Document:

Exhibit 10.4

 

Tax Agreement entered into by the Company and Americas Mining Corporation, effective as of February 20, 2017.

 

This Tax Agreement (this “Agreement”) is made and entered into by and among Americas Mining Corporation (“AMC”), on the one hand, and Southern Copper Corporation (“SCC”), on the other.  Each of AMC and SCC shall be referred to individually as a “Party” and shall be referred to collectively as the “Parties.”

 

WHEREAS, as of December 31, 2016, AMC is the record and beneficial owner of 687,275,997 shares of common stock (“Common Stock”) of SCC, which shares represent 88.9% of the total issued and outstanding Common Stock;

 

WHEREAS, on October 9, 2012, SCC received from AMC $2,108,221,000 (the “Judgment Amount”) in satisfaction of the judgment (the “Judgment”) issued by the Court of Chancery of Delaware in October 2011 in connection with the case captioned In re Southern Peru Copper Corporation Shareholder Derivative Litigation;

 

WHEREAS, the Judgment Amount was comprised of $1,347,000,000 in damages plus $684,617,363 in pre-judgment interest (the “Pre-Judgment Interest”) plus $76,603,637 in post-judgment interest (the “Post-Judgment Interest” and together with the Pre-Judgment Interest, the “Judgment Interest”);

 

WHEREAS, from the Judgment Amount, SCC paid $316,233,160 in legal fees and expenses (the “Legal Fees and Expenses Amount”) to satisfy the court ordered award of attorney’s fees and expenses in connection with the Judgment;

 

WHEREAS, the Legal Fees and Expenses Amount was comprised of $304,742,604 in attorneys’ fees and expenses (the “Plaintiff’s Attorneys Fees”) plus $11,490,556 in post-judgment interest;

 

WHEREAS, AMC along with SCC and other AMC subsidiaries each filed a consolidated U.S. Corporation Income Tax Return on Form 1120 for the tax year ended December 31, 2012 with AMC as the parent of the consolidated group (the “Group” and such return, the “Tax Return”) and for succeeding years;

 

WHEREAS, AMC is the taxpayer for U.S. federal income tax purposes and not SCC;

 

WHEREAS, AMC and SCC do not have a written tax sharing or similar agreement in effect but AMC from time to time causes each member of the Group to pay its share of the Group tax liability computed as if it were a separate company;

 

WHEREAS, on December 5, 2016, AMC received from the Internal Revenue Service (“IRS”) a draft Notice of Proposed Adjustment (“NOPA”) regarding the Tax Return asserting, among others, that (a) a portion of the deduction by SCC for Plaintiff’s Attorneys Fees should be disallowed, (b) the Judgment Interest excluded from gross income by SCC should be included in gross income by SCC, (c) the Post-Judgment Interest treated as in increase to investment by AMC should be deducted and (d) a portion of the Judgment Interest should be treated as gross income from sources within the United States by SCC ((b), (c) and (d), collectively, the “NOPA Interest Matters”); and

 

WHEREAS, AMC disagrees with the NOPA and intends to contest the IRS assertions vigorously (the “Appeal”).

 

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

 

1.         Assumption of Incremental Tax Liability.  Should the Appeal be resolved unfavorably to AMC, AMC shall, as the parent of the consolidated group, be responsible and discharge, any and all liabilities and payments due to the IRS on account of any incremental tax liabilities of AMC and/or SCC in connection with the NOPA Interest Matters on behalf of itself and SCC, and shall not seek reimbursement, contribution of collection of any amounts of money or any other asset in connection therewith from SCC or any of its subsidiaries, officers, directors or shareholders (each, an “SCC Party”).

 

2.         Release.  Effective as of the date hereof, AMC hereby waives, releases, acquits and forever discharges each SCC Party from any and all liability, reimbursement, contribution or collection obligations, claims, actions, causes of action, suits, debts, dues, accounts, damages, judgments and demands, in law or equity, including attorneys’ fees and disbursements, against an SCC Party, that AMC ever had, now has or hereafter may have, for, upon, or by reason of the NOPA Interest Matters.

