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SENIOR SUBORDINATED INTERCOMPANY NOTE
June 30, 1993
FOR VALUE RECEIVED, the undersigned, Kaiser Aluminum &
Chemical Corporation, a Delaware corporation (the "Company"),
HEREBY PROMISES TO PAY to the order of Kaiser Aluminum Corpora-
tion, a Delaware corporation (the "Payee"), the principal sum of
THIRTY SEVEN MILLION SEVEN HUNDRED NINETY SIX THOUSAND SEVEN
HUNDRED FIFTY-TWO AND 50/100 DOLLARS ($37,796,752.50), which
shall be due and payable as hereinafter provided.
1. This Note shall not bear interest. This Note shall
be payable in quarterly installments on March 30, June 29,
September 29 and December 30 of each year, commencing September
29, 1993, and ending June 29, 1996, each such quarterly install-
ment to be in the amount of $3,149,729.38.
2. The entire unpaid principal amount of this Note
shall be due and payable on June 29, 1996. Notwithstanding the
foregoing provisions of this Note, in the event that all shares
of Series A Mandatory Conversion Premium Dividend Preferred Stock
(the "Series A Stock") of the Payee are converted into shares of
the common stock of the Payee pursuant
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to the Certificate of Designations governing such shares of
Series A Stock, the Company may, after all amounts payable by the
Payee in respect of accrued and unpaid dividends in connection
with such conversion have been paid, defer further principal and
interest payments on this Note until such time as no Specified
Senior Debt (as defined in Section 7(c) of this Note) is then
outstanding.
3. The Company shall make each payment hereunder not
later than 5:00 p.m. (New York City time) on the day when due in
lawful money of the United States of America to the holder of
this Note by delivery of a certified or bank cashier's check in
the amount of such payment or, at such holder's option, by wire
transfer of immediately available funds.
4. Whenever any payment to be made hereunder shall be
stated to be due on a Saturday, Sunday or a public or bank holi-
day or the equivalent for banks generally under the laws of the
State of New York (any other day being a "Business Day"), such
payment may be made on the next succeeding Business Day.
5. The Company shall have the right to prepay the
principal amount of this Note, in whole or in part, at any time
or from time to time, without premium or penalty, but with inte-
rest on the portion of the principal amount so prepaid accrued to
the date of prepayment. This Note is the Equity Proceeds Note
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issued pursuant to the requirements of the Credit Agreement dated
as of December 13, 1989 between Kaiser Aluminum Corporation
(formerly named KaiserTech Limited), the Company, certain
financial institutions, Bank of America National Trust and
Savings Association, as agent, and Mellon Bank, N.A., as
collateral agent, as the same has been, or may hereafter be,
amended, supplemented, restated, or otherwise modified from time
to time (the "Credit Agreement").
6. In case one or more of the following events of
default shall have occurred and be continuing:
(a) the Company fails to pay any installment of prin-
cipal of, or interest on, this Note when due, whether or not
payment is prohibited by the provisions of Section 7 of this
Note; or
(b) a court having jurisdiction in the premises shall
have entered a decree or order for relief against the Company in
an involuntary case under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) of the Company or for all or any substan-
tial part of its property, or ordering the winding-up or liquida-
tion of its affairs, and such decree or order shall have remained
unstayed and in effect for a period of ninety consecutive days;
or
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(c) the Company shall have commenced a voluntary case under
any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or shall have consented to the entry of an
order for relief in an involuntary case under any such law, or
shall have consented to the appointment of or taking possession
by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or similar official) of the Company or for all or
any substantial part of its property, or shall have made an
assignment for the benefit of creditors, or shall have taken any
corporate action in furtherance of any of the foregoing;
then, in the case of an event specified in clause (a), unless the
principal of this Note shall have already become due and payable,
the holder of this Note by notice to the Company in writing may
at its option declare the principal amount and accrued interest
to the date of declaration of this Note to be due and payable
immediately. Upon any such declaration, the same shall become
and shall be immediately due and payable, provided that any pay-
ment pursuant to such acceleration shall be subject to Section
7(g) of this Note. If an event specified in clause (b) or (c)
above occurs, such amount shall ipso facto become and be immedi-
ately due and payable without any declaration or other act on the
part of the holder, but subject to Section 7(g) of this Note.
