRO
D. W
OLFF
|
|
Director
|
(Alejandro D. Wolff)
|
|
|
Contents
|
|
Page
|
|
|
1
|
Defined terms and interpretation
|
1
|
|
|
|
1.1
|
Definitions in the Dictionary
|
1
|
|
|
1.2
|
Interpretation
|
1
|
|
2
|
Conditions to Completion
|
2
|
|
|
|
2.1
|
Conditions precedent
|
2
|
|
|
2.2
|
Satisfaction of the Conditions
|
2
|
|
|
2.3
|
Extension of the Conditions Precedent Date
|
3
|
|
|
2.4
|
Waiver
|
3
|
|
|
2.5
|
Notice
|
3
|
|
|
2.6
|
Termination and failure to Complete
|
3
|
|
3
|
Subscription and allotment of Subscription Shares
|
4
|
|
|
|
3.1
|
Registration of WLOPL
|
4
|
|
|
3.2
|
Subscription
|
4
|
|
|
3.3
|
Constitution
|
5
|
|
|
3.4
|
Equal ranking
|
5
|
|
4
|
Sale and purchase of Sale Interest
|
5
|
|
|
|
4.1
|
Sale and purchase
|
5
|
|
|
4.2
|
Reserved Rights
|
5
|
|
|
4.3
|
Purchase Price
|
5
|
|
|
4.4
|
Payments to reduce Purchase Price
|
5
|
|
|
4.5
|
Method of making payments
|
5
|
|
5
|
Incomplete Infrastructure and Tantalum Assets
|
6
|
|
|
|
5.1
|
Construction and commissioning by Seller
|
6
|
|
|
5.2
|
CCC Handover
|
6
|
|
|
5.3
|
Warranties from suppliers and manufacturers
|
7
|
|
|
5.4
|
Tantalum Assets
|
7
|
|
6
|
Interim Period
|
7
|
|
|
|
page |
1
|
|
6.1
|
Third Party Agreements
|
7
|
|
|
6.2
|
Information and access
|
7
|
|
|
6.3
|
General Conduct – Sale Interest and Project
|
8
|
|
|
6.4
|
Initial Mine Plan and Budget
|
9
|
|
|
6.5
|
Registration of this agreement
|
10
|
|
|
6.6
|
General Conduct – WLOPL
|
10
|
|
|
6.7
|
Compliance with clause 6 and Permitted Acts
|
11
|
|
|
6.8
|
Tax Notice
|
11
|
|
7
|
Completion
|
11
|
|
|
|
7.1
|
Date and place for Completion
|
11
|
|
|
7.2
|
Obligations of the Seller and WLOPL at Completion
|
11
|
|
|
7.3
|
Buyer’s obligations at Completion
|
13
|
|
|
7.4
|
Security Interest
|
13
|
|
|
7.5
|
Interdependence
|
14
|
|
|
7.6
|
Effect of Completion – title and risk
|
14
|
|
|
7.7
|
Tenement Applications
|
14
|
|
|
7.8
|
Assigned Tenements
|
14
|
|
8
|
Completion Adjustment
|
15
|
|
|
|
8.1
|
Completion Adjustment
|
15
|
|
|
8.2
|
Completion Statement
|
15
|
|
|
8.3
|
Dispute
|
15
|
|
|
8.4
|
Payment of Completion Adjustment
|
17
|
|
9
|
Conduct after Completion
|
17
|
|
|
|
9.1
|
Duty
|
17
|
|
|
9.2
|
Transfer of Petroleum Pipeline Licences
|
18
|
|
|
9.3
|
Registration
|
18
|
|
|
9.4
|
Dealings
|
18
|
|
|
9.5
|
Non-Transferring Approvals
|
19
|
|
10
|
Third Party Agreements
|
19
|
|
|
|
page |
2
|
|
10.1
|
Assignment and Novation of Third Party Agreements
|
19
|
|
|
10.2
|
Obligations pending or if no novation
|
19
|
|
|
10.3
|
Third Party Agreements
|
20
|
|
|
10.4
|
Indemnity by Buyer in respect of Third Party Agreement Liabilities
|
20
|
|
|
10.5
|
No liability
|
20
|
|
|
10.6
|
Indemnity from Buyer and Seller
|
21
|
|
|
10.7
|
Implementation of documents
|
21
|
|
11
|
Liabilities
|
21
|
|
|
|
11.1
|
Acknowledgment
|
21
|
|
|
11.2
|
Benefit of pre-existing warranties, representations and indemnities
|
21
|
|
|
11.3
|
Retained Liabilities
|
22
|
|
|
11.4
|
Indemnity by Seller in respect of Retained Liability
|
22
|
|
12
|
Transferring Employees
|
22
|
|
|
|
12.1
|
Transferring Employees
|
22
|
|
|
12.2
|
Seller's payment obligations
|
22
|
|
|
12.3
|
Seller's indemnity
|
23
|
|
13
|
Insurance
|
23
|
|
|
|
13.1
|
Insurance policies to remain in force
|
23
|
|
|
13.2
|
Making of claims
|
24
|
|
|
13.3
|
Provision of information relevant to future insurances
|
24
|
|
14
|
Seller Group Warranties and limitations of Claims
|
24
|
|
|
|
14.1
|
Definition
|
24
|
|
|
14.2
|
Giving of Seller Group Warranties
|
24
|
|
|
14.3
|
Matters disclosed
|
25
|
|
|
14.4
|
No liability
|
26
|
|
|
14.5
|
Consequential Loss
|
26
|
|
|
14.6
|
Tax or other benefit
|
26
|
|
|
14.7
|
Disclaimer
|
27
|
|
|
14.8
|
Exclusion of warranties and statutory actions
|
28
|
|
|
|
page |
3
|
|
14.9
|
Notice and time limits on Claims
|
28
|
|
|
14.10
|
Minimum amount of Claims
|
28
|
|
|
14.11
|
Maximum liability
|
29
|
|
|
14.12
|
No double recovery
|
29
|
|
|
14.13
|
Disclosure regarding Third Party Claims
|
29
|
|
|
14.14
|
Conduct in respect of Third Party Claims
|
30
|
|
|
14.15
|
Recovery
|
30
|
|
|
14.16
|
Insured Claim or loss
|
31
|
|
|
14.17
|
Duty to mitigate
|
31
|
|
|
14.18
|
Independent limitations
|
31
|
|
|
14.19
|
Damages only remedy
|
31
|
|
|
14.20
|
No knowledge of breach
|
31
|
|
15
|
Buyer Warranties
|
31
|
|
|
|
15.1
|
Buyer Warranties
|
31
|
|
|
15.2
|
Reliance
|
32
|
|
|
15.3
|
Independent Buyer Warranties
|
32
|
|
|
15.4
|
Survival
|
32
|
|
16
|
Seller Guarantor Warranties
|
32
|
|
|
|
16.1
|
Seller Guarantor Warranties
|
32
|
|
|
16.2
|
Reliance
|
33
|
|
|
16.3
|
Independent Seller Guarantor Warranties
|
33
|
|
|
16.4
|
Survival
|
33
|
|
|
16.5
|
Indemnity
|
33
|
|
17
|
Buyer Guarantor Warranties
|
33
|
|
|
|
17.1
|
Buyer Guarantor Warranties
|
33
|
|
|
17.2
|
Reliance
|
34
|
|
|
17.3
|
Independent Buyer Guarantor Warranties
|
34
|
|
|
17.4
|
Survival
|
34
|
|
|
17.5
|
Indemnity
|
34
|
|
|
|
page |
4
|
18
|
Confidentiality
|
34
|
|
|
|
18.1
|
Confidentiality obligation
|
34
|
|
|
18.2
|
Exceptions
|
35
|
|
|
18.3
|
Information Recipient's obligations
|
35
|
|
|
18.4
|
Media announcement
|
35
|
|
|
18.5
|
Confidentiality Agreement
|
36
|
|
19
|
Seller Guarantee and indemnity
|
36
|
|
|
|
19.1
|
Consideration
|
36
|
|
|
19.2
|
Seller Guarantee
|
36
|
|
|
19.3
|
Indemnity
|
36
|
|
|
19.4
|
Extent of Seller Guarantee and indemnity
|
37
|
|
|
19.5
|
Payments
|
37
|
|
|
19.6
|
Continuing guarantee and indemnity
|
37
|
|
|
19.7
|
Enforcement against Seller Guarantor
|
38
|
|
|
19.8
|
Limitation
|
38
|
|
20
|
Buyer Guarantee and indemnity
|
38
|
|
|
|
20.1
|
Consideration
|
38
|
|
|
20.2
|
Buyer Guarantee
|
38
|
|
|
20.3
|
Indemnity
|
38
|
|
|
20.4
|
Extent of Buyer Guarantee and indemnity
|
39
|
|
|
20.5
|
Payments
|
39
|
|
|
20.6
|
Continuing guarantee and indemnity
|
39
|
|
|
20.7
|
Enforcement against Buyer Guarantor
|
40
|
|
|
20.8
|
Limitation
|
40
|
|
21
|
Dispute resolution
|
40
|
|
|
|
21.1
|
Dispute Notice
|
40
|
|
|
21.2
|
Continuance of Contract
|
40
|
|
22
|
Duty, costs and expenses
|
40
|
|
|
|
22.1
|
Duty
|
40
|
|
|
|
page |
5
|
|
22.2
|
Costs and expenses
|
41
|
|
|
22.3
|
Costs of performance
|
41
|
|
23
|
GST
|
41
|
|
|
|
23.1
|
Supply of a going concern
|
41
|
|
|
23.2
|
Taxable Supplies
|
41
|
|
24
|
Foreign resident capital gains withholding
|
42
|
|
|
|
24.1
|
Application of foreign resident capital gains withholding
|
42
|
|
|
24.2
|
Clearance Certificate given by Seller
|
43
|
|
|
24.3
|
Buyer entitled to withhold
|
43
|
|
|
24.4
|
Buyer’s obligation to pay Withholding Amount to the Commissioner
|
43
|
|
|
24.5
|
Payment of the Withholding Amount after Completion
|
43
|
|
|
24.6
|
Discharge of liability
|
43
|
|
|
24.7
|
Definitions and interpretation
|
43
|
|
25
|
PPS Act registration
|
44
|
|
|
|
25.1
|
Protecting interests
|
44
|
|
|
25.2
|
Notices
|
44
|
|
26
|
Notices
|
44
|
|
|
|
26.1
|
General
|
44
|
|
|
26.2
|
How to give a communication
|
44
|
|
|
26.3
|
Particulars for delivery
|
44
|
|
|
26.4
|
Communications by post
|
46
|
|
|
26.5
|
Communications by email
|
46
|
|
|
26.6
|
Process service
|
46
|
|
|
26.7
|
After hours communications
|
46
|
|
27
|
General
|
46
|
|
|
|
27.1
|
Consents and approvals
|
46
|
|
|
27.2
|
Entire agreement
|
47
|
|
|
27.3
|
Further assurances
|
47
|
|
|
27.4
|
Rights cumulative
|
47
|
|
|
|
page |
6
|
|
27.5
|
Survival and merger
|
47
|
|
|
27.6
|
Variation
|
47
|
|
|
27.7
|
Waiver
|
47
|
|
|
27.8
|
Governing law
|
47
|
|
|
27.9
|
Counterparts
|
48
|
|
|
27.10
|
Default interest
|
48
|
|
|
27.11
|
Interest payable on overdue amounts
|
48
|
|
|
27.12
|
Invalidity
|
48
|
|
|
27.13
|
Operation of indemnities
|
48
|
|
|
27.14
|
Payments
|
49
|
|
|
27.15
|
Relationship
|
49
|
|
|
27.16
|
Assignment, novation and other dealings
|
49
|
|
|
27.17
|
Third party rights
|
49
|
|
Schedule 1
|
|
Dictionary
|
50
|
|
Schedule 2
|
|
Seller Group Warranties
|
66
|
|
Schedule 3
|
|
Tenements
|
74
|
|
Schedule 4
|
|
Completed Infrastructure
|
87
|
|
Schedule 5
|
|
Incomplete Infrastructure
|
88
|
|
Schedule 6
|
|
Excluded Infrastructure
|
99
|
|
Schedule 7
|
|
Third Party Agreements
|
100
|
|
Schedule 8
|
|
Mobile Equipment
|
105
|
|
Schedule 9
|
|
Permitted Security Interest
|
112
|
|
Schedule 10
|
|
Approvals
|
113
|
|
Schedule 11
|
|
Non-Transferring Approvals
|
115
|
|
Schedule 12
|
|
Share Subscription Application
|
116
|
|
Schedule 13
|
|
Completion Adjustment
|
117
|
|
Schedule 14
|
|
Completion Adjustment pro-forma
|
119
|
|
Execution page
|
|
|
124
|
|
|
|
|
|
|
|
page |
7
|
Attachment A
|
|
Agreed form JVA
|
||
Attachment B
|
|
Mine Development Plan
|
||
Attachment C
|
|
Parent Guarantee
|
||
Attachment D
|
|
Deed of Cross Security
|
||
Attachment E
|
|
Chargee’s Priority Deed
|
|
|
page |
8
|
1
|
Wodgina Lithium Pty Ltd
ACN 611 488 932 of 1 Sleat Road, Applecross WA 6153 (
Seller
)
|
2
|
Albemarle Wodgina Pty Ltd
ABN 69 630 509 303 of Minter Ellison Building, Level 3, 25 National Circuit, Forrest ACT 2603 (
Buyer
)
|
3
|
Mineral Resources Limited
ACN 118 549 910 of 1 Sleat Road, Applecross WA 6153 (
Seller Guarantor
)
|
4
|
Albemarle Corporation
of 4350 Congress Street, Suite 700, Charlotte, NC 28209 (
Buyer Guarantor
)
|
A
|
The Seller is the beneficial and (except where expressly provided in this agreement) legal owner of the Sale Interest.
|
B
|
The Seller has agreed to sell to the Buyer, and the Buyer has agreed to purchase from the Seller, the Sale Interest on the terms and conditions set out in this agreement.
|
C
|
The Buyer has agreed to subscribe for, and the Seller has agreed to procure that WLOPL will allot and issue, the Subscription Shares on the terms and conditions set out in this agreement such that on and from Completion, the Buyer and the Seller will each hold 50% of the Ordinary Shares in WLOPL.
|
D
|
The Seller Guarantor has agreed to guarantee the obligations of the Seller under this agreement.
|
E
|
The Buyer Guarantor has agreed to guarantee the obligations of the Buyer under this agreement.
|
1
|
Defined terms and interpretation
|
1.1
|
Definitions in the Dictionary
|
(a)
|
which is defined in the Dictionary in Schedule 1, has the meaning given to it in the Dictionary;
|
(b)
|
which is defined in the Corporations Act, but is not defined in the Dictionary, has the meaning given to it in the Corporations Act; and
|
(c)
|
which is defined in the GST Law, but is not defined in the Dictionary or the Corporations Act, has the meaning given to it in the GST Law.
|
1.2
|
Interpretation
|
|
|
page |
1
|
2
|
Conditions to Completion
|
2.1
|
Conditions precedent
|
(a)
|
Regulatory approvals:
|
(i)
|
either:
|
(A)
|
the Buyer receiving notice in writing from the Federal Treasurer or his or her agent to the effect that there are no objections under the Australian Government's foreign investment policy or under FATA
to the Buyer acquiring the Sale Interest and the Subscription Shares in accordance with this agreement; or
|
(B)
|
the Treasurer being, by reason of lapse of time, no longer empowered to make an order under FATA in respect of the acquisition contemplated by this agreement; and
|
(ii)
|
either
:
|
(A)
|
a merger filing, if required, having been made by the parties to, and accepted by, SAMR pursuant to the Anti-Monopoly Law and SAMR having issued a decision confirming that it will not conduct further review of the transactions evidenced by this agreement or it will allow the transactions evidenced by this agreement to proceed without conditions or, subject to clause 2.2(b) on conditions reasonably acceptable to the parties; or
|
(B)
|
that all applicable waiting periods under the Anti-Monopoly Law in respect of the review of the transaction contemplated by this agreement have expired.
|
(b)
|
Ministerial consent for Tenements
: the Seller and the Buyer have received all necessary consents and approvals by the Minister under the Mining Act to the transfer of the Tenements (to the extent of the Sale Interest) on terms reasonably acceptable to the Seller and Buyer.
|
(c)
|
Title Agreements
: the consents or approvals of all Counterparties which are required under or pursuant to the Title Agreements in relation to the transactions evidenced by this agreement have been obtained on terms reasonably acceptable to the Buyer and the Seller, including the provision of duly executed unconditional and irrevocable releases of caveats, mortgages and other encumbrances over the Tenements the subject of the Title Agreements.
|
2.2
|
Satisfaction of the Conditions
|
(a)
|
The Buyer must use all reasonable endeavours to satisfy the Condition in clause 2.1(a)(i) by the Conditions Precedent Date.
|
(b)
|
Each of the Buyer and the Seller must use all reasonable endeavours to satisfy the Conditions in clauses 2.1(a)(ii), 2.1(b) and 2.1(c) by the Conditions Precedent Date, provided that in respect of the Condition in clause 2.1(a)(ii), neither party will be required to offer, propose or agree to any conditions to SAMR’s approval of the transaction evidenced by this agreement until the impact on the Project of such conditions have been agreed between the parties and the Transaction Documents have been revised to reflect such impact, if necessary, on terms reasonably satisfactory to each party.
|
|
|
page |
2
|
(c)
|
The Buyer and the Seller must cooperate with each other in doing anything reasonably necessary to satisfy the Conditions.
|
(d)
|
The Seller must duly seek all necessary consents and approvals by the Minister under the Mining Act in connection with the Condition in clauses 2.1(b) within 10 Business Days following the Execution Date.
|
2.3
|
Extension of the Conditions Precedent Date
|
(a)
|
If a Condition has not been satisfied, or is unlikely to be satisfied by the Conditions Precedent Date, the Seller or the Buyer may, by giving a written notice (
Extension Notice
) to the other party at any time prior to the Conditions Precedent Date, extend the Conditions Precedent Date in respect of that Condition to any date on or before the Final Conditions Precedent Date.
|
(b)
|
The Seller and the Buyer may only issue one Extension Notice each and provided that the date specified in any Extension Notice is no later than the Final Conditions Precedent Date.
|
2.4
|
Waiver
|
(a)
|
The Conditions in clause 2.1(a) and 2.1(b) are for the benefit of both the Seller and the Buyer and may only be waived by written agreement between the Seller and the Buyer.
|
(b)
|
The Condition in clause 2.1(c) is for the benefit of both Seller and the Buyer and may be waived by either the Seller or the Buyer.
|
2.5
|
Notice
|
(a)
|
keep the other party fully informed (by notices in writing) in relation to progress towards the satisfaction of the Conditions; and
|
(b)
|
promptly notify the other in writing if it becomes aware that a Condition is satisfied or incapable of being satisfied before the Conditions Precedent Date.
|
2.6
|
Termination and failure to Complete
|
(a)
|
The Buyer or the Seller may terminate this agreement before Completion by giving written notice to the other of the Buyer or the Seller (as the case may be) if:
|
(i)
|
a Condition is not satisfied or waived by the Conditions Precedent Date;
|
(ii)
|
a Condition (which has not been waived) becomes incapable of being satisfied by the Final Conditions Precedent Date;
|
(iii)
|
the parties agree that a Condition cannot be satisfied by the Conditions Precedent Date (unless that Condition is satisfied before termination of this agreement); or
|
|
|
page |
3
|
(iv)
|
the other of the Buyer or the Seller (as is relevant) suffers an Insolvency Event,
|
(b)
|
Provided the Conditions have been satisfied or waived, if either the Seller Group or the Buyer Group (
Defaulting Party
) does not Complete when required to do so under this agreement, other than as a result of default by the other group (
Non-Defaulting Party
), the Non-Defaulting Party may give the Defaulting Party notice requiring it to Complete within 10 Business Days of receipt of the notice. When a notice is given under this clause 2.6(b), time will be of the essence under this agreement in all respects.
|
(c)
|
If the Defaulting Party does not Complete within the period specified in clause 2.6(b), the Non-Defaulting Party may choose either to seek specific performance or terminate this agreement, without limitation to any accrued rights.
|
(d)
|
If this agreement is terminated, then:
|
(i)
|
if any Transaction Document does not automatically terminate in accordance with its terms on termination of this agreement, the parties will procure that each other Transaction Document that has been executed is terminated;
|
(ii)
|
each party is released from its obligations to further perform its obligations under this agreement and each Transaction Document, except those expressed to survive termination; and
|
(iii)
|
each party retains the rights it has against the other in respect of any breach of this agreement occurring before termination.
|
3
|
Subscription and allotment of Subscription Shares
|
3.1
|
Registration of WLOPL
|
3.2
|
Subscription
|
(a)
|
for the Subscription Amount;
|
(b)
|
with effect on and from Completion;
|
(c)
|
free from any Security Interest; and
|
(d)
|
on the terms and conditions of this agreement.
|
|
|
page |
4
|
3.3
|
Constitution
|
3.4
|
Equal ranking
|
4
|
Sale and purchase of Sale Interest
|
4.1
|
Sale and purchase
|
(a)
|
for the Purchase Price;
|
(b)
|
with effect from Completion;
|
(c)
|
free from any Security Interest
(other than a Permitted Security Interest); and
|
(d)
|
on the terms and conditions of this agreement.
|
4.2
|
Reserved Rights
|
4.3
|
Purchase Price
|
4.4
|
Payments to reduce Purchase Price
|
4.5
|
Method of making payments
|
(a)
|
All payments required to be made under this agreement must be paid without deduction or set-off in Immediately Available Funds to the bank account or accounts nominated in writing before the due date for payment by the party to whom the payment is due.
|
(b)
|
Any nomination referred to in clause 4.5(a) must be made at least 2 Business Days before the payment is due.
|
|
|
page |
5
|
5
|
Incomplete Infrastructure and Tantalum Assets
|
5.1
|
Construction and commissioning by Seller
|
(a)
|
Subject to clause 5.2(c), the Seller must at its cost construct and successfully Commission, or must procure the construction and successful Commissioning of, all Incomplete Infrastructure.
|
(b)
|
The Seller must use all reasonable endeavours to complete the construction and successful Commissioning, or to procure the completion of the construction and successful Commissioning, of all Incomplete Infrastructure by no later than 30 September 2019 (or, if not possible by that date, as soon as possible after that date).
|
(c)
|
The Seller must, at its cost, take all steps required to obtain the Approvals required for the construction and operation of the Incomplete Infrastructure (including those set out in Schedule 5) and must (on Completion or if later following construction and successful commissioning) transfer all Approvals for the Incomplete Infrastructure to the Buyer, to the extent of the Sale Interest, or to WLOPL (as applicable).
|
5.2
|
CCC Handover
|
(a)
|
On completion of construction and successful Commissioning of each item of Incomplete Infrastructure the Seller must hand over care, custody and control of the relevant item of Incomplete Infrastructure to WLOPL (
CCC Handover
).
|
(b)
|
At the later of Completion or the date of CCC Handover for each item of Incomplete Infrastructure:
|
(i)
|
the Seller must transfer title to each item of Incomplete Infrastructure to the Buyer in proportion to the Sale Interest;
|
(ii)
|
to the extent not provided at Completion where Completion occurs prior to CCC Handover for an item of Incomplete Infrastructure, the Seller must provide a duly executed deed of release of security in respect of 50% of the item of Incomplete Infrastructure from the Security Trustee; and
|
(iii)
|
the Seller and the Buyer will procure that WLOPL undertakes operational ramp up of that item of Incomplete Infrastructure.
|
(c)
|
Without limiting clause 5.1(a), in respect of each item of Incomplete Infrastructure (including to satisfy clause 5.2(d)), the Seller is solely responsible for rectifying any defects (including omissions) in the construction and supply of goods, materials and equipment incorporated within the Incomplete Infrastructure that exist or become apparent prior to the later of Completion and the date of CCC Handover of the Incomplete Infrastructure.
|
(d)
|
In order to be considered to have been constructed and successfully Commissioned, each item of Incomplete Infrastructure must meet the requirements and pass the commissioning tests set out in Schedule 5 to the extent applicable to that item of Incomplete Infrastructure.
|
|
|
page |
6
|
5.3
|
Warranties from suppliers and manufacturers
|
(a)
|
On or about the date of the CCC Handover, the Seller must assign or use all reasonable endeavours to procure the assignment of the benefit of all guarantees, representations, warranties and indemnities given in favour of the Seller or its Related Bodies Corporate (or which the Seller or its Related Bodies Corporate have a right to assignment of) and which are capable of assignment in respect of the Incomplete Infrastructure and from subcontractors, manufacturers and suppliers of plant, equipment and materials incorporated into the Incomplete Infrastructure (
Subcontractors
) (including where such warranties continue to operate beyond the expiration of any applicable defects liability period), to WLOPL which guarantees, representations, warranties and indemnities may, at the direction of the Buyer be, held on trust by WLOPL for the Seller and the Buyer (or to the extent not able to be assigned or transferred to WLOPL, held on trust by the Seller or its Related Bodies Corporate).
|
(b)
|
The Seller must use all reasonable endeavours to procure that the agreements entered into with Subcontractors after the Execution Date allow for all guarantees, representations, warranties and indemnities (including guarantees, representations, warranties and indemnities given by the Subcontractors' contractors) to be directly enforced by the Seller and Buyer against the parties giving the warranties.
|
(c)
|
For any guarantees, representations, warranties and indemnities not able to be assigned or transferred to WLOPL under clause 5.3(a), the Seller or its Related Bodies Corporate (as applicable) must, for and on behalf of WLOPL, pursue and seek to enforce its rights against under those guarantees, representations, warranties and indemnities in good faith and acting reasonably (and taking account of the Buyer's and WLOPL's interest under this clause 5).
|
5.4
|
Tantalum Assets
|
6
|
Interim Period
|
6.1
|
Third Party Agreements
|
(a)
|
the Seller and the Buyer must each use all reasonable endeavours to obtain from the relevant Counterparties all necessary approvals, consents to the assignment or novation of the relevant Third Party Agreement and/or waivers of any pre-emptive rights arising as a result of the transactions contemplated by this agreement; and
|
(b)
|
to the extent required by the terms of a Third Party Agreement, the Seller, the Buyer and each Counterparty must enter into a Deed of Assignment and Assumption on terms acceptable to the Buyer and the Seller (acting reasonably).
|
6.2
|
Information and access
|
|
|
page |
7
|
(a)
|
The Seller must provide to the Buyer, as soon as reasonably practicable after it becomes aware of the information, details (including copies where relevant) of all material information in relation to the Project, the Sale Interest or the Subscription Shares that the Seller, its Related Bodies Corporate or Representative become aware of during the Interim Period (including copies of all notices in respect of the Sale Interest and Subscription Shares received during the Interim Period, including from Government Agencies, contract counterparties or any other party).
|
(b)
|
During the Interim Period, the Seller must, to the extent permitted by law and subject to clauses 6.2(c) and 18:
|
(i)
|
give the Buyer and its representatives reasonable access to the Tenements, the Records and the Sale Interest during normal business hours and on reasonable notice (provided that the Buyer complies with the Seller's reasonable safety requirements); and
|
(ii)
|
provide information relating to the Project, the Sale Interest and WLOPL as the Buyer reasonably requires to enable the Buyer to become familiar with the Project (and the Buyer may make copies of such information).
|
(c)
|
The Buyer may only exercise its rights under clause 6.2(b) to the extent it does not unreasonably interfere with the conduct of the activities and operations of the Seller.
|
(d)
|
During the Interim Period, two Representatives of each of the Seller and the Buyer must meet not less than once every fortnight at such time and place (which may be by teleconference) agreed between the Seller and the Buyer to discuss the Project (including the progress regarding the construction of the Incomplete Infrastructure).
|
6.3
|
General Conduct – Sale Interest and Project
|
(a)
|
use all reasonable endeavours to carry on the Project in accordance with the Mine Development Plan and the Operational Spares Plan, in each case as amended with the written approval of the Buyer;
|
(b)
|
comply with all applicable laws in relation to the Sale Interest and Subscription Shares and the terms and conditions of the Tenements, the Petroleum Pipeline Licences and the Approvals;
|
(c)
|
not, and not take any steps to, surrender or relinquish the Tenements or the Petroleum Pipeline Licences, or agree to a variation of the terms of the Tenements or the Petroleum Pipeline Licences, except to the extent required by law;
|
(d)
|
use all reasonable endeavours to procure the grant of the Tenement Applications and the transfer of the Assigned Tenements to the Seller;
|
(e)
|
consult the Buyer and take upmost account of the Buyer’s views for the contracting and procurement strategy for the Project having regard to the Mine Development Plan, including with respect to the gas supply and water supply arrangements for the Project;
|
|
|
page |
8
|
(f)
|
not transfer, grant or permit the registration of any Security Interest over (other than a Permitted Security Interest) or otherwise deal with the Tenements, Sale Interest or Subscription Shares or its interest in them;
|
(g)
|
not vary in a material manner, voluntarily terminate, take any action that might give rise to a termination right or waive any right under a Third Party Agreement, other than the amendment and restatement of the agreement referred to in items 23 and 25 of Schedule 7 on arm’s length terms in respect of the Project following consultation with the Buyer of whose views the Seller shall take upmost account;
|
(h)
|
comply with its obligations under the Third Party Agreements;
|
(i)
|
not enter into any joint venture, partnership, unincorporated association, alliance or similar arrangement with any person in respect of the Sale Interest or the Project;
|
(j)
|
except as permitted under clause 6.3(o), not enter into any agreement with respect to the Product or Ore (or any other material derived from the Product or Ore) which relates to the period after the Completion Date;
|
(k)
|
not take any steps which would frustrate, impede or reduce the benefit of any Transaction Document;
|
(l)
|
without limiting clause 6.3(g), not enter into, amend or terminate (or agree to enter into, amend or terminate) a contract or commitment in respect of the Sale Interest or the Project that will result in aggregate annual receipts or expenditure in excess of $100,000, otherwise than in the ordinary course of business (which includes any gas transportation agreement on arm’s length terms);
|
(m)
|
not enter into or amend (or agree to enter into or amend) a contract or commitment with a Related Body Corporate of the Seller in respect of the Sale Interest or the Project;
|
(n)
|
not enter into any agreement otherwise than on arm's length or enter into any abnormal or unusual transaction, in each case in respect of the Sale Interest or the Project; and
|
(o)
|
not enter into any agreement for the sale of Product or Ore, except for spot agreements for the sale of single shipments of Product or Ore mined or produced prior to the Completion Date, and which do not include any obligation to deliver Product or Ore after the date that is one month after the date of execution of such agreement.
|
6.4
|
Initial Mine Plan and Budget
|
(a)
|
On or before 28 February 2019, the Seller must provide to the Buyer a draft business plan for the Life of Mine, including the amount of any proposed Called Sum for each of the Buyer and the Seller on the basis of, and in accordance with, the JVA (as if the JVA was in place) to be called from and paid to WLOPL by each of the Seller and the Buyer at Completion.
|
(b)
|
Within 20 Business Days after provision of the draft business plan to the Buyer in accordance with clause 6.4(a), the Buyer must, acting reasonably, either approve the business plan or give the Seller any comments or amendments to the draft business plan.
|
(c)
|
If the Buyer gives any comments or amendments to the draft business plan or if either party reasonably requests a change to a business plan approved or agreed
|
|
|
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9
|
(d)
|
The last draft business plan for the Life of Mine approved by the Buyer in accordance with clause 6.4(b) or agreed between the Seller and the Buyer in accordance with clause 6.4(c) (if any) is the
Initial Mine Plan and Budget
.
|
(e)
|
During the Interim Period, the Buyer and the Seller must meet within 5 Business Days of the end of each month in order to review and update (where necessary) the Initial Mine Plan and Budget. Any variations to an approved Initial Mine Plan and Budget (including any changes to the amount of any proposed Called Sum at Completion), must be approved by the Buyer acting reasonably or otherwise agreed between the Seller and the Buyer in accordance with clause 6.4(c) (as applicable).
|
(f)
|
For the avoidance of doubt neither party will be bound to implement, or take any steps towards implementation of, the Initial Mine Plan and Budget, unless and until Completion occurs.
|
6.5
|
Registration of this agreement
|
(a)
|
The Buyer must within 60 days of the Execution Date make an application as required by section 47 of the Petroleum Pipelines Act for:
|
(i)
|
approval of the dealings evidenced by this agreement; and
|
(ii)
|
the entry of such dealings into the register maintained under the Petroleum Pipelines Act.
|
(b)
|
Without limiting the generality of clause 6.5(a), the Buyer and the Seller:
|
(i)
|
must cooperate with each other and supply all necessary and appropriate information for the purpose of enabling registration of the dealings evidenced by this agreement to be obtained in the manner set out in clause 6.5(a);
|
(ii)
|
must supply to each other copies of all applications made and all information supplied for the purpose of obtaining registration of the dealings evidenced by this agreement as required by this clause 6.5; and
|
(iii)
|
inform each other once notice of approval and registration of the dealings is obtained.
|
6.6
|
General Conduct – WLOPL
|
(a)
|
issue any shares, options or securities that are convertible into shares in WLOPL;
|
(b)
|
buy back any of WLOPL's shares;
|
|
|
page |
10
|
(c)
|
trade or undertake any activity or enter into any agreement except as expressly authorised by a Transaction Document; and
|
(d)
|
alter the WLOPL Constitution.
|
6.7
|
Compliance with clause 6 and Permitted Acts
|
(a)
|
In complying with its obligations under this clause 6, the Seller:
|
(i)
|
is not required to do, to omit to do, or allow to be done anything which would breach, or would reasonably be expected to breach:
|
(A)
|
any law or regulation (including any competition or anti-trust laws); or
|
(B)
|
a Third Party Agreement; and
|
(ii)
|
may take such action as is:
|
(A)
|
required to reasonably and prudently respond to an emergency or disaster (including a situation giving rise to a risk of personal injury or damage to property);
|
(B)
|
authorised by a Transaction Document; or
|
(C)
|
agreed in writing between the Seller and the Buyer.
|
(b)
|
The Buyer must not unreasonably withhold or delay any consent required under clause 6.3.
|
(c)
|
The Seller and the Buyer must each ensure that at all times during the Interim Period it has nominated one or more persons as its Representative (each a
Seller's Nominee
or
Buyer’s Nominee
, as is relevant) for the purpose of clause 6.2(d). The Seller's Nominee and Buyer’s Nominee shall have authority to act on behalf of the Seller and Buyer (respectively) in relation to any queries, consents or approvals required under clause 6.3.
|
6.8
|
Tax Notice
|
7
|
Completion
|
7.1
|
Date and place for Completion
|
7.2
|
Obligations of the Seller and WLOPL at Completion
|
(a)
|
At Completion, the Seller must:
|
|
|
page |
11
|
(i)
|
give the Buyer:
|
(A)
|
Transfer Instruments duly executed by the Seller;
|
(B)
|
such signed original counterparts of each Deed of Assignment and Assumption duly executed by the Seller and the relevant Counterparty as the Seller has been able to obtain in accordance with clause 6.1;
|
(C)
|
letters to the Department from, or on behalf of, the holders of each of the consent caveats in respect of the Tenements that are included as a Permitted Security Interest, stating that they have no objection to the transfer of the relevant Tenements to the Buyer and seeking the consent of the Warden pursuant to section 122D(1) of the Mining Act;
|
(D)
|
a duly executed deed of release in respect of the Sale Interest from any person holding a Security Interest over the Petroleum Pipeline Licences;
|
(E)
|
all forms required to transfer all Approvals which the Buyer will be required to hold from Completion in connection with the Sale Interest, completed and executed by the Seller;
|
(F)
|
the documents and information referred to in clause 7.4;
|
(G)
|
any other documents required to register the transfer or assignment to the Buyer of any component of the Sale Interest, provided that the Seller will not be required to deliver instruments of title where they are already lodged with the relevant Government Agency for the registration of other dealings provided the Seller gives an undertaking to the Buyer to so deliver on receipt of possession or control of such documents;
|
(H)
|
a Tax Invoice in respect of the payment of the Purchase Price;
|
(I)
|
signed original counterparts of each Transaction Document duly executed by the Seller or relevant Seller Group Member that is a party thereto; and
|
(J)
|
copies of the Records; and
|
(K)
|
to the extent required by clause 5.2(b)(ii), a duly executed deed of release of security in respect of the Sale Interest from the Security Trustee; and
|
(ii)
|
if an Initial Mine Plan and Budget has been approved or agreed in accordance with clause 6.4, pay WLOPL (or as WLOPL directs) the amount of the Called Sum proposed at Completion as set out in the Initial Mine Plan and Budget.
|
(b)
|
At Completion, the Seller must procure that:
|
(i)
|
a meeting of the directors of WLOPL is held at which the directors resolve:
|
(A)
|
to allot and issue the Subscription Shares to the Buyer in consideration of the Subscription Amount; and
|
|
|
page |
12
|
(B)
|
to approve the appointment of the persons nominated by the Buyer as directors of WLOPL in accordance with the JVA with effect from Completion;
|
(ii)
|
WLOPL gives to the Buyer a certified copy of the resolution referred to in clause 7.2(b)(i);
|
(iii)
|
upon receipt of the Subscription Amount and the Share Subscription Application, WLOPL:
|
(A)
|
issues and allots the Subscription Shares to the Buyer; and
|
(B)
|
registers the Subscription Shares in WLOPL’s register of shareholders, in the name of the Buyer, free from any Security Interest; and
|
(iv)
|
WLOPL gives to the Seller and the Buyer signed original counterparts of each Transaction Document duly executed by WLOPL.
|
7.3
|
Buyer’s obligations at Completion
|
(a)
|
pay to the Seller the Purchase Price:
|
(i)
|
plus the amount of the absolute value of the Completion Adjustment if the Completion Adjustment is negative; or
|
(ii)
|
less the amount of the Completion Adjustment if the Completion Adjustment is positive,
|
(b)
|
if an Initial Mine Plan and Budget has been approved or agreed in accordance with clause 6.4, pay WLOPL (or as WLOPL directs) the amount of the Called Sum proposed at Completion as set out in the Initial Mine Plan and Budget;
|
(c)
|
give the Seller signed original counterparts of each Transaction Document duly executed by the Buyer;
|
(d)
|
to the extent not signed and exchanged between the parties prior to Completion give to the Seller signed original counterparts of each Deed of Assignment and Assumption duly executed by the Buyer;
|
(e)
|
provide WLOPL with an application to subscribe for the Subscription Shares in the form set out in Schedule 12 (
Share Subscription Application
); and
|
(f)
|
pay the Subscription Amount to WLOPL in accordance with clause 4.5.
|
7.4
|
Security Interest
|
|
|
page |
13
|
(a)
|
except in relation to the Security Trustee Security, an undertaking to procure the removal of the PPS Security Interest over the Sale Interest from the PPS Register as soon as practicable and in any event no later than 5 Business Days after Completion; and
|
(b)
|
in relation to the Security Trustee Security any undertaking or document required for the transfer of legal title to the Sale Interest to the Buyer, to the extent that the Buyer is entitled to such legal title.
|
7.5
|
Interdependence
|
(a)
|
The obligations of the Buyer and the Seller under this clause 7 are interdependent.
|
(b)
|
Unless otherwise stated, all actions required to be performed by a party at Completion are taken to have occurred simultaneously at Completion.
|
(c)
|
Completion will not occur unless all of the obligations of the Buyer and the Seller to be performed at Completion under this clause 7 are complied with and fully effective.
|
7.6
|
Effect of Completion – title and risk
|
(a)
|
Risk in and possession of the Sale Interest passes to the Buyer upon Completion and, subject to the registration of the Transfer Instruments and subject to clause 7.7 and clause 7.8, title to the Sale Interest passes to the Buyer upon Completion.
|
(b)
|
For the avoidance of doubt, beneficial title to a 50% interest in the Tenements and the Petroleum Pipeline Licences passes to the Buyer upon Completion regardless of whether the registration of the relevant Transfer Instruments has occurred and the Seller holds the legal title to a 50% interest in the Tenements and the Petroleum Pipeline Licences on trust for the Buyer until the registration of the relevant Transfer Instruments has occurred.
|
7.7
|
Tenement Applications
|
(a)
|
Where a Tenement Application has not been granted prior to Completion, the Seller will account to the Buyer, to the extent of the Sale Interest, for all amounts or other benefits (of whatsoever nature) it receives, or is otherwise entitled to receive, in respect of the relevant Tenement Application (
Granted Tenement
) the Seller and Buyer shall do all things necessary to transfer the relevant Sale Interest portion in the Granted Tenement to the Buyer and have that transfer registered under the Mining Act.
|
(b)
|
The Buyer acknowledges and agrees that the Seller makes no warranty or representation, and gives no assurance, in respect of the likelihood of grant, or the terms of grant, of any exploration or mining tenement pursuant to any Tenement Application.