 

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3.         Indemnity.  AMC shall indemnify, defend and hold harmless each SCC Party from, all actions, claims, demands, interests, damages, liabilities, losses, costs and/or expenses (including attorneys’ fees) any such SCC Party may suffer or incur arising out of, or in connection with, the NOPA Interest Matters or any breach of this Agreement.

 

4.         Choice of Law.  This Agreement shall be governed by, and construed, interpreted and enforced in accordance with, the internal laws of the State of New York. Any dispute, controversy or claim arising out of or related to this Agreement shall be resolved by final and binding arbitration administered by the International Chamber of Commerce in accordance with its Rules of Arbitration then in effect (“Rules”), except as modified herein. The seat of arbitration shall be New York, New York. There shall be three (3) arbitrators, of whom the claimant shall nominate one, and the respondent another, in each case within twenty (20) days of the date of the request for arbitration. The two Party-nominated arbitrators shall nominate the third, who shall serve as the chair of the tribunal, within twenty (20) days of the confirmation of the appointment of the second arbitrator. Any arbitrator who is not timely nominated as provided herein shall be appointed by the ICC Court of Arbitration. The award of the arbitrators shall be final and binding of the Parties, and judgment thereon may be entered or enforced in any court of competent jurisdiction and any court where a Party or its assets is located (to whose jurisdiction the Parties consent for the purposes of entering or enforcing the award). By agreeing to arbitration, the Parties do not intend to deprive any court of its jurisdiction to issue interim or preliminary relief in aid of arbitration without prejudice to the ability of the tribunal or an Emergency Arbitrator under the Rules to issue such relief. In any judicial action permitted under this section, the Parties irrevocably and unconditionally agree that the service may be effect in the manner provided for notices in of this Agreement, or as otherwise permitted by law; AND EACH OF THE PARTIES IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING, OR COUNTERCLAIM ARISING OUT OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. Any arbitration hereunder shall be confidential, and the Parties and their agents agree not to disclose to any third party the existence or status of the arbitration and all information made known and documents produced in the arbitration not otherwise in the public domain, and all awards arising from the arbitration, except and to the extent that disclosure is required (a) by law, regulation, subpoena, request for information, civil, administrative or arbitral investigative demand or similar order issued by a court or governmental body or any other body with jurisdiction over a Party’s activities, (b) by the rules of a stock exchange or any other listing entity, or any other requirement imposed by an exchange or a listing entity, or (c) to protect or pursue a legal right.

 

5.         Severability.  If any provision of this Agreement shall be declared invalid or unenforceable by any court of competent jurisdiction, such finding shall have no effect upon any other provision of this Agreement, which shall be given full force and effect.

 

6.         No Admission.  Nothing in this Agreement, including the fact of its execution or the making of any payment hereunder, shall be construed as an admission or acknowledgment of wrongdoing or liability by any Party to any other person.

 

7.         Specific Performance.  The Parties agree that irreparable injury will occur in the event that any of the provisions of this Agreement is not performed in accordance with its specific terms or is otherwise breached.  Each Party shall be entitled to an injunction or injunctions to prevent or remedy any breaches or threatened breaches of this Agreement by any other Party, to a decree or order of specific performance to specifically enforce the terms and provisions of this Agreement and to any further equitable relief.  The Parties’ rights in this section are an integral part of this Agreement and each Party hereby waives any objections to any remedy referred to in this section (including any objection on the basis that there is an adequate remedy at law or that an award of such remedy is not an appropriate remedy for any reason at law or equity).

 

8.         Miscellaneous.

 

(a)    This Agreement embodies the entire understanding between the Parties with respect to the matters described herein, and supersedes any prior agreements and negotiations, written or oral, between the Parties or their respective representatives in connection therewith.

 

(b)    No statements, promises or representations have been made by any Party to any other, or relied upon, and no consideration has been offered, promised, expected or held out other than as may be expressly provided herein.

 

(c)     This Agreement may not be altered, changed, amended or modified except by way of a written instrument signed by authorized representatives of the Parties.

 

(d)    Each of the Parties represents and warrants to the other Party that (i) it has all of the requisite authority and capacity to enter into and execute this Agreement, (ii) that this Agreement has been duly authorized, executed and delivered on its behalf and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other debtor relief laws and that certain equitable remedies may not be available regardless of whether enforcement is sought in equity or at law, and (iii) that the execution, delivery and performance of this Agreement by it do not and will not violate any applicable law.