7. (a) The Company, for itself, its successors and
assigns, covenants and agrees, and the Payee (and each other
holder of this Note), by its acceptance hereof, likewise cov-
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enants and agrees, for the benefit of all present and future
holders of Senior Indebtedness of the Company (as defined in
Section 7(h) of this Note), that all direct or indirect payments
or distributions on or with respect to this Note, whether pursu-
ant to the terms of this Note or upon acceleration or otherwise,
including, without limitation, by way of or on account of a
"Claim" (as defined hereinbelow) or the payment of the principal
of and interest on this Note, is hereby expressly subordinated,
to the extent and in the manner hereinafter set forth, in right
of payment to the prior payment in full in cash or cash equiva-
lents of all Senior Indebtedness of the Company (including,
without limitation, interest that would accrue but for the
occurrence of any proceeding of the kind referred to in the
introductory clause of Section 7(b) of this Note, whether or not
such interest is an allowable claim in such proceeding).
(b) Upon any direct or indirect payment or distribu-
tion of assets or securities of the Company of any kind or char-
acter, whether in cash, property or securities, upon any dissolu-
tion, winding up, liquidation or reorganization of the Company,
whether voluntary or involuntary or in bankruptcy, insolvency,
reorganization, receivership or other proceedings or upon an
assignment for the benefit of creditors or any other marshalling
of the assets and liabilities of the Company or otherwise,
(i) the holders of all Senior Indebtedness of the
Company shall be entitled to receive payment in full in cash or
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cash equivalents of such Senior Indebtedness of the Company (in-
cluding, without limitation, interest that would accrue but for
the occurrence of any such proceeding whether or not such inter-
est is an allowable claim in such proceeding) before the holder
of this Note shall be entitled to receive any direct or indirect
payment or distribution of assets or securities of the Company of
any kind or character, whether in cash, property or securities,
with respect to this Note, whether pursuant to the terms of this
Note or upon acceleration or otherwise, including by way of or on
account of any claim against the Company for rescission of the
issuance of this Note or for monetary damages from, or in connec-
tion with, the issuance of this Note, or for reimbursement or
contribution on account of such a claim (a "Claim"), or the pay-
ment of principal of or interest on this Note; and
(ii) any direct or indirect payment or distribu-
tion of assets or securities of the Company of any kind or
character, whether in cash, property or securities, to which the
holder of this Note would be entitled except for the provisions
of this Section 7 shall be paid by the Company or by any
liquidating trustee or agent or other person making such payment
or distribution, whether a trustee in bankruptcy, a receiver or
liquidating trustee or otherwise, directly to the holders of
Senior Indebtedness of the Company or their representative or
representatives, ratably according to the aggregate amounts
remaining unpaid on account of the Senior Indebtedness of the
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Company held or represented by each, to the extent necessary to
make payment in full in cash or cash equivalents of all Senior
Indebtedness of the Company (including, without limitation,
interest that would accrue but for the occurrence of any such
proceeding whether or not such interest is an allowable claim in
such proceeding) remaining unpaid, after giving effect to any
concurrent payment or distribution to the holders of such Senior
Indebtedness of the Company; and
(iii) in the event that, notwithstanding the fore-
going, any payment or distribution of assets of the Company of
any kind or character, whether in cash, property or securities,
shall be received by the holder of this Note, whether pursuant to
the terms of this Note or upon acceleration or otherwise, includ-
ing by way of or on account of a Claim, or the payment of princi-
pal of or interest on this Note, before all Senior Indebtedness
of the Company is paid in full in cash or cash equivalents, such
payment or distribution shall be received and held in trust for
and paid over to the holders of such Senior Indebtedness of the
Company or their representative or representatives, ratably as
aforesaid, for application to the payment of all Senior
Indebtedness of the Company remaining unpaid until all such
Senior Indebtedness of the Company shall have been paid in full
in cash or cash equivalents, after giving effect to any concur-
rent payment or distribution to the holders of such Senior
Indebtedness of the Company.
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The consolidation of the Company with, or the merger of the
Company into, another corporation or other entity or the liqui-
dation or dissolution of the Company following the sale or
conveyance of its property or assets as an entirety, or substan-
tially as an entirety, to another corporation or other entity
shall not be deemed a dissolution, winding up, liquidation or
reorganization of the Company for the purposes of this Section 7.