|
7.8
|
Assigned Tenements
|
|
|
page |
14
|
8
|
Completion Adjustment
|
8.1
|
Completion Adjustment
|
8.2
|
Completion Statement
|
(a)
|
Within 20 Business Days after the Completion Date, the Seller must provide the Buyer with a written statement containing the Completion Accounts and giving the Seller’s calculation of the final amount of the Completion Adjustment (
Completion Statement
).
|
(b)
|
The Completion Accounts must be prepared, and the Completion Adjustment calculated, in accordance with Schedule 13.
|
(c)
|
The Seller must provide (and the Seller and the Buyer must procure that WLOPL provide) the Buyer with such information and documents as are reasonably requested by the Buyer in relation to the Completion Statement.
|
(d)
|
If the Buyer does not issue any notice (
Completion Adjustment
Dispute Notice
) to the Seller that it disagrees with the amount of the Completion Adjustment set out in the Completion Statement within 30 Business Day after receipt of the Completion Statement, then the Completion Statement shall become final and binding.
|
(e)
|
If the Buyer issues a Completion Adjustment Dispute Notice, the Seller and the Buyer must use all reasonable endeavours to seek to agree on the amount of the Completion Adjustment.
|
8.3
|
Dispute
|
(a)
|
If the Seller and Buyer fail to agree the amount of the Completion Adjustment within 10 Business Days of the Completion Adjustment Dispute Notice, the parties' Representatives must meet at least once and confer in good faith in attempt to agree the amount of the Completion Adjustment.
|
(b)
|
If the parties' Representatives do not resolve the Dispute in respect of the Completion Adjustment Dispute Notice, or otherwise fail to meet, then each party shall within 20 Business Days after the Completion Adjustment Dispute Notice refer the Dispute to the Chief Executive Officers of their respective Ultimate Holding Companies to settle the Dispute. The Chief Executive Officers must meet within 30 Business Days of the Completion Adjustment Dispute Notice (or such longer period agreed in writing) and confer in good faith until such time that they resolve the Dispute.
|
(c)
|
If the Chief Executive Officers have met but not resolved the Dispute, or otherwise fail to meet, within 40 Business Days from the date of the Completion Adjustment Dispute Notice (or such longer period agreed in writing) the Completion Statement must promptly be submitted for determination to the Independent Accountant to determine the matter or matters in dispute in accordance with the following provisions of this clause 8.3.
|
|
|
page |
15
|
(d)
|
The Independent Accountant must be agreed by the Seller and the Buyer. If the Seller and the Buyer cannot agree the Independent Accountant within 45 Business Days of a Completion Adjustment Dispute Notice, then either the Seller or the Buyer may request that the Chair of the Resolution Institute (Chair) nominate the Independent Accountant. If it is not possible for the parties to request that the Chair nominate the Independent Accountant or the Chair otherwise fails to nominate the Independent Accountant, either the Buyer or the Seller may request that the President of the Western Australia Law Society (President) nominate the Independent Accountant (in which case all references to ‘Chair’ in clause 8.3(e) and clause 8.3(i) are to be read as references to ‘President’).
|
(e)
|
If the Seller or the Buyer requests that the Chair nominate the Independent Accountant, the parties must comply with all requirements of the Chair for the provision of that nomination including to provide the Chair with:
|
(i)
|
a copy of relevant provisions of this agreement;
|
(ii)
|
an executed copy of any release or similar document required by the Chair;
|
(iii)
|
a description of the dispute or issue to be resolved by the Independent Accountant, being the dispute in relation to the Completion Statement; and
|
(iv)
|
the approximate value of, and the technical area involved in, the dispute.
|
(f)
|
The disputed matters must be referred to the Independent Accountant by written submission which must include the Completion Statement, the Completion Adjustment Dispute Notice, any response to the Completion Adjustment Dispute Notice and an extract of the relevant provisions of this agreement. The Independent Accountant must also be instructed to finish its determination no later than 20 Business Days after its appointment (or another period agreed by the Seller and the Buyer).
|
(g)
|
The Seller and the Buyer must promptly supply the Independent Accountant with any information, assistance and cooperation requested in writing by the Independent Accountant in connection with its determination. All correspondence from the Independent Accountant to a party must be copied to the other parties. The Independent Accountant must promptly provide the parties with any correspondence received from other parties, provided that if the Independent Accountant has requested submissions or information from the Seller and the Buyer on the same topic, it must only provide such correspondence to the Seller and the Buyer after it has received a substantive response from both the Seller and the Buyer.
|
(h)
|
The Independent Accountant must act as an expert and not as an arbitrator and its written determination will be final and binding on the parties in the absence of manifest error and the Completion Statement will be deemed to be amended accordingly and will be taken to comprise the final Completion Statement and will be final and binding on the parties.
|
(i)
|
The costs of the:
|
(i)
|
Chair (if requested) in providing his or her nomination of the Independent Accountant; and
|
|
|
page |
16
|
(ii)
|
Independent Accountant (if instructed),
|
8.4
|
Payment of Completion Adjustment
|
(a)
|
If the amount of the Completion Adjustment is:
|
(i)
|
positive, the Seller must pay the amount of the Completion Adjustment to the Buyer; or
|
(ii)
|
negative, the Buyer must pay the amount of the Completion Adjustment to the Seller.
|
(b)
|
Payment of the Completion Adjustment must be made within 10 Business Days after the Completion Adjustment is final and binding or otherwise following agreement or determination of the Completion Adjustment under clause 8.3.
|
(c)
|
Where some, but not all items of the Completion Statement are in dispute, the relevant party must make payment (within 5 Business Days of the Buyer giving a Dispute Notice) of an interim Completion Adjustment calculated based on the value of the Completion Statement, excluding all items that are not in dispute. Once any dispute the subject of a Dispute Notice has been resolved, the parties must, within 5 Business Days of such resolution, make such payment as between them as are necessary (taking into account any interim Completion Adjustments paid).
|
9
|
Conduct after Completion
|
9.1
|
Duty
|
(a)
|
Subject to clause 9.1(b), the Buyer must lodge this agreement, the Transfer Instruments and any other instrument contemplated by this agreement for assessment of Duty (and must pay the Duty assessed) within the time required under the relevant legislation.
|
(b)
|
The Seller:
|
(i)
|
must pay to the Buyer, prior to the due date for payment, the amount of any Duty payable in respect of this agreement, the Transfer Instruments and any other instrument contemplated by this agreement which is assessed by reference to, or is otherwise attributable to, the value of rights that the Seller or any other person other than the Buyer has to mine or otherwise benefit from Iron Ore and Tantalum in the Tenements, including any Duty on any transfer of the Iron Ore and Tantalum Rights contemplated by this agreement; and
|
(ii)
|
indemnifies the Buyer from and against any Liabilities suffered or incurred by the Buyer arising from, or in connection with such Duty.
|
(c)
|
To the extent that the Buyer is not entitled to a tax deduction in respect of any Duty or Liability, the amount payable under this indemnity must be increased by an amount calculated as:
|
|
|
page |
17
|
1
|
(1 - Tax Rate)
|
(d)
|
The Buyer will lodge the stamped Transfer Instruments and any other instrument contemplated by this agreement at the Department for registration against the Tenements and the Petroleum Pipeline Licences (as applicable) as soon as reasonably practicable after payment of the Duty assessment.
|
(e)
|
The Buyer will pay the costs of registering the Transfer Instruments at the Department.
|
9.2
|
Transfer of Petroleum Pipeline Licences
|
(a)
|
The Buyer must within 5 Business Days of the Completion Date submit the Transfer Instruments in relation to the Petroleum Pipeline Licences to the Department to be approved and registered as required by section 44 of the Petroleum Pipelines Act.
|
(b)
|
The Buyer and the Seller must co-operate with each other and do all things reasonably necessary to obtain approval and registration of the Transfer Instruments in relation to the Petroleum Pipeline Licences as soon as practicable after the Completion Date.
|
9.3
|
Registration
|
(a)
|
The Buyer must notify the Seller as soon as reasonably practicable, and in any case within 5 Business Days, after the Buyer becomes aware that registration of the Transfer Instruments has occurred.
|
(b)
|
The Seller will provide all assistance reasonably required (including providing its consent) to enable the Buyer to register a caveat over the Assigned Tenements in respect of the Sale Interest.
|
9.4
|
Dealings
|
(a)
|
The Buyer must within 60 days of the Execution Date make an application as required by section 47 of the Petroleum Pipelines Act for:
|
(i)
|
approval of the dealings evidenced by the JVA; and
|
(ii)
|
the entry of such dealings into the register maintained under the Petroleum Pipelines Act.
|
(b)
|
Without limiting the generality of clause 9.4, the Buyer and the Seller:
|
(i)
|
must cooperate with each other and supply all necessary and appropriate information for the purpose of enabling registration of the dealings evidenced by the JVA to be obtained in the manner set out in clause 9.4;
|
(ii)
|
must supply to each other copies of all applications made and all information supplied for the purpose of obtaining registration of the dealings evidenced by the JVA as required by clause 9.4; and
|
|
|
page |
18
|
(iii)
|
inform each other once notice of approval and registration of the dealings is obtained.
|
9.5
|
Non-Transferring Approvals
|
10
|
Third Party Agreements
|
10.1
|
Assignment and Novation of Third Party Agreements
|
(a)
|
Subject to clause 2, in respect of each Third Party Agreement, the Seller and the Buyer must, to the extent required by the terms of a Third Party Agreement, use all reasonable endeavours to:
|
(i)
|
procure the novation or assignment of the rights and liabilities of the Seller, to the extent of the Sale Interest, under the Third Party Agreement to the Buyer; and
|
(ii)
|
procure that the novation or assignment takes effect on and from Completion on a several and not joint and several basis.
|
(b)
|
The obligation in this clause 10.1 to use all reasonable endeavours does not require any party to make any payment to procure the novation or assignment other than its out of pocket expenses directly referable to the novation or assignment.
|
(c)
|
Where the novation or assignment of a Third Party Agreement required under clause 10.1(a) has not occurred by Completion, the parties must each continue to use all reasonable endeavours to procure the novation or assignment of the Third Party Agreement in accordance with clause 10.1(a) as soon as reasonably practicable after Completion.
|
(d)
|
The Seller indemnifies the Buyer from and against any Liabilities suffered or incurred by the Buyer arising from, or in connection with a Deed of Assignment and Assumption in respect of any Key Third Party Agreement or any Title Agreement not having been executed at or before Completion, except to the extent arising from a breach of clause 7.3(d) by the Buyer or if the Buyer has waived the Condition in clause 2.1(c) in accordance with clause 2.4(b).
|
10.2
|
Obligations pending or if no novation
|
(a)
|
if the Seller is not prohibited from delegating or subcontracting performance of obligations under the Third Party Agreement, the Buyer must perform on behalf of the Seller all obligations of the Seller, to the extent of the Sale Interest, under the Third Party Agreement in respect of the period following Completion;
|
(b)
|
if the Seller is prohibited under the Third Party Agreement from delegating or subcontracting performance of obligations under the Third Party Agreement, then:
|
(i)
|
the Seller must perform or discharge those obligations in accordance with the terms of the Third Party Agreement;
|
|
|
page |
19
|
(ii)
|
the Buyer must, to the extent of the Sale Interest, pay to the Seller on demand the Seller's direct costs and expenses of performing or discharging those obligations in accordance with the terms of the Third Party Agreement; and
|
(iii)
|
the Buyer must provide to the Seller all reasonable assistance as the Seller may reasonably request to enable the Seller to comply with its obligations under clause 10.2(b)(i);
|
(c)
|
the Seller must account to the Buyer for any amounts paid by a Counterparty to the Seller to the extent they relate to the Sale Interest and for any other benefits received by the Seller after Completion in respect of the Third Party Agreement to the extent they relate to the Sale Interest; and
|
(d)
|
the Seller must perform and pay all of the Liabilities of the Seller under the Third Party Agreement in respect of the period following Completion that do not relate to the Sale Interest.
|
10.3
|
Third Party Agreements
|
10.4
|
Indemnity by Buyer in respect of Third Party Agreement Liabilities
|
(a)
|
From Completion and subject to clause 10.1(d) and 11.3, the Buyer indemnifies the Seller, its Related Bodies Corporate and their Representatives from and against all Liabilities suffered or incurred by the Seller arising from or in connection with any Third Party Agreement Liability.
|
(b)
|
If the Seller or any person on behalf of the Seller pays, performs or discharges a Third Party Agreement Liability (as applicable), the Buyer must reimburse or compensate the Seller for the Third Party Agreement Liability within 5 Business Days after the Buyer receives evidence of that payment, performance or discharge.
|
10.5
|
No liability
|
(a)
|
accepts that it is not entitled to withhold or delay:
|
(i)
|
Completion; or
|
(ii)
|
the payment of the whole or part of the Purchase Price,
|
(b)
|
acknowledges and agrees that, subject to compliance by the Seller with its obligations under this agreement (including this clause 10), it has no rights whatsoever against the Seller in relation to, or in connection with, any requirement under the terms of any Third Party Agreement to obtain any consent to assignment
|
|
|
page |
20
|
10.6
|
Indemnity from Buyer and Seller
|
(a)
|
The Buyer indemnifies the Seller from and against any Liabilities suffered or incurred by the Seller arising from, or in connection with, a breach of this clause 10 by the Buyer.
|
(b)
|
The Seller indemnifies the Buyer from and against any Liabilities suffered or incurred by the Buyer arising from, or in connection with, a breach of this clause 10 by the Seller.
|
10.7
|
Implementation of documents
|
(a)
|
The Buyer and the Seller must sign all documents which are required in order to effect a novation or assignment of the Sale Interest under the Third Party Agreement including without limitation all such documents as required to be signed to effect the novation or assignment in accordance with the terms of the relevant Third Party Agreement.
|
(b)
|
The Buyer and Seller acknowledge that the process of novation of the Third Party Agreements under clause 10.1 may reflect the parties’ preference that the Seller hold a Third Party Agreement as agent for and on behalf the Buyer and the Seller in accordance with their percentage interest on Completion on a several and not joint and several basis.
|
11
|
Liabilities
|
11.1
|
Acknowledgment
|
11.2
|
Benefit of pre-existing warranties, representations and indemnities
|
(a)
|
The Seller must pursue and seek to enforce its rights against GAM, GAMG, GAMW or Atlas (as applicable) under the GAM Sale Agreement or Atlas Exit Agreement in good faith and acting reasonably (and taking account of the Buyer's interest under this clause 11.2), but only where such rights relate to or affect the value of the Project or the Sale Interest.
|
(b)
|
If the Seller receives any payment or other benefit under or in relation to the GAM Sale Agreement or Atlas Exit Agreement in relation to the Sale Interest after the Execution Date, the Seller must within 5 Business Days of receipt (or, if later, at Completion) pay 50% of that amount (less 50% of the costs incurred in securing payment thereof including reasonable legal costs) to the Buyer.
|
(c)
|
The Seller must not compromise or otherwise deal with any rights under the GAM Sale Agreement or Atlas Exit Agreement without the Buyer's prior written consent (such consent not to be unreasonably withheld or delayed).
|
|
|
page |
21
|
11.3
|
Retained Liabilities
|
(a)
|
any conduct by the Seller or any Related Body Corporate or Representative of the Seller:
|
(i)
|
in breach of any law, Approval or condition of a Tenement or Petroleum Pipeline Licence in the MRL Ownership Period;
|
(ii)
|
in breach of a Third Party Agreement or other agreement with a Third Party in relation to the Project or Project Assets in the MRL Ownership Period; and
|
(b)
|
any Claim by a Third Party relating to the Project or Project Assets to the extent related to the MRL Ownership Period,
|
11.4
|
Indemnity by Seller in respect of Retained Liability
|
(a)
|
From Completion, the Seller indemnifies the Buyer, its Related Bodies Corporate and their Representatives from and against all Liabilities to the extent suffered or incurred by the Buyer, its Related Bodies Corporate and their Representatives:
|
(i)
|
arising from or in connection with any Retained Liability; or
|
(ii)
|
arising from or in connection with the Seller failing to comply with clause 11.3.
|
(b)
|
Without limitation, if the Buyer or any person on behalf of the Buyer pays, performs or discharges a Retained Liability, the Seller must reimburse or compensate the Buyer for the Retained Liability within 5 Business Days after the Seller receives evidence of that payment, performance or discharge.
|
12
|
Transferring Employees
|
12.1
|
Transferring Employees
|
(a)
|
The Seller and the Buyer must use all reasonable endeavours to agree on the list of Employees who will be offered employment by WLOPL and the terms of such employment.
|
(b)
|
The Seller must procure that no Employee is offered employment by WLOPL otherwise than in accordance with the agreement of the Buyer in accordance with clause 12.1(a), acting reasonably.
|
12.2
|
Seller's payment obligations
|
(a)
|
to the Transferring Employee, all amounts to which that Transferring Employee is or may become entitled by law, statute or under any industrial instrument, award, agreement or arrangement, on termination of employment in connection with
|
|
|
page |
22
|
(b)
|
to the Transferring Employee's nominated superannuation fund, all employer Superannuation Commitments due to be made by the Seller in respect of the period of employment up to and including the Completion Date in respect of that Transferring Employee.
|
12.3
|
Seller's indemnity
|
(a)
|
any entitlement owed or accruing to a Transferring Employee arising from the Transferring Employee's service with the Seller (which has not been paid in accordance with clause 12.2(a)), including any transferring or contingent entitlements or benefit arising in relation to a Transferring Employee under law, contract or industrial agreement of award;
|
(b)
|
any Claim by or in relation to any Transferring Employee or class of Transferring Employee for any wages, salary, leave, notice, redundancy, commission, bonuses, Superannuation Commitments and other benefits or entitlements accruing to the Transferring Employee in respect of the period before, on or after the Completion Date; and
|
(c)
|
any Claim by or in relation to any Transferring Employee in relation to their employment status, rights or entitlements arising from any service provided to the Seller prior to the Completion; and
|
(d)
|
any breach by the Seller or its Related Bodies Corporate or the WLOPL of statutory, contractual or other legal obligations to or in relation to any Transferring Employee before or on Completion or relating to Completion.
|
13
|
Insurance
|
13.1
|
Insurance policies to remain in force
|
(a)
|
The Seller must or must procure that its Related Bodies Corporate, maintain in force (or procure and maintain as appropriate) the Insurances (in all material respects on the same terms and similar level of cover prevailing at the Execution Date) until the Completion Date, save that the Seller or its Related Bodies Corporate may amend the Insurances maintained for the benefit of the Seller if such amended policies are substantially the same as those generally applicable to the Seller Group as a whole (provided reasonable prior notice of any such change is given to the Buyer); and
|
(b)
|
The Seller must procure that, within 7 Business Days of the Execution Date, an endorsement is issued for any Insurances which provide coverage in respect of property damage to or loss of use of any asset forming part of the Sale Interest noting the interest of the Buyer (subject to Completion).
|
|
|
page |
23
|
13.2
|
Making of claims
|
(a)
|
The Seller must use all reasonable endeavours to make (or procure that its Related Bodies Corporate make) all claims under the Insurances in respect of losses or liabilities covered by such policies arising in the Interim Period, at the cost of the Seller, promptly and in accordance with the requirements of the relevant policy.
|
(b)
|
To the extent that the Seller (or its Related Bodies Corporate) receives the proceeds of any claim under the Insurances described in clause 13.2(a), the Seller must use all reasonable endeavours to apply (or procure that the relevant Related Body Corporate applies) the proceeds to, as appropriate:
|
(i)
|
repair the damage or otherwise replace or reinstate the property;
|
(ii)
|
extinguish or reduce the relevant first party loss; or
|
(iii)
|
discharge the relevant liability,
|
13.3
|
Provision of information relevant to future insurances
|
(a)
|
loss histories in respect of the Sale Interest;
|
(b)
|
insurance notifications and claims histories (including, for the avoidance of doubt, current claims) for the Seller in connection with Insurances which provide cover for liabilities; and
|
(c)
|
declarations of written complaints or written claims by third parties in respect of the Seller or the Sale Interest.
|
14
|
Seller Group Warranties and limitations of Claims
|
14.1
|
Definition
|
14.2
|
Giving of Seller Group Warranties
|
(a)
|
The Seller:
|
(i)
|
warrants to the Buyer that each of the Seller Group Warranties:
|
(A)
|
is true, accurate and complete and not misleading as at the Execution Date; and
|
(B)
|
will be true, accurate and complete and not misleading as at the Completion Date; and
|
|
|
page |
24
|
(ii)
|
acknowledges that the Buyer has entered into this agreement in reliance on the Seller Group Warranties.
|
(b)
|
Each Seller Group Warranty must be construed independently and is not limited by reference to another Seller Group Warranty.
|
(c)
|
The Seller Group Warranties survive Completion of this agreement.
|
14.3
|
Matters disclosed
|
(a)
|
The Seller Group Warranties are given subject to and are qualified by, and the Liability of the Seller in respect of any breach of any Seller Group Warranty or for any Claim or Loss by the Buyer in respect of a Seller Group Warranty, will be reduced or extinguished (as the case may be) to the extent that the facts, matter or circumstance giving rise to the breach:
|
(i)
|
arise in connection with the transactions contemplated or authorised by this agreement or the Transaction Documents;
|
(ii)
|
have been fairly disclosed to the Buyer in the information contained in the Disclosure Material;
|
(iii)
|
are within the actual knowledge of the Buyer Individuals;
|
(iv)
|
would have been disclosed to the Buyer had the Buyer conducted searches in respect of GAM, the Seller, the Seller Guarantor, PMI or CSI (
Identified Group
) of records open to public inspection maintained by:
|
(A)
|
ASIC and which are available as a current company extract, or as part of the insolvency notices publication website only in respect of any member of the Identified Group;
|
(B)
|
the Australian Financial Security Authority on the PPS Register only in respect of any member of the Identified Group;
|
(C)
|
IP Australia only in respect of trade marks, patents and designs in respect of any member of the Identified Group;
|
(D)
|
the Department on its “Mineral Titles Online” or “Tengraph” system database only in respect of the Tenements; and
|
(E)
|
the High Court of Australia, the Federal Court of Australia, the Supreme Court of Western Australia and the District Court of Western Australia only in respect of any member of the Identified Group,
|
(b)
|
To the extent any of the Seller Group Warranties are given in relation to facts, matters or circumstances occurring prior to the commencement of the MRL Ownership Period, such Seller Group Warranties are given subject to and are qualified by the Seller's awareness of the relevant matter as at the Execution Date (on the basis that the Seller's awareness of the relevant matter is deemed to include such awareness as the Seller would have had if the Seller had made reasonable enquiries in relation to the matter for a person in the position of the Seller as the owner or Seller of the Sale Interest).
|
|
|
page |
25
|
14.4
|
No liability
|
(a)
|
to the extent that the Claim or Loss would not have arisen but for anything done or not done after Completion by the Buyer or a Related Body Corporate of the Buyer or any person acting, or purporting to act, on behalf of the Buyer or a Related Body Corporate of the Buyer including any failure by the Buyer or a Related Body Corporate of the Buyer after Completion to seek to mitigate its Loss, except to the extent the things done or not done were required by law or a contractual obligation to a third party arising prior to Completion to be done or not done, as the case may be;
|
(b)
|
to the extent that the Claim or the Loss would not have arisen but for:
|
(i)
|
the enactment or amendment of any legislation or regulations;
|
(ii)
|
a change in the judicial or administrative interpretation of the law; or
|
(iii)
|
a change in the practice or policy of any Government Agency,
|
(c)
|
to the extent that the Buyer recovers any amount in respect of the Claim or Loss or from the circumstances out of which the Claim or Loss arises (net of costs of the recovery) from any third party (including under any insurance policy);
|
(d)
|
to the extent that the Claim or Loss would not have arisen but for an act, omission, transaction or arrangement carried out by the Seller with the express written approval of the Buyer before Completion; or
|
(e)
|
except in relation to any Indemnity, if the Liability for that Claim or Loss is a contingent liability, unless and until the Liability is an actual liability and is due and payable.
|
14.5
|
Consequential Loss
|
(a)
|
in the case of fraud of the Seller or the Buyer (as applicable); or
|
(b)
|
if a Defaulting Party does not Complete within the period specified in clause 2.6(b) and the Non-Defaulting Party has elected to terminate this agreement in accordance with clause 2.6(c).
|
14.6
|
Tax or other benefit
|
(a)
|
any benefit received by the Buyer or any of its Related Bodies Corporate (including any Tax Relief obtained by the Buyer or any of its Related Bodies Corporate and any amount by which any Tax or Duty for which the Buyer or any of its Related
|
|
|
page |
26
|
(b)
|
any Tax that would be payable in relation to the payment to be made by the Seller to the Buyer in relation to the Loss under this agreement,
|
14.7
|
Disclaimer
|
(a)
|
in conducting its due diligence and in entering into this agreement and proceeding to Completion, it did not rely and is not relying on any statement (including resources and reserve estimates), representation, warranty, forecast, opinion or statement of belief made by or on behalf of the Seller or its Representatives or on any other conduct engaged in by the Seller or its Representatives, other than the Seller Group Warranties;
|
(b)
|
it has read and understood the information fairly disclosed in the Information Memorandum and has had the opportunity to review the materials in the Data Room and otherwise conduct its own due diligence in relation to the Sale Interest and Subscription Shares (including to ask questions in a question and answer facility);
|
(c)
|
it understands the risks and uncertainties of the mining industry and the general economic, regulatory and other risks that impact on or could impact on the Sale Interest, and its results, operations, financial position and prospects;
|
(d)
|
any estimates (including resources and reserve estimates), budgets or forecasts made, or opinion expressed, in relation to the prospects of the Sale Interest (whether written or oral) were made or expressed to and accepted by the Buyer, and this agreement is entered into, on the basis and condition that, except as provided for in the Seller Group Warranties:
|
(i)
|
neither the Seller nor its Representatives have made nor makes any representation or warranty as to the accuracy or completeness of such estimate (including resources and reserve estimates), budget, forecast or expression of opinion or that any such estimate (including resources and reserve estimates), budget, forecast or expression of opinion will be achieved; and
|
(ii)
|
neither the Seller nor its Representatives will be liable to the Buyer or its Representatives in the event that, for whatever reason, such estimate (including resources and reserve estimates), budget, forecast or expression of opinion is or becomes inaccurate, incomplete or misleading in any respect; and
|
(e)
|
neither the Seller nor its Officers, agents, employees or advisers has made or makes any representation or warranty as to the accuracy or completeness of the disclosures regarding the Sale Interest and Subscription Shares (including, the information, forecasts and statements of intent contained in the Disclosure Material
|
|
|
page |
27
|
14.8
|
Exclusion of warranties and statutory actions
|
(a)
|
any Claim by the Buyer must be based solely on and limited to express provisions of this agreement and, to the maximum extent permitted by law, all terms and conditions that may be implied by law or under statute in any jurisdiction and which are not expressly set out in this agreement are excluded (and to the extent that any terms and conditions of this type cannot be excluded then the Buyer irrevocably waives all rights and remedies that it may have in relation to, and releases the Seller from any terms and conditions of this type); and
|
(b)
|
to the maximum extent permitted by law, the Buyer will not make and waives any right it may have to make any Claim against the Seller under the Australian Consumer Law (including sections 4, 18 and 29 of the Australian Consumer Law), the Corporations Act (including section 1041H of that Act), the
Australian Securities and Investments Commission Act 2001
(Cth) or the corresponding provision of any other federal, state or territory legislation, or a similar provision under any applicable law, for any act or omission concerning the transactions contemplated by this agreement or for any statement or representation concerning any of those things.
|
14.9
|
Notice and time limits on Claims
|
(a)
|
The Buyer must notify the Seller in writing of any Claim it has against the Seller under this agreement (including any breach of any Seller Group Warranty), setting out reasonable details of the facts, matters or circumstances giving rise to the Claim and the nature of the Claim as soon as practicable after it becomes aware of it.
|
(b)
|
The Buyer may not make, and the Seller is not liable for, any Claim for a breach of a Seller Group Warranty unless full details of the Claim have been notified to the Seller within 15 months after the Completion Date. For the purposes of this clause, the Buyer may give details of a Claim even if that Claim is contingent, or if the Buyer is temporarily prevented from making a Claim under another clause of this agreement.
|
(c)
|
A Claim will not be enforceable against the Seller and is to be taken for all purposes
to have been withdrawn unless legal proceedings in connection with the Claim are commenced within 12 months after written notice of the Claim is served on the Seller in accordance with clause 14.9(a).
|
14.10
|
Minimum amount of Claims
|
(a)
|
the amount finally agreed or determined to be payable in respect of that Claim or a series of related Claims exceeds US$1,000,000 (each such Claim, a
Permitted Claim
); and
|
(b)
|
the aggregate amount of all such Permitted Claims against the Seller exceeds US$5,000,000,
|
|
|
page |
28
|
14.11
|
Maximum liability
|
(a)
|
Subject to clause 14.11(b) the Seller’s total Liability for Loss (in aggregate) arising in respect of all Claims under or in connection with this agreement is limited in aggregate to the amount of 50% of the sum of the Purchase Price and the Subscription Amount.
|
(b)
|
The Seller’s total Liability for Loss or damage arising in respect of a breach of a Seller Group Warranty in items 1, 7(a), 7(b), 7(c), 8(a), 8(b), 8(c) and 8(d) of Schedule 2 is limited in aggregate to the sum of the Purchase Price and the Subscription Amount.
|
14.12
|
No double recovery
|
14.13
|
Disclosure regarding Third Party Claims
|
(a)
|
The Buyer must notify the Seller if:
|
(i)
|
a Third Party Claim is made against the Buyer; or
|
(ii)
|
the Buyer becomes aware of any events, matters or circumstances (including any potential threatened Third Party Claim) against the Buyer that may give rise to a Claim against the Seller.
|
(b)
|
The Buyer must include in a notice under clause 14.13(a) all relevant details (including the amount) then known to the Buyer of:
|
(i)
|
the Third Party Claim; and
|
(ii)
|
the events, matters or circumstances giving rise or which may give rise to the Claim (as appropriate).
|
(c)
|
The Buyer must also include in a notice given under clause 14.13(a) an extract of:
|
(i)
|
any part of a Demand that identifies the Liability or amount to which the Claim relates or other evidence of the amount of the Demand to which the Claim relates; and
|
(ii)
|
if available or relevant, any corresponding part of any adjustment sheet or other explanatory material issued by a Government Agency that specifies the basis for the Demand to which the Claim relates or other evidence of that basis.
|
(d)
|
The Buyer must provide a copy of any document referred to in clause 14.13(c) to the Seller as soon as practicable and, in any event, within 10 Business Days after the receipt of that document by the Buyer.
|
(e)
|
The Buyer must also, on an ongoing basis, keep the Seller informed of all developments in relation to the Claim notified under clause 14.13(a).
|
|
|
page |
29
|
14.14
|
Conduct in respect of Third Party Claims
|
(a)
|
Subject to the Seller first accepting liability for and agreeing to indemnify the Buyer without limit in relation to a Third Party Claim, the Buyer will not:
|
(i)
|
accept, compromise or pay;
|
(ii)
|
agree to arbitrate, compromise or settle; or
|
(iii)
|
make any admission or take any action in relation to,
|
(b)
|
Following receipt of a notice in respect of a Claim which arises from or involves a Third Party Claim, the Seller may, by written notice to the Buyer, assume the conduct of the defence of the Third Party Claim.
|
(c)
|
If the Seller advises the Buyer that the Seller wishes to assume the conduct of the defence of the Third Party Claim:
|
(i)
|
provided that the Seller provides the Buyer with an Indemnity against all Liabilities which the Buyer shall incur or which may result from the Third Party Claim, the Buyer must take all action reasonably requested by the Seller to avoid, contest, compromise or defend the Third Party Claim; and
|
(ii)
|
in conducting any proceedings or actions in respect of that Third Party Claim, the Seller must:
|
(A)
|
act in good faith;
|
(B)
|
liaise with the Buyer in relation to the defence of the Third Party Claim; and
|
(C)
|
provide the Buyer with reasonable access to a copy of any notice, correspondence or other document relating to the Third Party Claim.
|
(d)
|
If the Seller advises the Buyer that the Seller does not wish to assume the conduct of the defence of the Third Party Claim, then the Buyer must:
|
(i)
|
act in good faith;
|
(ii)
|
liaise with the Seller in relation to the defence of the Third Party Claim; and
|
(iii)
|
provide the Seller with reasonable access to a copy of any notice, correspondence or other document relating to the Third Party Claim.
|
14.15
|
Recovery
|
(a)
|
use all reasonable endeavours to recover that sum before making the Claim;
|
(b)
|
keep the Seller at all times fully and promptly informed of the conduct of such recovery; and
|
|
|
page |
30
|
(c)
|
reduce the amount of the Claim to the extent that sums are recovered.
|
14.16
|
Insured Claim or loss
|
14.17
|
Duty to mitigate
|
14.18
|
Independent limitations
|
14.19
|
Damages only remedy
|
14.20
|
No knowledge of breach
|
(a)
|
has not already formulated an intention to make a Seller Group Warranty Claim; and
|
(b)
|
does not presently have actual knowledge (except as disclosed in the Disclosure Material) of any circumstances which it believes may entitle it to make a Claim in respect of a Seller Group Warranty.
|
15
|
Buyer Warranties
|
15.1
|
Buyer Warranties
|
(a)
|
it is duly incorporated and validly exists under the law of its place of incorporation;
|
|
|
page |
31
|
(b)
|
the execution and delivery of this agreement has been properly authorised by all necessary corporate action of the Buyer;
|
(c)
|
it has full corporate power and lawful authority to execute and deliver this agreement and to consummate and perform or cause to be performed its obligations under this agreement;
|
(d)
|
this agreement constitutes a legal, valid and binding obligation of the Buyer enforceable in accordance with its terms;
|
(e)
|
the execution, delivery and performance by the Buyer of this agreement does not or will not (with or without the lapse of time, the giving of notice or both) contravene, conflict with or result in a breach of or default under:
|
(i)
|
any provision of the constitution of the Buyer;
|
(ii)
|
any material term or provision of any security arrangement (including any Security Interest), undertaking, agreement or agreement to which it is bound;
|
(iii)
|
any writ, order or injunction, judgement, or law to which it is a party or is subject or by which it is bound;
|
(f)
|
no Insolvency Event has occurred in relation to the Buyer; and
|
(g)
|
so far as it is aware, there are no facts, matters or circumstances which give any person the right to apply to liquidate or wind up the Buyer.
|
15.2
|
Reliance
|
15.3
|
Independent Buyer Warranties
|
15.4
|
Survival
|
16
|
Seller Guarantor Warranties
|
16.1
|
Seller Guarantor Warranties
|
(a)
|
it is duly incorporated and validly exists under the law of its place of incorporation;
|
(b)
|
the execution and delivery of this agreement has been properly authorised by all necessary corporate action of the Seller Guarantor;
|
|
|
page |
32
|
(c)
|
it has full corporate power and lawful authority to execute and deliver this agreement and to consummate and perform or cause to be performed its obligations under this agreement;
|
(d)
|
this agreement constitutes a legal, valid and binding obligation of the Seller Guarantor enforceable in accordance with its terms;
|
(e)
|
the execution, delivery and performance by the Seller Guarantor of this agreement does not or will not (with or without the lapse of time, the giving of notice or both) contravene, conflict with or result in a breach of or default under:
|
(i)
|
any provision of the constitution of the Seller Guarantor;
|
(ii)
|
any material term or provision of any security arrangement (including any Security Interest), undertaking, agreement or agreement to which it is bound;
|
(iii)
|
any writ, order or injunction, judgement, or law to which it is a party or is subject or by which it is bound;
|
(f)
|
no Insolvency Event has occurred in relation to the Seller Guarantor; and
|
(g)
|
so far as it is aware, there are no facts, matters or circumstances which give any person the right to apply to liquidate or wind up the Seller Guarantor.
|
16.2
|
Reliance
|
16.3
|
Independent Seller Guarantor Warranties
|
16.4
|
Survival
|
16.5
|
Indemnity
|
17
|
Buyer Guarantor Warranties
|
17.1
|
Buyer Guarantor Warranties
|
(a)
|
it is duly incorporated and validly exists under the law of its place of incorporation;
|
(b)
|
the execution and delivery of this agreement has been properly authorised by all necessary corporate action of the Buyer Guarantor;
|
|
|
page |
33
|
(c)
|
it has full corporate power and lawful authority to execute and deliver this agreement and to consummate and perform or cause to be performed its obligations under this agreement;
|
(d)
|
this agreement constitutes a legal, valid and binding obligation of the Buyer Guarantor enforceable in accordance with its terms;
|
(e)
|
the execution, delivery and performance by the Buyer Guarantor of this agreement does not or will not (with or without the lapse of time, the giving of notice or both) contravene, conflict with or result in a breach of or default under:
|
(i)
|
any provision of the constitution of the Buyer Guarantor;
|
(ii)
|
any material term or provision of any security arrangement (including any Security Interest), undertaking, agreement or agreement to which it is bound;
|
(iii)
|
any writ, order or injunction, judgement, or law to which it is a party or is subject or by which it is bound;
|
(f)
|
no Insolvency Event has occurred in relation to the Buyer Guarantor; and
|
(g)
|
so far as it is aware, there are no facts, matters or circumstances which give any person the right to apply to liquidate or wind up the Buyer Guarantor.
|
17.2
|
Reliance
|
17.3
|
Independent Buyer Guarantor Warranties
|
17.4
|
Survival
|
17.5
|
Indemnity
|
18
|
Confidentiality
|
18.1
|
Confidentiality obligation
|
(a)
|
may use Confidential Information of a Disclosing Party only for the purposes of this agreement and the transactions contemplated by this agreement; and
|
(b)
|
must keep confidential all Confidential Information of each Disclosing Party except for disclosures permitted under clause 18.2.
|
|
|
page |
34
|
18.2
|
Exceptions
|
(a)
|
has the prior written consent of the Disclosing Party;
|
(b)
|
is a media announcement in the form agreed between the Buyer and the Seller in accordance with clause 18.4;
|
(c)
|
is to its Officers, employees, professional advisers, consultants, financiers and Related Bodies Corporate to whom (and to the extent to which) it is necessary to disclose the information in order to properly perform its obligations under this agreement;
|
(d)
|
is necessary to enforce its rights or to defend any Claim or Action under this agreement or for use in legal proceedings regarding this agreement or the transaction contemplated by this agreement;
|
(e)
|
is necessary to obtain any consent or approval contemplated by this agreement; or
|
(f)
|
is necessary to comply with any applicable law, legal process, any order or rule of any Government Agency, the rules of a recognised stock exchange or in a prospectus or other document with statutory content requirements prepared for a transaction involving a party, after first consulting with the other party to the extent practicable having regard to those obligations about the form and content of the disclosure,
|
(g)
|
in the case of the Information Recipient's (and their Related Body Corporate's) Officers and employees, those persons have been directed by the Information Recipient to keep confidential all Confidential Information of the Disclosing Party; and
|
(h)
|
in the case of other persons (except those disclosures under clauses 18.2(b), 18.2(d), 18.2(e) and 18.2(f)), those persons have agreed in writing with the Information Recipient to comply with substantially the same obligations in respect of Confidential Information of the Disclosing Party as those imposed on the Information Recipient under this agreement,
|
18.3
|
Information Recipient's obligations
|
(a)
|
ensure that each person to whom it discloses Confidential Information of a Disclosing Party under clause 18.2 complies with its Direction; and
|
(b)
|
notify the Disclosing Party of, and take all reasonable steps to prevent or stop, any suspected or actual breach of a Direction.
|
18.4
|
Media announcement
|
(a)
|
No party may, before or after Completion, make or send a public announcement, communication or circular concerning this agreement or the transactions referred
|
|
|
page |
35
|
(b)
|
Clause 18.4(a) does not apply to a public announcement, communication or circular required by law or the requirements of a regulatory body (including the ASX and any other relevant stock exchange), if the party required to make or send it has, if practicable, first consulted and taken into account the reasonable requirements of the other parties, provided that the party must only disclose such information necessary to comply with the requirements of law or the applicable regulatory body.
|
18.5
|
Confidentiality Agreement
|
19
|
Seller Guarantee and indemnity
|
19.1
|
Consideration
|
19.2
|
Seller Guarantee
|
(a)
|
The Seller Guarantor unconditionally and irrevocably guarantees to the Buyer the due and punctual performance by the Seller of all its obligations under this agreement, including each obligation to pay money (the
Seller
Guaranteed Obligations
).
|
(b)
|
If the Seller fails to perform the Seller Guaranteed Obligations in full and on time, the Seller Guarantor agrees to comply with the Seller Guaranteed Obligations on demand from the Buyer. A demand may be made whether or not the Buyer has made demand on the Seller.