 

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(e)     This Agreement has been drafted cooperatively by the Parties and their counsel of choice, and, as such, any ambiguities are the responsibility of the Parties and shall not be construed against any Party.

 

(f)      This Agreement is binding upon, and inures to the benefit of, any successors.  This Agreement may not be assigned by AMC.

 

(g)     Nothing contained in this Agreement shall be deemed to give rise to any right in a person not a party hereto to seek enforcement of, or damages arising out of any alleged default with respect to, any provisions of this Agreement.

 

(h)    This Agreement shall be effective as of February 20, 2017.

 

9.         Notice.  Any notice required or permitted under this Agreement shall be given in writing and shall be deemed effectively given: (i) upon personal hand delivery; (ii) upon sending such notice by facsimile, provided receipt is confirmed by a machine-generated transmission report; (iii) three (3) business days after sending such notice by U.S. registered or certified mail, postage prepaid and return receipt requested; (iv) one (1) business day after depositing such notice with a nationally-recognized courier service guaranteeing next day delivery; or (v) upon acknowledgment of receipt by the recipient after delivery of a notice via email.  Notices shall be addressed to the Party to be notified at the addresses or facsimile number set forth below or at such other address or facsimile number as any such Party may designate by advance written notice to the other Parties.

 

If to AMC:

Americas Mining Corporation

1440 E. Missouri

Suite 160

Phoenix, AZ 85014

Attention: Oscar Gonzalez Barron

E-mail: oscar.gonzalez@americasmining.com

 

If to SCC:

Southern Copper Corporation

1440 E. Missouri

Suite 160

Phoenix, AZ 85014

Attention: Stanley Keegan & Raul Jacob

E-mail: skeegan@southernperu.com.pe; rjacob@southernperu.com.pe

 

10.  Counterparts.  This Agreement may be executed and delivered in two or more counterparts, each of which when so executed and delivered shall be the original, but such counterparts together shall constitute one and the same instrument. This Agreement shall be final and binding upon the execution and delivery of this Agreement by all Parties.  It is specifically agreed by all parties that a facsimile or scanned copy of this Agreement shall have the same effect and may be accepted with the same authority as the original.

 

[Remainder of page left blank intentionally]

 

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IN WITNESS WHEREOF, the Parties have executed this instrument on February 28, 2017.

 

AMERICAS MINING CORPORATION

 

	
By:
    	
/s/  Oscar Gonzalez Barron
    	
 
    
	
 
    	
Name: Oscar Gonzalez Barron
    	
 
    
	
 
    	
Title: Director of Administration
    	
 
    
	
 
    	
 
    	
 
    
	
SOUTHERN COPPER   CORPORATION
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ Raul Jacob Ruisanchez
    	
 
    
	
 
    	
Name: Raul Jacob Ruisanchez
    	
 
    
	
 
    	
Title: Vice President, Finance, Treasurer   and Chief Financial Officer
    
				

 

4Exhibit

DELTA APPAREL, INC. 2010 STOCK PLAN
PERFORMANCE UNIT AWARD AGREEMENT

THIS PERFORMANCE UNIT AWARD AGREEMENT (“Agreement”) is dated this ________ day of ____________, ______, by and between DELTA APPAREL, INC., a Georgia corporation (“Company”), and ______________________ (“Participant”).

WHEREAS, the Board of Directors of the Company has, pursuant to the Delta Apparel, Inc. 2010 Stock Plan (“Plan”), made an Award of the grant of Performance Units of the Company to the Participant and authorized and directed the execution and delivery of this Agreement;

NOW THEREFORE, in consideration of the foregoing, the mutual promises hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and the Participant hereby agree as follows. All capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the Plan.

	
		
	 
	 

	Section 1.
	AWARD OF PERFORMANCE UNITS

In consideration of the services performed and to be performed by the Participant, the Company hereby awards to the Participant under the Plan a total of ___________ Performance Units under Section 8e of the Plan, subject to the terms and conditions set forth in this Agreement and the Plan. The value of each Performance Unit shall be determined and measured by the value of one share of stock of the Company.