|
19.3
|
Indemnity
|
(a)
|
The Seller Guarantor:
|
(i)
|
unconditionally and irrevocably indemnifies the Buyer against any Loss or Claim which may be incurred or sustained by the Buyer arising from or in relation to any default or delay by the Seller in the due and punctual performance of any of the Seller Guaranteed Obligations, including any Loss or Claim incurred or sustained by the Buyer arising from or in relation to the enforcement of this Seller Guarantee; and
|
(ii)
|
agrees to pay amounts due under this clause 19.3 on demand from the Buyer.
|
(b)
|
The Buyer need not incur expense or make payment before enforcing this right of indemnity.
|
|
|
page |
36
|
19.4
|
Extent of Seller Guarantee and indemnity
|
(a)
|
The Seller Guarantor will be responsible to the Buyer in respect of the Seller Guaranteed Obligations in the same manner as if the Seller Guarantor was the Seller under this agreement.
|
(b)
|
The rights given to the Buyer pursuant to this Seller Guarantee, and the Seller Guarantor’s liability under it, are not affected by any act, omission or other thing which might otherwise affect it in law or in equity including one or more of the following:
|
(i)
|
an Insolvency Event affecting a person or the death of a person;
|
(ii)
|
a change in the constitution, membership, or partnership of a person;
|
(iii)
|
the partial performance of the Seller Guaranteed Obligations;
|
(iv)
|
the Seller Guaranteed Obligations not being enforceable at any time against any person other than the Seller Guarantor;
|
(v)
|
the Buyer granting any time or other indulgence or concession to, compounding or compromising with, or wholly or partially releasing the Seller or Seller Guarantor of an obligation;
|
(vi)
|
any novation of a right of the Buyer;
|
(vii)
|
acquiescence, delay, acts, omissions or mistakes on the part of the Buyer; or
|
(viii)
|
the occurrence of any other thing which might otherwise release, discharge or affect the obligations of the Seller Guarantor under this agreement, except to the extent that that thing also releases, discharges or affects the obligations of the Seller to the Buyer.
|
19.5
|
Payments
|
(a)
|
in full without set-off or counterclaim, and without any deduction in respect of Taxes unless prohibited by law; and
|
(b)
|
in the currency in which the payment is due, and otherwise in Australian dollars, in Immediately Available Funds.
|
19.6
|
Continuing guarantee and indemnity
|
(a)
|
extends to cover this agreement as amended, varied or replaced, whether with or without the consent of the Seller Guarantor;
|
(b)
|
is a principal obligation and is not to be treated as ancillary or collateral to another right or obligation;
|
(c)
|
is independent of and not in substitution for or affected by any other security interest or guarantee or other document or agreement which the Buyer may hold concerning the Seller Guaranteed Obligations; and
|
|
|
page |
37
|
(d)
|
is a continuing guarantee and indemnity despite any intervening payment, settlement or other thing and extends to all of the Seller’s obligations arising from or in relation to this agreement and, despite Completion, remains in full force and effect for so long as the Seller has any liability or obligation to the Buyer under this agreement and until all of those liabilities or obligations have been fully discharged.
|
19.7
|
Enforcement against Seller Guarantor
|
19.8
|
Limitation
|
20
|
Buyer Guarantee and indemnity
|
20.1
|
Consideration
|
20.2
|
Buyer Guarantee
|
(a)
|
The Buyer Guarantor unconditionally and irrevocably guarantees to the Seller the due and punctual performance by the Buyer of all its obligations under this agreement, including each obligation to pay money (the
Buyer
Guaranteed Obligations
).
|
(b)
|
If the Buyer fails to perform the Buyer Guaranteed Obligations in full and on time, the Buyer Guarantor agrees to comply with the Buyer Guaranteed Obligations on demand from the Seller. A demand may be made whether or not the Seller has made demand on the Buyer.
|
20.3
|
Indemnity
|
(a)
|
The Buyer Guarantor:
|
(i)
|
unconditionally and irrevocably indemnifies the Seller against any Loss or Claim which may be incurred or sustained by the Seller arising from or in relation to any default or delay by the Buyer in the due and punctual performance of any of the Buyer Guaranteed Obligations, including any Loss or Claim incurred or sustained by the Seller arising from or in relation to the enforcement of this Buyer Guarantee; and
|
(ii)
|
agrees to pay amounts due under this clause 20.3 on demand from the Seller.
|
(b)
|
The Seller need incur expense or make payment before enforcing this right of indemnity.
|
|
|
page |
38
|
20.4
|
Extent of Buyer Guarantee and indemnity
|
(a)
|
The Buyer Guarantor will be responsible to the Seller in respect of the Buyer Guaranteed Obligations in the same manner as if the Buyer Guarantor was the Buyer under this agreement.
|
(b)
|
The rights given to the Seller pursuant to this Buyer Guarantee, and the Buyer Guarantor’s liability under it, are not affected by any act, omission or other thing which might otherwise affect it in law or in equity including one or more of the following:
|
(i)
|
an Insolvency Event affecting a person or the death of a person;
|
(ii)
|
a change in the constitution, membership, or partnership of a person;
|
(iii)
|
the partial performance of the Buyer Guaranteed Obligations;
|
(iv)
|
the Buyer Guaranteed Obligations not being enforceable at any time against any person other than the Buyer Guarantor;
|
(v)
|
the Seller granting any time or other indulgence or concession to, compounding or compromising with, or wholly or partially releasing the Buyer or Buyer Guarantor of an obligation;
|
(vi)
|
any novation of a right of the Seller;
|
(vii)
|
acquiescence, delay, acts, omissions or mistakes on the part of the Seller; or
|
(viii)
|
the occurrence of any other thing which might otherwise release, discharge or affect the obligations of the Buyer Guarantor under this agreement, except to the extent that that thing also releases, discharges or affects the obligations of the Buyer to the Seller.
|
20.5
|
Payments
|
(a)
|
in full without set-off or counterclaim, and without any deduction in respect of Taxes unless prohibited by law; and
|
(b)
|
in the currency in which the payment is due, and otherwise in Australian dollars, in Immediately Available Funds.
|
20.6
|
Continuing guarantee and indemnity
|
(a)
|
extends to cover this agreement as amended, varied or replaced, whether with or without the consent of the Buyer Guarantor;
|
(b)
|
is a principal obligation and is not to be treated as ancillary or collateral to another right or obligation;
|
(c)
|
is independent of and not in substitution for or affected by any other security interest or guarantee or other document or agreement which the Seller may hold concerning the Buyer Guaranteed Obligations; and
|
|
|
page |
39
|
(d)
|
is a continuing guarantee and indemnity despite any intervening payment, settlement or other thing and extends to all of the Buyer’s obligations arising from in relation to this agreement and, despite Completion, remains in full force and effect for so long as the Buyer has any liability or obligation to the Seller under this agreement and until all of those liabilities or obligations have been fully discharged.
|
20.7
|
Enforcement against Buyer Guarantor
|
20.8
|
Limitation
|
21
|
Dispute resolution
|
21.1
|
Dispute Notice
|
(a)
|
If a Dispute arises then either party may give to the other party a Dispute Notice.
|
(b)
|
Within 14 days after service of a Dispute Notice, the parties’ Representatives must meet at least once and confer in good faith to attempt to resolve the Dispute.
|
(c)
|
If the parties' Representatives cannot resolve the Dispute, then each party shall within 21 days after service of a Dispute Notice refer the Dispute to their respective Chief Executive Officers to settle the Dispute. The Chief Executive Officers must meet within 14 days of the Dispute being referred to them (or such longer period agreed in writing) and confer in good faith until such time that they resolve the Dispute.
|
(d)
|
If the Chief Executive Officers have met but not resolved the Dispute, or otherwise fail to meet, within 2 months from the date the Dispute was referred to them (or such longer period agreed in writing) either party may commence legal proceedings.
|
21.2
|
Continuance of Contract
|
(a)
|
Compliance with this clause 21 is a condition precedent to a party being entitled to commence legal proceedings in any court in respect of a Dispute except for proceedings seeking urgent injunctive relief.
|
(b)
|
Prior to the resolution of a Dispute, the parties must continue to perform their respective obligations in this agreement insofar as those obligations are not the subject matter of the Dispute.
|
22
|
Duty, costs and expenses
|
22.1
|
Duty
|
|
|
page |
40
|
22.2
|
Costs and expenses
|
22.3
|
Costs of performance
|
23
|
GST
|
23.1
|
Supply of a going concern
|
(a)
|
The parties agree that the Supply made by the Seller to the Buyer under this agreement (
Business Supply
) is a Supply of a Going Concern for the purposes of section 38‑325 of the GST Act and will be treated as being a GST-free Supply such that clause 23.2 does not apply to it.
|
(b)
|
The Seller warrants and represents that it:
|
(i)
|
will supply to the Buyer all of the things that are necessary for the continued operation of an Enterprise; and
|
(ii)
|
will continue to carry on the Enterprise without interruption until and including the Completion Date.
|
(c)
|
The Buyer warrants that it is registered or required to be registered for GST under the GST Law as at the Completion Date.
|
(d)
|
If there is an assessment by the Commissioner of Taxation that GST is payable on the Business Supply, then clause 23.2 applies to the Business Supply such that an additional amount will be payable on account of GST (
Additional Amount
), except that:
|
(i)
|
any Additional Amount payable under clause 23.2 is payable by the Buyer within 10 Business Days of receipt of a Tax Invoice for the Business Supply; and
|
(ii)
|
the Additional Amount must be refunded to the Buyer if the assessment is overturned by the Commissioner of Taxation, a Court or tribunal.
|
23.2
|
Taxable Supplies
|
(a)
|
Any consideration or amount payable under this agreement, including any non-monetary consideration (as reduced in accordance with clause 23.2(e) if required) (
Consideration
) is exclusive of GST.
|
(b)
|
If GST is or becomes payable on a Supply made under or in connection with this agreement, an Additional Amount is payable by the party providing the
|
|
|
page |
41
|
(c)
|
The Additional Amount payable under clause 23.2(b) is payable without set off, demand or deduction at the same time and in the same manner as the Consideration for the Supply, and the Supplier must provide the Recipient with a Tax Invoice as a pre-condition to payment of the Additional Amount.
|
(d)
|
If for any reason (including, without limitation, the occurrence of an Adjustment Event) the amount of GST payable on a Supply made under or in connection with this agreement (taking into account any Decreasing or Increasing Adjustments in relation to the Supply) varies from the Additional Amount payable by the Recipient under clause 23.2(b):
|
(i)
|
the Supplier must provide a refund or credit to the Recipient, or the Recipient must pay a further amount to the Supplier, as appropriate;
|
(ii)
|
the refund, credit or further amount (as the case may be) will be calculated by the Supplier in accordance with the GST Law; and
|
(iii)
|
the Supplier must notify the Recipient of the refund, credit or further amount within 10 Business Days after becoming aware of the variation to the amount of GST payable. Any refund or credit must accompany such notification or the Recipient must pay any further amount within 7 days after receiving such notification, as appropriate. If there is an Adjustment Event in relation to the Supply, the requirement for the Supplier to notify the Recipient will be satisfied by the Supplier issuing to the Recipient an Adjustment Note within 10 Business Days after becoming aware of the occurrence of the Adjustment Event.
|
(e)
|
Despite any other provision in this agreement:
|
(i)
|
if an amount payable under or in connection with this agreement (whether by way of reimbursement, indemnity or otherwise) is calculated by reference to an amount incurred by a party, whether by way of cost, expense, outlay, disbursement or otherwise (
Amount Incurred
), the amount payable must be reduced by the amount of any Input Tax Credit to which that party is entitled in respect of that Amount Incurred; and
|
(ii)
|
no Additional Amount is payable under clause 23.2(b) in respect of a Supply made under or in connection with this agreement to which section 84-5 of the GST Act applies.
|
(f)
|
Any reference in this clause to an Input Tax Credit to which a party is entitled includes an Input Tax Credit arising from a Creditable Acquisition by that party but to which the Representative Member of the GST Group of which that party is a member is entitled.
|
24
|
Foreign resident capital gains withholding
|
24.1
|
Application of foreign resident capital gains withholding
|
(a)
|
the sale of the Sale Interest and the subscription of the Subscription Shares is a transaction that is excluded under section 14-215(1); or
|
|
|
page |
42
|
(b)
|
the Seller gives to the Buyer a Clearance Certificate for a period covering the Completion Date on or before the date that is 5 Business Days before Completion.
|
24.2
|
Clearance Certificate given by Seller
|
(a)
|
the Buyer is not required to pay a Withholding Amount; and
|
(b)
|
the Buyer may not withhold a Withholding Amount from the Purchase Price payable on Completion to the Seller.
|
24.3
|
Buyer entitled to withhold
|
24.4
|
Buyer’s obligation to pay Withholding Amount to the Commissioner
|
(a)
|
give to the Seller a copy of a receipt showing that the Withholding Amount has been paid to the Commissioner before Completion; or
|
(b)
|
produce a cheque, drawn on a Bank, payable to the Commissioner for an amount equal to the Withholding Amount.
|
24.5
|
Payment of the Withholding Amount after Completion
|
(a)
|
pay the Withholding Amount to the Commissioner, by mailing or delivering the cheque to the Commissioner, before the end of the first Business Day after Completion; and
|
(b)
|
provide to the Seller within 2 Business Days after Completion, evidence showing that the Withholding Amount has been paid to the Commissioner.
|
24.6
|
Discharge of liability
|
24.7
|
Definitions and interpretation
|
(a)
|
all section references are to those provisions of Schedule 1 to the
Taxation Administration Act 1953
(Cth);
|
(b)
|
Clearance Certificate
means a certificate issued by the Commissioner under section 14-220 that applies to the Seller and is for a period covering the time that the transaction is entered into;
|
(c)
|
Commissioner
means the Commissioner of Taxation of Australia; and
|
|
|
page |
43
|
(d)
|
Withholding Amount
means an amount that the Buyer is required to pay to the Commissioner, determined in accordance with section 14-200(3).
|
25
|
PPS Act registration
|
25.1
|
Protecting interests
|
(a)
|
The parties agree to do all things as may be reasonably necessary including:
|
(i)
|
providing information and executing or ensuring the execution of documents; and
|
(ii)
|
ensuring that relevant third parties do all things reasonably necessary,
|
(b)
|
A grantor of a PPS Security Interest under or in connection with this agreement consents to the registration of the PPS Security Interest on any relevant register and any notification made or given in respect of that PPS Security Interest.
|
25.2
|
Notices
|
26
|
Notices
|
26.1
|
General
|
26.2
|
How to give a communication
|
(a)
|
personally delivered;
|
(b)
|
left at the party’s current delivery address for notices;
|
(c)
|
sent to the party’s current postal address for notices by pre-paid ordinary mail or, if the address is outside Australia, by pre-paid airmail;
|
(d)
|
sent by email to the party’s current email address for notices; or
|
(e)
|
sent by such other form of communication as the parties and WLOPL may from time to time agree.
|
26.3
|
Particulars for delivery
|
|
|
page |
44
|
(a)
|
The particulars for delivery of notices are initially:
|
(i)
|
in the case of the Seller:
|
(ii)
|
in the case of the Buyer:
|
Delivery address:
|
4350 Congress Street, Suite 700, Charlotte, NC 28209
|
Postal address:
|
4350 Congress Street, Suite 700, Charlotte, NC 28209
|
(iii)
|
in the case of the Seller Guarantor:
|
(iv)
|
in the case of the Buyer Guarantor:
|
|
|
page |
45
|
(b)
|
Each party may change its particulars for delivery of notices by notice to each other party.
|
26.4
|
Communications by post
|
(a)
|
within Australia to an Australian postal address, three (3) Business Days after posting; or
|
(b)
|
outside of Australia to an Australian postal address or within Australia to an address outside of Australia, ten (10) Business Days after posting.
|
26.5
|
Communications by email
|
(a)
|
Subject to clause 26.7, a communication is given if sent by email, upon the earlier of:
|
(i)
|
the time the sender receives an automated message from the intended recipient’s information system confirming delivery of the email;
|
(ii)
|
the time that the email is first opened or read by the intended recipient, or an employee or Officer of the intended recipient; and
|
(iii)
|
four (4) hours after the time the email is sent (as recorded on the device from which the sender sent the email) unless the sender receives, within that four (4) hour period, an automated message that the email has not been delivered.
|
(b)
|
Despite anything to the contrary in this agreement, a notice given under clause 2.6 must not be given by email.
|
26.6
|
Process service
|
26.7
|
After hours communications
|
(a)
|
after 5.00 pm in the place of receipt; or
|
(b)
|
on a day which is a Saturday, Sunday or bank or public holiday in the place of receipt,
|
27
|
General
|
27.1
|
Consents and approvals
|
|
|
page |
46
|
27.2
|
Entire agreement
|
(a)
|
This agreement is the entire agreement between the parties about its subject matter and replaces all previous agreements, understandings, representations and warranties about that subject matter.
|
(b)
|
Each party represents and warrants that it has not relied on any representations or warranties about the subject matter of this agreement except as expressly provided in this agreement.
|
27.3
|
Further assurances
|
27.4
|
Rights cumulative
|
27.5
|
Survival and merger
|
(a)
|
No term of this agreement merges on completion of any transaction contemplated by this agreement.
|
(b)
|
Clauses 18, 22, 23, 26 and 27 survive termination or expiry of this agreement together with any other term which by its nature is intended to do so.
|
27.6
|
Variation
|
27.7
|
Waiver
|
(a)
|
No waiver of a right or remedy under this agreement is effective unless it is in writing and signed by the party granting it. It is only effective in the specific instance and for the specific purpose for which it is granted.
|
(b)
|
A single or partial exercise of a right or remedy under this agreement does not prevent a further exercise of that or of any other right or remedy.
|
(c)
|
Failure to exercise or delay in exercising a right or remedy under this agreement does not operate as a waiver or prevent further exercise of that or any other right or remedy.
|
27.8
|
Governing law
|
(a)
|
This agreement is governed by the laws of Western Australia
.
|
|
|
page |
47
|
(b)
|
Each party irrevocably and unconditionally submits to the exclusive jurisdiction of the courts of Western Australia including, for the avoidance of doubt, the Federal Court of Australia sitting in Western Australia.
|
27.9
|
Counterparts
|
27.10
|
Default interest
|
(a)
|
If a party fails to pay any amount payable under this agreement on the due date for payment, that party must pay interest on the amount unpaid at the higher of:
|
(i)
|
the Interest Rate; or
|
(ii)
|
the rate of interest per annum (if any) fixed or payable under any judgment or other thing into which the liability to pay the amount becomes merged.
|
(b)
|
The interest payable under clause 27.10(a):
|
(i)
|
accrues from day to day from and including the due date for payment up to the actual date of payment, before and, as an additional and independent obligation, after any judgment or other thing into which the liability to pay the amount becomes merged; and
|
(ii)
|
may be capitalised by the person to whom it is payable at monthly intervals.
|
(c)
|
The right to require payment of interest under this clause is without prejudice to any other rights the non-defaulting party may have against the defaulting party at law or in equity.
|
27.11
|
Interest payable on overdue amounts
|
27.12
|
Invalidity
|
(a)
|
If a provision of this agreement or a right or remedy of a party under this agreement is invalid or unenforceable in a particular jurisdiction:
|
(i)
|
it is read down or severed in that jurisdiction only to the extent of the invalidity or unenforceability; and
|
(ii)
|
it does not affect the validity or enforceability of that provision in another jurisdiction or the remaining provisions in any jurisdiction.
|
(b)
|
This clause is not limited by any other provision of this agreement in relation to severability, prohibition or enforceability.
|
27.13
|
Operation of indemnities
|
|
|
page |
48
|
(a)
|
Each Indemnity contained in this agreement is an additional, separate and independent obligation and no one Indemnity limits the generality of another Indemnity.
|
(b)
|
Each Indemnity contained in this agreement survives Completion under this agreement.
|
27.14
|
Payments
|
27.15
|
Relationship
|
(a)
|
nothing in this agreement is intended to constitute a relationship of employment, trust, agency or partnership or any other fiduciary relationship between the parties; and
|
(b)
|
no party has authority to bind any other party.
|
27.16
|
Assignment, novation and other dealings
|
(a)
|
Subject to clause 27.16(b), a party must not assign or novate this agreement or otherwise deal with the benefit of it or a right under it, or purport to do so, without the prior written consent of each other party which consent may be withheld at the absolute discretion of the party from whom consent is sought.
|
(b)
|
Clause 27.16(a) does not apply to any benefit or right under a Transaction Document from Completion.
|
27.17
|
Third party rights
|
(a)
|
each person who executes this agreement does so solely in its own legal capacity and not as agent or trustee for or a partner of any other person; and
|
(b)
|
only those persons who execute this agreement have a right or benefit under it.
|
|
|
page |
49
|
Schedule 1
|
Dictionary
|
1
|
Dictionary
|
(a)
|
the accounting standards applicable for the purposes of the Corporations Act;
|
(b)
|
the requirements of the Corporations Act for the preparation and content of financial statements, directors' reports and auditor's reports; and
|
(c)
|
generally accepted and consistently applied accounting principles and practices in Australia (including
Australian International Financial Reporting Standards
), except those inconsistent with the standards of requirements referred to in paragraphs (a) or (b).
|
(a)
|
the mining tenements specified in Part 2 of Schedule 3; and
|
(b)
|
to the extent that they are held by the Seller, any renewals, conversions, amalgamations or substitutions of the mining tenements referred to in paragraph (a).
|
(a)
|
a perpetual, royalty-free license to use and benefit from all Intellectual Property Rights in connection with the Project; and
|
(b)
|
the benefit of any contracts (whether written or oral) between the Seller and the provider of the Mining Information for production of that information, including any actual or implied warranties as to the accuracy of that information.
|
|
|
Schedule 1
– Dictionary | page |
50
|
(a)
|
Jeffrey Bachrach;
|
(b)
|
Kraig Houser;
|
(c)
|
Alex Gutierrez;
|
(d)
|
Matt Lynch;
|
(e)
|
Clint Parham;
|
(f)
|
Andrew Purvis;
|
(g)
|
Edward Tatum;
|
(h)
|
Brian Tessin; and
|
(i)
|
Chris Yandell.
|
|
|
Schedule 1
– Dictionary | page |
51
|
(a)
|
the infrastructure being ready for use, having all necessary approvals and not requiring any further construction steps; and
|
(b)
|
the 'Requirements for Commissioning' set out in Schedule 5 being satisfied in respect of that item of Incomplete Infrastructure.
|
(a)
|
the nature and existence of this agreement and the terms of this agreement, its schedules and annexures; and
|
(b)
|
all information treated by the Disclosing Party as confidential and disclosed by the Disclosing Party to another party or of which another party becomes aware, whether before or after the Execution Date, except information:
|
(i)
|
another party creates (whether alone or jointly with any third person) independently of the Disclosing Party;
|
(ii)
|
which was lawfully obtained by a party before the Discloser disclosed it to the Recipient;
|
(iii)
|
which is received in good faith by a party from a third party entitled to disclose it; or
|
(iv)
|
is public knowledge (otherwise than as a result of a breach of confidentiality by another party or any of its permitted disclosees).
|
|
|
Schedule 1
– Dictionary | page |
52
|
(a)
|
the information and documents made available to the Buyer and its Representatives on or before the Cut-off Time in the Data Room as listed in the Data Room Index; and
|
(b)
|
the written answers or written confirmations provided to the Buyer or its Representatives in the Data Room as attached to the Disclosure Letter on or before the Cut-off Time in response to requests for information.
|
|
|
Schedule 1
– Dictionary | page |
53
|
(a)
|
the Information Memorandum;
|
(b)
|
all written information and data provided or communicated to a Buyer Individual (whether by electronic mail, portable electronic advice or in any other manner) by Representatives of the Seller (directly or indirectly) prior to the Cut-off Time;
|
(c)
|
the Disclosure Letter;
|
(d)
|
this agreement, including the schedules and annexures thereto, and all documents referred to therein; and
|
(e)
|
the Data Room Information.
|
(a)
|
the party's position in respect of the Dispute;
|
(b)
|
the facts on which the party relies in support of its position;
|
(c)
|
the contractual or common law basis for the party's position; and
|
(d)
|
the remedy sought by the party.
|
|
|
Schedule 1
– Dictionary | page |
54
|
(a)
|
land, air and water;
|
(b)
|
any layer of the atmosphere;
|
(c)
|
any organic or inorganic matter and any living organism; and
|
(d)
|
human-made or modified structures and areas and includes interacting natural ecosystems that include any components of the kind referred to in paragraphs (a) to (c) of this definition.
|
(a)
|
any aspect of the Environment; and
|
(b)
|
the use of substances or conduct which may harm the Environment or be hazardous or otherwise harmful to human health,
|
(a)
|
the Contracted Product;
|
(b)
|
the Old Crusher;
|
(c)
|
the New Crusher;
|
(d)
|
the Excluded Infrastructure;
|
(e)
|
the Construction Equipment;
|
(f)
|
the Iron Ore Rights; and
|
(g)
|
the GAMG Assets.
|
|
|
Schedule 1
– Dictionary | page |
55
|
(a)
|
an application is made to a court for an order, or an order is made, that it be wound up, declared bankrupt or that a provisional liquidator or receiver or receiver and manager be appointed, and the application is not withdrawn, struck out or dismissed within 15 Business Days of it being made;
|
(b)
|
a liquidator or provisional liquidator is appointed;
|
(c)
|
an administrator is appointed to it under sections 436A, 436B or 436C of the Corporations Act;
|
(d)
|
a Controller (as defined in section 9 of the Corporations Act) is appointed to it or any of its Sale Interest;
|
(e)
|
a receiver is appointed to it or any of its Sale Interest;
|
|
|
Schedule 1
– Dictionary | page |
56
|
(f)
|
it enters into an arrangement or composition with one or more of its creditors, or an assignment for the benefit of one or more of its creditors, in each case other than to carry out a reconstruction or amalgamation while solvent;
|
(g)
|
it proposes a winding-up, dissolution or reorganisation, moratorium, agreement of company arrangement or other administration involving one or more of its creditors;
|
(h)
|
it is insolvent as disclosed in its accounts or otherwise, states that it is insolvent, is presumed to be insolvent under an applicable law (including under sub-section 459C(2) or section 585 of the Corporations Act) or otherwise is, or states that it is, unable to pay all its debts as and when they become due and payable;
|
(i)
|
it is taken to have failed to comply with a statutory demand as a result of sub-section 459F(1) of the Corporations Act;
|
(j)
|
a notice is issued under sections 601AA or 601AB of the Corporations Act and not withdrawn or dismissed within 15 Business Days;
|
(k)
|
a writ of execution is levied against it or its property which is not dismissed within 15 Business Days;
|
(l)
|
it ceases to carry on business or threatens to do so, other than for reorganisation or restructuring in accordance with the terms of this agreement; or
|
(m)
|
anything occurs under the law of any jurisdiction which has a substantially similar effect to any of the events set out in the above paragraphs of this definition.
|
(a)
|
any Third Party Agreement; or
|
(b)
|
the terms of grant of the Tenements, including any right to apply for a variation to such terms to include the right to explore or mine for Iron Ore.
|
|
|
Schedule 1
– Dictionary | page |
57
|
(a)
|
the mining tenements specified in Part 1 of Schedule 3; and
|
(b)
|
to the extent that they are held by the Seller, any renewals, conversions, amalgamations or substitutions of the mining tenements referred to in paragraph (a).
|
|
|
Schedule 1
– Dictionary | page |
58
|
(a)
|
the PPS Act;
|
(b)
|
any regulations made at any time under the PPS Act;
|
(c)
|
any legislative instrument made at any time under the PPS Act;
|
(d)
|
any amendment to any of the above, made at any time; or
|
(e)
|
any amendment made at any time to any other legislation as a consequence of a PPS Law referred to in paragraphs (a) to (d).
|
|
|
Schedule 1
– Dictionary | page |
59
|
(a)
|
the Tenements;
|
(b)
|
the Mining Information;
|
(c)
|
the Approvals;
|
(d)
|
the Project Assets;
|
(e)
|
the Consumables and Spares;
|
(f)
|
the Third Party Agreements (subject to any exclusions identified in this agreement and to the extent that they relate to the Tenements only);
|
(g)
|
the Petroleum Pipeline Licences;
|
|
|
Schedule 1
– Dictionary | page |
60
|
(h)
|
the Stockpiles (but excluding Contracted Product); and
|
(i)
|
the Associated Rights,
|
(a)
|
any third party rights or interests including a mortgage, bill of sale, charge, lien, pledge, trust, encumbrance, power or title retention arrangement, right of set off, assignment of income, garnishee order, monetary claim, flawed deposit arrangement or any other arrangement having a similar effect; and
|
(b)
|
a PPS Security Interest,
|
(c)
|
and includes any agreement to create any of them or allow them to exist.
|
|
|
Schedule 1
– Dictionary | page |
61
|
(a)
|
the mining tenement applications specified in Part 3 of Schedule 3 and those applications once granted;
|
(b)
|
to the extent that they are held by the Seller, any renewals, conversions, amalgamations or substitutions of the mining tenements referred to in paragraph (a); and
|
(c)
|
any mining tenement applications relating to the Project during the Interim Period and those applications once granted.
|
(a)
|
the Mining Tenements;
|
(b)
|
the Assigned Tenements; and
|
(c)
|
the Tenement Applications.
|
|
|
Schedule 1
– Dictionary | page |
62
|
(a)
|
the JVA;
|
(b)
|
the Deed of Cross Security;
|
(c)
|
the Chargee's Priority Deed;
|
(d)
|
the Commercial Terms Agreement;
|
(e)
|
the crushing contract for the provision of crushing, mining and processing services between WLOPL, CSI and the Seller Guarantor, to be entered into substantially on the terms described in the Commercial Terms Agreement;
|
(f)
|
the camp and accommodation contract for the provision of operating and maintenance services for the camp and airport between WLOPL, PMI and the Seller Guarantor, to be entered into substantially on the terms described in the Commercial Terms Agreement;
|
(g)
|
the logistics contract for the provision of haulage, port, loading and shipping services between the Seller, the Buyer, PMI and the Seller Guarantor, to be entered into substantially on the terms described in the Commercial Terms Agreement;
|
(h)
|
the marketing agreement for the provision of marketing services for the Product between the Seller and Albemarle US, Inc, to be entered into substantially on the terms described in the Commercial Terms Agreement;
|
(i)
|
the intellectual property licensing agreement for the licensing of intellectual property to the Project between the Seller, the Buyer, WLOPL and Albemarle US, Inc., to be entered into substantially on the terms described in the Commercial Terms Agreement;
|
(j)
|
the Parent Guarantee;
|
(k)
|
the WLOPL Shareholders Agreement
|
(l)
|
the WLOPL Constitution; and
|
(m)
|
any other agreement the parties agree is a Transaction Document for the purposes of this agreement.
|
|
|
Schedule 1
– Dictionary | page |
63
|
2
|
Interpretation
|
(a)
|
the singular includes the plural and vice versa;
|
(b)
|
words that are gender neutral or gender specific include each gender;
|
(c)
|
where a word or phrase is given a particular meaning, other parts of speech and grammatical forms of that word or phrase have corresponding meanings;
|
(d)
|
the words 'such as', 'including', 'particularly' and similar expressions are not used as, nor are intended to be, interpreted as words of limitation;
|
(e)
|
a reference to:
|
(i)
|
a person includes a natural person, partnership, joint venture, government agency, association, corporation or other body corporate;
|
(ii)
|
a thing (including, but not limited to, a chose in action or other right) includes a part of that thing, unless the context denotes otherwise;
|
(iii)
|
a party includes its successors and permitted assigns;
|
(iv)
|
a document includes all amendments or supplements to that document;
|
(v)
|
a clause, term, party, schedule or attachment is a reference to a clause or term of, or party, schedule or attachment to this agreement;
|
(vi)
|
this agreement includes all schedules and attachments to it;
|
(vii)
|
a law includes a constitutional provision, treaty, decree, convention, statute, regulation, ordinance, by-law, judgment, rule of common law or equity and is a reference to that law as amended, consolidated or replaced;
|
(viii)
|
an agreement includes an undertaking, or legally enforceable arrangement or understanding, whether or not in writing; and
|
(ix)
|
unless expressly stated otherwise in this agreement, a monetary amount is in Australian dollars;
|
|
|
Schedule 1
– Dictionary | page |
64
|
(f)
|
when the day on which something must be done is not a Business Day, that thing must be done on the following Business Day;
|
(g)
|
in determining the time of day, where relevant to this agreement, the relevant time of day is:
|
(i)
|
for the purposes of giving or receiving notices, the time of day where a party receiving a notice is located; or
|
(ii)
|
for any other purpose under this agreement, the time of day in the place where the party required to perform an obligation is located;
|
(h)
|
no rule of construction applies to the disadvantage of a party because that party was responsible for the preparation of this agreement or any part of it; and
|
(i)
|
a reference to so far as the Seller is aware, or words to that effect, in relation to a fact, matter or circumstance is to the actual knowledge of any of the following persons as at the Execution Date having made due and proper enquiries prior to 5.00 pm on the day prior to the Execution Date:
|
(i)
|
Chris Ellison;
|
(ii)
|
Mark Wilson;
|
(iii)
|
Simon Rushton;
|
(iv)
|
Tim Williams;
|
(v)
|
Mark Mitchell;
|
(vi)
|
Rohan O’Grady;
|
(vii)
|
Darren Killeen;
|
(viii)
|
Tim Berryman;
|
(ix)
|
Dave Geraghty; and
|
(x)
|
Nick Rohr.
|
|
|
Schedule 1
– Dictionary | page |
65
|
Schedule 2
|
Seller Group Warranties
|
1
|
General
|
1.1
|
Incorporation
|
1.2
|
Capacity
|
(a)
|
The Seller has full corporate power and authority to own the Project Assets, the Sale Interest and to sell and transfer the Sale Interest and cause the issue of the Subscription Shares.
|
(b)
|
The execution and delivery of this agreement has been properly authorised by all necessary corporate action of the Seller.
|
(c)
|
The Seller has full corporate power and lawful authority to execute and deliver this agreement and, subject to clause 2, to consummate and perform or cause to be performed its obligations under this agreement.
|
(d)
|
This agreement constitutes a legal, valid and binding obligation of the Seller, enforceable in accordance with its terms.
|
1.3
|
No default
|
(a)
|
The execution, delivery and (subject to satisfaction of the Conditions) performance by the Seller of this agreement does not or will not (with or without the lapse of time, the giving of notice or both) contravene, conflict with or result in a breach of or default under:
|
(i)
|
any agreement or instrument to which the Seller is a party;
|
(ii)
|
any provision of the constitution of the Seller; and
|
(iii)
|
any writ, order or injunction, judgement, or law to which it is a party or is subject or by which it is bound.
|
1.4
|
Ownership
|
(a)
|
There are no Security Interests over the Sale Interest (other than a Permitted Security Interest or, prior to Completion, the Security Trustee Security).
|
(b)
|
Except as expressly provided in this agreement, the Seller has not granted any option or right of pre-emption or first refusal in respect of any of the Sale Interest to any other person and subject to clause 2 and clause 5.2, the Seller will:
|
(i)
|
at Completion be able to transfer legal and beneficial ownership and title to all of the Sale Interest to the Buyer other than the Assigned Tenements and the Incomplete Infrastructure in each case which are not yet legally owned by the Seller, but in respect of which the Seller will transfer ownership of and a 50% beneficial interest; and
|
|
|
Schedule 2
| page |
66
|
(ii)
|
immediately after Completion, hold the remaining 50% legal and beneficial interest in the Project other than the Assigned Tenements and the Incomplete Infrastructure, in which the Seller will hold the remaining 50% beneficial interest.
|
1.5
|
Insolvency
|
(a)
|
No Insolvency Event has occurred in relation to the Seller.
|
(b)
|
So far as it is aware, there are no facts, matters or circumstances which give any person the right to apply to liquidate or wind up the Seller.
|
1.6
|
Share capital
|
(a)
|
At Completion, the Subscription Shares will constitute 50% of the issued ordinary share capital of WLOPL.
|
(b)
|
At Completion, there will be no shares in WLOPL allotted or on issue apart from Ordinary Shares and the Ordinary Shares will be fully paid.
|
(c)
|
At Completion, other than in accordance with this agreement and the Transaction Documents, WLOPL is not obliged to issue or allot any Shares or other securities of WLOPL, and WLOPL has not granted any person the right to call for the issue or allotment of any Shares or other securities of WLOPL.
|
2
|
Operation of the assets
|
2.1
|
Licences, authorisations and consents
|
(a)
|
The Seller has all material licences, authorisations and consents required for the activities it carries on in respect of the Project and the Seller has not received a written notice that it is in default under any such licence, authorisation or consent.
|
(b)
|
So far as the Seller is aware, the Approvals comprise all of the material licences and authorisations which are legally capable of being transferred to the Buyer or WLOPL and which were used by the Seller in activities in respect of the Project as conducted immediately prior to Completion including, without limitation, all material licences and authorisations which are necessary for the Seller to discharge in all material respects its contractual obligations which it owed to any third party immediately prior to Completion (but excluding any licences and authorisations which are held by third parties as required by applicable law).
|
2.2
|
Compliance with laws and regulations
|
2.3
|
Litigation
|
|
|
Schedule 2
| page |
67
|
3
|
Sale Interest
|
(a)
|
If the Economic Effective Date occurs prior to or on the Completion Date, at Completion the Sale Interest, together with the Seller's 50% interest in the Project, the Non-Transferring Approvals, the Excluded Assets and the Transaction Documents described in paragraph (e), (f) and (g) of the definition of Transaction Documents, comprises all of the material assets required for the production of Concentrate at the site of the Project, except for the supply of goods and services that can only be procured by WLOPL after Completion.
|
(b)
|
Save for the Excluded Assets and the Non-Transferring Approvals, at Completion, there are no material assets owned by the Seller or any of its Related Bodies Corporate which were used by the Seller to produce Concentrate at the site of the Project prior to Completion and which are not included in the Sale Interest and are required for the production of Concentrate at the site of the Project.
|
(c)
|
The Seller Group Warranties in this paragraph 3 are given only at Completion.
|
4
|
Disclosure
|
(a)
|
was submitted in, and (where the information was subject to judgments, estimates or assumptions of the Seller) prepared in, good faith; and
|
(b)
|
other than the information referred to in the parentheses in paragraph (a) above, as at the Execution Date, is true and accurate in all material respects.
|
5
|
Contracts
|
(a)
|
Except as disclosed in the Disclosure Material or otherwise disclosed to the Buyer by separate arrangement, copies of all Third Party Agreements as at the Execution Date are contained in the Data Room Information.
|
(b)
|
Aside from the Third Party Agreements, there are no agreements, arrangements or understandings to which the Seller is party which are material to the operation of the Project Assets having regard to their state of completion as at the Execution Date.
|
(c)
|
As at the Execution Date, the Seller has not received any notice of termination, rescission or, invalidation or claim pursuant to any actual or alleged breach or default of any Third Party Agreement to which the Seller is a party or any claim by any party to be able to terminate, rescind or invalidate any contract to which the Seller is a party by reason of any actual or alleged breach of that contract.
|
(d)
|
So far as the Seller is aware:
|
(i)
|
all Third Party Agreements then in existence are in full force and effect and binding in accordance with their terms (subject to any applicable insolvency laws);
|
(ii)
|
as at the Execution Date, there is no material default or material breach of any Third Party Agreement which may have a material adverse effect on the Project or the Project Assets;
|
|
|
Schedule 2
| page |
68
|
(iii)
|
it is not in material default or material breach of any Third Party Agreement which may have a material adverse effect on the Project or the Project Assets; and
|
(iv)
|
as at the Execution Date, there are no current or threatened material disputes or material claims in respect of any Third Party Agreement.
|
(e)
|
So far as the Seller is aware, with respect to each Equipment Lease:
|
(i)
|
no party to the contract is in material breach of it or otherwise in default as described in such Equipment Leases;
|
(ii)
|
there are no grounds for rescission, avoidance or repudiation of that Equipment Lease;
|
(iii)
|
no party has given notice to terminate it or has sought to repudiate or disclaim it or intends to do so;
|
(iv)
|
there are no facts or circumstances which are likely to give rise to any of the above; and
|
(v)
|
it is not terminable by virtue of the sale of the Sale Interest.
|
(f)
|
The Equipment Leases constitute all the equipment leases, hire purchase agreements, conditional purchase agreements and other hiring arrangements for assets used in the Project comprising part of the Sale Interest.
|
(g)
|
The Disclosure Material contains copies of each Equipment Lease in existence at the Execution Date.