	
		
	 
	 

	Section 2.
	VESTING OF UNITS BASED ON PERFORMANCE REQUIREMENTS

The Performance Unit grants are based on performance requirements. ______________ of such Performance Units shall vest for each of the Company’s 2018, 2019 and 2020 fiscal years, all upon the date that both of the following have occurred (1) the Board of Directors’ (or committee thereof, if applicable) certification in writing that the Company achieved the following performance-based goals established by the Board of Directors (or committee thereof, if applicable) on a consolidated basis and (2) the filing by the Company with the Securities and Exchange Commission of its annual report on Form 10-K for the applicable fiscal year (“PSU Vesting Date”). 

Notwithstanding the above, the Participant must be employed on the PSU Vesting Date to vest in the Performance Units for that fiscal year; provided, however, if the Participant’s employment is terminated by the Company other than for Cause (as defined in the Participant’s employment agreement with the Company), subject to satisfaction of the applicable performance criteria, the full award will be made for the fiscal year in which the Participant’s employment is terminated.

The annual vested amount under this Section 2, if any, will be determined based upon the following performance criteria:
	
		
	 

	 
	 

	Fiscal Years 2018, 2019 and 2020 Return on Capital Employed Requirement
	Granted Units Earned Based on Average Return on Capital Employed

	Less than 3%
	0%

	3%
	Minimum 20%

	7%
	Par 100%

	12%
	Maximum 120%

	Greater Than 12%
	Maximum 120%

Performance Unit Awards shall be prorated between the Minimum and Maximum percentages based upon actual Return on Capital Employed results. Notwithstanding the foregoing or anything to the contrary contained herein, the maximum amount that Executive may be awarded in any fiscal year pursuant to this Agreement is subject to the limitations set forth in Section 7(c) of the Plan, and Executive will forfeit any Awards in excess of such limitations in which he vests in any fiscal year as well as any related shares or cash awards to which he is otherwise entitled in connection with such excess Awards.

The Return on Capital Employed shall mean an amount calculated by dividing the sum of Delta Apparel, Inc.’s consolidated earnings before interest and tax for the applicable fiscal year by the sum of Delta Apparel, Inc.’s consolidated annual average capital employed for the applicable fiscal year. 

Notwithstanding the above, occurrence of any of the following events shall cause the immediate vesting at 100% of Performance Units:

	
		
	 
	 

	(a)
	The death of the Participant;

(c)        A Change in Control.
	
		
	 
	 

	(b)
	Disability of the Participant; or

Except as otherwise set forth herein, the unvested portion of the Performance Unit Award shall be entirely forfeited by the Participant in the event that prior to vesting the Participant breaches any terms or conditions of the Plan, the Participant resigns from the Company, the Participant’s employment with the Company is terminated for reasons other than death or Disability, or any conditions imposed upon vesting are not met.

Section 3.    NON-TRANSFERABILITY OF RIGHTS

The Participant shall have no right to sell, transfer, pledge, assign or otherwise assign or hypothecate any of the Participant’s rights under this Agreement or, until the Award granted hereby covering the Performance Units shall vest, such Performance Units covered by the Award granted hereby, other than by will or the laws of descent and distribution, and such rights shall be exercisable during Participant’s lifetime only by the Participant.

Section 4.    PAYMENT UPON VESTING OF PERFORMANCE UNITS

With respect to any Performance Units that vest in connection with fiscal years 2018, 2019, or 2020 pursuant to the terms of Section 2, subject to the terms and conditions of the Plan, the Company shall, as soon as practicable following the PSU Vesting Date (but no later than March 15 of the calendar year following the calendar year that includes such vesting date), deliver to you a number of shares equal to the aggregate number of Performance Units that became vested on the PSU Vesting Date.
  
Upon payment by the Company, the Performance Units shall therewith be cancelled. The delivery of shares and cash awards under this Section 4 shall be subject to applicable employment and income tax withholding.

Section 5.    NO DIVIDEND OR VOTING RIGHTS

The Participant acknowledges that he or she shall be entitled to no dividend or voting rights with respect to the Performance Units.

Section 6.    WITHHOLDING TAXES; SECTION 83(b) ELECTION

	
		
	 
	 

	(a)
	No shares will be payable upon the vesting of a Performance Unit unless and until the Participant satisfies any Federal, state or local withholding tax obligation required by law to be withheld in respect of this Award. The Participant acknowledges and agrees that to satisfy any such tax obligation the Company may deduct and retain from the shares payable upon vesting of the Performance Units such number of Shares as is equal in value to the Company’s minimum statutory withholding obligations with respect to the income recognized by the Participant upon such vesting (based on minimum statutory withholding rates for Federal and state tax purposes, including payroll taxes, that are applicable to such income). The number of such shares to be deducted and retained shall be based on the closing price of the shares on the day prior to the PSU Vesting Date.

	
		
	 
	 

	(b)
	The Participant acknowledges that in the event an election under Section 83(b) of the Internal Revenue Code of 1986 is filed with respect to this Award, Participant must give a copy of the election to the Company within ten days after filing with the Internal Revenue Service.

Section 7.    ENFORCEMENT; INCORPORATION OF PLAN PROVISIONS

The participant acknowledges receipt of the Plan. The Performance Units Award evidenced hereby is made under and pursuant to the Plan, and incorporated herein by reference, and the Award is subject to all of the provisions thereof. Capitalized terms used herein without definition shall have the same meanings given such terms in the Plan. The Participant represents and warrants that he or she has read the Plan and is fully familiar with all the terms and conditions of the Plan and agrees to be bound thereby.

Section 8.    MISCELLANEOUS

	
		
	 
	 

	(a)
	No Representations or Warranties. Neither the Company nor the Committee or any of their representatives or agents has made any representations or warranties to the Participant with respect to the income tax or other consequences of the transactions contemplated by this Agreement, and the Participant is in no manner relying on the Company, the Committee or any of their representatives or agents for an assessment of such tax or other consequences.

	
		
	 
	 

	(b)
	Employment. Nothing in this Agreement or in the Plan or in the making of the Award shall confer on the Participant any right to or guarantee of continued employment with the Company or any of its Subsidiaries or in any way limit the right of the Company or any of its Subsidiaries to terminate the employment of the Participant at any time.

	
		
	 
	 

	(c)
	Investment. The Participant hereby agrees and represents that any shares payable upon vesting of the Performance Units shall be held for the Participant’s own account for investment purposes only and not with a view of resale or distribution unless the shares are registered under the Securities Act of 1933, as amended.

	
		
	 
	 

	(d)
	Necessary Acts. The Participant and the Company hereby agree to perform any further acts and to execute and deliver any documents which may be reasonably necessary to carry out the provisions of this Agreement.

	
		
	 
	 

	(e)
	Severability. The provisions of this Agreement are severable and if any one or more provisions may be determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions, and any partially enforceable provision to the extent enforceable in any jurisdiction, shall nevertheless be binding and enforceable.

	
		
	 
	 

	(f)
	Waiver. The waiver by the Company of a breach of any provision of this Agreement by the Participant shall not operate or be construed as a waiver of any subsequent breach by the Participant.

	
		
	 
	 

	(g)
	Binding Effect; Applicable Law. This Agreement shall bind and inure to the benefit of the Company and its successors and assigns, and the Participant and any heir, legatee, or legal representative of the Participant. This Agreement shall be construed, administered and enforced in accordance with and subject to the terms of the Plan and the laws of the State of Georgia.

	
		
	 
	 

	(h)
	Administration. The authority to manage and control the operation and administration of this Agreement shall be vested in the Committee, and the Committee shall have all powers with respect to this Agreement as it has with respect to the Plan. Any interpretation of the Agreement by the Committee and any decision made by it with respect to the Agreement is final and binding.

	
		
	 
	 

	(i)
	Amendment. This Agreement may be amended by written agreement of the Participant and the Company, without the consent of any other person.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first hereinabove written.

	
		
	 

	 
	 

	DELTA APPAREL, INC.

	 
	 

	By:
	 

	 
	

	 
	Vice President of Administration & General Counsel

	 
	 

	PARTICIPANT

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