|
6
|
Environmental
|
(a)
|
In this warranty 6:
|
(i)
|
Dangerous Substance
means any natural or artificial substance likely to cause significant damage to the environment; and
|
(ii)
|
Environmental Licence
means any permit, licence, authorisation, consent or other approval required under or in relation to any Environmental Law.
|
(b)
|
The Seller has all Environmental Licences necessary to own and operate the Project Assets in the state they exist as at the Execution Date and the Seller has not received written notice that it is materially in default under any such licence and, so far as the Seller is aware, there are no circumstances likely to give rise to such material default.
|
(c)
|
As at the Execution Date, the Seller has not received any notice that it is in violation of any Environmental Law where such violation would have a material adverse effect on the Project, the Sale Interest or the Tenements.
|
(d)
|
As at the Execution Date, the Seller has not received any notices, orders or directions issued by any Government Authority under any Environmental Law in respect of the Tenements or the Petroleum Pipeline Licences that have not been completely satisfied, and so far as the Seller is aware no such notice, order or direction is pending or has been threatened by any Government Authority and the Seller is not aware of any circumstance that would cause or might reasonably be expected to cause, or contribute to, the issue of such a notice, order or direction.
|
|
|
Schedule 2
| page |
69
|
(e)
|
So far as the Seller is aware, as at the Execution Date, there are no proceedings taken by any Government Authority in respect of the Tenements or the Petroleum Pipeline Licences and no such proceedings are pending or have been threatened by any Government Authority in writing, and the Seller is not aware of any investigations being carried out or proposed by any Government Agency in respect of any breach or alleged breach of or non-compliance with any Environmental Law relevant to the Tenements or the Petroleum Pipeline Licences by the Seller.
|
(f)
|
As at the Execution Date, the Seller is not engaged in any litigation, arbitration or administrative proceeding concerning Environmental Law or Dangerous Substances which is in progress and which is material in relation to the Project Assets or the Sale Interest nor, as far as the Seller is aware, have any such proceeding been threatened in writing by or against the Seller.
|
7
|
Tenements and Petroleum Pipeline Licences
|
(a)
|
Other than the Assigned Tenements and the Tenement Applications, the Tenements are legally and beneficially owned solely by the Seller and at Completion will be free and clear of all Security Interests (other than Permitted Security Interests).
|
(b)
|
The Assigned Tenements are beneficially owned by the Seller and the Seller is entitled to become the legal owner of the Assigned Tenements and after transfer to the Buyer will be free and clear of all Security Interests (other than the Permitted Security Interests).
|
(c)
|
The Seller will, on grant of the Tenement Applications, be the sole legal and beneficial owner of the Tenement Applications and at Completion, the Tenement Applications will be free and clear of all Security Interests (other than Permitted Security Interests).
|
(d)
|
There are no material breaches of any of the terms and conditions of the Tenements (other than the Assigned Tenements) or the Petroleum Pipeline Licences and, so far as the Seller is aware, the Assigned Tenements.
|
(e)
|
So far as the Seller is aware:
|
(i)
|
each of the Tenements is in good standing and in full effect in accordance with its terms and the Mining Act;
|
(ii)
|
each of the Petroleum Pipeline Licences is in good standing and in full effect in accordance with its terms and the Petroleum Pipelines Act;
|
(iii)
|
except as disclosed in the Disclosure Material, as at the Execution Date. the Seller has not received any written notice of any potential native title claims which have been lodged in respect of any of the Tenements;
|
(iv)
|
except as disclosed in the Disclosure Material, as at the Execution Date, there is not in existence any current compensation agreement with the owner or occupier of any land which is subject to the Tenements or the Petroleum Pipeline Licences; and
|
|
|
Schedule 2
| page |
70
|
(v)
|
none of the Tenements or the Petroleum Pipeline Licences are liable to forfeiture, cancellation or suspension and there is no matter likely to prejudice the renewal of the Tenements or the Petroleum Pipeline Licences or which might adversely affect the rights or benefits conferred by the Tenements or the Petroleum Pipeline Licences.
|
8
|
Project Assets
|
(a)
|
The Seller is:
|
(i)
|
the legal and beneficial owner of the Completed Infrastructure;
|
(ii)
|
entitled to become the legal and beneficial owner of the Incomplete Infrastructure; and
|
(iii)
|
the beneficial owner of all other Project Assets.
|
(b)
|
There will be no Security Interest (other than a Permitted Security Interest) over or affecting any Project Assets and the Seller is not party to any agreement to grant any Security Interest over any Project Assets.
|
(c)
|
So far as the Seller is aware, no person has a continuing claim of an entitlement to a Security Interest (other than a Permitted Security Interest) over or affecting any Project Assets other than as provided for in the Third Party Agreements.
|
(d)
|
Each item of Completed Infrastructure:
|
(i)
|
is (to the extent any purchase moneys are due and payable) fully paid for;
|
(ii)
|
is not the subject of any lease or hire purchase agreement or agreement for purchase on deferred terms, other than in the ordinary course of business;
|
(iii)
|
is located at the Tenements or otherwise within the physical possession or control of the Seller;
|
(iv)
|
is in the physical possession or control of the Seller; and
|
(v)
|
not the subject of any agreements or arrangements to dispose or not to dispose or which otherwise restrict their use or disposal by the Seller.
|
(e)
|
Each item of the Project Assets, to the extent they are complete and operational:
|
(i)
|
is as at the Execution Date in a good and safe state of repair and condition and is in satisfactory working order for its age; and
|
(ii)
|
between the Execution Date and Completion, has in all material respects been operated and maintained in accordance with the standard that would reasonably be expected of persons operating and maintaining equipment similar to the Project Assets in the mining industry in Australia.
|
9
|
Records
|
(a)
|
have been properly maintained; and
|
|
|
Schedule 2
| page |
71
|
(b)
|
do not contain material inaccuracies or discrepancies of any kind.
|
10
|
Real property
|
11
|
Intellectual Property Rights
|
(a)
|
So far as the Seller is aware, the Seller's use of any Intellectual Property Rights in connection with the Project Assets which are material in the context of the Project as a whole, does not infringe, breach an obligation of confidence or wrongfully use any confidential information, trade secrets, copyright, letters patent, trade marks, service marks, trade names, designs, business names or other similar industrial, commercial or intellectual property rights of any corporation or person.
|
(b)
|
So far as the Seller is aware, as at the Execution Date, no Claims have been asserted challenging the Seller's use of the Intellectual Property Rights.
|
12
|
Anti-bribery and corruption
|
(a)
|
So far as the Seller is aware, neither the Seller nor any of their Representatives has in relation to the Project Assets:
|
(i)
|
offered, paid, promised to pay, or authorised the payment of any money, or has offered, given, promised to give, or authorised the giving of anything of value, including, but not limited to, cash, cheques, wire transfers, tangible and intangible gifts, favours, services, and those entertainment and travel expenses, to any Governmental Authority, political party or candidate for government office, nor provided or promised anything of value or which may constitute an undue advantage to any other person while knowing that all or a portion of that thing of value would or will be offered, given, or promised, directly or indirectly, to any Governmental Authority, political party or candidate for government office, for the purpose of improperly:
|
(A)
|
influencing any act or decision of such official, party or candidate in his official capacity, inducing such official, party or candidate to do or omit to do any act in violation of their lawful duty, or securing any improper advantage; or
|
(B)
|
inducing such official, party or candidate to use his influence with his government or instrumentality to affect or influence any act or decision of such government or instrumentality, in order to assist in obtaining or retaining business for or with, or directing business to, any person;
|
(ii)
|
violated any applicable anti-corruption laws;
|
(iii)
|
violated any applicable anti-money laundering laws; or
|
(iv)
|
otherwise made, offered, sought, provided or received any bribe, payoff, influence payment, kickback, or other similar unlawful payment or an undue advantage to obtain favourable treatment in securing business for the Seller or the Project.
|
|
|
Schedule 2
| page |
72
|
(b)
|
Without limiting the foregoing, there are and have been no enforcement actions or, investigations (internal or governmental) involving or, so far as the Seller is aware, allegations or disclosures to, Governmental Authorities, related to actual or potential violations of any anti-corruption or anti-money laundering laws or regulations relating to any improper conduct of the Seller in relation to the Project Assets, and so far as the Seller is aware there are no circumstances likely to give rise to any Claim relating to any such improper conduct of the Seller in relation to the Project Assets. The Seller has not received any notice, request, or citation for any actual or potential non-compliance with any of the foregoing in this Warranty 12.2 as it relates to the Project.
|
(c)
|
The Seller maintains and utilises controls procedures and internal accounting control systems that are consistent with the requirements of any applicable anti-corruption laws.
|
13
|
Insurance
|
(a)
|
The Disclosure Materials contain, as at the Execution Date, complete and accurate particulars of all current insurance policies taken out in respect of the Project Assets (
Insurances
).
|
(b)
|
Each Insurance policy is currently in full force and effect.
|
(c)
|
So far as the Seller is aware, as at the Execution Date, nothing has been done or omitted to be done that would make any Insurance void or voidable or that would permit an insurer to cancel the Insurance or refuse or materially reduce a claim.
|
14
|
Tax
|
(a)
|
the Tenements (other than the Assigned Tenements) has been paid; and
|
(b)
|
the Assigned Tenements, so far as the Seller is aware, has been paid.
|
|
|
Schedule 2
| page |
73
|
Schedule 13
|
Completion Adjustment
|
1
|
Calculation
|
(a)
|
the value of all operational spares at Completion minus the value of all operational spares at the Economic Effective Date, in each case to the extent that the operational spares are for use in connection with the Project;
|
(b)
|
the value of all Ore and Product on the Stockpile as at the Economic Effective Date (valued at cost); and
|
(c)
|
the value of all oil, diesel, greases, lubricants, hydraulic fluids, cleaning products, explosives and all other consumables used in connection with the Project as at the Economic Effective Date (valued at cost).
|
2
|
Principles and Policies
|
2.1
|
General Principles
|
(a)
|
the pro-forma income statement set out in Schedule 14 and must:
|
(i)
|
only include income and expenses falling within categories included in that pro-forma income statement;
|
(ii)
|
exclude any income and expenses of a categories identified as 'EXCLUDED' in that pro-forma income statement; and
|
(iii)
|
not include any expense incurred otherwise than in accordance with this agreement (including clause 6);and
|
(b)
|
except to the extent set out in clause 2.1(a) above, in accordance with the Accounting Standards.
|
2.2
|
Specific principles, policies and procedures
|
|
|
Schedule 13
| page |
117
|
(a)
|
no item shall be included more than once;
|
(b)
|
no item shall be included or excluded solely on the grounds of materiality;
|
(c)
|
any item that has or will otherwise be provided for under any Transaction Document shall be excluded from the Completion Statement to the extent that the inclusion would result in two payments in respect of the same item; and
|
(d)
|
all amounts in a currency other than US dollars are to be converted to US dollars at the closing Reserve Bank of Australia rate on the Completion Date or as otherwise agreed between the parties.
|
|
|
Schedule 13
| page |
118
|
Executed by
Wodgina Lithium Pty Ltd
ACN 611 488 932 in accordance with section 127 of the
Corporations Act 2001
(Cth) by:
/s/ Chris Ellison
|
|
/s/ Mark Gregory Wilson
|
Signature of director
Chris Ellison
|
|
Signature of director/secretary
Mark Gregory Wilson
|
Name of director (print)
|
|
Name of director/secretary (print)
|
Executed by
Albemarle Wodgina Pty Ltd
ACN 630 509 303 in accordance with section 127 of the
Corporations Act 2001
(Cth) by:
/s/ Terrence Hammons
|
|
/s/ Mathew Shane Zauner
|
Signature of director
Terrence Hammons
|
|
Signature of director/secretary
Mathew Shane Zauner
|
Name of director (print)
|
|
Name of director/secretary (print)
|
Executed by
Mineral Resources Limited
ACN 118 549 910 in accordance with section 127 of the
Corporations Act 2001
(Cth) by:
/s/ Chris Ellison
|
|
/s/ Mark Gregory Wilson
|
Signature of director
Chris Ellison
|
|
Signature of director/secretary
Mark Gregory Wilson
|
Name of director (print)
|
|
Name of director/secretary (print)
|
|
|
Execution
| page |
124
|
Executed by
Albemarle Corporation
in the presence of:
/s/ A. Chanler Krupa
|
|
/s/ Ander Krupa
|
Signature of witness
A. Chanler Krupa
|
|
Signature of authorised signatory
Ander Krupa
|
Name of witness (print)
|
|
Name of authorised signatory (print)
|
|
|
Execution
| page |
125
|
Contents
|
|
Page
|
|
|
1
|
Defined terms and interpretation
|
1
|
|
|
|
1.1
|
Definitions in the Dictionary
|
1
|
|
|
1.2
|
Interpretation
|
1
|
|
2
|
Joint Venture
|
1
|
|
|
|
2.1
|
Formation of Joint Venture
|
1
|
|
|
2.2
|
Purposes of Joint Venture
|
1
|
|
|
2.3
|
Reserved Rights
|
2
|
|
|
2.4
|
Exercise of Iron Ore Rights
|
2
|
|
|
2.5
|
Transfer of incomplete Project Facilities
|
4
|
|
|
2.6
|
Name
|
4
|
|
|
2.7
|
Relationship of Participants
|
4
|
|
|
2.8
|
Entitlement to Product
|
5
|
|
|
2.9
|
Tenants in common
|
5
|
|
|
2.1
|
No partition
|
5
|
|
|
2.11
|
Rights and obligations several
|
5
|
|
|
2.12
|
Mutual obligations
|
6
|
|
|
2.13
|
Protection of Tenements and Pipeline Licences
|
6
|
|
|
2.14
|
Maintain Tenements and Pipeline Licences
|
6
|
|
|
2.15
|
Rehabilitation
|
6
|
|
|
2.16
|
Party warranties
|
7
|
|
3
|
Term and termination
|
8
|
|
|
|
3.1
|
Term of Joint Venture
|
8
|
|
|
3.2
|
Disposal of Joint Venture Assets upon termination
|
8
|
|
|
3.3
|
Certain obligations continue beyond termination
|
9
|
|
4
|
Manager
|
9
|
|
|
|
4.1
|
Initial Manager
|
9
|
|
|
4.2
|
Shareholding in the Manager
|
9
|
|
|
4.3
|
Removal of Manager
|
9
|
|
|
|
|
|
4.4
|
No transfer of Manager’s interest
|
10
|
|
|
4.5
|
Delivery of property on change of Manager
|
10
|
|
|
4.6
|
Liability of Manager and indemnity
|
11
|
|
|
4.7
|
Attorney
|
11
|
|
5
|
Powers and duties of Manager
|
11
|
|
|
|
5.1
|
Conduct of Joint Venture Operations
|
11
|
|
|
5.2
|
Insurance
|
14
|
|
|
5.3
|
Funding of the Manager
|
15
|
|
|
5.4
|
Conduct of operations
|
15
|
|
|
5.5
|
Independent status of Manager
|
15
|
|
|
5.6
|
Delegation
|
15
|
|
|
5.7
|
Manager's custody of Joint Venture Assets
|
15
|
|
|
5.8
|
Contracts with Affiliates of Manager
|
16
|
|
|
5.9
|
Contracts with Third Parties
|
17
|
|
|
5.10
|
No profit or loss by Manager
|
18
|
|
|
5.11
|
Good faith
|
18
|
|
|
5.12
|
Ratify actions of Manager
|
18
|
|
6
|
Management Committee
|
18
|
|
|
|
6.1
|
Establishment of Management Committee
|
18
|
|
|
6.2
|
Composition of Management Committee
|
19
|
|
|
6.3
|
Meetings
|
19
|
|
|
6.4
|
Notice of meetings
|
20
|
|
|
6.5
|
Quorum
|
20
|
|
|
6.6
|
Chairperson
|
20
|
|
|
6.7
|
Senior management personnel of the Manager
|
20
|
|
|
6.8
|
Voting rights
|
21
|
|
|
6.9
|
Ordinary Resolutions
|
22
|
|
|
6.10
|
Special Resolutions
|
22
|
|
|
6.11
|
Deadlocks
|
22
|
|
|
6.12
|
Stage 2 Decision
|
23
|
|
|
|
|
|
6.13
|
Advisers
|
27
|
|
|
6.14
|
Authority of Representatives
|
27
|
|
|
6.15
|
Resolution without meeting
|
27
|
|
|
6.16
|
Manager’s delegate
|
27
|
|
|
6.17
|
Minutes
|
28
|
|
|
6.18
|
Sub-committees
|
28
|
|
|
6.19
|
Services
|
28
|
|
|
6.20
|
Recommendations and decisions of sub-committees
|
29
|
|
7
|
Budgets, planning and contributions
|
29
|
|
|
|
7.1
|
Commencement under Initial Mine Plan and Budget
|
29
|
|
|
7.2
|
Preparation and approval of the Business Plan
|
29
|
|
|
7.3
|
Contents of Business Plan
|
29
|
|
|
7.4
|
Revision of Business Plan
|
32
|
|
|
7.5
|
Approval of Business Plan and revisions
|
32
|
|
|
7.6
|
Temporary operating plan if Business Plan not approved
|
32
|
|
|
7.7
|
Business Plan is binding on the Manager
|
33
|
|
|
7.8
|
Urgent action
|
33
|
|
8
|
Provision of funds
|
34
|
|
|
|
8.1
|
Obligation to contribute
|
34
|
|
|
8.2
|
Manager may apply funds held
|
34
|
|
|
8.3
|
Monthly Cash Call
|
34
|
|
|
8.4
|
Payment of Called Sum
|
35
|
|
|
8.5
|
Emergency Cash Call
|
36
|
|
|
8.6
|
Bank account
|
36
|
|
|
8.7
|
Disbursements from bank accounts
|
37
|
|
|
8.8
|
Repayment of surplus funds
|
37
|
|
|
8.9
|
Accounting for Called Sums
|
37
|
|
9
|
Records, accounts and reports
|
37
|
|
|
|
9.1
|
Manager to keep records and accounts
|
37
|
|
|
9.2
|
Place for records
|
38
|
|
|
|
|
|
9.3
|
Annual financial statement
|
38
|
|
|
9.4
|
Monthly report
|
38
|
|
|
9.5
|
Forecasts
|
39
|
|
|
9.6
|
Other reporting requirements
|
40
|
|
|
9.7
|
Information and data
|
40
|
|
|
9.8
|
Copies of reports to Participants
|
42
|
|
|
9.9
|
Format
|
42
|
|
|
9.10
|
Additional reporting
|
42
|
|
10
|
Audit and access
|
42
|
|
|
|
10.1
|
Audit
|
42
|
|
|
10.2
|
Participant’s access to records
|
43
|
|
|
10.3
|
Access to Joint Venture Area and Joint Venture Assets
|
43
|
|
11
|
Confidential Information
|
44
|
|
|
|
11.1
|
Information to be kept confidential
|
44
|
|
|
11.2
|
Protection of Confidential Information
|
45
|
|
|
11.3
|
Announcements
|
45
|
|
|
11.4
|
Continuing confidentiality obligation
|
45
|
|
|
11.5
|
MRL Standstill
|
45
|
|
|
11.6
|
Albemarle Standstill
|
46
|
|
12
|
Assignments and charges
|
47
|
|
|
|
12.1
|
Restrictions on assignments and charges
|
47
|
|
|
12.2
|
Permitted transfer to Subsidiaries
|
48
|
|
|
12.3
|
Sale of Participant's lithium business
|
48
|
|
|
12.4
|
Transfer of Participant’s Joint Venture Interest
|
48
|
|
|
12.5
|
Right of last refusal
|
49
|
|
|
12.6
|
Requirements of offer to Continuing Participants
|
51
|
|
|
12.7
|
Charge of Participant’s Joint Venture Interest
|
52
|
|
|
12.8
|
Notice of intention to create Security Interest
|
52
|
|
|
12.9
|
Sale of Joint Venture Interest by Chargee
|
52
|
|
|
12.10
|
Set-off
|
53
|
|
|
|
|
|
12.11
|
Assumption of Joint Venture obligations by Transferee
|
53
|
|
|
12.12
|
Change in Control
|
54
|
|
13
|
Defaults and remedies
|
58
|
|
|
|
13.1
|
Event of Default
|
58
|
|
|
13.2
|
Notices of default
|
58
|
|
|
13.3
|
Payment of interest upon default
|
59
|
|
|
13.4
|
Rights following an Event of Default
|
59
|
|
|
13.5
|
Payment of Unpaid Called Sum
|
60
|
|
|
13.6
|
Delivery of Cross Security
|
60
|
|
|
13.7
|
Option to acquire Joint Venture Interest of Defaulting Participant
|
61
|
|
|
13.8
|
Value of Joint Venture Interest of Defaulting Participant
|
64
|
|
|
13.9
|
Remedies not exclusive
|
65
|
|
14
|
Force Majeure
|
65
|
|
|
15
|
Notices
|
66
|
|
|
|
15.1
|
General
|
66
|
|
|
15.2
|
How to give a communication
|
66
|
|
|
15.3
|
Particulars for delivery
|
66
|
|
|
15.4
|
Communications by post
|
67
|
|
|
15.5
|
Communications by email
|
67
|
|
|
15.6
|
Process service
|
68
|
|
|
15.7
|
After hours communications
|
68
|
|
16
|
GST
|
68
|
|
|
|
16.1
|
Construction
|
68
|
|
|
16.2
|
Consideration GST exclusive
|
68
|
|
|
16.3
|
Payment of GST
|
69
|
|
|
16.4
|
Timing of GST payment
|
69
|
|
|
16.5
|
Tax invoice
|
69
|
|
|
16.6
|
Adjustment event
|
69
|
|
|
16.7
|
Reimbursements
|
69
|
|
|
16.8
|
Calculations based on other amounts
|
69
|
|
|
|
|
|
16.9
|
No merger
|
69
|
|
|
16.10
|
GST joint venture
|
70
|
|
17
|
Expert determination
|
70
|
|
|
|
17.1
|
When appointed
|
70
|
|
|
17.2
|
Appointment
|
70
|
|
|
17.3
|
Instructions
|
71
|
|
|
17.4
|
Procedure
|
71
|
|
|
17.5
|
Costs
|
71
|
|
18
|
Dispute resolution
|
71
|
|
|
|
18.1
|
Dispute resolution process
|
71
|
|
|
18.2
|
Dispute Notice
|
71
|
|
|
18.3
|
Meeting of the parties' designated representatives
|
72
|
|
|
18.4
|
Meeting of Senior Executives and Chief Executive Officers
|
72
|
|
|
18.5
|
Court proceedings
|
72
|
|
|
18.6
|
Urgent interlocutory relief
|
72
|
|
19
|
General
|
72
|
|
|
|
19.1
|
Consents and approvals
|
72
|
|
|
19.2
|
Duty
|
72
|
|
|
19.3
|
Legal costs
|
73
|
|
|
19.4
|
No liability for consequential losses
|
73
|
|
|
19.5
|
Entire agreement
|
73
|
|
|
19.6
|
Further assurances
|
73
|
|
|
19.7
|
Rights cumulative
|
73
|
|
|
19.8
|
Severability
|
73
|
|
|
19.9
|
Survival and merger
|
74
|
|
|
19.10
|
PPS Act
|
74
|
|
|
19.11
|
Variation
|
74
|
|
|
19.12
|
Waiver
|
74
|
|
|
19.13
|
Governing law
|
74
|
|
|
19.14
|
Counterparts
|
74
|
|
|
|
|
|
|
|
1
|
Wodgina Lithium Pty Ltd
ACN 611 488 932 of 1 Sleat Road, Applecross WA 6153 ( WLPL ) |
2
|
Albemarle Wodgina Pty Ltd
ACN 630 509 303 of [ insert address ] ( AWPL ) |
3
|
Wodgina Lithium Operations Pty Ltd
ACN [ insert ACN ] of [ insert address ] ( WLOPL ) |
1
|
Defined terms and interpretation
|
1.1
|
Definitions in the Dictionary
|
(a)
|
which is defined in the Dictionary in Schedule 1, has the meaning given to it in the Dictionary;
|
(b)
|
which is defined in the Corporations Act, but is not defined in the Dictionary, has the meaning given to it in the Corporations Act; and
|
(c)
|
which is defined in the GST Law, but is not defined in the Dictionary or the Corporations Act, has the meaning given to it in the GST Law.
|
1.2
|
Interpretation
|
2
|
Joint Venture
|
2.1
|
Formation of Joint Venture
|
WLPL’s Joint Venture Interest
|
AWPL’s Joint Venture Interest
|
50%
|
50%
|
2.2
|
Purposes of Joint Venture
|
|
|
page |
1
|
(a)
|
the exploration, development, mining, processing and production of Minerals from the Joint Venture Area upon the terms and conditions set out in this agreement;
|
(b)
|
the construction and operation of a Refinery Plant on such part of the Joint Venture Area as determined by the Management Committee upon the terms and conditions set out in this agreement;
|
(c)
|
to implement the Business Plan;
|
(d)
|
to carry out any other activities as the Participants may agree; and
|
(e)
|
all such other matters and things as may be incidental to the foregoing, including Rehabilitation of the Tenements and Mine Closure.
|
2.3
|
Reserved Rights
|
(a)
|
The parties acknowledge that:
|
(i)
|
WLPL is the holder of Iron Ore Rights, and such rights permit WLPL to conduct certain exploration and mining activities on the Tenements in respect of Iron Ore, for so long as the Iron Ore Rights exist, and such rights do not form part of the Joint Venture Assets; and
|
(ii)
|
pursuant to the GAMG Mineral Rights Agreement, rights to conduct certain exploration and mining activities on the Tenements in respect of Tantalum were granted to GAMG, and such rights do not form part of the Joint Venture Assets.
|
(b)
|
AWPL acknowledges that WLPL may apply for a variation to the terms of grant of the Tenements to the extent necessary so that the terms of grant include the right to explore or mine for Iron Ore and that upon such variation being granted, such Iron Ore Rights will be reserved to WLPL (and in such case AWPL will consent to such application and sign any required forms and applications in that regard), subject to WLPL indemnifying AWPL in relation to any taxes or duties (including stamp duty) payable by AWPL in relation to such variation or reservation).
|
2.4
|
Exercise of Iron Ore Rights
|
(a)
|
Except as may be expressly permitted under the terms of a Notice of Consent, WLPL must exercise its Iron Ore Rights in such a manner so as to not adversely interfere with or impair the Exploration Operations and/or Mining Operations of the Joint Venture, which WLPL acknowledges takes precedence over WLPL’s rights to conduct Exploration Operations and Mining Operations in respect of Iron Ore.
|
(b)
|
If WLPL intends to commence any Exploration Operations or Mining Operations pursuant to its Iron Ore Rights it must first give a notice (
Notice of Proposed Activity
) to the Manager containing the following particulars (
Proposed Activity
):
|
(i)
|
in the case of Exploration Operations:
|
(A)
|
the general nature and methods of Exploration Operations proposed on any part of the area of the Tenements;
|
(B)
|
the approximate number of Personnel and the general nature of the plant and machinery which it proposes to take on to the area of the Tenements for the purpose of conducting such Exploration Operations; and
|
|
|
page |
2
|
(C)
|
the areas within each of the Tenements which it proposes to enter upon for the purpose of conducting such Exploration Operations; and
|
(ii)
|
in the case of Mining Operations:
|
(A)
|
a proposed Mine Development plan;
|
(B)
|
such relevant information as is reasonably necessary for the Manager to effectively consider the proposal to commence Mining Operations; and
|
(C)
|
the date that it intends to commence Mining Operations.
|
(c)
|
Upon receipt of a Notice of Proposed Activity, the Manager must convene a meeting of the Management Committee to consider the Notice of Proposed Activity. The Manager will give the Participants at least 45 days’ prior notice of such meeting.
|
(d)
|
If the Management Committee resolves (acting reasonably) that WLPL’s Proposed Activity may adversely interfere with or impair the Joint Venture's Mining Operations or currently existing Exploration Operations or areas identified as prospective for Minerals other than Iron Ore and Tantalum (
Other Minerals
) through any prior Exploration Operations, then the Manager must within five (5) Business Days of such resolution give a notice of objection to WLPL (
Notice of Objection
).
|
(e)
|
If the Management Committee resolves (acting reasonably) that WLPL’s Proposed Activity will not adversely interfere with or impair the Joint Venture's Mining Operations or currently existing Exploration Operations or areas identified as prospective for Other Minerals through any prior Exploration Operations (or, subject to clause 2.4(f)(ii), will not if WLPL complies with conditions determined by the Management Committee), the Manager must within five (5) Business Days of such resolution give a notice of consent to WLPL (
Notice of Consent
).
|
(f)
|
If the Manager:
|
(i)
|
does not issue a notice in accordance with either clause 2.4(d) or clause 2.4(e); or
|
(ii)
|
issues a notice in accordance with clause 2.4(e) and, within five (5) Business Days of receipt of such notice, WLPL notifies the Manager that it does not accept the conditions determined by the Management Committee which attach to such notice,
|
(g)
|
A resolution of the Management Committee to issue a Notice of Objection or a Notice of Consent shall be by a Special Resolution.
|
(h)
|
WLPL may not proceed with its Proposed Activity unless it has received a Notice of Consent from the Manager.
|
(i)
|
Subject to clause 2.4(f), upon receipt of a Notice of Consent from the Manager, WLPL may proceed to implement its Exploration Operations or Mining Operations (as applicable) in accordance with the relevant Notice of Proposed Activity subject to and in compliance with any conditions set out in the Notice of Consent, and provided it continues to use its best endeavours to minimise any adverse interference with the Joint Venture Operations.
|
|
|
page |
3
|
(j)
|
Within five (5) days of a Notice of Objection being given, the Manager, AWPL and WLPL shall meet and discuss WLPL’s Proposed Activity and any objections to it in a bona fide endeavour to resolve the matter by agreement, and such discussions may include amendment or variation by:
|
(i)
|
WLPL of the extent or timing of the Proposed Activity or conditions it will comply with in relation to the Proposed Activity; or
|
(ii)
|
the Manager of the affected Mining Operations or Exploration Operations program given in its Notice of Objection.
|
(k)
|
If, notwithstanding the discussions between WLPL, AWPL and the Manager, they are unable to resolve the Manager’s objections set out in the Notice of Objection within fourteen (14) days of the Notice of Objection being received by WLPL, then a Participant may issue a Dispute Notice in accordance with clause 18.2 to attempt to resolve the matter.
|
(l)
|
If the Participants are unable to resolve the matter in accordance with clause 18.2, then the Proposed Activity may not proceed.
|
(m)
|
The Participants agree that (as between themselves):
|
(i)
|
the area of the Wodgina Resource is deemed to be a Development Area (as defined in the Mineral Rights Agreement) for Minerals other than Iron Ore and WLPL will not during the term of the Joint Venture issue a Notice of Proposed Activity in the exercise of its Iron Ore Rights in that area;
|
(ii)
|
subject to clause 2.4(m)(i), the process in this clause 2.4 will apply in substitution of the 'Notice of Proposal to Mine' process in clause 6.9 of the Mineral Rights Agreement, which for the avoidance of doubt means that the Participants (including AWPL) are not required to comply clause 6.9 of the Mineral Rights Agreement; and
|
(iii)
|
this agreement prevails to the extent of any inconsistency with the Iron Ore Rights.
|
2.5
|
Transfer of incomplete Project Facilities
|
2.6
|
Name
|
2.7
|
Relationship of Participants
|
(a)
|
Nothing contained in a Joint Venture Document will be deemed to constitute a Participant being the partner of any other Participant.
|
(b)
|
Except as otherwise specifically provided for in a Joint Venture Document, nothing contained in a Joint Venture Document will be construed so as to constitute a Participant an agent or representative of any other Participant or to create any trust for any purpose howsoever, except to the extent to which the Manager is the agent of the Participants.
|
|
|
page |
4
|
(c)
|
No Participant shall be under any fiduciary or other duty to the other which will prevent it from engaging in or enjoying the benefits of any competing endeavours, subject to the express provisions of this agreement.
|
2.8
|
Entitlement to Product
|
(a)
|
Each Participant shall be entitled and obliged, unless otherwise agreed by the Participants, to take in kind and separately dispose of, in proportion to its Joint Venture Interest, all Product as and when produced by the Joint Venture.
|
(b)
|
The Manager must deliver each Participant’s Joint Venture Interest share of Product to the Participant at the Delivery Point, and if separately delivered, by use of equipment and techniques which are specifically designed and intended not to favour any one Participant over another.
|
(c)
|
Title to, and the risk of loss of, or damage to, the Product passes to the relevant Participant at the Delivery Point.
|
(d)
|
Upon commencement of operation of the Refinery Plant, each Participant will cause such amount of its Lithium recovered from the Tenements to be refined using the Refinery Plant as specified in the Refinery Plant Business Plan.
|
(e)
|
If the Sole Risk Participant develops the Alternative Refinery Plant in accordance with clause 6.12(h), the Sole Risk Participant will not be obliged to refine any of the Non-consenting Participant’s Product in the Alternative Refinery Plant.
|
2.9
|
Tenants in common
|
(a)
|
The Joint Venture Assets will be beneficially owned by the Participants as tenants in common in proportion to their respective Joint Venture Interests, notwithstanding that the legal title may be held by one or some only of the Participants or the Manager.
|
(b)
|
The Manager or any Participant which holds the legal title to any Joint Venture Asset, holds such Joint Venture Asset as agent for the Participants in proportion to their respective Joint Venture Interests.
|
2.10
|
No partition
|
2.11
|
Rights and obligations several
|
|
|
page |
5
|
2.12
|
Mutual obligations
|
2.13
|
Protection of Tenements and Pipeline Licences
|
2.14
|
Maintain Tenements and Pipeline Licences
|
2.15
|
Rehabilitation
|
(a)
|
Subject to clause 2.15(b), with effect from the Effective Date, the Participants shall bear the responsibility for Rehabilitation Obligations and the payment of the Rehabilitation Levy applicable to the Tenements in accordance with their respective Joint Venture Interests.
|
(b)
|
WLPL agrees that it is responsible for such amount of the Rehabilitation Levy paid by AWPL under clause 2.15(a) (or by the Manager on behalf of AWPL) and any costs incurred by AWPL in respect of Rehabilitation Obligations which are attributable to:
|
(i)
|
acts, errors or omissions of WLPL, its Affiliates or their Personnel which were in breach of a law, Approval or Tenement condition, during the WLPL Ownership Period;
|
(ii)
|
any exploration for or mining of Iron Ore on the Tenements occurring after the Effective Date; and
|
(iii)
|
any exploration for or mining of Tantalum on the Tenements occurring after the Effective Date pursuant to the exercise of mining or exploration rights for Tantalum in circumstances where GAMG is no longer the holder of the rights under the GAMG Mineral Rights Agreement and such rights have reverted to WLPL (including by WLPL becoming the successor to the GAMG under the GAMG Mineral Rights Agreement),
|
(c)
|
WLPL must reimburse AWPL within 5 Business Days after it receives evidence of the payment by AWPL of any Rehabilitation Liability Costs.
|
(d)
|
As soon as reasonably practicable after the Effective Date, WLPL must provide AWPL with any information WLPL has compiled in relation to the Tenements for the purposes of calculating the Rehabilitation Levy.
|
(e)
|
Without limitation to clause 2.15(a), WLPL must indemnify AWPL against any loss, cost, damage or liability in relation to the exploration, mining and other related activities occurring on or after the Effective Date in respect of:
|
|
|
page |
6
|
(i)
|
Iron Ore; and
|
(ii)
|
Tantalum (but only in circumstances where GAMG is no longer the holder of the rights under the GAMG Mineral Rights Agreement and such rights have reverted to WLPL),
|
2.16
|
Party warranties
|
(a)
|
Each party represents and warrants to each of the other parties that each of the following statements is true, accurate and complete and not misleading as at the Effective Date:
|
(i)
|
it is duly incorporated and validly exists under the law of its place of incorporation;
|
(ii)
|
the execution and delivery of this agreement has been properly authorised by all necessary corporate action;
|
(iii)
|
it has full corporate power and lawful authority to execute and deliver this agreement and to consummate and perform or cause to be performed its obligations under this agreement;
|
(iv)
|
this agreement constitutes a legal, valid and binding obligation on it enforceable in accordance with its terms;
|
(v)
|
the execution, delivery and performance by it of this agreement does not or will not (with or without the lapse of time, the giving of notice or both) contravene, conflict with or result in a breach of or default under:
|
(A)
|
any provision of its constitution;
|
(B)
|
any material term or provision of any security arrangement (including any Security Interest), undertaking, agreement or deed to which it is bound;
|
(C)
|
any writ, order or injunction, judgement or law to which it is a party or is subject or by which it is bound;
|
(vi)
|
no Insolvency Event has occurred in relation to it; and
|
|
|
page |
7
|
(vii)
|
so far as it is aware, there are no facts, matters or circumstances which give any person the right to apply to liquidate it or wind it up.
|
(b)
|
Each party acknowledges that each of the other parties has entered into this agreement in reliance on the warranties provided in clause 2.16(a).
|
(c)
|
Each of the warranties in clause 2.16(a) must be construed independently and is not limited by reference to another warranty provided in clause 2.16(a).
|
(d)
|
Each party indemnifies each of the other parties against any Loss which the other party may incur to the extent caused by any breach of the warranties provided in clause 2.16(a).
|
3
|
Term and termination
|
3.1
|
Term of Joint Venture
|
(a)
|
the Participants agreeing to terminate the Joint Venture;
|
(b)
|
the Management Committee by a Special Resolution determining:
|
(i)
|
that there are no economically recoverable reserves of Minerals in the Joint Venture Area and that the Tenements should be surrendered; or
|
(ii)
|
that all the reserves of economically recoverable Minerals in the Joint Venture Area have been recovered; or
|
(c)
|
there being less than two (2) Participants holding an interest in the Joint Venture Assets.
|
3.2
|
Disposal of Joint Venture Assets upon termination
|
(a)
|
Upon the occurrence of a termination event under clause 3.1 (other than clause 3.1(c)), the Manager must commence winding up the Joint Venture Operations including:
|
(i)
|
satisfying all Rehabilitation Obligations and Mine Closure Obligations;
|
(ii)
|
taking such steps to dispose of the Joint Venture Assets in accordance with such instructions (if any) as the Manager may receive from the Management Committee; and
|
(iii)
|
otherwise complying with the Approved Closure Plan.
|
(b)
|
The net proceeds of realisation of the Joint Venture Assets, after satisfying all Rehabilitation Obligations and Mine Closure Obligations, will be distributed to the Participants in proportion to their respective Joint Venture Interests.
|
(c)
|
For the avoidance of doubt, all costs and expenses incurred by the Manager as a result of the termination of the Joint Venture will be Joint Venture Costs and will be paid by the Participants in proportion to their respective Joint Venture Interests.
|
|
|
page |
8
|
3.3
|
Certain obligations continue beyond termination
|
(a)
|
the obligation to pay any actual or contingent liabilities relating to Joint Venture Operations, including the cost of all Rehabilitation Obligations and Mine Closure Obligations and any severance, sickness and other employee benefit costs incurred or imposed in connection with Joint Venture Operations, or otherwise arising from this agreement, that have not been discharged as at the date of termination; and
|
(b)
|
any other obligations expressed to survive termination.
|
4
|
Manager
|
4.1
|
Initial Manager
|
4.2
|
Shareholding in the Manager
|
(a)
|
As at the date of this agreement, the entire issued share capital in the Manager is held by the Participants in the same proportions as their respective Joint Venture Interests.
|
(b)
|
If a Participant transfers the whole or any part of its Joint Venture Interest under clause 12 or clause 13, the transferring Participant must ensure that such number of shares in the Manager are transferred to the applicable transferee as is necessary to ensure that a Participant’s shareholding in the Manager remains in proportion to its Joint Venture Interest.
|
4.3
|
Removal of Manager
|
(a)
|
The Manager may only be removed by Special Resolution of the Management Committee, provided that the Manager may only be removed if the Management Committee, in the same meeting, appoints a replacement Manager by Special Resolution as the new Manager on the terms and conditions contained in this agreement, provided that if no new Manager can be appointed by such a vote, then, in circumstances where the Participants do not hold equal Joint Venture Interests, the Participant with the largest Joint Venture Interest will be deemed to be the Manager. If there is more than one Participant with the largest Joint Venture Interest, then those Participants will appoint the Manager and failing agreement between them, the matter will be referred to an Expert to be determined in accordance with clause 17.
|
(b)
|
The removal of the Manager under clause 4.3(a) will take effect immediately, but such removal does not prevent the Manager from recovering Joint Venture Costs incurred up to that date from the Participants, as well as other unavoidable, pre-committed or existing Joint Venture Costs incurred after that date.
|
|
|
page |
9
|
4.4
|
No transfer of Manager’s interest
|
4.5
|
Delivery of property on change of Manager
|
(a)
|
deliver to its successor (or as the Participants may otherwise direct):
|
(i)
|
all Joint Venture Assets in its possession or under its control;
|
(ii)
|
the Joint Venture Records and Accounts;
|
(iii)
|
all Confidential Information;
|
(iv)
|
the results of all work undertaken by or for the Manager for the purposes of the Joint Venture, including all Mining Information and the results of any tests undertaken by or for the Manager; and
|
(v)
|
all exploration, mining, engineering and other reports or studies prepared by or for the Manager;
|
(b)
|
transfer title to any Joint Venture Assets to its successor (or as the Participants, acting unanimously, may otherwise direct);
|
(c)
|
transfer any Security Interest it holds over Joint Venture Assets to its successor;
|
(d)
|
deliver documents regarding the novation or assignment of the rights and liabilities of the Manager under any contract entered into in its capacity as Manager to the successor which takes effect on and from the effective date of the Manager’s removal, and where the novation or assignment of such a contract has not occurred by the effective date of the Manager’s removal, the Participants and the outgoing Manager must each continue to use all reasonable endeavours to procure the novation or assignment of the contract as soon as reasonably practicable;
|
(e)
|
to the maximum extent legally permissible, transfer any authorisations from any Government Agency that can be transferred in relation to the Joint Venture Assets, and in respect of any such authorisations which cannot be transferred by the Manager to its successor, it must do all things reasonably necessary to assist the successor in applying for new authorisations, and if requested by the successor, terminate, surrender or cancel those authorisations once the successor has obtained the relevant authorisation or to enable the successor to apply for a replacement authorisation; and
|
(f)
|
provide assistance to the Participants as requested, for up to 90 days and on a cost reimbursement basis, to allow the management, supervision and conduct of Joint Venture Operations to continue without interruption or adverse effect and to facilitate the orderly transfer of responsibility for and conduct of the Joint Venture Operations to its successor,
|
|
|
page |
10
|
4.6
|
Liability of Manager and indemnity
|
4.7
|
Attorney
|
5
|
Powers and duties of Manager
|
5.1
|
Conduct of Joint Venture Operations
|
(a)
|
Subject to the terms and conditions of this agreement, and to such instructions as it may from time to time receive from the Management Committee, the Manager will, and is empowered to exercise all powers necessary to:
|
(i)
|
manage, supervise and conduct Joint Venture Operations on behalf of, and as agent for, the Participants; and
|
(ii)
|
implement the Business Plan and exercise and discharge its powers and duties under this agreement in accordance with the Business Plan.
|
(b)
|
Without limiting the generality of the foregoing, the Manager will:
|
(i)
|
perform and attend to all acts, matters and things required of the Manager in accordance with the Joint Venture Documents;
|
(ii)
|
subject to clause 5.1(d), perform on behalf of the Participants their obligations under the Tenements and the Pipeline Licences, and their obligations under any agreement entered into by the Participants (or by the Manager on behalf of the Participants) for the purposes of Joint Venture Operations;
|
(iii)
|
pay:
|
(A)
|
all rentals and other charges payable under the Tenements and the Pipeline Licences;
|
(B)
|
all rates and taxes (other than taxes based upon or measured by income) payable on or assessed with respect to Joint Venture Operations or any Joint Venture Asset; and
|
|
|
page |
11
|
(C)
|
the Rehabilitation Levy in respect of the Tenements, subject to the terms set out in clause 2.15(b);
|
(iv)
|
generally do all things necessary to maintain the Tenements and the Pipeline Licences in good standing and perform the Joint Venture Operations;
|
(v)
|
prepare and file all reports and returns (except returns with respect to taxes based upon or measured by income) required by law or by the Tenements, the Pipeline Licences or any agreement with the State, the Commonwealth or other Government Agency with respect to Joint Venture Operations or the Joint Venture Assets;
|
(vi)
|
comply with all laws applicable to Joint Venture Operations, including laws pertaining to safety and environmental protection;
|
(vii)
|
comply with any decision or instruction of the Management Committee or the Participants made or given in accordance with this agreement;
|
(viii)
|
maintain the Project Facilities and the Refinery Plant in good working order;
|
(ix)
|
act as the Participant's representative in respect of matters relating to Native Title Claims and Native Title Rights, and negotiate agreements with persons holding Native Title Rights and with parties to Native Title Claims, provided that the Manager may not execute any such agreements, without the prior approval of the Management Committee by Ordinary Resolution;
|
(x)
|
comply or procure compliance with all contracts entered into by the Manager or the Participants in relation to the Joint Venture Operations (including any native title or heritage agreement) and ensure any proposed Business Plans are prepared to ensure compliance with any requirements under those agreements;
|
(xi)
|
replace any Project Facilities as the Manager determines are necessary or desirable so that Joint Venture Operations may be safely, efficiently and lawfully conducted at all times;
|
(xii)
|
sell or otherwise dispose of any Project Facilities or supplies that may be worn out, surplus or no longer required for Joint Venture Operations, provided that any contract or arrangement for sale of such assets which have a book value, net of accumulated depreciation of:
|
(A)
|
more than $100,000 but less than $250,000 must be first approved by the Management Committee by an Ordinary Resolution; and
|
(B)
|
$250,000 or more must be first approved by the Management Committee by a Special Resolution;
|
(xiii)
|
ensure that health, safety and environmental management systems are developed, implemented and maintained in respect of the Joint Venture Operations to the satisfaction of the Management Committee;
|
(xiv)
|
endeavour to ensure that contractors engaged for the Joint Venture Operations develop, implement and maintain health, safety and environmental management systems to standards that comply with health, safety and environment plans approved by the Management Committee;
|
|
|
page |
12
|
(xv)
|
in the case of any emergency or accident, take such action as the Manager considers is necessary or advisable for the protection of life or the Joint Venture Assets;
|
(xvi)
|
acquire all materials, supplies, machinery, equipment and services necessary for the conduct of Joint Venture Operations;
|
(xvii)
|
subject to the requirements of Schedule 3, engage (which may be by secondment), dismiss, supervise and control all management, technical and labour personnel necessary for the performance of its obligations under this agreement including determining the terms and conditions of such engagement and conducting all industrial relations;
|
(xviii)
|
arrange for the transportation, handling, loading, treatment and delivery of Product to the Delivery Point;
|
(xix)
|
notify the Participants as soon as practicable after becoming aware of any event or circumstance of which it is aware which is likely to result in:
|
(A)
|
litigation, arbitration or similar proceedings;
|
(B)
|
a material breach of any licence, authority, approval, direction, instrument or other similar matter;
|
(C)
|
a material breach of any applicable legal requirement;
|
(D)
|
a material breach of any Joint Venture Document or of any other material agreement of the Joint Venture; or
|
(E)
|
Force Majeure;
|
(xx)
|
subject to the requirements of Schedule 3, institute, defend, compromise or settle any court or arbitration proceedings or insurance claims commenced or threatened by or against the Manager or a Participant affecting or relating to Joint Venture Operations or Joint Venture Assets, provided that unless otherwise instructed by a Participant, the Manager may conduct such proceedings or claims for and on behalf of and in the name of each Participant;
|
(xxi)
|
subject to the requirements of Schedule 3, take forward cover for, or hedge, foreign currency obligations or pre-pay or take any other appropriate action to avoid currency losses, in each case in relation to Joint Venture Operations, but in no circumstances is the Manager responsible for or entitled to any currency gains and losses, such losses and gains being borne by or credited to the Participants pro rata in proportion to their respective Joint Venture Interests;
|
(xxii)
|
carry out the Rehabilitation Obligations and Mine Closure Obligations and comply with the Approved Closure Plan;
|
(xxiii)
|
keep each of the Participants fully informed on all current material matters and developments arising out of Joint Venture Operations; and
|
(xxiv)
|
generally do all such acts and things as may be necessary or desirable for the efficient conduct of Joint Venture Operations, the protection of the Joint Venture Assets and the attainment of the objects of the Joint Venture.
|
|
|
page |
13
|
(c)
|
Subject always to this agreement, the Manager has the power to enter into agreements and bind the Participants in the exercise of its duties in accordance with this agreement.
|
(d)
|
Despite any other provision of this agreement, the Participants agree that if GAMG gives a notice of proposed activity under the GAMG Mineral Rights Agreement then:
|
(i)
|
subject to 5.1(d)(ii), if the proposed activity might materially adversely affect a known or possible deposit of Iron Ore capable of commercial exploitation, then WLPL may determine whether to issue a notice of objection to GAMG and may have conduct of any expert determination process under the GAMG Mineral Rights Agreement on behalf of the tenement holders in relation to that notice of objection and will indemnify AWPL against the costs of any such expert determination process;
|
(ii)
|
if the proposed activity might materially adversely affect known or possible deposits of both Iron Ore and any other Mineral (excluding Tantalum), which are each capable of commercial exploitation, including in respect of Iron Ore and any other Mineral (excluding Tantalum) in the Wodgina Resource, then either WLPL or AWPL may determine whether to issue a notice of objection to GAMG and have conduct of any expert determination under the GAMG Mineral Rights Agreement on behalf of the tenement holders in relation to that notice of objection, and if WLPL has issued a notice of objection in respect of Iron Ore only, WLPL will indemnify AWPL against the costs of any such expert determination process; and
|
(iii)
|
in all other circumstances, the Participants agree to jointly exercise their rights under the GAMG Mineral Rights Agreement through the Manager.
|
(e)
|
A Participant has the right to participate, at its own expense, in litigation or administrative proceedings initiated by the Manager on behalf of the Participants.
|
5.2
|
Insurance
|
(a)
|
take out and keep in full force and effect, all in the name of the Participants, insurance required by the laws in force in Western Australia or by virtue of any contractual obligations entered into for the purposes of the Joint Venture;
|
(b)
|
effect and maintain in the name of the Participants public and product liability insurance for an amount of not less than $50,000,000 in respect of each occurrence and unlimited in the aggregate in respect of all incidents occurring during the period of insurance;
|
(c)
|
without limiting clause 5.2(d), effect and maintain in the name of the Participants such other insurances suitable for the Joint Venture Operations which may (without limitation) include pollution legal liability insurance, excess liability insurance, motor vehicle insurance, transit insurance and mining operations insurance, each for amounts and on such terms as may be determined by the Management Committee from time to time;
|
(d)
|
effect and maintain in the name of the Participants such other insurances as may be determined by the Management Committee from time to time; and
|
|
|
page |
14
|
(e)
|
if requested, provide full details of all such insurances and certificates of currency to a Participant.
|
5.3
|
Funding of the Manager
|
5.4
|
Conduct of operations
|
5.5
|
Independent status of Manager
|
(a)
|
The Manager will report to, and be subject to, the general supervision and direction of the Management Committee. Subject to that supervision, and to the terms of this agreement, the Manager will have the authority, discretions and powers of an independent contractor in its management, supervision and conduct of Joint Venture Operations.
|
(b)
|
The Manager may perform its obligations under this agreement itself or through its employees or such agents or contractors as it may decide (subject to clause 5.8). However, the use of an agent or contractor by the Manager in the performance of any of the duties of the Manager will not relieve the Manager of responsibility to the Participants for those duties.
|
5.6
|
Delegation
|
(a)
|
any delegation of the whole or a large part of its obligations requires the prior approval by Special Resolution of the Management Committee;
|
(b)
|
any delegation of any of its obligations to a Participant or an Affiliate of a Participant requires the prior approval by Special Resolution of the Management Committee;
|
(c)
|
it remains liable for any acts or omissions of its delegates as if they were the acts or omissions of the Manager;
|
(d)
|
the Manager promptly informs the Management Committee of the identity of the delegate and the matter which has been delegated; and
|
(e)
|
the delegation is at no additional cost to the Participants.
|
5.7
|
Manager's custody of Joint Venture Assets
|
(a)
|
Subject to the provisions of this agreement, the Manager will have the custody and control of the Joint Venture Assets.
|
(b)
|
The Manager will hold any Joint Venture Asset which stands in its name as agent for the Participants in proportion to their respective Joint Venture Interests.
|
(c)
|
Except:
|
|
|
page |
15
|
5.8
|
Contracts with Affiliates of Manager
|
(a)
|
Subject to clause 5.8(b), the Manager agrees that:
|
(i)
|
any agreements which are entered into by the Manager in the performance of its duties under this agreement with any of its Affiliates or with a Participant or any of its Affiliates (
Related Party Contracts
), will be on normal ‘arm's length’ commercial terms consistent with the provisions of this clause;
|
(ii)
|
the terms of such agreements will be no less commercially reasonable in the particular circumstances of such agreements than would have been the case had such agreements been entered into with Third Parties which are not Affiliates of the Manager or any Participant; and
|
(iii)
|
any such agreements (or material amendments to such agreements) will be submitted to the Management Committee for approval by Special Resolution before the Manager enters into them.
|
(b)
|
The Participants will procure that the Manager enters into (as Manager for and on behalf of the Participants):
|
(i)
|
the Crushing Services Agreement with the Crushing Services Provider;
|
(ii)
|
the Camp Services Agreement with the Camp Services Provider; and
|
(iii)
|
the Intellectual Property Licence Agreement with the Licence Provider,
|
(iv)
|
each of the Crushing Services Provider and the Camp Services Provider is an Affiliate of WLPL;
|
(v)
|
the Licence Provider is an Affiliate of AWPL; and
|
(vi)
|
the provisions of clause 5.8(a) do not apply in relation to the entry into the agreements listed in this clause 5.8(b).
|
(c)
|
Notwithstanding clause 5.8(b), the Manager agrees that any material amendment to any of the agreements listed in clause 5.8(b)(i) to 5.8(b)(iii) will be submitted to the Management Committee for approval by Special Resolution before the Manager agrees to such amendment.
|
|
|
page |
16
|
5.9
|
Contracts with Third Parties
|
(a)
|
Unless otherwise decided by the Management Committee, all contracts or other arrangements with Third Parties entered into by the Manager for the purposes of or in the course of Joint Venture Operations will be entered into by the Manager as agent for the Participants, with the result that:
|
(i)
|
wherever possible, using the Manager’s reasonable endeavours, the Participants will be severally liable under such contracts and arrangements as principals in proportion to their respective Joint Venture Interests, and not jointly or jointly and severally liable; and
|
(ii)
|
in the event of any breach or default on the part of a Third Party under such contracts and arrangements, proceedings may be brought against such Third Party to recover each Participant's loss.
|
(b)
|
Where, despite the Manager’s reasonable endeavours under clause 5.9(a)(i), the Participants are or become jointly or jointly and severally liable under a contract or other arrangement with a Third Party, the Participants agree that as between themselves, all liabilities under or in respect of any such contract (Contract Liability) will be borne by the Participants in proportion to their respective Joint Venture Interests, notwithstanding the terms of the contract.
|
(c)
|
In respect of clause 5.9(b):
|
(i)
|
if a Participant (
Discharging Participant
) or any person on behalf of a Participant pays, performs or discharges a Contract Liability of another Participant, then that Participant must reimburse or compensate the Discharging Participant within 5 Business Days after it receives evidence of that payment, performance or discharge; and
|
(ii)
|
each Participant (
Indemnifying Participant
) indemnifies each of the other Participants (
Other Participants
) for and against all Contract Liability suffered or incurred by the Other Participants:
|
(A)
|
arising from or in connection with the Other Participants taking any reasonable action to avoid, resist or defend themselves against any Contract Liability of the Indemnifying Participant; and
|
(B)
|
arising from or in connection with the Indemnifying Participant failing to comply with this clause 5.9(c).
|
(d)
|
The Manager must not enter into any contract where:
|
(i)
|
it does not have sufficient approval to commit to the Operating Costs or Capital Cost in accordance with clauses 7.7 or 7.8;
|
(ii)
|
the expected expenditure would be worth greater than $1,000,000 (annualised if applicable) unless the contract has first been submitted to the Management Committee and approved by an Ordinary Resolution; or
|
(iii)
|
there is a multi-year expenditure commitment (whether by reason of minimum expenditure, take or pay, termination fees or inability to terminate the contract without a claim for damages) of at least $1,000,000 (annualised), unless the contract has first been submitted to the Management Committee and approved by a Special Resolution.
|
|
|
page |
17
|
(e)
|
The Manager must not enter into any contract requiring a Special Resolution unless the contract has first been submitted to the Management Committee and approved by a Special Resolution.
|
(f)
|
The Manager must, upon a request by any Participant, disclose to the Participants details and, if requested, copies of all contracts or other arrangements with Third Parties entered into by the Manager for the purposes of or in the course of Joint Venture Operations.
|
5.10
|
No profit or loss by Manager
|
(a)
|
the Manager will neither gain nor lose by performing its duties under this agreement;
|
(b)
|
the Manager will not be entitled to any fee margin or other remuneration from the Participants for the performance of its duties under this agreement; and
|
(c)
|
all costs, expenses and liabilities of the Manager arising out of the proper performance by the Manager of its obligations under this agreement, in accordance with the terms of this agreement, will be Joint Venture Costs and will be borne by the Participants in proportion to their respective Joint Venture Interests.
|
5.11
|
Good faith
|
(a)
|
The Manager will at all times act reasonably and in good faith in all its dealings with the Participants and in the performance of its duties under this agreement.
|
(b)
|
The Manager will at all times act in the best interests of the Joint Venture as a whole.
|
5.12
|
Ratify actions of Manager
|
6
|
Management Committee
|
6.1
|
Establishment of Management Committee
|
(a)
|
The Participants will prior to the Effective Date establish a Management Committee in accordance with this clause 6.
|
(b)
|
The Management Committee is empowered to make all decisions in relation to matters within the scope of the Joint Venture, other than:
|
(i)
|
matters expressly reserved by this agreement for the Participants’ determination, decision, approval or consent; or
|
(ii)
|
matters which have been expressly delegated in accordance with this agreement to a Participant or the Manager.
|
|
|
page |
18
|
6.2
|
Composition of Management Committee
|
(a)
|
Each Participant will be entitled to appoint Representatives on the Management Committee as follows:
|
(i)
|
a Participant with a Joint Venture Interest of 10% or greater, but less than 25%, may appoint one (1) Representative;
|
(ii)
|
a Participant with a Joint Venture Interest of 25% or greater, but less than 50%, may appoint two (2) Representatives; and
|
(iii)
|
a Participant with a Joint Venture Interest of 50% or greater may appoint three (3) Representatives.
|
(b)
|
Each Participant may also appoint an alternate for each of its Representatives who will be entitled to attend and vote at meetings of the Management Committee in which the relevant Representative does not participate.
|
(c)
|
Each Participant will appoint its Representatives and alternates (if any) by notice in writing to the Manager and the other Participants.
|
(d)
|
A Participant may replace any of its Representatives or alternates, or revoke any such appointment, at any time by giving notice in writing to the Manager and the other Participants. The relevant appointment or removal will take effect immediately on receipt of that notice.
|
(e)
|
A Participant whose Joint Venture Interest falls below 10% will cease to have any right to appoint Representatives to the Management Committee, and any such appointments will cease to have effect immediately upon its Joint Venture Interest falling below 10%.
|
6.3
|
Meetings
|
(a)
|
Meetings of the Management Committee will (unless otherwise agreed by Special Resolution of the Management Committee):
|
(i)
|
be held at the Manager’s office in Perth or at such other place in Perth as the Management Committee may from time to time determine; and
|
(ii)
|
be held at least once in each Quarter or at such other intervals as the Management Committee may determine.
|
(b)
|
In addition, the Manager may at any time, and will within five (5) Business Days of being requested to do so by a Participant or Participants who, in aggregate, hold a Joint Venture Interest of 25% or more, convene a meeting of the Management Committee. Any request by a Participant or Participants for a meeting to be convened must set out the matters to be considered at the meeting.
|
(c)
|
Each Participant will bear the travel and other expenses of its Representatives attending meetings.
|
(d)
|
Meetings of the Management Committee may be held in person or by telephone, video conference or other means of instantaneous communication.
|
(e)
|
Each Participant will ensure its Representatives convene and attend meetings expeditiously to ensure the continuity of Joint Venture Operations.
|
|
|
page |
19
|
6.4
|
Notice of meetings
|
(a)
|
Except as otherwise expressly stated otherwise in this agreement, the Manager will give to each Participant at least ten (10) Business Days’ notice of each meeting of the Management Committee (or at least two (2) Business Days' notice for a reconvened meeting), which notice must outline the business to be conducted at the meeting. Such notice will not be required where the Representatives of each Participant agree to waive notice of the meeting. Each Participant may give a notice to the Manager and each other Participant at least five (5) Business Days prior to the meeting to include any additional items of business to be conducted at the meeting.
|
(b)
|
Business not mentioned in a notice of meeting will not be dealt with at the meeting unless all Representatives (not just those present at the meeting) unanimously agree.
|
6.5
|
Quorum
|
(a)
|
The quorum for a meeting of the Management Committee will be at least one Representative of each Participant entitled to vote.
|
(b)
|
If a quorum is not present within one hour after the time appointed for the meeting:
|
(i)
|
the meeting will stand adjourned to the same hour on the next Business Day at the same venue; and
|
(ii)
|
the Manager will endeavour to contact the Representatives who were not present at the first meeting to advise them of the adjourned meeting.
|
(c)
|
The quorum at an adjourned meeting will be those Representatives present at the adjourned meeting.
|
6.6
|
Chairperson
|
(a)
|
The chairperson at meetings of the Management Committee (Chairperson) will be selected by the Participant with the largest Joint Venture Interest from the Representatives of that Participant.
|
(b)
|
If two or more Participants have equal Joint Venture Interests and are the largest Joint Venture Interest holders, then the Chairperson will be selected by those Participants (from their appointed Representatives) respectively on a 12 month rotating basis (such 12 Month periods to cover a Financial Year).
|
(c)
|
From the Effective Date until 30 June 2020, one of the Representatives of WLPL shall be the Chairperson.
|
(d)
|
The Chairperson will not have a casting vote.
|
6.7
|
Senior management personnel of the Manager
|
(a)
|
WLPL will have the right to appoint the initial chief executive officer of the Manager from the Effective Date (for a period of no more than 2 years (unless agreed otherwise by AWPL) and after that AWPL, and then WLPL on rotation on the same basis.
|
(b)
|
AWPL will have the right to appoint the initial chief financial officer of the Manager from the Effective Date (for a period of no more than 2 years (unless agreed otherwise by WLPL) and after that WLPL, and then AWPL on rotation on the same basis.
|
|
|
page |
20
|
(c)
|
The salary of any chief executive officer or chief financial officer to be paid by the Manager or secondment fee if seconded by the relevant appointor shall be capped at an equal amount agreed by the Participants or as otherwise determined by Ordinary Resolution of the Management Committee.
|
(d)
|
AWPL will have the right to appoint the manager of the Refinery Plant, other than any Alternative Refinery Plant developed by WLPL.
|
(e)
|
In exercising their appointment rights under this clause 6.7, WLPL and AWPL must consult with the other, and must appoint suitably qualified persons with the requisite expertise and demeanour.
|
(f)
|
Clauses 6.7(a) and 6.7(b) only apply while the Joint Venture Interest of each Participant is 50% of the aggregate Joint Venture Interests of all Participants.
|
6.8
|
Voting rights
|
(a)
|
The Representatives of a Participant present and entitled to vote at any meeting of the Management Committee will have between them that number of votes which is equal to the Joint Venture Interest of the Participant who appointed those Representatives. By way of example, the Representatives of a Participant whose Joint Venture Interest is 50% will have between them 50 votes. Any one Representative appointed by a Participant shall be entitled to cast all votes of the Representatives appointed by such Participant.
|
(b)
|
Subject to clause 6.8(d), a Representative may attend and vote on a matter at a meeting of the Management Committee notwithstanding there is a conflict of interest in respect of that matter with the Participant appointing that Representative. However at the start of the relevant meeting before the vote is taken, the existence of this conflict of interest must be declared if not already known by the other Participants. Subject to the foregoing, clause 6.8(d) does not prevent a Representative who has a personal conflict of interest in respect of a matter from attending and voting on a matter at a meeting of the Management Committee, provided that the matter does not relate to the matters described in clauses 6.8(d)(i) to 6.8(d)(v).
|
(c)
|
A Representative who decides (at his or her election) to withdraw from a meeting of the Management Committee due to a conflict of interest will be treated as not being entitled to vote at that meeting and such withdrawal will not result in the meeting lacking quorum.
|
(d)
|
In circumstances where there is a meeting of the Management Committee at which a resolution is proposed regarding:
|
(i)
|
the enforcement by the Manager of a right against a Participant, or any Affiliate of the Participant, in relation to a right under or performance in accordance with any contract, or a liability, loss, cost, charge or expense paid, suffered or incurred by the Joint Venture from an act or omission of that person;
|
(ii)
|
the execution of any Related Party Contract (other than the execution of the Related Party Contracts by the Manager in accordance with clause 5.8(b));
|
|
|
page |
21
|
(iii)
|
the enforcement or waiver of any rights of the Manager under any Related Party Contract;
|
(iv)
|
the issuing by the Manager of a Notice of Objection or a Notice of Consent under clause 2.4; or
|
(v)
|
any delegation by the Manager under clause 5.6(b),
|
(vi)
|
will not have the right to vote at the meeting;
|
(vii)
|
will not be counted for the purpose of determining the quorum for the meeting; and
|
(viii)
|
any resolution dealing with that matter may be passed pursuant to the decision making threshold applicable to that decision, with those thresholds being adjusted such that the voting entitlement of the Representatives appointed by the Participants other than the Conflicted Participant will in aggregate be deemed equal to 100% total votes of all Representatives present and entitled to vote (and which for the avoidance of doubt shall exclude the Representatives appointed by the Conflicted Participant).
|
(e)
|
For the purposes of clause 6.8(d), if the Manager resolves to commence enforcement action against a Conflicted Participant or any of its Affiliates in respect of a Related Party Contract, the Conflicted Participant and its Representatives shall have no involvement in (other than its independent rights to defend against such action), and no right to receive information in respect of the conduct of, that enforcement action by the Manager on behalf of the Joint Venture and the Manager shall implement appropriate information handling protocols.
|
6.9
|
Ordinary Resolutions
|
6.10
|
Special Resolutions
|
6.11
|
Deadlocks
|
(a)
|
Following a meeting of the Management Committee at which one (or more) Participants (via their Representatives) have voted in favour of a proposed resolution and other Participants (via their Representatives) have voted against the proposed resolution of the decision that is the subject matter of the proposed resolution and such proposed resolution was not passed in accordance with the agreement (Deadlock), a Participant
|
|
|
page |
22
|
(i)
|
identifies the proposed resolution which was not passed at the meeting of the Management Committee; and
|
(ii)
|
designates a senior representative of the Initiating Participant who will have the authority to resolve the Deadlock on its behalf.
|
(b)
|
Within five (5) Business Days of the date of the Deadlock Notice, the Other Participants must promptly designate, by written notice to the Initiating Participant, senior representatives who will have authority to resolve the Deadlock on their behalf.
|
(c)
|
Each Participant's senior representatives designated under clauses 6.11(a) and 6.11(b) must meet and use all reasonable endeavours acting in good faith to resolve the Deadlock within ten (10) Business Days after the date of the Deadlock Notice.
|
(d)
|
If the Deadlock is not resolved under clause 6.11(c), then within fifteen (15) Business Days of the date of the Deadlock Notice, each chief executive officer of the Ultimate Holding Company of each Participant must (including by telephone or video conference) meet and use all reasonable endeavours acting in good faith to resolve the Deadlock.
|
(e)
|
Any resolution of a Deadlock under this clause 6.11 will be a valid resolution of the Management Committee to the extent that the senior representatives or chief executive officers (as applicable) agree that the resolution will have such effect.
|
(f)
|
If:
|
(i)
|
the Joint Venture Interest of each Participant is no longer 50% of the aggregate Joint Venture Interests of all Participants; or
|
(ii)
|
Albemarle and MRL cease to be the Ultimate Holding Companies of AWPL and WLPL, respectively (or of any of their respective Transferee Subsidiaries under clause 12.2),
|
6.12
|
Stage 2 Decision
|
(a)
|
Without limiting any other provision of this agreement, the Participants agree that they will proceed with the construction and commissioning of the Initial Refinery Plant.
|
(b)
|
The Participants agree to act reasonably and work together to progress the Initial Refinery Plant, including by agreeing the budget for preparation of and directing the Manager to prepare, as soon as reasonably practicable, a Refinery Plant Business Plan for a Refinery Plant Development for consideration and, if appropriate, approval by the Management Committee as soon as practicable after the Effective Date.
|
|
|
page |
23
|
(c)
|
If following a meeting of the Management Committee at which one Participant (via its Representatives) has proposed a resolution regarding a Stage 2 Decision and voted in favour of such proposed resolution and the other Participant (via its Representatives) has voted against the proposed resolution, then if the Deadlock process in clause 6.11 has been followed and the Deadlock has not been resolved, or if the Participant who voted against the proposed resolution failed to comply with the Deadlock process, then subject to clause 6.12(e), the Participant who voted in favour of the resolution (Sole Risk Participant) may no later than 3 months after the date of the Management Committee meeting at which the proposed resolution was not passed, give written notice (Alternative Refinery Plant Notice) to the other Participant (Non-consenting Participant) of its intention to develop an Alternative Refinery Plant outside the terms of the Joint Venture, which such notice shall include a detailed design of the Alternative Refinery Plant.
|
(d)
|
If, after the Effective Date, a Participant or any of its Affiliates commences construction of any new facilities (or enters into contractual arrangements, including arrangements for the acquisition of such facilities, which have substantially the same effect as the construction of new facilities by that Participant or any of its Affiliates) located anywhere in the world (excluding AWPL and its Affiliates' modules with designed production capacity at Kemerton of up to 75ktpa plus debottlenecking or efficiency improvements) which will provide that Participant or any of its Affiliates with additional production capacity for lithium hydroxide monohydrate or lithium carbonate fed by spodumene of greater than 20ktpa, other than as a result of debottlenecking or efficiency improvements at existing or new lithium production facilities (Additional Production Capacity), that Participant must (in good faith) and as soon as reasonably practicable issue a notice in writing to the other Participant(s) notifying the other Participant(s) of such occurrence (Notice of Additional Production Capacity).
|
(e)
|
An Alternative Refinery Plant Notice may only be issued in circumstances where prior to the issue of the Alternative Refinery Plant Notice, the Non-consenting Participant or any of its Affiliates has issued a Notice of Additional Production Capacity, provided that a Notice of Additional Production Capacity will be deemed to have been issued if no Notice of Additional Production Capacity has been given and the Sole Risk Participant can provide evidence, acting reasonably, to each Non-consenting Participant that such Additional Production Capacity of the Non-consenting Participant has commenced construction and the Non-consenting Participant (acting reasonably) has not, within ten (10) Business Days of being provided with such evidence, issued a Dispute Notice to the Sole Risk Participant in relation to such matter.
|
(f)
|
Within twenty (20) Business Days of the date of the Alternative Refinery Plant Notice, the Non-consenting Participant must:
|
(i)
|
confirm in writing its intention to participate in the Stage 2 Refinery Plant, in which case the Stage 2 Decision will be deemed to have been passed;
|
(ii)
|
confirm in writing that it will not participate in the Stage 2 Refinery Plant at that time; or
|
(iii)
|
request in writing a meeting with the chief executive officer of the Ultimate Holding Company of the Sole Risk Participant.
|
(g)
|
If the Non-consenting Participant issues a request under clause 6.12(f)(iii), each chief executive officer of the Ultimate Holding Company of each Participant must meet within five (5) Business Days of the date of the request issued under clause 6.12(f)(iii) and use all reasonable endeavours (acting in good faith) to resolve the matter in respect of the proposed Stage 2 Decision. Any resolution of a matter under this clause 6.12(g) will be deemed to be a valid resolution of the Management Committee approving a Stage 2 Decision.
|
|
|
page |
24
|
(h)
|
If:
|
(i)
|
the Non-consenting Participant does not comply with clause 6.12(d) and the Sole Risk Participant has given a notice to the Non-consenting Participant in accordance with clause 6.12(e) and in relation to which no Dispute Notice has been given to the Sole Risk Participant in accordance with clause 6.12(e);
|
(ii)
|
the Non-consenting Participant issues a confirmation under clause 6.12(f)(ii) that it will not participate; or
|
(iii)
|
the steps set out in clauses 6.12(f)(iii) and 6.12(g) have been taken and the matter in respect of the proposed Stage 2 Decision is not resolved within the ten (10) Business Days of the date of the request issued under clause 6.12(f)(iii),
|
(i)
|
The Sole Risk Participant must not construct, commission and operate the Alternative Refinery Plant in circumstances where it would have an adverse impact on the costs of, operation of or production output of the Initial Refinery Plant or other Joint Venture Operations, including in relation to the availability of water, power, feedstock or other utilities, accommodation and site facilities. In such circumstances the Sole Risk Participant will be permitted to alter the method or design of construction, commissioning or operation of the Alternative Refinery Plant to the extent required to remedy such adverse impact.
|
(j)
|
If a Sole Risk Participant has not commenced construction of the Alternative Refinery Plant notified under an Alternative Refinery Plant Notice within 12 months of the date it is permitted to proceed with the construction, commissioning and operation of the Alternative Refinery Plant, then the right to do so will end, and the Sole Risk Participant may give another Alternative Refinery Plant Notice (without the need to first call a meeting of the Management Committee or propose a resolution regarding a Stage 2 Decision) and the Participants must again comply with this clause 6.12.
|
(k)
|
If the Sole Risk Participant, at its own cost and risk, develops the Alternative Refinery Plant outside of the Joint Venture in accordance with clause 6.12(h), it will be entitled to:
|
(i)
|
construct and operate the Alternative Refinery Plant on an appropriate area of the Tenements which is suitable for a lithium hydroxide monohydrate plant (
Designated Area
), provided that the Sole Risk Participant must not deliver any of its share of Lithium recovered from the Tenements into the Alternative Refinery Plant unless the Sole Risk Participant delivers on an ongoing basis its proportionate share of Lithium recovered from the Tenements to facilitate the operation of the Initial Refinery Plant at its maximum production capacity;
|
|
|
page |
25
|
(ii)
|
access (for itself, its Affiliates and its and its Affiliates' Personnel) the Designated Area for the purposes of constructing and operating the Alternative Refinery Plant;
|
(iii)
|
use any Intellectual Property Rights in any Joint Venture feasibility studies conducted in respect of the development of a lithium hydroxide monohydrate plant;
|
(iv)
|
receive from the Joint Venture all required goods and services which are requested by the Sole Risk Participant to construct and operate the Alternative Refinery Plant on a cost basis (including but not limited to power, accommodation and site facilities), provided that any expansion of any facilities which are required to accommodate the needs of the Sole Risk Participant will be borne solely by the Sole Risk Participant, and subject to such goods and services being available without adversely impacting on the production output of the Initial Refinery Plant; and
|
(v)
|
where WLPL is the Sole Risk Participant, enter into an agreement with the Licence Provider on terms equivalent to the Intellectual Property Licence Agreement.
|
(l)
|
The Sole Risk Participant must obtain any further Approvals required for the development of the Alternative Refinery Plant and must indemnify the Non-consenting Participant against:
|
(i)
|
the costs of developing, operating and maintaining and ultimately closing the Sole Risk Participant's Alternative Refinery Plant; and
|
(ii)
|
any:
|
(A)
|
Rehabilitation Obligations; and
|
(B)
|
any other losses sustained or liabilities incurred (except where such loss or liability arises as a direct result of the Non-Consenting Participant's fraud, Wilful Misconduct or Gross Negligence),
|
(m)
|
Prior to commencing construction of the Alternative Refinery Plant, the Sole Risk Participant must offer to the Non-consenting Participant to construct any foundations, pipework or other shared or potentially shared infrastructure at the cost of the Non-consenting Participant, which would facilitate the future construction by the Non-consenting Participant of a further Alternative Refinery Plant under clause 6.12(n) and facilitate its interconnection and integration with the Sole Risk Participant's Alternative Refinery Plant.
|
(n)
|
If the Sole Risk Participant develops an Alternative Refinery Plant in accordance with this clause 6.12, the Non-consenting Participant may at any time develop its own Alternative Refinery Plant, subject to the requirements and principles in clauses 6.12(i) to 6.12(l) at the cost and risk of the Non-consenting Participant, which shall not form part of the Joint Venture Assets and shall not be governed by this agreement. If the Non-consenting Participant has developed an Alternative Refinery Plant in accordance with this clause 6.12(n), the Participants may agree to include each Alternative Refinery Plant in the Joint Venture Assets, to be governed by the terms of this agreement.
|
|
|
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26
|
(o)
|
No Alternative Refinery Plant Notice may be given and the Sole Risk Participant may not commence construction of an Alternative Refinery Plant the Joint Venture Interest of any Participant is less than 50% of the aggregate Joint Venture Interests of all Participants.
|
(p)
|
Upon request from the Sole Risk Participant, and subject to clause 6.12(q), the Manager shall, in good faith, acting reasonably, consider reasonable modifications to the manner in which it operates the Initial Refinery Plant in order to avoid an adverse impact on the production output of the Initial Refinery Plant resulting from the operation of the Alternative Refinery Plant.
|
(q)
|
The Sole Risk Participant agrees to indemnify the Manager and the Non- consenting Participant for the costs of any modifications to the Initial Refinery Plant and any related future costs (including in operation and maintenance) which are made under clause 6.12(p) (including any increase in the cost of goods and services procured by the Joint Venture in connection with the Initial Refinery Plant).
|
6.13
|
Advisers
|
(a)
|
the Participant must ensure that each Adviser and Observer is under a duty of confidentiality in relation to all information and materials to which the Adviser or Observer gains access as a consequence of the Adviser or Observer being present at a meeting of the Management Committee; and
|
(b)
|
a Participant must inform the other Participants of its intention to have an Adviser or Observer attend a meeting of the Management Committee on behalf of the Participant at least two (2) Business Days before the meeting (and such notice must include the name and origin of each Adviser and Observer).
|
6.14
|
Authority of Representatives
|
6.15
|
Resolution without meeting
|
(a)
|
A resolution of the Management Committee which is signed by a Representative of each Participant who is entitled to vote (Circular Resolution) will be as valid and effective as if it had been passed at a meeting of the Management Committee properly convened and held.
|
(b)
|
A Circular Resolution may consist of one or more documents in identical terms, signed by a Representative of each Participant.
|
6.16
|
Manager’s delegate
|
(a)
|
The Manager will by notice in writing to the Participants designate a delegate to the Management Committee.
|
|
|
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27
|
(b)
|
The Manager may change its delegate at any time by giving notice in writing to the Participants.
|
(c)
|
The Manager will cause its delegate, who may be accompanied by Advisers, to be present at each meeting of the Management Committee. Such delegate and Advisers will have no voting rights and the Manager must ensure that its delegate and Advisers are under a duty of confidentiality in relation to all information and materials to which the delegate or the Advisers gains access as a consequence of the Adviser or delegate being present at a meeting of the Management Committee.
|
(d)
|
The Manager’s delegate is not entitled to vote at meetings of the Management Committee.
|
6.17
|
Minutes
|
(a)
|
The Manager must arrange for minutes of each Management Committee meeting and each sub-committee meeting as described under clause 6.18 to be taken. The Manager’s costs and expenses in providing this service will be included in Joint Venture Costs.
|
(b)
|
A copy of the minutes of each Management Committee meeting and each sub-committee meeting must be given to each Participant as soon as practicable, but no later than 21 days after each meeting.
|
(c)
|
If a Participant wishes to make any comments in respect of the minutes, it must do so within 21 days after receiving the minutes by providing a notice to the Manager.
|
(d)
|
The minutes of a Management Committee meeting or subcommittee meeting, respectively, will be considered and approved (with or without amendments) at the next meeting of the Management Committee or relevant sub-committee (as applicable), and are to be signed by the Chairperson of the relevant Management Committee meeting or the chairperson of the relevant sub-committee meeting as described in clause 6.18(c), and are then conclusive evidence of the proceedings and decisions of the meeting to which they relate.
|
6.18
|
Sub-committees
|
(a)
|
The Management Committee may establish one or more sub-committees to consider and make recommendations or, if the Management Committee unanimously and expressly confers such a power, decisions on such matters as the Management Committee may from time to time refer to any such sub-committee.
|
(b)
|
Each Participant will be entitled, but will not be obliged, to be represented on each sub-committee.
|
(c)
|
The Participant who has nominated the Chairperson of the Management Committee will appoint the chairperson of any sub-committee.
|
6.19
|
Services
|
(a)
|
require the Manager to provide it with such services as the Management Committee may request; and
|
(b)
|
engage advisers and consultants as required,
|
|
|
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28
|
6.20
|
Recommendations and decisions of sub-committees
|
7
|
Budgets, planning and contributions
|
7.1
|
Commencement under Initial Mine Plan and Budget
|
7.2
|
Preparation and approval of the Business Plan
|
(a)
|
prior to 28 February of each year, the Manager will consult with each of the Participants to discuss and agree the assumptions (including metal price, exchange rates, diesel price and other key commodities consumed, discount rate and inflation rate) to be used in preparing the draft Business Plan and Proposed Budget;
|
(b)
|
prior to 30 April of each year, the Manager will submit to each Participant a draft Business Plan (incorporating a Proposed Budget) which, among other periods, covers the period commencing on the following 1 July;
|
(c)
|
the Participants will promptly review the draft Business Plan (incorporating a Proposed Budget) in consultation with the Manager. The Manager will update the draft Business Plan (incorporating a Proposed Budget) to include agreed changes, prior to submission of the Business Plan (incorporating a Proposed Budget) to the Management Committee for consideration and approval at least a Month prior to the end of the current Financial Year; and
|
(d)
|
at the relevant meeting of the Management Committee in the final Quarter of each Financial Year, or at such other time as the Participants may otherwise agree, the Management Committee will consider and may approve all or part of the draft Business Plan and the Proposed Budget in accordance with clause 7.5(a), with or without amendment; and
|
(e)
|
the Participants agree to, and will procure that the Manager completes, a similar process to the process described in clauses 7.2(a) to 7.2(d) for the purpose of updating the Business Plan approved by the Management Committee under clause 7.2(d) to facilitate AWPL or its Affiliates' fiscal year (currently on a calendar year basis), if any are different (at no cost to AWPL or its Affiliates).
|
7.3
|
Contents of Business Plan
|
(a)
|
Each Business Plan will set out and cover the following separate areas:
|
|
|
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29
|
(i)
|
detailed information in relation to the proposed Joint Venture Operations and Joint Venture Costs in each Month during the first two Financial Years covered by the Business Plan, which information must be presented in accordance with the relevant categories set out in clause 7.3(c) (in respect of the LOM Business Plan) and clause 7.3(d) (in respect of the Refinery Plant Business Plan); and
|
(ii)
|
to the extent reasonably practical, information in relation to proposed Joint Venture Operations and Joint Venture Costs for each subsequent Financial Year during the then estimated Life of Mine, which information must be presented in accordance with the relevant categories set out in clause 7.3(c) (in respect of the LOM Business Plan) and clause 7.3(d) (in respect of the Refinery Plant Business Plan).
|
(b)
|
Each Proposed Budget will set out detailed information in relation to the proposed Joint Venture Operations and Joint Venture Costs in each Month during the new Financial Year, which information must be presented in accordance with the relevant categories set out in clause 7.3(c) (in respect of the LOM Business Plan) and clause 7.3(d) (in respect of the Refinery Plant Business Plan).
|
(c)
|
For the purposes of clauses 7.3(a) and 7.3(b), the monthly and annual information set out in a LOM Business Plan must be divided into the following separate plan categories (except to the extent that no expenditure or activity is anticipated for the relevant category):
|
(i)
|
(
Mine Development / evaluation plan
): this must contain details of proposed Mine Development and reasonable justification for projects proposed for Mine Development and evaluation activities.
|
(ii)
|
(
mining physicals / mine metal plan
): this must contain details of ore tonnes moved, waste, production risk rating.
|
(iii)
|
(
Capital Costs plan
): this must contain details and reasonable justification for any proposed Capital Works and a ranking of the priority of each proposed Capital Work. Assets to be scrapped or disposed of as a result of proceeding with any new Capital Work should be identified.
|
(iv)
|
(
Operating Costs plan
): this must reflect the guidance and directions of the Management Committee as to the grade of ore to be mined, the amount of Minerals to be produced, and other matters relating to Operating Costs, including utilisation and availability of equipment.
|
(v)
|
(
exploration plan
): A plan for Exploration Operations including details and reasonable justification for projects together with a budget for those works, split into work on the Development Area (if appropriate) and work on other areas of the Tenements as proposed.
|
(vi)
|
(
Rehabilitation plan
): this must describe anticipated works to be carried out to meet Rehabilitation Obligations and clearly identify the expenditure to be charged against existing provisions and the expenditure which is not covered by existing provisions.
|
(vii)
|
(
care and maintenance plan
): this must describe the care and maintenance activities to be undertaken (if any) and the associated costs.
|
(viii)
|
(
Closure Plan
): this must describe the anticipated activities to be carried out to meet the Mine Closure Obligations.
|
|
|
page |
30
|
(ix)
|
(
manpower plan
): this must be a plan setting out the staffing and manpower required in connection with the implementation of any proposed Joint Venture Operations referred to in this clause 7.3(c) or any other approved work programme or Joint Venture Operations under this agreement.
|
(x)
|
(
budget
): this must show:
|
(A)
|
working capital
: expected movement in the individual significant components of working capital for the following year.
|
(B)
|
cash flow
: the relevant periodic cash requirements for each of the categories in the LOM Business Plan and clearly distinguish between Capital Costs and Operating Costs.
|
(C)
|
Called Sum forecast
: the extent to which the periodic cash requirements can be satisfied from cash on hand, and will include a Called Sums forecast showing the estimated periodic contribution required from each Participant.
|
(d)
|
For the purposes of clauses 7.3(a) and 7.3(b), the monthly and annual information set out in a Refinery Plant Business Plan must be divided into the following separate plan categories (except to the extent that no expenditure or activity is anticipated for the relevant category):
|
(i)
|
(
Refinery Plant Development / evaluation plan
): this must contain details of the proposed Refinery Plant Development and reasonable justification for projects proposed for Refinery Plant Development and evaluation activities.
|
(ii)
|
(
Capital Costs plan
): this must contain details and reasonable justification for any proposed Capital Works and a ranking of the priority of each proposed Capital Work. Assets to be scrapped or disposed of as a result of proceeding with any new Capital Work should be identified.
|
(iii)
|
(
Operating Costs plan
): this must reflect the guidance and directions of the Management Committee as to the grade and amount of lithium hydroxide monohydrate to be produced, and other matters relating to Operating Costs, including utilisation and availability of equipment.
|
(iv)
|
(
manpower plan
): this must be a plan setting out the staffing and manpower required in connection with the implementation of any proposed Joint Venture Operations referred to in this clause 7.3(d) or any other approved work programme or Joint Venture Operations under this agreement.
|
(v)
|
(
budget
): this must show:
|
(A)
|
working capital
: expected movement in the individual significant components of working capital for the following year.
|
(B)
|
cash flow
: the relevant periodic cash requirements for each of the categories in the Refinery Plant Business Plan and clearly distinguish between Capital Costs and Operating Costs.
|
(C)
|
Called Sum forecast
: the extent to which the periodic cash requirements can be satisfied from cash on hand, and will include a Called Sums forecast showing the estimated periodic contribution required from each Participant.
|
|
|
page |
31
|
7.4
|
Revision of Business Plan
|
(a)
|
At any time prior to the approval and adoption of the next succeeding Business Plan (including the Proposed Budget), the Manager may propose revisions to the Business Plan (incorporating the Approved Budget) for approval by the Management Committee in accordance with the terms of this agreement.
|
(b)
|
The Manager must prepare proposed revisions to the Business Plan (incorporating the Approved Budget) if, at any time, it becomes necessary to make a material alteration in respect of any of the plans specified in the most recent Business Plan and/or Approved Budget (including if there is a Refinery Plant Decision), or if the Management Committee otherwise requests such an amendment, and submit the proposed revisions for approval by the Management Committee in accordance with the terms of this agreement.
|
(c)
|
The Manager must promptly provide the Participants with any revisions to the Business Plan (incorporating the Approved Budget) approved by the Management Committee.
|
7.5
|
Approval of Business Plan and revisions
|
(a)
|
A proposed Business Plan (incorporating a Proposed Budget) may be approved in whole or in part by the Management Committee by Ordinary Resolution.
|
(b)
|
Subject to clause 7.7(d), a revision or variation to the approved Business Plan (including the Approved Budget) requires approval by the Management Committee by Ordinary Resolution.
|
7.6
|
Temporary operating plan if Business Plan not approved
|
(a)
|
the portions of the Business Plan and Proposed Budget for the Relevant Year which are approved by the Management Committee will apply (to the extent practicable);
|
(b)
|
the relevant portions of the Business Plan for the Relevant Year from the most recently approved Business Plan will apply (to the extent they are applicable and were approved and including, at a minimum, ensuring that the expenditure obligations prescribed under each of the Tenements and all unavoidable obligations contained in agreements related to the Joint Venture Operations are properly met) to the portions of the Business Plan and Proposed Budget for the Relevant Year which are not approved by the Management Committee;
|
(c)
|
the portions of the plans and budgets referred to in clauses 7.6(a) and 7.6(b) will together be deemed to be an Approved Budget for the Relevant Year and implemented by the Manager in accordance with this agreement; and
|
(d)
|
when the Management Committee approves any unapproved portion of the new Business Plan under the terms of this agreement, the Manager will, as soon as practicable, vary its activities and expenditure so as to continue in accordance with the new and approved Business Plan (including the Approved Budget).
|
|
|
page |
32
|
7.7
|
Business Plan is binding on the Manager
|
(a)
|
The most recent Business Plan (including the component plans and Approved Budget), as approved or revised and amended by the Management Committee in accordance with this agreement, will be binding on the Manager and the Participants.
|
(b)
|
Except as otherwise required or allowed under this agreement, the Manager must carry on the development, construction, maintenance and conduct of the Joint Venture Operations in accordance with the Business Plan (including the Approved Budget).
|
(c)
|
The Manager is obliged and authorised to conduct Joint Venture Operations and to incur expenditure and make disbursements approved, or for which an allowance or provision is made, in an Approved Budget and in accordance with the Approved Budget.
|
(d)
|
The Manager must use all reasonable endeavours not to incur any expenditure (including Capital Costs and Operating Costs) in excess of the amount budgeted in an Approved Budget except as provided below:
|
(i)
|
aggregate over-expenditure on Operating Costs of:
|
(A)
|
10% or less of the total expenditure under the Approved Budget is permitted without approval of the Management Committee;
|
(B)
|
more than 10% but less than 20% of the total expenditure under the Approved Budget is permitted if approved in advance by Ordinary Resolution of the Management Committee; and
|
(C)
|
20% or more of the total expenditure under the Approved Budget is permitted if approved in advance by Special Resolution of the Management Committee;
|
(ii)
|
aggregate unbudgeted Capital Costs (including any overruns on budgeted Capital Costs) of:
|
(A)
|
the lesser of 20% of the individual line item or up to $5,000,000 from that under the Approved Budget is permitted without approval of the Management Committee;
|
(B)
|
between $5,000,000 and $25,000,000 from that under the Approved Budget is permitted if approved in advance by Ordinary Resolution of the Management Committee; and
|
(C)
|
$25,000,000 or more from that under the Approved Budget is permitted if approved in advance by Special Resolution of the Management Committee; and
|
(iii)
|
reasonable expenditure to fund urgent action under clause 7.8 is permitted without approval of the Management Committee.
|
7.8
|
Urgent action
|
(a)
|
Subject to clause 7.8(c), the Manager may take such emergency action as, in the Manager’s judgement, is necessary to preserve property, avoid, mitigate or prevent material risk of harm or damage to persons, property or the environment and to ensure Participants comply with their respective contractual and legal obligations in relation to the Joint Venture Operations.
|
|
|
page |
33
|
(b)
|
The Manager must promptly notify the Participants as and when any costs of the nature referred to in clause 7.8(a) above are incurred.
|
(c)
|
To the extent that time permits, the Manager must use reasonable endeavours to:
|
(i)
|
seek the approval of the Management Committee as otherwise required of it under this agreement; or
|
(ii)
|
consult with the Participants and the Management Committee,
|
8
|
Provision of funds
|
8.1
|
Obligation to contribute
|
8.2
|
Manager may apply funds held
|
8.3
|
Monthly Cash Call
|
(a)
|
At or prior to the Effective Date, the Manager will notify the Participants of the estimated funding requirements required by the Manager for the period from the Effective Date up to the date the next Called Sum is payable by Participants under clause 8.4(a), including details of the estimated disbursements to be made for Joint Venture Costs during that period. The amount specified will comprise a Called Sum and is payable within five (5) Business Days after the Effective Date in accordance with clause 8.4(b).
|
(b)
|
Based upon the Business Plan (including the Approved Budget, as revised by the Management Committee from time to time) or where applicable any Approved Budget under clause 7.6, the Manager must submit to each Participant, on or before the 15th day of each Month, a statement (
Cash Call
) showing:
|
(i)
|
the estimated disbursements to be made for Joint Venture Costs during the following Month (showing Operating Costs and Capital Costs separately);
|
(ii)
|
the extent, if any, to which such disbursements can be satisfied by funds already held by the Manager for the account of the Participants under this agreement;
|
(iii)
|
the amount (
Called Sum
) required to be paid by each Participant (which, for the avoidance of doubt, is the cash amount which is required to be paid by a Participant after application of funds held by the Manager to the account of the Participant in accordance with clause 8.3(b)(ii));
|
|
|
page |
34
|
(iv)
|
the place or places where, and manner in which, payment is to be made; and
|
(v)
|
such other details as the Management Committee may from time to time direct.
|
(c)
|
Subject to clause 8.5, a Called Sum for a Month may be for an amount which is:
|
(i)
|
under 120% of the monthly Called Sum forecast for that Month under the then current Approved Budget without approval of the Management Committee;
|
(ii)
|
120% or more, but less than 140%, of the monthly Called Sum forecast for that Month under the then current Approved Budget, if approved by an Ordinary Resolution of the Management Committee; or
|
(iii)
|
140% or more of the monthly Called Sum forecast for that Month under the then current Approved Budget, if approved by a Special Resolution of the Management Committee,
|
(iv)
|
if at any time after the first three (3) Months of the Financial Year, the “Year to Date” Called Sum and the proposed Called Sum for the next Month would be greater than 110% of the Called Sum forecast for that period under the then current Approved Budget, the proposed Called Sum requires approval by an Ordinary Resolution of the Management Committee; and
|
(v)
|
if at any time after the first three (3) Months of the Financial Year, the “Year to Date” Called Sum and the proposed Called Sum for the next Month would be greater than 120% of the Called Sum forecast for that period under the then current Approved Budget, the proposed Called Sum requires approval by a Special Resolution of the Management Committee.
|
8.4
|
Payment of Called Sum
|
(a)
|
Each Participant must pay to the Manager the Called Sum applicable to it by the later of:
|
(i)
|
10 Business Days after a Cash Call is made; and
|
(ii)
|
the fifth Business Day of the Month following the Month in which the Cash Call is made.
|
(b)
|
Called Sums must be paid to the Manager:
|
(i)
|
within the timeframe prescribed by this clause 8.4;
|
(ii)
|
in Immediately Available Funds;
|
(iii)
|
free of set-off, deduction or counterclaim;
|
(iv)
|
unless specified in an Approved Budget or as otherwise agreed, in the currency requested by the Manager (
Requested Currencies
), it being agreed that unless otherwise agreed between the Participants, the Requested Currencies are limited to $Australian, $US, the Euro and Chinese Yuan and the breakdown of denominations requested must be consistent with the denomination of Manager expenditures; and
|
|
|
page |
35
|
(v)
|
at the place or places, and in the manner, specified in the Cash Call.
|
(c)
|
Nothing in this clause 8.4 prevents a Participant paying a Called Sum on behalf of another Participant pursuant to any agreement which may exist between them or their Affiliates, and any such payment shall be credited as a payment by the Participant against whom the Cash Call was made.
|
8.5
|
Emergency Cash Call
|
(a)
|
If at any time the Manager is, or is likely to be, required to take urgent action under clause 7.8 which requires funds in excess of the funds then available to the Manager, and which have not been provided for in the most recent Cash Call, the Manager may issue an emergency Cash Call to each Participant stating:
|
(i)
|
the amount of funds required for Joint Venture Costs;
|
(ii)
|
the Called Sum required to be paid by each Participant;
|
(iii)
|
the place or places where, and manner in which, payment is to be made; and
|
(iv)
|
the circumstances, in reasonable detail, giving rise to the necessity for obtaining such funds.
|
(b)
|
Each Participant must, as soon as practicable (and in any event within five (5) Business Days) after receipt of an emergency Cash Call, pay to the Manager the Called Sum applicable to it.
|
(c)
|
The parties acknowledge that clause 8.3(a) does not apply to any Cash Calls made under this clause 8.5.
|
8.6
|
Bank account
|
(a)
|
All Called Sums and other moneys received or earned by the Manager on behalf of the Joint Venture will be deposited into a designated account or accounts in the name of the Manager, as manager of the Joint Venture, maintained at a branch or branches of a bank authorised to carry on a banking business under the
Banking Act 1959
(Cth) selected by the Manager. Such bank must offer full on-line account visibility (on a read-only basis) to Participants.
|
(b)
|
Subject to clause8.6(d), the Manager alone will be entitled to operate such account or accounts and may from time to time temporarily invest any surplus funds in such account in accordance with such short term investment policies as may from time to time be approved by the Management Committee.
|
(c)
|
No such investment will have a maturity exceeding the time within which the funds so invested are required to be disbursed on account of Joint Venture Costs.
|
(d)
|
All funds in any account opened by the Manager (including any short term investments acquired with such funds) will remain the beneficial property of the Participants in proportion to their Joint Venture Interests until such time as those funds are disbursed on account of Joint Venture Costs.
|
|
|
page |
36
|
(e)
|
The Manager may only open a bank account with the approval of the Participants by Special Resolution and must notify the Participants when the Manager opens or closes any such bank account acting as agent for the Participants.
|
8.7
|
Disbursements from bank accounts
|
8.8
|
Repayment of surplus funds
|
(a)
|
The Manager will, if directed by the Management Committee, repay to each Participant (other than a Participant in respect of which there is an Event of Default or which is in default in the payment of any Called Sum) any funds which are in excess of that Participant’s share of the estimated disbursements for the following Month and the amount of working capital deemed necessary by the Manager for Joint Venture Operations as set out in the Cash Call provided to that Participant in accordance with clause 8.3.
|
(b)
|
The Manager will not be obliged to repay any such funds to a Participant if the amount is less than $100,000, unless requested to do so by that Participant.
|
8.9
|
Accounting for Called Sums
|
9
|
Records, accounts and reports
|
9.1
|
Manager to keep records and accounts
|
(a)
|
The Manager will, in accordance with the Accounting Procedure and generally accepted accounting principles and customary cost accounting practices in the mining industry, keep, or cause to be kept, comprehensive, true and accurate records and accounts of:
|
(i)
|
Joint Venture Operations;
|
(ii)
|
the Joint Venture Assets;
|
(iii)
|
all Called Sums received by the Manager from (or on behalf of) each Participant;
|
(iv)
|
all contracts and transactions entered into by or on behalf of the Participants in connection with the Joint Venture;
|
(v)
|
the Joint Venture Cost and expenses of all transactions entered into by or on behalf of the Participants;
|
(vi)
|
all approvals of requisitions, purchase orders, invoices, contracts, authorisation for capital expenditure requests;
|
(vii)
|
all approvals required in connection with this agreement, including minutes of meetings, Ordinary Resolutions and Special Resolutions;
|
|
|
page |
37
|
(viii)
|
agendas, minutes and documents provided to members for the Management Committee and any sub committees; and
|
(ix)
|
Personnel of the Manager subject to applicable laws, including in relation to privacy,
|
(b)
|
Without limiting the generality of the foregoing, the Joint Venture Records and Accounts will be maintained in such manner as may be reasonably necessary to enable each Participant to meet its reporting, accounting and tax return requirements (including deadlines).
|
9.2
|
Place for records
|
(a)
|
The Manager will determine the place or places within Australia where the Joint Venture Records and Accounts are kept.
|
(b)
|
The Manager must keep each Participant informed as to each location where the Joint Venture Records and Accounts are kept.
|
(c)
|
The Manager will make appropriate use of IT systems, including separate instances of systems and software utilised by the respective Participants, so as to maximise efficiency, effectiveness, transparency and visibility of the Joint Venture Records for the Participants and the Manager's costs in performing its obligations under this clause will form part of the Joint Venture Costs.
|
9.3
|
Annual financial statement
|
(a)
|
The Manager must, in respect of each Financial Year, provide to each Participant as soon as practicable (and no later than 30 days) after the end of each Financial Year (commencing with the Financial Year in which the Effective Date occurs) a financial statement reflecting:
|
(i)
|
all receipts, expenditures and transactions made by the Manager on behalf of the Participants in connection with the Joint Venture during that Financial Year;
|
(ii)
|
all Joint Venture Assets in the custody or control of the Manager as at the end of that Financial Year; and
|
(iii)
|
all Joint Venture liabilities as at the end of that Financial Year.
|
(b)
|
The Manager will also provide comparable information to the information described in clause 9.3(a) as required by AWPL, including GAAP adjustments as applicable, as of the end of each AWPL or its Affiliates' fiscal years (currently ending 31 December).
|
(c)
|
All costs incurred by the Manager in complying with this clause will form part of Joint Venture Costs.
|
9.4
|
Monthly report
|
|
|
page |
38
|
(a)
|
the progress and results of Joint Venture Operations during the Month just ended (with commentary on any material departures from the Business Plan, including the Approved Budget);
|
(b)
|
all outgoings incurred and payments made during that Month;
|
(c)
|
a running reconciliation of actual incurred expenditures to date against costs under the Approved Budget (with commentary on any material departures);
|
(d)
|
all proposed outgoings and payments to be incurred or made during the next Month (with commentary on any material proposed departures from the Approved Budget);
|
(e)
|
estimate on quantity of stockpiles and estimated Mineral content including Lithium; and
|
(f)
|
a statement of the assets and liabilities of the Joint Venture and each Participant’s investment in the Joint Venture,
|
9.5
|
Forecasts
|
(a)
|
operational forecasting for the next three full calendar Months (broken down by Month) which includes:
|
(i)
|
spodumene production forecast in metric tonnes per day;
|
(ii)
|
maintenance plan on the Processing Plant; and
|
(iii)
|
if the Initial Refinery Plant or other lithium hydroxide monohydrate plant that is a Joint Venture Asset is to operate in the relevant period:
|
(A)
|
lithium hydroxide monohydrate production in metric tonnes per day;
|
(B)
|
maintenance plan on lithium hydroxide monohydrate plant sodium; and
|
(C)
|
sulphate production forecast in metric tonnes per day;
|
(b)
|
operational forecasting for the next 18 full calendar Months which includes:
|
(i)
|
spodumene production forecast in metric tonnes per day;
|
|
|
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39
|
(ii)
|
if the Initial Refinery Plant or other lithium hydroxide monohydrate plant that is a Joint Venture Asset is to operate in the relevant period, lithium hydroxide monohydrate production in metric tonnes per day; and
|
(iii)
|
timing of expected extended plant maintenance and turnarounds;
|
(c)
|
financial forecasting for the next 12 full calendar Months, including at a minimum:
|
(i)
|
sales volume and cost of production by product family;
|
(ii)
|
other cost of goods sold;
|
(iii)
|
selling and administrative;
|
(iv)
|
depreciation and amortisation;
|
(v)
|
any other items that would be included in the income statement;
|
(vi)
|
operational spending broken down by cost centre; and
|
(vii)
|
capital project spending;
|
(d)
|
cash forecasting for the next full 12 calendar weeks, broken down by week, to be provided weekly; and
|
(e)
|
cash forecasting for the next full 12 calendar Months, broken down by Month.
|
9.6
|
Other reporting requirements
|
(a)
|
immediately after the occurrence of any event which causes, or is likely to cause, material damage to the Joint Venture Assets or delay or adversely affect the Joint Venture Operations, a report of the event and an estimate of likely resultant costs, to the extent it can be reasonably estimated at that time;
|
(b)
|
as soon as practicable after the occurrence of any lost time injury, any legal or threatened claim valued above $250,000, significant environmental incident, damage or destruction of property valued at over $250,000 or other event that requires a report to be filed or notification to be lodged with a Government Agency, notice of that occurrence or event;
|
(c)
|
within ten (10) Business Days after a written request from a Participant, all reports and information required by a Participant (or any of its Affiliates) to comply with its (or any of its Affiliates’) periodic reporting and disclosure obligations under the rules of any applicable stock exchange, including in respect of mineral reserves and resources; and
|
(d)
|
as soon as practicable after notice to the Manager, a report on the status and conduct of any actual or threatened court or arbitration proceedings or insurance claims.
|
9.7
|
Information and data
|
(a)
|
The Manager will provide all information, data and material concerning Joint Venture Operations which the Participant (or its Affiliate) may reasonably require to meet its statutory reporting, audit and disclosure obligations under the
|
|
|
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40
|
(b)
|
The Manager will ensure that Exploration Information and Resources and Reserves are calculated and reported to the Participants in a manner that complies with the JORC Code.
|
(c)
|
Subject to clause 9.9, the Manager will provide reports on the Exploration Information and Resources and Reserves that are in a format reasonably required by a Participant (or its Affiliate) to meet its reporting and disclosure requirements referred to in clause 9.7(a). To the extent compliance with those reporting and disclosure requirements requires the consent of a Competent Person, the Manager must obtain that consent on behalf of the Participants (or its Affiliate) in the form reasonably required by the Participant (or its Affiliate).
|
(d)
|
The Manager will (in conjunction with the relevant Competent Person) be responsible for determining the assumptions to be used for the calculation of Resources and Reserves but will, so far as is practical, notify the Participants of those assumptions in advance of finalising any estimates of Resources and Reserves. Subject to being advised by the Participants of the relevant deadlines, the Manager will use all reasonable endeavours to provide the details of those assumptions to enable the Participant to comply with applicable regulatory reporting deadlines (of the Participant and/or its Affiliates), if it disagrees with the assumptions adopted by the Manager. If any Participant does not agree with the assumptions used by the Manager, the Manager will, upon request of any Participant, promptly provide to the Participants an electronic copy of the model used to generate the estimates of Resources and Reserves in such a form and with such content as will enable the Participant (or its Affiliate) to alter the relevant assumptions and generate its own estimates of Resources and Reserves. The Manager must provide the Participant (or its Affiliate) with such reasonable assistance as the Participant (or its Affiliate) may require in order to operate and assess the model for that purpose. In that event, the Participant (or its Affiliate) will be responsible for obtaining the necessary Competent Person consent for the estimates of Resource and Reserves that it generates.
|
(e)
|
To enable Participants (and their Affiliates) who have a financial year end of 30 June, or 31 December, or is required to publish a half-yearly or quarterly report to comply with their statutory reporting obligations, the Manager will provide those Participants (and their Affiliates) with the following information in relation to the Joint Venture for (as applicable) the year ending on, or as at, 30 June and/or 31 December or half year ending 30 June, or quarter year ending 31 March, 30 June, 30 September:
|
(i)
|
statement of financial position;
|
(ii)
|
income statement;
|
(iii)
|
cash flow statement;
|
(iv)
|
trial balance;
|
(v)
|
asset register of the Joint Venture Assets;
|
(vi)
|
inventory;
|
(vii)
|
employee leave balance, payroll tax returns and superannuation payments;
|
|
|
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41
|
(viii)
|
cash balance;
|
(ix)
|
details of calculation of contingent liabilities and capital commitments;
|
(x)
|
Business Activity Statements, all sales tax, fringe benefits tax, customs duty, excise duty and diesel fuel rebates returns or statements;
|
(xi)
|
royalty statements in relation to the royalties payable to the State; and
|
(xii)
|
accounting policies,
|
9.8
|
Copies of reports to Participants
|
(a)
|
copies of all reports prepared by the Manager in connection with Joint Venture Operations; and
|
(b)
|
copies of all material reports and other significant written communications to or from any government, government minister or Government Agency relating to any Tenement or Joint Venture Operations.
|
9.9
|
Format
|
9.10
|
Additional reporting
|
10
|
Audit and access
|
10.1
|
Audit
|
(a)
|
The Manager must provide to each Participant, within 30 days (or such later date agreed by the Participants) after the relevant end of each Financial Year, a report by an internationally recognised and qualified independent auditor registered in accordance with Part 9.2 of the Corporations Act appointed by AWPL after having first obtained the consent of WLPL (not to be unreasonably withheld) (
Auditor
), in which the Auditor reports to the Participants that the Auditor has examined the Joint Venture Records and Accounts, the basis for provision of funds to the Manager and the financial statement for the relevant Financial Year and is satisfied
|
|
|
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42
|
(b)
|
The audit will be conducted in accordance with Australian Auditing Standards ASQC1 – Quality Control for Firms that Perform Audits and Reviews of Financial Reports and Other Financial Information, Other Assurance Engagements and Related Services Engagements (Complied) and will confirm that the financial report presents fairly, the financial position of the Joint Venture as at the balance date in accordance with the basis of preparation described in the Joint Venture financial statements. An objective of the audit is that the Participants and their Affiliates may rely on that audit for the purposes of preparing its audited financial statements as required by applicable laws. Notwithstanding, the audit will also be conducted in a manner consistent with the standards of the US PCAOB or of other US regulators applicable to audits of US publicly-held companies.
|
(c)
|
Each Participant will have the right of direct communication with the Auditor.
|
(d)
|
Without limiting this clause 10.2, AWPL has the right to request that in addition to the above audit, a similar audit be performed under GAAP and PCAOB auditing standards for relevant periods corresponding to AWPL or its Affiliates’ fiscal years' end (currently ending 31 December) and such costs will constitute Joint Venture Costs under this agreement.
|
10.2
|
Participant’s access to records
|
(a)
|
permit a Participant to inspect and copy;
|
(b)
|
provide to a Participant copies of; and
|
(c)
|
provide to a Participant statements compiled from,
|
10.3
|
Access to Joint Venture Area and Joint Venture Assets
|
(a)
|
Each Participant and its properly authorised representatives will be entitled at all reasonable times, and at the risk and expense of such Participant, to have:
|
(i)
|
access to, and the right to inspect, the Joint Venture Assets and the Joint Venture Area, provided the Participants and their officers, employees, agents and contractors must comply with the directions of the Manager when doing so;
|
(ii)
|
the right to consult with the employees of the Manager and with any independent contractors (and their employees) which have been engaged by the Manager concerning
|
|
|
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43
|
(iii)
|
the right to take such samples of material employed by or produced from the Joint Venture Operations as are reasonably requested; and
|
(iv)
|
the right to appoint an independent Auditor to audit the affairs of the Joint Venture and the Manager, including the basis for the provision of funds by the Participants under clause 8.
|
(b)
|
Information and access will be provided promptly on request, provided that it does not unreasonably disrupt the conduct of the Joint Venture Operations.
|
(c)
|
The Manager must co-operate with Participants and any Auditor appointed to enable them to obtain information and samples contemplated by clause 10.3(a).
|
11
|
Confidential Information
|
11.1
|
Information to be kept confidential
|
(a)
|
a Participant or its directors, officers, employees and agents;
|
(b)
|
an Affiliate of a Participant or that Affiliate’s directors, officers, employees and agents;
|
(c)
|
the Manager;
|
(d)
|
any government, government minister, or Government Agency, which requires it or has power to require it under any applicable law, rule or regulation;
|
(e)
|
any court of competent jurisdiction which has directed it;
|
(f)
|
any bank or other recognised financial institution making a loan or giving accommodation to a Participant or to an Affiliate of a Participant;
|
(g)
|
any person to whom disclosure is permitted under the terms of any Joint Venture Document;
|
(h)
|
any person which in good faith is seeking to purchase or otherwise acquire the whole or part of the Joint Venture Interest of a Participant, or shares in a Participant or an Affiliate of a Participant, provided that an undertaking as to confidentiality by the person in a form set out in Attachment B is first obtained;
|
(i)
|
any professional legal adviser subject to professional obligations of confidentiality;
|
(j)
|
any other professional or other independent consultant or adviser engaged by a Participant or the Manager provided that an undertaking as to confidentiality by the person, in a form set out in Attachment B, is first obtained;
|
|
|
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44
|
(k)
|
as may be required by law or by the rules of any recognised stock exchange on which shares or other securities of a Participant or its Affiliates are listed, except that the parties agree to the extent permitted that they will not disclose information of the kind described by section 275(1) of the PPS Act, except as permitted by any other provision of this clause or required by any other law or regulation. For the avoidance of doubt, this does not permit the disclosure of information under section 275(4) of the PPS Act unless section 275(7) applies;
|
(l)
|
to satisfy legal disclosure obligations in a disclosure document issued by a Participant or its Affiliates to raise funds or implement or propose a corporate transaction involving the Participant or its Affiliates; or
|
(m)
|
for the purposes of any arbitration or court proceeding in respect of any dispute arising out of any Joint Venture Document.
|
11.2
|
Protection of Confidential Information
|
11.3
|
Announcements
|
11.4
|
Continuing confidentiality obligation
|
(a)
|
This clause 11 will apply to:
|
(i)
|
any Participant which ceases to be a Participant for a period of three (3) years after the date upon which such Participant ceases to be a Participant; and
|
(ii)
|
a Manager which ceases to be a Manager for a period of three (3) years after the date upon which such Manager was removed.
|
(b)
|
Upon the termination of this agreement, this clause 11 will, notwithstanding such termination, apply to the Participants and the Manager at the date of termination, for a period of three (3) years after such termination.
|
11.5
|
MRL Standstill
|
(a)
|
The Participants acknowledge and agree that some or all of the Confidential Information may be relevant to the price or value of the securities of MRL. Each Participant (other than WLPL) undertakes (which undertaking is given for the benefit of MRL) that it will not (and must ensure that its Affiliates will not) do anything that breaches the insider trading provisions of the Corporations Act from time to time.
|
(b)
|
During the period commencing on the date of this agreement and ending on the earliest of the following dates:
|
|
|
page |
45
|
(i)
|
two (2) months after a Participant ceases to be a Participant;
|
(ii)
|
the date a person or persons jointly or in concert (other than a Participant or its Affiliates), publicly announce their intention to commence a Control Transaction which, at the time of announcement, is unanimously recommended by the board of directors of MRL; and
|
(iii)
|
the date MRL publicly announces that its board of directors has approved an agreement which contemplates a Control Transaction,
|
(iv)
|
announce any intention to commence a Control Transaction in relation to MRL;
|
(v)
|
enter into any swap, derivative or other similar instrument the effect of which is to give the Participant an economic interest in securities (including shares) in the capital of MRL;
|
(vi)
|
acquire, agree to acquire or make any invitation or proposal to acquire, a relevant interest (as defined in the Corporations Act) directly or indirectly in any securities (including shares) in the capital of MRL; or
|
(vii)
|
advise, assist or encourage any other person in connection with any of the foregoing,
|
(c)
|
The Participants acknowledge that MRL may enforce the undertaking given by the Participants in this clause 11.5 despite the fact that it is not a party to this agreement.
|
(d)
|
For the avoidance of doubt, the provisions of this clause 11.5 will cease to apply if neither WLPL nor any of its Affiliates is a Participant.
|
(e)
|
The provisions of this clause 11.5 will cease to apply if MRL ceases to be the Ultimate Holding Company of any Participant.
|
11.6
|
Albemarle Standstill
|
(a)
|
The Participants acknowledge and agree that some or all of the Confidential Information may be relevant to the price or value of the securities of Albemarle. Each Participant (other than AWPL) undertakes (which undertaking is given for the benefit of Albemarle that it will not (and must ensure that its Affiliates will not) do anything that breaches the insider trading provisions of the Corporations Act or any other law or regulation from time to time.
|
(b)
|
During the period commencing on the date of this agreement and ending on the earliest of the following dates:
|
(i)
|
two (2) months after a Participant ceases to be a Participant;
|
(ii)
|
the date a person or persons jointly or in concert (other than a Participant or its Affiliates), publicly announce their intention to commence a Control Transaction which, at the time of announcement, is unanimously recommended by the board of directors of Albemarle; and
|
|
|
page |
46
|
(iii)
|
the date Albemarle publicly announces that its board of directors has approved an agreement which contemplates a Control Transaction,
|
(iv)
|
announce any intention to commence a Control Transaction in relation to Albemarle;
|
(v)
|
enter into any swap, derivative or other similar instrument the effect of which is to give the Participant an economic interest in securities (including shares) in the capital of Albemarle;
|
(vi)
|
acquire, agree to acquire or make any invitation or proposal to acquire, a beneficial interest directly or indirectly in any securities (including shares) in the capital of Albemarle; or
|
(vii)
|
advise, assist or encourage any other person in connection with any of the foregoing,
|
(c)
|
The Participants acknowledge that Albemarle may enforce the undertaking given by the Participants in this clause 11.6 despite the fact that it is not a party to this agreement.
|
(d)
|
For the avoidance of doubt, the provisions of this clause 11.6 will cease to apply if neither AWPL nor any of its Affiliates is a Participant.
|
(e)
|
The provisions of this clause 11.6 will ceases to apply if Albemarle ceases to be the Ultimate Holding Company of any Participant.
|
12
|
Assignments and charges
|
12.1
|
Restrictions on assignments and charges
|
(a)
|
Subject to clause 12.1(b), except as permitted in this clause 12, or as required under clause 13, no Participant will:
|
(i)
|
sell, convey, assign, transfer, novate, lease, sublease or otherwise dispose of; or
|
(ii)
|
create or permit to exist any Security Interest (other than a Permitted Security Interest) in respect of,
|
(b)
|
Nothing in this clause 12 will operate to prevent a Participant from selling or otherwise disposing of its share of Product in the ordinary course of the Participant’s business.
|
(c)
|
Notwithstanding any other provision of this agreement (and, in particular, clauses 12.2 and 12.3), a Participant must not make any sale, transfer or other disposition if, upon completion of that sale, transfer or other disposition, that Participant or the assignee would have a Joint Venture Interest less than 10% but greater than zero (in other words, each Participant must have a Joint Venture Interest of at least 10%).
|
|
|
page |
47
|
(d)
|
For the purposes of clause 12 and 13 of this agreement, a Participant's Joint Venture Interest will be deemed to include the whole or the same proportionate part of that Participant's ownership interest in an Alternative Refinery Plant not forming part of the Joint Venture Assets.
|
12.2
|
Permitted transfer to Subsidiaries
|
12.3
|
Sale of Participant's lithium business
|
(a)
|
A Participant that is WLPL (or any Transferee Subsidiary of WLPL under clause 12.2) which is not in default in the payment of any Called Sum, and with respect to which an Event of Default is not then in existence, and provided that MRL is the Ultimate Holding Company of that Participant, may at any time subject to provisions of clause 12.11, transfer the whole of its Joint Venture Interest to a Third Party, provided that the transfer is affected as part of a sale of all or substantially all of MRL's lithium business which, as at the Effective Date, includes MRL's and its Affiliates' direct and indirect legal and beneficial ownership interest of:
|
(i)
|
the Participant's Joint Venture Interest; and
|
(ii)
|
its share of the Mount Marion Lithium Project.
|
(b)
|
A Participant that is AWPL (or any Transferee Subsidiary of AWPL under clause 12.2), which is not in default in the payment of any Called Sum, and with respect to which an Event of Default is not then in existence, and provided that Albemarle is the Ultimate Holding Company of that Participant, may at any time, subject to provisions of clause 12.11, transfer the whole or any part of its Joint Venture Interest to a Third Party, provided that the transfer is affected as part of a sale of all or substantially all of its global lithium business as described in its annual corporate filings from time to time.
|
12.4
|
Transfer of Participant’s Joint Venture Interest
|
(a)
|
the provisions of clause 12.5 have first been complied with; and
|
(b)
|
in the case of an assignment to a person who is not a Participant or its Affiliate, that assignee must be approved by the other Participants, which approval cannot be withheld if the assignee has:
|
(i)
|
the financial capacity to meet both the purchase price for acquiring the Selling Participant’s Joint Venture Interest, and the financial commitments of a Participant under this agreement to the extent of the assigned Joint Venture Interest, whether through its own financial standing or through the provision of satisfactory security, which may include
|
|
|
page |
48
|
(ii)
|
the technical and operational capacity to meet the obligations of a Participant under this agreement.
|
12.5
|
Right of last refusal
|
(a)
|
the Selling Participant must give notice of the proposed sale to each of the other Participants, and must include in the notice (
Proposed Sale Notice
):
|
(i)
|
the name and address of the person to whom the Selling Participant’s Joint Venture Interest is proposed to be sold (
Proposed Buyer
);
|
(ii)
|
the portion of the Selling Participant’s Joint Venture Interest which is the subject of the proposed sale (
Sale Interest
);
|
(iii)
|
the cash consideration or cash equivalent of the non-cash consideration for which the Selling Participant’s Joint Venture Interest is proposed to be sold; and
|
(iv)
|
all the other terms and conditions of the proposed sale;
|
(b)
|
the Selling Participant must include with the Proposed Sale Notice an offer to sell the Sale Interest to such of the other Participants who are not then in default in the payment of any Called Sums, and with respect to which an Event of Default is not then in existence (
Continuing Participants
), in proportion to their respective Joint Venture Interests, at the same price (being in the case of non-cash consideration, unless the Continuing Participants agree otherwise in relation to a royalty, the cash equivalent determined under this clause 12.5) and, subject to clause 12.6, on the same terms and conditions on which it is willing to sell the Sale Interest to the Proposed Buyer. The offer must be in a form which is capable of immediate acceptance by the Continuing Participants;
|
(c)
|
if the consideration notified by the Selling Participant to the Continuing Participants under the Proposed Sale Notice is non-cash consideration, the Selling Participant must bona fide convert the non-cash consideration to a cash equivalent on a basis that is transparent and disclosed in the Proposed Sale Notice;
|
(d)
|
if any Continuing Participant does not agree with the basis on which the non-cash consideration has been converted to a cash equivalent, that party must so notify the Selling Participant and the other Continuing Participants within seven (7) days of it receiving the Proposed Sale Notice;
|
(e)
|
on a Continuing Participant so notifying the Selling Participant, all of the Participants will promptly meet and endeavour to reach agreement on the amount of the cash equivalent of the non-cash consideration. If agreement is reached, the Selling Participant must issue a new Proposed Sale Notice including the agreed cash equivalent. The period of 60 days referred to in clause 12.5(h) will be deemed to commence on the date that the Selling Participant issues a fresh Proposed Sale Notice and the original notification to the Continuing Participants will be deemed never to have been made. If within 14 days after their first meeting, the Selling Participant and the Continuing Participants have not reached agreement on the amount of the cash equivalent of the non-cash consideration, the matter will be referred to an Expert in accordance with clause 17 to determine whether or not the Selling Participant’s calculation of the cash equivalent was fair
|
|
|
page |
49
|
(f)
|
if the Expert determines that the Selling Participant’s calculation of the cash equivalent was fair and reasonable:
|
(i)
|
the period of 60 days referred to in clause 12.5(h) will be deemed to have commenced on the date the Proposed Sale Notice was given provided that if the period of 60 days has expired or would expire prior to 14 days after the date upon which the Expert notifies the Participants of his determination, the 60 day period will be extended to the date which is 14 days after the date upon which the Expert notifies the Participants of the Expert’s determination; and
|
(ii)
|
the Expert’s costs will be borne by the Continuing Participant who objected to the Selling Participant’s calculation of the cash equivalent;
|
(g)
|
if the Expert determines that the Selling Participant’s calculation of the cash equivalent was not fair and reasonable:
|
(i)
|
the Selling Participant must issue a fresh Proposed Sale Notice to the Continuing Participants in accordance with the requirements of clause 12.5(a) including the cash equivalent as determined by the Expert and the original Proposed Sale Notice will be deemed never to have been made; and
|
(ii)
|
the Expert’s costs will be borne by the Selling Participant;
|
(h)
|
the Continuing Participants will have the right to accept the offer set out in the Proposed Sale Notice at any time within a period of 60 days from the date the Proposed Sale Notice is given (subject to any extension under clause 12.5(f)), and such offer must remain open for that period;
|
(i)
|
if one or more (but not all) of the Continuing Participants accept the offer within such 60 day period, the Selling Participant must notify the accepting Continuing Participant or Continuing Participants of details of the unaccepted portion of the Sale Interest and such Continuing Participant or Continuing Participants will have the right within a period of 60 days after the Selling Participant’s notice is given to accept the unaccepted part of the Sale Interest in proportion to their respective Joint Venture Interests (or as they may otherwise agree) at the same price and on the same terms and conditions;
|
(j)
|
if:
|
(i)
|
the whole of the Sale Interest is not accepted by one or more of the Continuing Participants; or
|
(ii)
|
the whole of the Sale Interest is accepted by one or more of the Continuing Participants but the contract or contracts for transfer of the Sale Interest to the accepting Continuing Participant or Continuing Participants is terminated before completion for reasons other than for a default on the part of the Selling Participant,
|
|
|
page |
50
|
(iii)
|
in the circumstances outlined in clause 12.5(j)(i), the end of either the 60 day period referred to in clause 12.5(h) or the 60 day period referred to in clause 12.5(i) as the case may be; and
|
(iv)
|
in the circumstances outlined in clause 12.5(j)(ii), the date of termination of the contract or contracts for transfer of the Sale Interest to the accepting Continuing Participant or Continuing Participants;
|
(k)
|
if the whole of the Sale Interest is accepted by one or more of the Continuing Participants, then the Selling Participant will transfer the Sale Interest to those Continuing Participants in accordance with the terms and conditions of the resulting contracts with those Continuing Participants. For the avoidance of doubt, the transfer of the Sale Interest to those Continuing Participants is not subject to any further rights of last refusal under this clause 12.5; and
|
(l)
|
for the avoidance of doubt, an offer made under clause 12.5(b) must relate only to the Sale Interest and must not include or relate to any other assets.
|
12.6
|
Requirements of offer to Continuing Participants
|
(a)
|
An offer to sell the Sale Interest to the Continuing Participants under clause 12.5(b) must:
|
(i)
|
contain a condition or conditions to the effect that the sale is conditional upon the Continuing Participants who accept the offer obtaining all Transfer Approvals either unconditionally or on conditions acceptable to such Continuing Participants (acting reasonably); and
|
(ii)
|
provide for a date for the satisfaction of any conditions precedent, and a date for completion of the sale, which would result in any Continuing Participants who accept the offer having a period of time for satisfaction of conditions precedent (as may have been extended in clause 12.5(j)) and for completion not less than the corresponding periods of time that the Proposed Buyer would have had under the contract signed by it,
|
(b)
|
For the purposes of the offer to sell the Sale Interest to the Continuing Participants under clause 12.5(b):
|
(i)
|
the requirement for a cash consideration does not preclude the consideration for the sale of the Sale Interest consisting partly of cash and partly of other valuable promises (e.g. a royalty to the extent agreed under clause 12.5) that have been offered by the Proposed Buyer, provided that the Continuing Participants are objectively capable of giving and fulfilling those same promises and are not inherently disadvantaged (when compared to the Proposed Buyer) by the inclusion of those promises as part of the consideration;
|
|
|
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51
|
(ii)
|
the consideration for the sale of the Sale Interest will be a cash consideration even though:
|
(A)
|
payment of the purchase price may occur in two or more tranches;
|
(B)
|
some or all of the purchase price may be paid after the date of transfer of the Sale Interest to the buyer;
|
(C)
|
the payment of some or all of the purchase price may be subject to a contingency (provided that the contingency is not such that it is inherently more likely to be satisfied where the Continuing Participants are the buyer of the Sale Interest than where the Proposed Buyer is the buyer of the Sale Interest); and
|
(D)
|
the amount of the purchase price, or some component of it, is not fixed and ascertainable at the date of the offer to sell the Sale Interest to the Continuing Participants (provided that the offer clearly sets out the basis upon which the purchase price, or the relevant component of it, is to be calculated, and the basis of calculation is not inherently likely to result in the Continuing Participants paying a higher price for the Sale Interest than the Proposed Buyer would pay if it were the buyer).
|
12.7
|
Charge of Participant’s Joint Venture Interest
|
(a)
|
A Participant (
Chargor
) may create a Security Interest upon all or part of its Joint Venture Interest in favour of any person (
Chargee
) if the Chargee has entered into a deed (
Chargee's Priority Deed
) with the other Participants and the Manager, in a form acceptable to the other Participants and the Manager acting reasonably, under which the Chargee agrees that this agreement, the Deed of Cross Security, all other Joint Venture Documents and the constituent documents of the Manager will have priority over the Chargee’s Security Interest and any enforcement of that Security Interest will be subject to compliance with the provisions of this agreement, the Deed of Cross Security, all other Joint Venture Documents and the constituent documents of the Manager.
|
(b)
|
The Participants acknowledge that the Chargee’s Priority Deed will also contain provisions under which the Chargee is entitled to receive prior notice of any default by the Chargor or other circumstances that may result in enforcement of remedies under this agreement or the Deed of Cross Security against the Chargor and to take action to step-in or take other measures to avoid the exercise of such remedies. The Participants will negotiate such provisions reasonably and in good faith and will not unreasonably withhold their agreement to provisions proposed by the Chargee which are consistent with normal finance practice.
|
12.8
|
Notice of intention to create Security Interest
|
12.9
|
Sale of Joint Venture Interest by Chargee
|
(a)
|
A Chargee of a Participant's Joint Venture Interest may, without the consent of any Participant, in the exercise of any power of sale or the enforcement of any other rights conferred by law or by the instrument creating such Security Interest, upon the happening of any event of default specified in the Security Interest, sell (but not otherwise dispose of) the whole or part of the Joint Venture Interest of such Participant (
Defaulting Participant
).
|
|
|
page |
52
|
(b)
|
Any proposed sale (whether by private treaty or public auction) by a Chargee of the whole or part of a Defaulting Participant’s Joint Venture Interest will be subject to the rights of last refusal of the other Participants under clauses 12.3, 12.5 and 12.6 and the Chargee’s Priority Deed must acknowledge this.
|
12.10
|
Set-off
|
(a)
|
A Non-Defaulting Participant may, in connection with its purchase of the Joint Venture Interest or part of the Joint Venture Interest of a Defaulting Participant under this clause 12, credit against the purchase price payable by such Participant the amount of any debt due and payable to such Participant by the Defaulting Participant under clause 13.5.
|
(b)
|
Except to the extent of such credit, the Chargee must pay to the Manager (for the account of the other Participants) from the proceeds of such sale, all amounts due and payable under any of the Joint Venture Documents by the Defaulting Participant, or in the event such amounts have been paid on behalf of the Defaulting Participant by any other Participant, will reimburse such other Participant the amounts so paid together with interest as provided in clause 13.5.
|
12.11
|
Assumption of Joint Venture obligations by Transferee
|
(a)
|
the execution and delivery by the transferee and the other Participants of a deed of assignment and assumption in the form provided in Schedule 5:
|
(i)
|
evidencing the agreement of such transferee (to the extent of the Joint Venture Interest being transferred):
|
(A)
|
to become a Participant, or if already a Participant, to increase its Joint Venture Interest;
|
(B)
|
to be bound by the provisions of the Joint Venture Documents; and
|
(C)
|
to assume all of the liabilities and to perform all of the obligations and duties under the Joint Venture Documents of the Participant whose Joint Venture Interest, or part of whose Joint Venture Interest, is to be sold, transferred or disposed of to the extent of the Joint Venture Interest being sold, transferred or disposed of; and
|
(ii)
|
evidencing the agreement of the other Participants that such transferee (to the extent of the Joint Venture Interest being transferred) will be entitled to all of the rights and benefits of a Participant under the Joint Venture Documents; and
|
(b)
|
the execution and delivery by the transferee of a deed of charge in, or substantially in, the form of the Deed of Cross Security.
|
|
|
page |
53
|
12.12
|
Change in Control
|
(a)
|
If there is a Change in Control of a Participant or of a Holding Company of a Participant (except when the Participant or Holding Company the subject of the Change in Control is listed on a stock exchange, or in the circumstances described in clause 12.12(b)), then unless the other Participants have consented in writing to such Change in Control, the relevant Participant (
Changed Participant
) must immediately notify the other Participants of the Change in Control.
|
(b)
|
For the purposes of this clause 12.2, no Change in Control of a Participant or of a Holding Company of a Participant will be deemed to have occurred in circumstances where:
|
(i)
|
if the Participant is WLPL (or any Transferee Subsidiary under clause 12.2), MRL has affected a sale of all or substantially all of MRL's lithium business which, as at the Effective Date, includes MRL's and its Affiliates' direct and indirect legal and beneficial ownership interest of:
|
(A)
|
the Participant's Joint Venture Interest; and
|
(B)
|
its share of the Mount Marion Lithium Project; and
|
(ii)
|
if the Participant is AWPL (or any Transferee Subsidiary under clause 12.2), Albemarle has affected a sale of all or substantially all of its global lithium business as described in its annual corporate filings from time to time.
|
(c)
|
Any other Participant may, within ten (10) Business Days after receiving the notice under clause 12.12(a), give a notice to the Changed Participant requiring that the Changed Participant must determine the value of its Joint Venture Interest (the
Offered Interest
). That value will be the value agreed between the parties using reasonable endeavours and acting in good faith to agree the value within 20 days from the date of the notice under clause 12.12(a). If the parties are unable to agree upon the value of the Offered Interest within 30 days from the date of the notice under clause 12.12(a), then the parties must endeavour to agree upon the appointment of two Valuers. If the parties are unable to agree upon the appointment of the Valuers within 40 days from the date of the notice under clause 12.12(a), then the Valuers will be two (2) suitably qualified and experienced persons nominated by the President (or acting President) for the time being of the Minerals Council of Australia or their nominee at the request of any other Participant. The following provisions apply where the value of the Offered Interest is required to be determined by the Valuers:
|
(i)
|
the Valuers must be engaged on terms which require the Valuers to use their best endeavours to make independently a determination within 30 days after their appointment, or such other timeframes as the parties may agree;
|
(ii)
|
each Valuer will determine the value of the Offered Interest, on the following basis:
|
(A)
|
the price that would have been paid by a knowledgeable and willing (but not anxious) buyer to a knowledgeable and willing (but not anxious) seller dealing at arm's length;
|
|
|
page |
54
|
(B)
|
any Rehabilitation Obligations and Mine Closure Obligations relating to the Offered Interest are to be taken into consideration;
|
(C)
|
the Offered Interest is to be valued on a stand-alone basis, and without taking into account any element of control that the other Participants may obtain as a result of acquiring all or part of the Changed Participant's Joint Venture Interest in addition to the other Participant's existing Joint Venture Interest;
|
(D)
|
the valuation is to be determined independently and generally in accordance with the VALMIN Code of the Australasian Institute of Mining and Metallurgy; and
|
(E)
|
otherwise the valuation methodologies to be applied are to be determined by the Valuer in its own discretion, taking into account usual and prudent industry practices;
|
(iii)
|
the value of the Offered Interest will be deemed to be the average of the two Valuer's determinations;
|
(iv)
|
in making the determination, each Valuer will be deemed to be acting as an expert and not as an arbitrator, and the laws relating to commercial arbitration will not apply to either Valuer, the Valuer's determination or the means by which each Valuer makes the determination;
|
(v)
|
each Participant will be entitled to submit such evidence to each Valuer as the Valuer may reasonably allow or require, and will provide all information, written or oral, which the Valuer may reasonably request, provided that:
|
(A)
|
all oral evidence must be presented in the presence of the other parties; and
|
(B)
|
copies of all written evidence must be given to all other parties;
|
(vi)
|
each Valuer may consult such legal, technical and financial experts as the Valuer, in his or her absolute discretion, thinks fit;
|
(vii)
|
the costs of the Valuers, and of any legal, technical and financial experts consulted by the Valuers, will be borne by the Changed Participant; and
|
(viii)
|
the determination of the Valuer will be final and binding on the parties without appeal so far as the law allows and except in the case of manifest error.
|
(d)
|
Once the value of the Offered Interest has been agreed or determined as contemplated by clause 12.12(b), the Changed Participant will within 5 Business Days notify the other Participants and will be deemed to have offered to assign the Offered Interest to such of the other Participants who are not then in default of payment of any Called Sums, and with respect to which an Event of Default is not then in existence (
Other Participants
), in proportion to their respective Joint Venture Interests, at a price equal to the value of the Offered Interest. The Other Participants will be entitled to accept that offer 60 days of the making of the offer.
|
(e)
|
If one or more (but not all) of the Continuing Participants accept the offer within such 60 day period, the Changed Participant must notify the accepting Continuing Participant or Continuing Participants of details of the unaccepted portion of the Offered Interest and such Continuing Participant or Continuing Participants will have the right within a period of 60 days after the Changed Participant’s notice is given to accept the unaccepted part of the Offered Interest in proportion to their respective Joint Venture Interests (or as they may otherwise agree) at the same price.
|
|
|
page |
55
|
(f)
|
If the whole of the Offered Interest is accepted by one or more of the Continuing Participants (
Accepting Participants
), then the Changed Participant and the Accepting Participants will be deemed to have entered into a contract for the sale to the Accepting Participants (in the proportions that their respective Joint Venture Interests bear to the aggregate of their Joint Venture Interests) of the Changed Participant’s Joint Venture Interest upon the following terms and conditions:
|
(i)
|
The liability of the Accepting Participants (including obligations to pay money) will be several in the proportions that their respective Joint Venture Interests bear to the aggregate of their Joint Venture Interests.
|
(ii)
|
The sale will be conditional upon the parties obtaining all Transfer Approvals, which may include, without limitation:
|
(A)
|
Ministerial consents required under the Mining Act for the assignment of the Changed Participant's Joint Venture Interest in the Tenements; and
|
(B)
|
approval for the sale from the Foreign Investment Review Board (if applicable).
|
(iii)
|
The parties must execute all documents and do all other things reasonably necessary to apply for and obtain the Transfer Approvals as expeditiously as possible.
|
(iv)
|
If the Transfer Approvals:
|
(A)
|
have not all been obtained within 90 days after the date of expiry of the 60 day period referred to in clause 12.12(d), the Accepting Participants may elect to terminate the contract for the sale of the Changed Participant's Joint Venture Interest;
|
(B)
|
have all been obtained or the Accepting Participants have not elected to terminate the contract for the sale of the Changed Participant's Joint Venture Interest under clause 12.12(f)(iv)(A), then completion of the sale of the Changed Participant's Joint Venture Interest will take place at the place in Western Australia nominated by the Accepting Participants by notice in writing to the Changed Participant and on the date which is 30 days after the date upon which the last of the necessary Approvals was obtained, or such earlier date agreed by the Accepting Participants, provided that if all Transfer Approvals have not been obtained within 12 months of the offer described in clause 12.12(d), this clause 12.12 shall cease to apply in respect of that Change in Control event;
|
(C)
|
have all been obtained by some but not all Accepting Participants within 90 days after the date of expiry of the 60 day period referred to in clause 12.12(d), then:
|
(1)
|
those Accepting Participants who have not obtained all necessary Approvals may elect to withdraw from the contract for the sale of the Changed Participant's Joint Venture Interest; and
|
|
|
page |
56
|
(2)
|
if, within a further 14 days after the end of the 90 day period (or such longer period agreed by the Accepting Participants), any remaining Accepting Participants who have obtained all Transfer Approvals (within the 12 month limitation period described in clause 12.12(f)(iv)(B)) agree to purchase the Changed Participant's Joint Venture Interest, either in the proportions that those Accepting Participants' respective Joint Venture Interests bear to the aggregate of their Joint Venture Interests, or in such other proportions that those remaining Accepting Participants otherwise agree, then:
|
(AA)
|
the contract for the sale of the Changed Participant's Joint Venture Interest will be deemed to be between the Changed Participant and those remaining Accepting Participants, and in such proportions as those Accepting Participants agree; and
|
(BB)
|
completion of the sale of the Changed Participant's Joint Venture Interest will take place at the place in Western Australia nominated by the relevant Accepting Participants by notice in writing to the Changed Participant on the date which is 14 days after the end of the 14 day period specified in clause 12.12(f)(iv)(C)(2).
|
(v)
|
At completion:
|
(A)
|
the Changed Participant must transfer its Joint Venture Interest to the relevant Accepting Participants free from all Security Interests (subject to the Permitted Security Interests which apply to the Joint Venture Interest). The relevant Accepting Participants will be entitled to a transfer of the Joint Venture Interest of the Changed Participant in the proportions that their respective Joint Venture Interests bear to the aggregate of their Joint Venture Interests or in such other proportions as the relevant Accepting Participants agree;
|
(B)
|
the Changed Participant must execute and deliver all instruments of sale, assignment, conveyance and transfer and all other documents, and take such other action, as the relevant Accepting Participants may reasonably request to effect such transfer; and
|
(C)
|
in return for the transfer of the Changed Participant's Joint Venture Interest, the relevant Accepting Participants must pay to the Changed Participant, or as the Changed Participant's solicitor may direct, the amount that is equal to the value of the Changed Participant's Joint Venture Interest (as agreed or determined in accordance with clause 12.12(b)).
|
(g)
|
For the avoidance of doubt, a Change in Control of a Participant or its Holding Company does not constitute a transfer or proposed transfer for the purposes of clause 12.3.
|
|
|
page |
57
|
13
|
Defaults and remedies
|
13.1
|
Event of Default
|
(a)
|
any failure by the Participant to pay a Called Sum (under clauses 8.3 or 8.5) in accordance with clause 8.4 within five (5) Business Days after notice has been given by the Manager or a Participant under clause 13.2;
|
(b)
|
subject to clause 19.15, an Insolvency Event occurs in relation to the Participant;
|
(c)
|
any default by the Participant in the performance of any material obligation under a Joint Venture Document (other than one referred to in clauses 13.1(a) or 13.1(b) above):
|
(i)
|
which is capable of remedy, and which default is not remedied within 30 Business Days after receipt of written notice from any other Participant or the Manager given under clause 13.2;
|
(ii)
|
but if the default is not reasonably capable of being remedied within 30 Business Days after receipt of written notice from any other Participant or the Manager given under clause 13.2, the Participant fails to commence or has not otherwise taken bona fide steps to remedy the relevant default within 30 Business Days of receiving such notice and does not remedy that default within 50 Business Days after receipt of written notice from any other Participant or the Manager given under clause 13.2 (or such longer period agreed by the Management Committee, where any Defaulting Participant or its Affiliates does not vote); or
|
(d)
|
any default by the Participant in the performance of any material obligation under a Joint Venture Document which is not capable of remedy (other than one referred to in clauses 13.1(a) or 13.1(b) above), where the Defaulting Participant has not paid monetary compensation to the Non-Defaulting Participants within 30 Business Days of receipt of notification of the amount of compensation payable as determined under clause 13.2(d).
|
13.2
|
Notices of default
|
(a)
|
If any Participant:
|
(i)
|
fails to pay when due any amount due by it referred to in clause 13.1(a); or
|
(ii)
|
defaults in the performance of any of its material obligations under any of the Joint Venture Documents,
|
(b)
|
Failure by the Manager to give such notice will not release the Defaulting Participant from any of its obligations under the Joint Venture Documents.
|
(c)
|
If a Participant becomes aware that another Participant has defaulted in the performance of any of its obligations under the Joint Venture Documents but the Manager has not given a notice of default to the Defaulting Participant under
|
|
|
page |
58
|
(d)
|
If a default of a material obligation is not capable of being remedied, the Participants must agree in writing the amount of adequate monetary compensation to be paid by the Defaulting Participant to compensate for that default. If the Participants have not reached agreement within 14 days after the date on which notice of default is given, that amount must be referred to an Expert for determination in accordance with clause 17, who must make such determination within 30 days of his or her appointment. On agreement or determination of the amount of adequate monetary compensation under this clause, that amount, and any interest and costs payable or reimbursable under this agreement, becomes money due and payable under this agreement within the 30 Business Day period referred to in clause 13.1(d).
|
13.3
|
Payment of interest upon default
|
13.4
|
Rights following an Event of Default
|
(a)
|
the Representatives of the Defaulting Participant:
|
(i)
|
will not have the right to vote at meetings of the Management Committee;
|
(ii)
|
will not be counted for the purposes of determining the relevant quorum; and
|
(iii)
|
if Chairperson of the Management Committee, will cease to be Chairperson and the next entitled Non-Defaulting Participant may appoint the Chairperson;
|
(b)
|
if the Event of Default is a circumstance described in clause 13.1(a), the Defaulting Participant will not have a right to participate in the management of the Joint Venture or to participate in any determinations under this agreement and the Representatives appointed by the Defaulting Participant will not have the right to vote at Management Committee meetings, but will be entitled to attend and otherwise participate in those meetings;
|
(c)
|
the Defaulting Participant will have no further right to take and dispose of its share of Product and the Manager may take and dispose of what would otherwise be the Defaulting Participant’s share of Product on such terms as the Manager considers reasonable and must credit the net proceeds of sale after deducting all costs incurred in effecting the sale, towards the moneys owed by the Defaulting Participant;
|
(d)
|
the Defaulting Participant will continue to have the right to receive the reports and information from the Manager under clause 9;
|
|
|
page |
59
|
(e)
|
the Non-Defaulting Participants and the Manager may exercise each and every power and remedy provided in the Deed of Cross Security executed by the Defaulting Participant and use and apply any moneys realised from such exercise in accordance with the Deed of Cross Security; and
|
(f)
|
the Non-Defaulting Participants may acquire the Joint Venture Interest of the Defaulting Participant subject to and in accordance with clause 13.7.
|
13.5
|
Payment of Unpaid Called Sum
|
(a)
|
Subject to clause 13.5(b), if requested by written notice from the Manager, the Non-Defaulting Participants will, in the proportion that their respective Joint Venture Interests bear to the aggregate of their Joint Venture Interests, pay on behalf of the Defaulting Participant all or any part nominated by the Manager of the amounts owing by such Defaulting Participant (including under clause 13.3), such payment to be made by the Non-Defaulting Participants within such time as the Manager may reasonably determine.
|
(b)
|
The Manager will exercise its rights under the Deed of Cross Security (as contemplated in clause 13.4(e)), and take and sell what would otherwise be the Defaulting Participant’s Joint Venture Interest share of Product under clause 13.4(c), in priority to calling upon the Non-Defaulting Participants to pay any amounts owing by the Defaulting Participant (as contemplated in clause 13.5(a)), if the Manager is of the opinion that exercising its rights under the Deed of Cross Security or against the share of Product will result in it obtaining payment of the relevant outstanding amounts, within a timeframe that will enable Joint Venture Operations to continue without disruption.
|
(c)
|
If any Non-Defaulting Participant pays any amount on behalf of a Defaulting Participant under clause 13.5(a), the amount so paid will constitute a debt due and payable by the Defaulting Participant to such Non-Defaulting Participant, and will bear interest at the Interest Rate calculated on daily balances, and capitalised monthly, from the date such debt became due to the Non-Defaulting Participant until the date such debt is paid by the Defaulting Participant.
|
13.6
|
Delivery of Cross Security
|
(a)
|
It is acknowledged that, for the purposes of securing the performance of their obligations under the Joint Venture Documents, each Participant has executed and delivered the Deed of Cross Security, creating a charge upon the Participant's Joint Venture Interest and its shares in the Manager in favour of the other Participants and the Manager and creating a charge upon the Participant's Joint Venture Interest in favour of the Manager.
|
(b)
|
Each Participant (and each Transferee of a Joint Venture Interest which has executed a similar deed of charge in accordance with clause 12.11(b)) will as soon as practicable after the creation of the Deed of Cross Security promptly register the Deed of Cross Security, or will file or record such other notices or documents relating to the Deed of Cross Security, in each jurisdiction where such registration, filing or recording may be required to perfect the security created by the Deed of Cross Security and to protect further the rights of the Manager and other Participants under the Deed of Cross Security.
|
|
|
page |
60
|
13.7
|
Option to acquire Joint Venture Interest of Defaulting Participant
|
(a)
|
Upon the occurrence of an Event of Default, the Manager (or failing the Manager doing so, any Participant) will notify the Participants of the Event of Default (
EOD Notice
).
|
(b)
|
Upon the occurrence of an Event of Default, and until such Event of Default has been rectified, each Non-Defaulting Participant will have the option to acquire the whole of the Joint Venture Interest of the Defaulting Participant.
|
(c)
|
Such option may be exercised by notice in writing (
Exercise Notice
) given to the Defaulting Participant at any time during the 60 day period immediately following the later of the occurrence of the Event of Default and the date that the Manager (or a Participant) gives the Participants an EOD Notice (
Option Exercise Period
), provided the Event of Default giving rise to such option remains unremedied as at the date of the Exercise Notice.
|
(d)
|
The Non-Defaulting Participant must give a copy of the Exercise Notice to:
|
(i)
|
the Manager; and
|
(ii)
|
the other Non-Defaulting Participants,
|
(e)
|
If:
|
(i)
|
one or more Non-Defaulting Participants give an Exercise Notice within the Option Exercise Period; and
|
(ii)
|
at least the first of such Exercise Notices was given at a point in time when the Event of Default which gave rise to the option remained unremedied,
|
(f)
|
Within 14 days after the value of the Joint Venture Interest of the Defaulting Participant has been determined in accordance with clause 13.8, any Non-Defaulting Participant who had given an Exercise Notice may, by notice in writing (
Notice to Proceed
) given to the Defaulting Participant (with copies to the Manager and the other Non-Defaulting Participants) advise that the Non-Defaulting Participant wishes to proceed with the acquisition of the Joint Venture Interest of the Defaulting Participant.
|
(g)
|
If one or more Non-Defaulting Participants (
Acquiring Participants
) give a Notice to Proceed, the Defaulting Participant and the Acquiring Participants will be deemed to have entered into a contract for the sale to the Acquiring Participants (in the proportions that their respective Joint Venture Interests bear to the aggregate of their Joint Venture Interests) of the Defaulting Participant’s Joint Venture Interest upon the following terms and conditions:
|
(i)
|
The liability of the Acquiring Participants (including obligations to pay money) will be several in the proportions that their respective Joint Venture Interests bear to the aggregate of their Joint Venture Interests.
|
|
|
page |
61
|
(ii)
|
The sale will be conditional upon the parties obtaining all Governmental Agency consents, approvals or clearances required in respect of the sale (
Approvals
), which may include, without limitation:
|
(A)
|
Ministerial consents required under the Mining Act for the assignment of a Defaulting Participant’s Joint Venture Interest in the Tenements; and
|
(B)
|
approval for the sale from the Foreign Investment Review Board (if applicable).
|
(iii)
|
The parties must execute all documents and do all other things reasonably necessary to apply for and obtain the necessary Approvals as expeditiously as possible.
|
(iv)
|
If the necessary Approvals:
|
(A)
|
have not all been obtained within 90 days after the date of expiry of the 14 day period referred to in clause 13.7(f), the Acquiring Participants may elect to terminate the contract for the sale of the Defaulting Participant’s Joint Venture Interest;
|
(B)
|
have all been obtained or the Acquiring Participants have not elected to terminate the contract for the sale of the Defaulting Participant’s Joint Venture Interest under clause 13.7(g)(iv)(A), then completion of the sale of the Defaulting Participant’s Joint Venture Interest will take place at the place in Western Australia nominated by the Acquiring Participants by notice in writing to the Defaulting Participant and on the date which is 30 days after the date upon which the last of the necessary Approvals was obtained, or such earlier date agreed by the Acquiring Participants;
|
(C)
|
have all been obtained by some but not all Acquiring Participants within 90 days after the date of expiry of the 14 day period referred to in clause 13.7(f), then:
|
(1)
|
those Acquiring Participants who have not obtained all necessary Approvals may elect to withdraw from the contract for the sale of the Defaulting Participant’s Joint Venture Interest; and
|
(2)
|
if, within a further 14 days after the end of the 90 day period (or such longer period agreed by the Acquiring Participants), any remaining Acquiring Participants who have obtained all necessary Approvals agree to purchase the Defaulting Participant’s Joint Venture Interest, either in the proportions that those Acquiring Participants’ respective Joint Venture Interests bear to the aggregate of their Joint Venture Interests, or in such other proportions that those remaining Acquiring Participants otherwise agree, then:
|
(AA)
|
the contract for the sale of the Defaulting Participant’s Joint Venture Interest will be deemed to be between the Defaulting Participant and those remaining Acquiring Participants, and in such proportions as those Acquiring Participants agree; and
|
|
|
page |
62
|
(BB)
|
completion of the sale of the Defaulting Participant’s Joint Venture Interest will take place at the place in Western Australia nominated by the relevant Acquiring Participants by notice in writing to the Defaulting Participant on the date which is 14 days after the end of the 14 day period specified in clause 13.7(g)(iv)(C)(2).
|
(v)
|
At completion:
|
(A)
|
the Defaulting Participant must transfer its Joint Venture Interest to the relevant Acquiring Participants free from all Security Interests (subject to the Permitted Security Interests which apply to the Joint Venture Interest). The relevant Acquiring Participants will be entitled to a transfer of the Joint Venture Interest of the Defaulting Participant in the proportions that their respective Joint Venture Interests bear to the aggregate of their Joint Venture Interests or in such other proportions as the relevant Acquiring Participants agree;
|
(B)
|
the Defaulting Participant must execute and deliver all instruments of sale, assignment, conveyance and transfer and all other documents, and take such other action, as the relevant Acquiring Participants may reasonably request to effect such transfer;
|
(C)
|
in return for the transfer of the Defaulting Participant’s Joint Venture Interest, the relevant Acquiring Participants must pay to the Defaulting Participant, or as the Defaulting Participant’s solicitor may direct, the amount that is equal to 95% of the value of the Defaulting Participant’s Joint Venture Interest (as determined in accordance with clause 13.8) less the following amounts:
|
(1)
|
all amounts due but unpaid under any of the Joint Venture Documents by the Defaulting Participant, which amounts must, immediately following completion, be paid by the relevant Acquiring Participants on behalf of the Defaulting Participant;
|
(2)
|
the amount of the debt owed by the Defaulting Participant to the acquiring Participants under clause 13.5(c); and
|
(3)
|
the amount (as reasonably determined by the Non-Defaulting Participants) of all other outstanding liabilities and obligations of the Defaulting Participant under any of the Joint Venture Documents which are to be assumed by the relevant Acquiring Participants; and
|
(4)
|
all amounts of any stamp and other duties, levies, imposts or other taxes, together with any interest or penalty thereon, imposed by the State or the Commonwealth or any taxing authority, paid or which may thereafter be payable by the relevant Acquiring Participants in connection with the exercise of the option and the transfers effected consequent upon its exercise; and
|
(D)
|
the amount payable to the Defaulting Participant under clause 13.7(g)(v)(C) must be paid by electronic transfer of clear and available funds into a bank account in Australia nominated by the Defaulting Participant for this purpose.
|
|
|
page |
63
|
(vi)
|
To secure the rights of the Acquiring Participants under this clause, the Defaulting Participant hereby irrevocably appoints each relevant Acquiring Participant, the Manager and their respective directors as the several attorneys of the Defaulting Participant with power to sign all documents and do all other things in the name of the Defaulting Participant which are reasonably necessary to:
|
(A)
|
apply for and obtain the necessary Government Agency consents, approvals and clearances referred to in clause 13.7(g); and
|
(B)
|
effect the transfer of the Defaulting Participant’s Joint Venture Interest as contemplated in clauses 13.7(g)(v)(A) and 13.7(g)(v)(B).
|
(vii)
|
The Defaulting Participant and the relevant Acquiring Participants must sign any deed of covenant and deed of charge that is required under clause 12.11(b).
|
13.8
|
Value of Joint Venture Interest of Defaulting Participant
|
(a)
|
The Defaulting Participant and the Non-Defaulting Participants who have given an Exercise Notice must endeavour to agree the value of the Joint Venture Interest of the Defaulting Participant.
|
(b)
|
If the parties are unable to agree upon the value of the Joint Venture Interest of the Defaulting Participant within 14 days after the expiry of the Option Exercise Period, the parties must endeavour to agree upon the appointment of two Valuers.
|
(c)
|
If the parties are unable to agree upon the appointment of the Valuers within 14 days after the expiry of the Option Exercise Period, then the Valuers will be two (2) suitably qualified and experienced persons nominated by the President (or acting President) for the time being of the Minerals Council of Australia or their nominee at the request of Non-Defaulting Participants who have given an Exercise Notice.
|
(d)
|
The Valuers must be engaged on terms which require the Valuers to use their best endeavours to make independently a determination within 30 days after their appointment, or such other timeframes as the Defaulting Participant and Non-Defaulting Participants who have given an Exercise Notice may agree.
|
(e)
|
Each Valuer will determine the value of the Joint Venture Interest of the Defaulting Participant, as at the date of the first Exercise Notice given, on the following basis:
|
(i)
|
the price that would have been paid by a knowledgeable and willing (but not anxious) buyer to a knowledgeable and willing (but not anxious) seller dealing at arm’s length;
|
(ii)
|
any Rehabilitation Obligations and Mine Closure Obligations relating to the Joint Venture Interest are to be taken into consideration;
|
(iii)
|
the Joint Venture Interest is to be valued on a stand-alone basis, and without taking into account any element of control that a Non-Defaulting Participant may obtain as a result of acquiring all or part of the Defaulting Participant’s Joint Venture Interest in addition to the Non-Defaulting Participant’s existing Joint Venture Interest;
|
|
|
page |
64
|
(iv)
|
the valuation is to be determined independently and generally in accordance with the VALMIN Code of the Australasian Institute of Mining and Metallurgy; and
|
(v)
|
otherwise the valuation methodologies to be applied are to be determined by the Valuer in its own discretion, taking into account usual and prudent industry practices.
|
(f)
|
The value of the Joint Venture Interest of the Defaulting Participant will be deemed to be the average of the two Valuer’s determinations.
|
(g)
|
In making the determination, each Valuer will be deemed to be acting as an expert and not as an arbitrator, and the laws relating to commercial arbitration will not apply to either Valuer, the Valuer’s determination or the means by which each Valuer makes the determination.
|
(h)
|
Each Participant will be entitled to submit such evidence to each Valuer as the Valuer may reasonably allow or require, and will provide all information, written or oral, which the Valuer may reasonably request, provided that:
|
(i)
|
all oral evidence must be presented in the presence of the other parties; and
|
(ii)
|
copies of all written evidence must be given to all other parties.
|
(i)
|
Each Valuer may consult such legal, technical and financial experts as the Valuer, in his or her absolute discretion, thinks fit.
|
(j)
|
The costs of the Valuers, and of any legal, technical and financial experts consulted by the Valuers, will be borne by the Defaulting Participant.
|
(k)
|
The determination of the Valuer will be final and binding on the parties without appeal so far as the law allows and except in the case of manifest error.
|
13.9
|
Remedies not exclusive
|
(a)
|
Each and every power and remedy given to the Non-Defaulting Participants in this clause 13 are in addition to every other power and remedy existing at law or in equity, and each and every power and remedy may be exercised from time to time and simultaneously and as often and in such order as may be deemed expedient.
|
(b)
|
All such powers and remedies will be cumulative, and the exercise of one will not be deemed a waiver of the right to exercise any other or others.
|
(c)
|
No delay or omission in the exercise of any such power or remedy will impair any such power or remedy or will be construed to be a waiver of any default.
|
14
|
Force Majeure
|
(a)
|
If a party (
Affected Party
) is prevented or hindered by Force Majeure from fully or partly complying with any obligation (except for the payment of money) under this agreement, that obligation is suspended for the duration of, and to the extent affected by, such Force Majeure.
|
(b)
|
If the Affected Party wishes to claim the benefit of this clause it must give prompt notice of the Force Majeure occurrence to the other parties including reasonable details of:
|
|
|
page |
65
|
(i)
|
the Force Majeure occurrence and why it constitutes Force Majeure;
|
(ii)
|
the effect of the Force Majeure occurrence on the performance of the Affected Party’s obligations; and
|
(iii)
|
the likely duration of the delay in performance of those obligations.
|
(c)
|
The Affected Party must use its best endeavours to remove or overcome the cause and/or effect of the Force Majeure provided that nothing in this clause requires the Affected Party to:
|
(i)
|
settle any strike, or other labour dispute; or
|
(ii)
|
contest the validity or enforceability of any law or legally enforceable order by way of legal proceedings,
|
(d)
|
If the Force Majeure event cannot be removed or overcome to an extent that allows resumption of performance within six (6) Months (or such other period as the Participants agree) from the date the notice is given under clause 14(b)(i), the parties must consider and determine whether this agreement should be modified or terminated.
|
(e)
|
Notwithstanding the Force Majeure, the Participants must continue to pay any Called Sum called by the Manager in accordance with clauses 8.3 and 8.5 to the extent such monies are necessary to maintain the Joint Venture Assets in good condition and keep the Tenements and the Petroleum Pipelines in good standing.
|
15
|
Notices
|
15.1
|
General
|
15.2
|
How to give a communication
|
(a)
|
personally delivered;
|
(b)
|
left at the party’s current delivery address for notices;
|
(c)
|
sent to the party’s current postal address for notices by pre-paid ordinary mail or, if the address is outside Australia, by pre-paid airmail;
|
(d)
|
sent by email to the party’s current email address for notices; or
|
(e)
|
sent by such other form of communication as the Participants and the Manager may from time to time agree.
|
15.3
|
Particulars for delivery
|
|
|
page |
66
|
(a)
|
The particulars for delivery of notices are initially:
|
(i)
|
in the case of WLPL:
|
(ii)
|
in the case of AWPL:
|
(iii)
|
in the case of the Manager:
|
(b)
|
Each party may change its particulars for delivery of notices by notice to each other party.
|
15.4
|
Communications by post
|
(a)
|
within Australia to an Australian postal address, three (3) Business Days after posting; or
|
(b)
|
outside of Australia to an Australian postal address or within Australia to an address outside of Australia, ten (10) Business Days after posting.
|
15.5
|
Communications by email
|
(a)
|
Subject to clause 15.7, a communication is given if sent by email, upon the earlier of:
|
(i)
|
the time the sender receives an automated message from the intended recipient’s information system confirming delivery of the email;
|
|
|
page |
67
|
(ii)
|
the time that the email is first opened or read by the intended recipient, or an employee or officer of the intended recipient; and
|
(iii)
|
four (4) hours after the time the email is sent (as recorded on the device from which the sender sent the email) unless the sender receives, within that four (4) hour period, an automated message that the email has not been delivered.
|
(b)
|
Despite anything to the contrary in this agreement, the following communications must not be given by email:
|
(i)
|
a notice given by the Manager under clause 13.2(a) or any Participant under clause 13.2(c); and
|
(ii)
|
an EOD Notice given under clause 13.7.
|
15.6
|
Process service
|
15.7
|
After hours communications
|
(a)
|
after 5.00 pm in the place of receipt; or
|
(b)
|
on a day which is a Saturday, Sunday or bank or public holiday in the place of receipt,
|
16
|
GST
|
16.1
|
Construction
|
(a)
|
unless there is a contrary indication, words and expressions which are not defined in this agreement but which have a defined meaning in the GST Law have the same meaning as in the GST Law;
|
(b)
|
references to GST payable and input tax credit entitlements include:
|
(i)
|
notional GST payable by, and notional input tax credit entitlements of the Commonwealth, a State or a Territory (including a government, government body, authority, agency or instrumentality of the Commonwealth, a State or a Territory); and
|
(ii)
|
GST payable by, and the input tax credit entitlements of, the representative member of a GST group of which the entity is a member.
|
16.2
|
Consideration GST exclusive
|
|
|
page |
68
|
16.3
|
Payment of GST
|
(a)
|
a party; or
|
(b)
|
an entity that is taken under the GST Law to make the supply by reason of the capacity in which a party acts,
|
16.4
|
Timing of GST payment
|
16.5
|
Tax invoice
|
16.6
|
Adjustment event
|
16.7
|
Reimbursements
|
16.8
|
Calculations based on other amounts
|
16.9
|
No merger
|
|
|
page |
69
|
16.10
|
GST joint venture
|
17
|
Expert determination
|
17.1
|
When appointed
|
(a)
|
any matter is expressly to be referred to an Expert; or
|
(b)
|
the parties agree that a point of difference between them will be resolved by an Expert,
|
17.2
|
Appointment
|
(a)
|
the party wishing the appointment to be made will give notice in writing to that effect to the other parties and give details of the matter which it proposes will be resolved by the Expert;
|
(b)
|
within ten (10) Business Days from the date of that notice, the parties will meet in an endeavour to agree upon a single Expert (who will be independent of the parties and will have qualifications and experience appropriate to the matter in dispute) to whom the matter in dispute will be referred for determination; and
|
(c)
|
if within that ten (10) Business Days the parties fail to agree upon the appointment of a single Expert then any party may request the nomination of an Expert by:
|
(i)
|
the President of the Australasian Institute of Mining and Metallurgy to appoint the Expert, if the subject matter of the dispute relates to a technical issue;
|
(ii)
|
the President of the Institute of Chartered Accountants in Australia, if the subject matter of the dispute relates to a financial issue;
|
(iii)
|
the President of the Western Australian Law Society, if the subject matter of the dispute relates to a legal issue; and
|
|
|
page |
70
|
(iv)
|
the National Chairman of the Australian Institute of Company Directors, if the subject matter of the dispute relates to any other issue,
|
(d)
|
If an Independent Body fails to nominate an Expert within ten (10) Business Days of being requested to do so, or otherwise refuses to make such an appointment, then any party may request the nomination of an Expert by the President of the Resolution Institute of Australia, which nominee the parties must appoint.
|
17.3
|
Instructions
|
(a)
|
determine the dispute within the shortest practicable time; and
|
(b)
|
deliver a report stating his opinion with respect to the matters in dispute and setting out the reasons for the decision.
|
17.4
|
Procedure
|
(a)
|
The Expert will determine the procedures for the conduct of the process in order to resolve the dispute and must provide each party with a fair opportunity to make submissions in relation to the matter in issue.
|
(b)
|
Any process or determination of the dispute by the Expert will be made as an expert and not as an arbitrator and the determination of the Expert will be final and binding on the parties without appeal so far as the law allows and except in the case of manifest error or where a party to the matter in issue has not been provided with a fair opportunity to make submissions in relation to the matter in issue.
|
17.5
|
Costs
|
18
|
Dispute resolution
|
18.1
|
Dispute resolution process
|
18.2
|
Dispute Notice
|
(a)
|
A party claiming a Dispute (
Initiating Party
) must give notice (
Dispute Notice
) to the other party which:
|
(i)
|
identifies the subject matter of the Dispute; and
|
|
|
page |
71
|
(ii)
|
designates a senior representative for the Dispute who will have the authority to settle the Dispute on its behalf.
|
(b)
|
The other party must then promptly designate, by notice to the Initiating Party, its senior representative for the Dispute who will have authority to settle the Dispute on its behalf.
|
18.3
|
Meeting of the parties' designated representatives
|
18.4
|
Meeting of Senior Executives and Chief Executive Officers
|
(a)
|
If the Dispute is not resolved under clause 18.3, then within ten (10) Business Days of the Dispute Notice, a senior executive of the Ultimate Holding Company of each party to the Dispute (
Disputing Parties
) must meet and use all reasonable endeavours acting in good faith to resolve the Dispute.
|
(b)
|
If the Dispute is not resolved under clause 18.4(a), then within 20 Business Days of the date the Dispute Notice has been given, each chief executive officer of the Ultimate Holding Company of each Disputing Party must meet and use all reasonable endeavours acting in good faith to resolve the Dispute.
|
18.5
|
Court proceedings
|
(a)
|
the steps under clauses 18.3, 18.4(a) and 18.4(b) have been taken and one or other of the chief executive officers of the Ultimate Holding Companies of the Disputing Parties has stated that they consider that the Dispute will not be resolved within 40 Business Days from the date of the Dispute Notice; or
|
(b)
|
one of the parties has attempted to follow the steps in clauses 18.3, 18.4(a) and 18.4(b) and the other party has not complied with its obligations under those clauses.
|
18.6
|
Urgent interlocutory relief
|
19
|
General
|
19.1
|
Consents and approvals
|
19.2
|
Duty
|
|
|
page |
72
|
(a)
|
Except as expressly stated otherwise in this agreement (including as provided in clause 2.15), the Manager, as between the parties, is liable for and must pay all duty (including any fine, interest or penalty except where it arises from default by another party) on or relating to this agreement, any agreement executed under it or any dutiable transaction evidenced or effected by it.
|
(b)
|
If a party other than the Manager pays any duty (including any fine, interest or penalty) on or relating to this agreement, any document executed under it or any dutiable transaction evidenced or effected by it, the Manager must pay that amount to the paying party on demand.
|
(c)
|
All amounts payable by the Manager under clauses 19.2(a) and 19.2(b) will form part of Joint Venture Costs.
|
19.3
|
Legal costs
|
(a)
|
Except as expressly stated otherwise in this agreement, each party must pay its own legal and other costs and expenses of negotiating, preparing, executing and performing its obligations under this agreement.
|
(b)
|
The legal costs of the Manager in negotiating, preparing, and executing this agreement do not form part of Joint Venture Costs, however the legal costs of the Manager in performing its obligations under this agreement form part of Joint Venture Costs.
|
19.4
|
No liability for consequential losses
|
19.5
|
Entire agreement
|
(a)
|
This agreement is the entire agreement between the parties about its subject matter and replaces all previous agreements, understandings, representations and warranties about that subject matter.
|
(b)
|
Each party represents and warrants that it has not relied on any representations or warranties about the subject matter of this agreement except as expressly provided in this agreement.
|
19.6
|
Further assurances
|
19.7
|
Rights cumulative
|
19.8
|
Severability
|
|
|
page |
73
|
19.9
|
Survival and merger
|
(a)
|
No term of this agreement merges on completion of any transaction contemplated by this agreement.
|
(b)
|
Clause 11 survives termination or expiry of this agreement together with any other term which by its nature is intended to do so.
|
19.10
|
PPS Act
|
(a)
|
Each party waives the right to receive any notice under the PPS Act (including a notice of verification statement) unless the notice is required under the PPS Act and the obligation to give it cannot be excluded.
|
(b)
|
Unless expressed to the contrary, a reference to a term which is defined in the PPS Act has the meaning it has in the PPS Act.
|
19.11
|
Variation
|
19.12
|
Waiver
|
(a)
|
No waiver of a right or remedy under this agreement is effective unless it is in writing and signed by the party granting it. It is only effective in the specific instance and for the specific purpose for which it is granted.
|
(b)
|
A single or partial exercise of a right or remedy under this agreement does not prevent a further exercise of that or of any other right or remedy.
|
(c)
|
Failure to exercise or delay in exercising a right or remedy under this agreement does not operate as a waiver or prevent further exercise of that or any other right or remedy.
|
19.13
|
Governing law
|
(a)
|
This agreement is governed by the laws of Western Australia
.
|
(b)
|
Each party irrevocably and unconditionally submits to the exclusive jurisdiction of the courts of Western Australia including, for the avoidance of doubt, the Federal Court of Australia sitting in Western Australia.
|
19.14
|
Counterparts
|
19.15
|
Ipso Facto Stay
|
|
|
page |
74
|
19.16
|
Relationship with Shareholders' Deed
|
19.17
|
Remote conferencing
|
|
|
page |
75
|
Schedule 1
|
Dictionary
|
1
|
Dictionary
|
(a)
|
all Intellectual Property Rights that the Participants or the Manager holds pertaining to the Mining Information including rights subsisting under copyright, design, trade mark, patent or similar legislation, together with rights recognised at common law; and
|
|
|
Schedule 1 – Dictionary | page |
76
|
(b)
|
the benefit of any contracts (whether written or oral) between the Manager and the provider of the Mining Information for production of that information, including any actual or implied warranties as to the accuracy of that information.
|
(a)
|
a change in the entity that Controls the first mentioned entity (other than if the Ultimate Holding Company of the first mentioned entity remains the same following the change);
|
(b)
|
an entity that Controls the first mentioned entity ceases to Control that entity (other than if the Ultimate Holding Company of the first mentioned entity remains the same following the change); or
|
(c)
|
if the first mentioned entity is not Controlled, another entity acquires Control of the first mentioned entity.
|
|
|
Schedule 1 – Dictionary | page |
77
|
(a)
|
in respect of MRL, any transaction or dealing which would result, on completion, in a Change in Control of MRL and includes, for the purposes of this definition, any person or group of persons acting jointly or in concert, acquiring a relevant interest (as defined in the Corporations Act) in 20% or more of MRL’s issued shares; and
|
(b)
|
in respect of Albemarle, any transaction or dealing which would result, on completion, in a Change in Control of Albemarle and includes, for the purposes of this definition, any person or group of persons acting jointly or in concert, acquiring a beneficial interest in 20% or more of Albemarle's issued shares.
|
|
|
Schedule 1 – Dictionary | page |
78
|
(a)
|
feasibility level study work; or
|
(b)
|
Mining Operations.
|
(a)
|
the Contracted Concentrate;
|
(b)
|
the Excluded Infrastructure;
|
(c)
|
the Retained Mineral Rights;
|
(d)
|
the GAMG Assets; and
|
(e)
|
the WLPL Assets.
|
|
|
Schedule 1 – Dictionary | page |
79
|
(a)
|
is beyond the control of the Affected Party;
|
(b)
|
was not directly or indirectly caused or materially contributed to by the Affected Party; and
|
(c)
|
could not have been reasonably prevented by the Affected Party,
|
(d)
|
act of God;
|
(e)
|
law, rule, regulation or order of any government or Government Agency;
|
(f)
|
executive or administrative orders or acts of either general or particular application of any official acting under the authority of any government, or of any official acting under the authority of such government;
|
(g)
|
act of war (declared or undeclared);
|
(h)
|
public disorder;
|
(i)
|
riot, insurrection, rebellion, sabotage or act of terrorists;
|
(j)
|
fire, flood, drought, earthquake, storm, hail, lightning, severe weather conditions or other natural calamity;
|
(k)
|
explosion, breakdown or injury to or expropriation, confiscation or requisitioning of production, manufacturing, selling, transportation or delivery facilities;
|
(l)
|
shortage or unavailability (whether permanent or temporary) of water, electricity, gas, telecommunications or other essential goods or services;
|
(m)
|
inability to access all or any part of the Joint Venture Area because of Native Title Claims or Native Title Rights or otherwise;
|
(n)
|
quarantine or customs restrictions;
|
(o)
|
the decision of any court or other body of competent jurisdiction; and
|
(p)
|
strike, boycott, lockout or other labour disturbance.
|
|
|
Schedule 1 – Dictionary | page |
80
|
(a)
|
it is, or states that it is, unable to pay all of its debts as and when they become due and payable, or it has failed to comply with a statutory demand as provided in section 459F(1) of the Corporations Act;
|
(b)
|
an application or order is made for the winding up or dissolution, or a resolution is passed or any steps are taken to pass a resolution for the winding up or dissolution, of the Insolvent Party (other than for the purposes of a solvent reconstruction, amalgamation or other like corporate reorganisation), and the application is not dismissed, the order is not set aside or the resolution is not withdrawn (as applicable) within 14 days;
|
(c)
|
an administrator, provisional liquidator, liquidator or person having a similar or analogous function under the laws of any relevant jurisdiction is appointed in respect of the Insolvent Party or any action is taken to appoint any such person and the action is not stayed, withdrawn or dismissed within 14 days;
|
(d)
|
a controller (as defined in the Corporations Act) is appointed in respect of any property of the Insolvent Party;
|
(e)
|
the Insolvent Party is deregistered under the Corporations Act;
|
(f)
|
a distress, attachment or execution is levied or becomes enforceable against any property of the Insolvent Party;
|
|
|
Schedule 1 – Dictionary | page |
81
|
(g)
|
the Insolvent Party enters into, or takes any action to enter into, an arrangement (including a scheme of arrangement or deed of company arrangement), composition or compromise with, or assignment for the benefit of, all or any class of its creditors or members or a moratorium involving any of them; or
|
(h)
|
anything analogous to or of a similar effect to anything described above under the law of any relevant jurisdiction occurs in respect of the Insolvent Party.
|
(a)
|
6% per annum; plus
|
(b)
|
the Reserve Bank of Australia’s cash rate, or, if that rate cannot be so determined, the rate (expressed as a percentage yield per annum to maturity) quoted at or about such time by Westpac Banking Corporation as the rate at which it would be prepared to purchase bills of exchange accepted by an Australian trading bank and having a tenor of 90 days and of an amount of $100,000.
|
(a)
|
the Tenements;
|
(b)
|
the Pipeline Licences;
|
(c)
|
the Mining Information;
|
|
|
Schedule 1 – Dictionary | page |
82
|
(d)
|
the Project Facilities;
|
(e)
|
the Approvals;
|
(f)
|
the Third Party Agreements (subject to any exclusions identified in this agreement and to the extent that they relate to the Tenements or Pipeline Licences only);
|
(g)
|
the stockpiles (but excluding Contracted Concentrate);
|
(h)
|
the Associated Rights;
|
(i)
|
Product, prior to it being taken in kind by a Participant in accordance with clause 2.8 (for the avoidance of doubt, Product to which a Participant is entitled to take in kind in accordance with clause 2.8, contracts with respect to the sale of Product and proceeds from the sale of Product are not Joint Venture Assets); and
|
(j)
|
the Refinery Plant,
|
(a)
|
all expenditure expressed to be part of Joint Venture Costs in this agreement; and
|
(b)
|
all expenditure and liabilities incurred by the Manager in accordance with this agreement including those set out in Schedule 4.
|
(a)
|
this agreement;
|
(b)
|
the Tenements;
|
(c)
|
the Shareholders’ Deed;
|
(d)
|
the Deed of Cross Security; and
|
(e)
|
all other agreements entered into by the Participants from time to time in connection with the Joint Venture (whether or not there are also other parties to such agreements) which the Participants agree will be a Joint Venture Document,
|
(f)
|
any contract for the sale by a Participant of its share of Product;
|
(g)
|
any agreement whereby a Participant appoints an agent or representative to perform duties and functions in relation to the sale of its share of Product;
|
(h)
|
any agreement entered into by a Participant for separately financing its obligations in connection with the Joint Venture; or
|
(i)
|
any other agreement entered into by the Participants from time to time which:
|
(j)
|
is not in connection with the Joint Venture; or
|
|
|
Schedule 1 – Dictionary | page |
83
|
(k)
|
the Participants agree will not be a Joint Venture Document.
|
(a)
|
the obligation, subject to the terms of this agreement, to contribute that percentage of all Joint Venture Costs;
|
(b)
|
the ownership of and right and benefit as a tenant in common to receive in kind and to dispose of for its own account that percentage of Minerals produced by the Joint Venture;
|
(c)
|
the rights, duties, obligations and liabilities of the Participants arising from the Joint Venture Documents; and
|
(d)
|
the beneficial ownership as a tenant in common of an undivided share in that percentage of all Joint Venture Assets.
|
|
|
Schedule 1 – Dictionary | page |
84
|
(a)
|
the Mining Act (including the terms and conditions of the Tenements);
|
(b)
|
authorisations, approvals or licences granted by any Government Agency; and
|
(c)
|
all other applicable statutory and contractual obligations relating to Mine Closure and the requirements of good mining industry practice on and following Mine Closure.
|
(a)
|
Mine Development; and
|
(b)
|
the weighing, sampling, assaying, mining, extraction, crushing, refining, treatment, transportation, handling, storage, loading and delivery of Minerals.
|
|
|
Schedule 1 – Dictionary | page |
85
|
(a)
|
Native Title Rights which is accepted by the Native Title Tribunal or the Registrar thereof pursuant to the Native Title Act; or
|
(b)
|
Native Title Interests.
|
(a)
|
“native title” or “native title rights and interests” as defined in section 223(1) of the Native Title Act; and
|
(b)
|
Native Title Interests.
|
|
|
Schedule 1 – Dictionary | page |
86
|
(a)
|
any lien arising by operation of law:
|
(i)
|
for the unpaid balance of purchase moneys under an instalment contract entered into in the ordinary course of business; or
|
(ii)
|
in the ordinary course of day to day trading and securing obligations not more than 30 days old;
|
(b)
|
any bankers’ lien or right of set-off or combination arising by operation of law or practice over property or moneys deposited with a banker in the ordinary course of ordinary business of the depositor;
|
(c)
|
any Security Interest arising under an operating lease or finance lease entered into in the ordinary course of business and not arising as a result of any default or omission by any Participant;
|
(d)
|
any retention of title arrangement in connection with the acquisition of goods on arm's length terms in the ordinary course of ordinary business on the suppliers' usual terms of sale;
|
(e)
|
any Security Interest created by statute in favour of Government Agency securing the payment of taxes, except as created because of any failure to duly pay any taxes; and
|
(f)
|
a deemed Security Interest under section 12(3) of the PPS Act that does not secure payment or performance of an obligation.
|
|
|
Schedule 1 – Dictionary | page |
87
|
(a)
|
the Mining Act (including the terms and conditions of the Tenements); and
|
(b)
|
authorisations, approvals or licences granted by any Government Agency; and
|
|
|
Schedule 1 – Dictionary | page |
88
|
(a)
|
the Mining Tenements;
|
(b)
|
the Assigned Tenements;
|
(c)
|
the Tenement Applications;
|
(d)
|
all other permits, licences and leases under the Mining Act (if any) granted to, or applied for by or on behalf of, the Participants for the purposes of the Joint Venture from time to time; and
|
|
|
Schedule 1 – Dictionary | page |
89
|
(e)
|
all renewals, conversions, extensions, amalgamations or amendments of, and substitutions for, the tenements and applications mentioned in paragraphs (a) to (d).
|
(a)
|
the Offered Interest; or
|
(b)
|
the Joint Venture Interest of the Defaulting Participant,
|
2
|
Interpretation
|
|
|
Schedule 1 – Dictionary | page |
90
|
(a)
|
the singular includes the plural and vice versa;
|
(b)
|
words that are gender neutral or gender specific include each gender;
|
(c)
|
where a word or phrase is given a particular meaning, other parts of speech and grammatical forms of that word or phrase have corresponding meanings;
|
(d)
|
the words 'such as', 'including', 'particularly' and similar expressions are not used as, nor are intended to be, interpreted as words of limitation;
|
(e)
|
a reference to:
|
(i)
|
a person includes a natural person, partnership, joint venture, Government Agency, association, corporation or other body corporate;
|
(ii)
|
a thing (including, but not limited to, a chose in action or other right) includes a part of that thing;
|
(iii)
|
a party includes its successors and permitted assigns;
|
(iv)
|
a document includes all amendments or supplements to that document;
|
(v)
|
a clause, term, party, schedule or attachment is a reference to a clause or term of, or party, schedule or attachment to this agreement;
|
(vi)
|
this agreement includes all schedules and attachments to it;
|
(vii)
|
a law includes a constitutional provision, treaty, decree, convention, statute, regulation, ordinance, by-law, judgment, rule of common law or equity and is a reference to that law as amended, consolidated or replaced;
|
(viii)
|
an agreement other than this agreement includes an undertaking, or legally enforceable arrangement or understanding, whether or not in writing; and
|
(ix)
|
a monetary amount is in Australian dollars;
|
(f)
|
when the day on which something must be done is not a Business Day, that thing must be done on the following Business Day;
|
(g)
|
in determining the time of day, where relevant to this agreement, the relevant time of day is:
|
(i)
|
for the purposes of giving or receiving notices, the time of day where a party receiving a notice is located; or
|
(ii)
|
for any other purpose under this agreement, the time of day in the place where the party required to perform an obligation is located;
|
(h)
|
A reference to AWPL and WLPL, includes in each case each of their respective successors and permitted assigns and (where applicable) legal personal representatives which at any time hereafter becomes a Participant; and
|
(i)
|
no rule of construction applies to the disadvantage of a party because that party was responsible for the preparation of this agreement or any part of it.
|
|
|
Schedule 1 – Dictionary | page |
91
|
Schedule 1
|
Special Resolutions
|
(a)
|
The disposition or surrender or relinquishment of a Tenement other than as required by the Mining Act or terms and conditions of the Tenement.
|
(b)
|
A sale, lease or exchange of all or substantially all of the Joint Venture Assets or merger or consolidation of any of the Project Facilities or the Joint Venture Operations with any other business or entity.
|
(c)
|
The disposal or sale of any Project Facilities referred to in clause 5.1(b)(xii) or other Joint Venture Assets, the written down book value of which exceeds $500,000.
|
(d)
|
Placing the Joint Venture Operations on “care and maintenance”.
|
(e)
|
Suspending the Joint Venture Operations for more than 60 days, other than due to Force Majeure.
|
(f)
|
The appointment of the Manager or any successor Manager.
|
(g)
|
Changing the Manager’s remuneration.
|
(h)
|
The selection of a new Auditor.
|
(i)
|
The Manager taking forward cover for, or hedging, foreign currency obligations or pre-paying or taking any other appropriate action to avoid currency losses, in each case in relation to Joint Venture Operations.
|
(j)
|
Any of the following actions by the Manager:
|
(i)
|
borrowing of money;
|
(ii)
|
entering into any financing arrangement or any commitment with respect to financial derivatives; or
|
(iii)
|
any leasing or finance leasing of assets.
|
(k)
|
Granting by the Manager of any Security Interest over any or all or substantially all of the Joint Venture Assets other than Permitted Security Interests or as otherwise permitted by this agreement.
|
(l)
|
The initiation, defence, compromise or settlement of any court or arbitration proceedings affecting or relating to the Joint Venture Operations or Joint Venture Assets where the total claim amount is reasonably estimated by the Manager to exceed $250,000 (provided that the Manager may initiate or defend a court or arbitration proceeding affecting or relating to the Joint Venture Operations or Joint Venture Assets if it reasonably decides that it must take immediate action in order to protect the rights of the Participants).
|
(m)
|
The approval of any Closure Plan prior to submission to any Government Agency.
|
(n)
|
The ratification of expenditure outside of the authority of the Manager.
|
|
|
Schedule 3
93
|
(o)
|
Any other matter which the Management Committee may from time to time, by Special Resolution, resolve shall only be done or authorised by such a vote and any other matter which is expressed under this agreement to require a Special Resolution.
|
|
|
Schedule 3
94
|
Signed by
Wodgina Lithium Operations Pty Ltd
in accordance with section 127 of the
Corporations Act 2001
(Cth) by:
|
|
|
Signature of director
|
|
Signature of director/secretary
|
Name of director (print)
|
|
Name of director/secretary (print)
|
|
|
Execution | page |
97
|
NAME
|
|
PLACE OF FORMATION
|
ACI Cyprus, L.L.C.
|
|
Delaware
|
Albemarle Argentina SRL
|
|
Argentina
|
Albemarle Brazil Holdings LTDA.
|
|
Brazil
|
Albemarle Care Fund
|
|
Virginia
|
Albemarle Catalysts Company B.V.
|
|
Netherlands
|
Albemarle Chemical Canada Ltd.
|
|
Canada
|
Albemarle Chemicals (Shanghai) Company Limited
|
|
China
|
Albemarle Chemicals Ltd.
|
|
Cyprus
|
Albemarle Chemicals Private Limited
|
|
India
|
Albemarle Chemicals S.A.S.
|
|
France
|
Albemarle Chemicals South Africa (PTY) Ltd.
|
|
South Africa
|
Albemarle de Venezuela C.A.
|
|
Venezuela
|
Albemarle Delaware Holdings 1 LLC
|
|
Delaware
|
Albemarle Delaware Holdings 2 LLC
|
|
Delaware
|
Albemarle Dutch Holdings B.V.
|
|
Netherlands
|
Albemarle Dutch Holdings 2 B.V.
|
|
Netherlands
|
Albemarle Europe Sprl
|
|
Belgium
|
Albemarle Finance Company B.V.
|
|
Netherlands
|
Albemarle Foundation
|
|
Virginia
|
Albemarle Germany Gmbh
|
|
Germany
|
Albemarle Hilfe GmbH Unterstutzungskasse
|
|
Germany
|
Albemarle Holdings Company Limited
|
|
Turks & Caicos Islands
|
Albemarle Holdings Limited
|
|
Hong Kong
|
Albemarle Hungary Ltd.
|
|
Hungary
|
Albemarle Italy S.R.L.
|
|
Italy
|
Albemarle Japan Corporation
|
|
Japan
|
Albemarle Japan Holdings B.V.
|
|
Netherlands
|
Albemarle Knight Lux 1 Holdings Corporation
|
|
Delaware
|
Albemarle Korea Corporation
|
|
Korea
|
Albemarle Limitada
|
|
Chile
|
Albemarle Lithium Holding Corporation
|
|
Delaware
|
Albemarle Lithium Holding GmbH
|
|
Germany
|
Albemarle Lithium Pty Ltd
|
|
Australia
|
Albemarle Management (Shanghai) Co., Ltd.
|
|
China
|
Albemarle Middle East Corporation FZE
|
|
United Arab Emirates
|
Albemarle Netherlands B.V.
|
|
Netherlands
|
Albemarle New Holding GmbH
|
|
Germany
|
Albemarle Overseas Employment Corporation
|
|
Virginia
|
Albemarle Quimica LTDA
|
|
Brazil
|
Albemarle Saudi Trading Company
|
|
Saudi Arabia
|
Albemarle Singapore PTE LTD
|
|
Singapore
|
Albemarle Spain S.L.U.
|
|
Spain
|
Albemarle Taiwan Limited
|
|
Taiwan
|
NAME
|
|
PLACE OF FORMATION
|
Albemarle U.S., Inc.
|
|
Delaware
|
Albemarle Wodgina Pty Ltd
|
|
Australia
|
DNVJ Vermögensverwaltung GmbH
|
|
Germany
|
Dynamit Nobel GmbH
|
|
Germany
|
Dynamit Nobel Unterstützungsfonds GmbH
|
|
Germany
|
Excalibur Realty Company
|
|
Delaware
|
Excalibur II Realty Company
|
|
Delaware
|
Foote Chile Holding Company
|
|
Delaware
|
Foote Minera e Inversiones Ltda.
|
|
Chile
|
Jiangxi Albemarle Lithium Co., Ltd.
|
|
China
|
Jordan Bromine Company Limited
|
|
Jordan
|
Knight Lux 1 S.à r.l.
|
|
Luxembourg
|
Knight Lux 2 S.à r.l.
|
|
Luxembourg
|
Metalon Environmental Management & Solutions GmbH
|
|
Germany
|
Rockwood Holdings, Inc.
|
|
Delaware
|
Rockwood Lithium India Pvt. Ltd.
|
|
India
|
Rockwood Lithium Japan K.K.
|
|
Japan
|
Rockwood Lithium Korea LLC
|
|
South Korea
|
Rockwood Lithium Shanghai Co., Ltd.
|
|
China
|
Rockwood Lithium Taiwan Co., Ltd.
|
|
Taiwan
|
Rockwood Lithium (UK) Ltd.
|
|
United Kingdom
|
Rockwood Specialties GmbH
|
|
Germany
|
Rockwood Specialties Group, Inc.
|
|
Delaware
|
Rockwood Specialties LLC
|
|
Delaware
|
Rockwood Specialties Limited
|
|
United Kingdom
|
RT Lithium Limited
|
|
United Kingdom
|
RSG Immobilien GmbH
|
|
Germany
|
Sales de Magnesio Limitada
|
|
Chile
|
Shandong Sinobrom Albemarle Bromine Chemicals Company Limited
|
|
China
|
Sichuan Guorun New Material Co., Ltd.
|
|
China
|
1.
|
I have reviewed this Annual Report on Form 10-K of Albemarle Corporation for the period ended
December 31, 2018
;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
Date:
|
February 27, 2019
|
/s/ L
UTHER
C. K
ISSAM
IV
|
Luther C. Kissam IV
|
Chairman, President and Chief Executive Officer
|
1.
|
I have reviewed this Annual Report on Form 10-K of Albemarle Corporation for the period ended
December 31, 2018
;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
Date:
|
February 27, 2019
|
/s/ S
COTT
A. T
OZIER
|
Scott A. Tozier
|
Executive Vice President and Chief Financial Officer
|
(1)
|
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ L
UTHER
C. K
ISSAM
IV
|
Luther C. Kissam IV
|
Chairman, President and Chief Executive Officer
|
February 27, 2019
|
(1)
|
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ S
COTT
A. T
OZIER
|
Scott A. Tozier
|
Executive Vice President and Chief Financial Officer
|
February 27, 2019
|
FIVE-YEAR SUMMARY
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
(In Thousands, Except for Per Share Amounts and Footnote Data)
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Year Ended December 31
|
|
2018
|
|
2017
(a)
|
|
2016
(a)(b)
|
|
2015
(a)(b)(c)
|
|
2014
(a)
|
||||||||||
Results of Operations
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
|
$
|
3,374,950
|
|
|
$
|
3,071,976
|
|
|
$
|
2,677,203
|
|
|
$
|
2,826,429
|
|
|
$
|
2,445,548
|
|
Costs and expenses
(d)
|
|
2,463,410
|
|
|
2,500,316
|
|
|
2,076,223
|
|
|
2,516,596
|
|
|
2,049,557
|
|
|||||
Operating profit
|
|
911,540
|
|
|
571,660
|
|
|
600,980
|
|
|
309,833
|
|
|
395,991
|
|
|||||
Interest and financing expenses
|
|
(52,405
|
)
|
|
(115,350
|
)
|
|
(65,181
|
)
|
|
(81,650
|
)
|
|
(41,358
|
)
|
|||||
Other (expenses) income, net
|
|
(64,434
|
)
|
|
(9,512
|
)
|
|
(20,535
|
)
|
|
82,561
|
|
|
(141,454
|
)
|
|||||
Income from continuing operations before income taxes and equity in net income of unconsolidated investments
|
|
794,701
|
|
|
446,798
|
|
|
515,264
|
|
|
310,744
|
|
|
213,179
|
|
|||||
Income tax expense
|
|
144,826
|
|
|
431,817
|
|
|
96,263
|
|
|
11,134
|
|
|
18,484
|
|
|||||
Income from continuing operations before equity in net income of unconsolidated investments
|
|
649,875
|
|
|
14,981
|
|
|
419,001
|
|
|
299,610
|
|
|
194,695
|
|
|||||
Equity in net income of unconsolidated investments (net of tax)
|
|
89,264
|
|
|
84,487
|
|
|
59,637
|
|
|
27,978
|
|
|
35,742
|
|
|||||
Net income from continuing operations
|
|
739,139
|
|
|
99,468
|
|
|
478,638
|
|
|
327,588
|
|
|
230,437
|
|
|||||
Income (loss) from discontinued operations (net of tax)
(e)
|
|
—
|
|
|
—
|
|
|
202,131
|
|
|
32,476
|
|
|
(69,531
|
)
|
|||||
Net income
|
|
739,139
|
|
|
99,468
|
|
|
680,769
|
|
|
360,064
|
|
|
160,906
|
|
|||||
Net income attributable to noncontrolling interests
|
|
(45,577
|
)
|
|
(44,618
|
)
|
|
(37,094
|
)
|
|
(25,158
|
)
|
|
(27,590
|
)
|
|||||
Net income attributable to Albemarle Corporation
|
|
$
|
693,562
|
|
|
$
|
54,850
|
|
|
$
|
643,675
|
|
|
$
|
334,906
|
|
|
$
|
133,316
|
|
Financial Position and Other Data
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets
(f)
|
|
$
|
7,581,674
|
|
|
$
|
7,750,772
|
|
|
$
|
8,161,207
|
|
|
$
|
9,597,954
|
|
|
$
|
5,202,437
|
|
Operations:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Working capital
|
|
$
|
815,248
|
|
|
$
|
1,276,638
|
|
|
$
|
2,166,515
|
|
|
$
|
214,317
|
|
|
$
|
2,208,964
|
|
Current ratio
|
|
1.69
|
|
|
2.06
|
|
|
2.90
|
|
|
1.13
|
|
|
2.94
|
|
|||||
Depreciation and amortization
|
|
$
|
200,698
|
|
|
$
|
196,928
|
|
|
$
|
226,169
|
|
|
$
|
260,076
|
|
|
$
|
103,572
|
|
Capital expenditures
|
|
$
|
699,991
|
|
|
$
|
317,703
|
|
|
$
|
196,654
|
|
|
$
|
227,649
|
|
|
$
|
110,576
|
|
Acquisitions, net of cash acquired
|
|
$
|
11,403
|
|
|
$
|
44,367
|
|
|
$
|
208,734
|
|
|
$
|
2,100,490
|
|
|
$
|
—
|
|
Cash proceeds from divestitures, net
|
|
$
|
413,569
|
|
|
$
|
6,857
|
|
|
$
|
3,325,571
|
|
|
$
|
8,883
|
|
|
$
|
104,718
|
|
Research and development expenses
|
|
$
|
70,054
|
|
|
$
|
84,330
|
|
|
$
|
80,475
|
|
|
$
|
89,187
|
|
|
$
|
88,310
|
|
Gross profit as a % of net sales
|
|
36.1
|
|
|
36.0
|
|
|
36.2
|
|
|
30.4
|
|
|
31.5
|
|
|||||
Total long-term debt
(f)
|
|
$
|
1,705,210
|
|
|
$
|
1,837,372
|
|
|
$
|
2,369,262
|
|
|
$
|
3,817,157
|
|
|
$
|
2,913,465
|
|
Total equity
(g)
|
|
$
|
3,759,108
|
|
|
$
|
3,817,696
|
|
|
$
|
3,942,604
|
|
|
$
|
3,401,313
|
|
|
$
|
1,488,635
|
|
Total long-term debt as a % of total capitalization
|
|
31.2
|
|
|
32.5
|
|
|
37.5
|
|
|
52.9
|
|
|
66.2
|
|
|||||
Net debt as a % of total capitalization
(h)
|
|
23.4
|
|
|
15.5
|
|
|
2.5
|
|
|
51.4
|
|
|
22.2
|
|
|||||
Common Stock
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic earnings (loss) per share
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
|
$
|
6.40
|
|
|
$
|
0.49
|
|
|
$
|
3.93
|
|
|
$
|
2.72
|
|
|
$
|
2.57
|
|
Discontinued operations
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1.80
|
|
|
$
|
0.29
|
|
|
$
|
(0.88
|
)
|
Shares used to compute basic earnings per share
|
|
108,427
|
|
|
110,914
|
|
|
112,379
|
|
|
111,182
|
|
|
78,696
|
|
|||||
Diluted earnings (loss) per share
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
|
$
|
6.34
|
|
|
$
|
0.49
|
|
|
$
|
3.90
|
|
|
$
|
2.71
|
|
|
$
|
2.57
|
|
Discontinued operations
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1.78
|
|
|
$
|
0.29
|
|
|
$
|
(0.88
|
)
|
Shares used to compute diluted earnings per share
|
|
109,458
|
|
|
112,380
|
|
|
113,239
|
|
|
111,556
|
|
|
79,102
|
|
|||||
Cash dividends declared per share
|
|
$
|
1.34
|
|
|
$
|
1.28
|
|
|
$
|
1.22
|
|
|
$
|
1.16
|
|
|
$
|
1.10
|
|
Total equity per share
(g)
|
|
$
|
35.59
|
|
|
$
|
34.53
|
|
|
$
|
35.04
|
|
|
$
|
30.31
|
|
|
$
|
19.08
|
|
Return on average total equity
|
|
18.3
|
%
|
|
1.4
|
%
|
|
17.5
|
%
|
|
13.7
|
%
|
|
8.3
|
%
|
(a)
|
As a result of the adoption of new accounting guidance effective January 1, 2018, on a retrospective basis, all components of net benefit cost (credit), other than service cost, are to be shown outside of operations on the consolidated statements of income. We recast these components of net benefit cost (credit), which resulted in an increase (reduction) of $3.7 million, $0.3 million, $3.7 million and ($34.4) million in Cost of goods sold, respectively, and $12.4 million, ($26.7) million, $31.6 million and ($90.3) million in Selling, general and administrative expenses, respectively, with an offsetting impact of $16.1 million, ($26.4) million, $35.3 million and ($124.7) million in Other (expenses) income, net, respectively, for the years ended December 31, 2017, 2016, 2015 and 2014. There was no impact to Net income attributable to Albemarle Corporation.
|
(b)
|
On December 14, 2016 the Company sold the Chemetall Surface Treatment business, which qualifies for discontinued operations treatment because it represents a strategic shift that will have a major effect on the Company’s operations and financial results. As a result, in the second quarter of 2016, the Company began accounting for this business as discontinued operations in the consolidated statements of income and excluded the business from segment results for the years ended December 31, 2016 and 2015, the periods this business was owned by Albemarle. Related assets and liabilities are classified as held for sale for 2015.
|
(c)
|
On January 12, 2015, we completed the acquisition of Rockwood Holdings, Inc. Results for 2015 include the operations of Rockwood commencing on January 13, 2015.
|
(d)
|
The year ended December 31, 2018 included a gain before income taxes of $210.4 million related to the sale of the polyolefin catalysts and components portion of the Performance Catalysts Solutions business. The year ended December 31, 2016 included gains before income taxes of $11.5 million and $112.3 million related to the sales of the metal sulfides business and the minerals-based flame retardants and specialty chemicals business, respectively.
|
(e)
|
Included in Income (loss) from discontinued operations (net of tax) for the year ended December 31, 2016 is a pre-tax gain of $388.0 million ($135.0 million after income taxes) related to the sale of the Chemetall Surface Treatment business. The year ended December 31, 2014 includes a pre-tax loss of $85.5 million ($65.7 million after income taxes) related to the sale of the antioxidant, ibuprofen and propofol businesses.
|
(f)
|
As a result of the adoption of new accounting guidance effective January 1, 2016 on a retrospective basis, unamortized debt issuance costs are now deducted from the carrying amount of the associated debt liability on the balance sheet. The reclassification of these unamortized debt issuance costs resulted in reductions of Long-term debt and Other assets on the consolidated balance sheets of $17.1 million in 2015 and $20.6 million in 2014.
|
(g)
|
Equity reflects the repurchase of common shares amounting to: 2018—5,262,654; 2017—2,341,083; 2016—0; 2015—0; and 2014—2,190,254. 2015 also includes the impact of 34,113,064 shares of common stock issued in connection with the acquisition of Rockwood.
|
(h)
|
We define net debt as total debt plus the portion of outstanding joint venture indebtedness guaranteed by us (or less the portion of outstanding joint venture indebtedness consolidated but not guaranteed by us), less cash and cash equivalents.
|