Subject to the payment in full in cash or cash equiva-
lents of all Senior Indebtedness of the Company, the holder of
this Note shall be subrogated (without any duty on the part of
the holders of Senior Indebtedness of the Company to warrant,
create, effectuate, preserve or protect such subrogation) to the
rights of the holders of Senior Indebtedness of the Company to
receive payments or distributions of cash, property or securities
of the Company applicable to Senior Indebtedness of the Company
until the principal of and interest on this Note shall be paid in
full and, for the purpose of such subrogation, no payments or
distributions to the holders of Senior Indebtedness of the Com-
pany of cash, property or securities otherwise distributable to
the holder of this Note shall, as between the Company, its cre-
ditors other than the holders of Senior Indebtedness of the
Company, and the holder of this Note, be deemed to be a payment
by the Company to the holders of or on account of the Senior
Indebtedness of the Company. It is understood that the provi-
sions of this Section 7 are and are intended solely for the
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purpose of defining the relative rights of the holder of this
Note, on the one hand, and the holders of Senior Indebtedness of
the Company, on the other hand. Nothing contained in this
Section 7 or elsewhere in this Note is intended to or shall im-
pair, as between the Company, its creditors other than the hold-
ers of Senior Indebtedness of the Company, and the holder of this
Note, the obligation of the Company, which is unconditional and
absolute, to pay to the holder of this Note the principal of and
interest on this Note as and when the same shall become due and
payable in accordance with its terms, or to affect the relative
rights of the holder of this Note and creditors of the Company
other than the holders of Senior Indebtedness of the Company, nor
shall anything herein prevent the holder of this Note from exer-
cising all remedies otherwise permitted by applicable law upon
default under this Note, subject to the rights, if any, under
this Section 7 of the holders of Senior Indebtedness of the
Company in respect of cash, property or securities of the Company
received upon the exercise of any such remedy. Upon any payment
or distribution of assets of the Company referred to in this
Section 7, the holder of this Note shall be entitled to rely upon
any order or decree of a court of competent jurisdiction in which
any proceedings of the nature described in this Section are
pending or upon a certificate of the liquidating trustee or agent
or other person making any distribution to the holder of this
Note for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of Senior Indebted-
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ness of the Company and other indebtedness of the Company, the
amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to
this Section 7.
(c) No direct or indirect payments or distributions by
or on behalf of the Company on or with respect to this Note
(whether pursuant to the terms of this Note or upon acceleration
or otherwise, including by way of or on account of a Claim, or
the payment of principal of or interest on this Note) shall be
made if, at the time of such payment or distribution, there
exists a default in the payment of all or any portion of any
Senior Indebtedness of the Company (other than a payment default
to the extent it relates to those items described in clause
(i)(B) of the definition of "Senior Indebtedness" contained in
the Subordinated Indenture (as the term Subordinated Indenture is
defined in the Credit Agreement)), and such payment default
(other than to the extent it relates to those items described in
clause (i)(B) of the definition of "Senior Indebtedness" con-
tained in the Subordinated Indenture) shall not have been cured
or waived or the benefits of this sentence waived in writing by
or on behalf of the holders of such Senior Indebtedness of the
Company. In addition, during the continuance of any other
default with respect to the obligations of the Company referred
to in clause (i) of Section 7(h) (the "Specified Senior Debt")
that would permit (or would so permit with the passage of time or
giving of notice or both) the acceleration of the
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maturity of such Specified Senior Debt, no direct or indirect
payments or distributions by or on behalf of the Company on or
with respect to this Note may be made (whether pursuant to the
terms of this Note or upon acceleration or otherwise, including
by way of or on account of a Claim, or the payment of principal
of or interest on this Note) for a period (the "Payment Blockage
Period") commencing on the date of receipt by the holder of this
Note of notice of such default specifying that such notice is a
Payment Blockage Notice from the Agent under the Credit Agree-
ment, or, if such default results from the acceleration of this
Note, commencing on the earlier of the date of receipt of such
notice by the holder of this Note or the date of such accelera-
tion, and ending on the earliest of (a) 179 days thereafter, (b)
the date on or as of which (i) such default has been cured or
waived, (ii) the Company has delivered to the holder of this Note
an Officers' Certificate (as hereinafter defined) to such effect
and (iii) the Agent under the Credit Agreement shall have
endorsed on such Officers' Certificate that it does not object to
the form or substance of such Officers' Certificate, provided,
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that if such default has been cured or waived, the Company shall
promptly notify the holder of this Note of such cure or waiver
and the Agent under the Credit Agreement shall promptly endorse
such notice, and (c) the date on or as of which the Agent under
the Credit Agreement shall have consented in writing to the
termination of such Payment Blockage Period. Notwithstanding the
foregoing, in no event (a) may the total
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number of days during which any Payment Blockage Period or
Payment Blockage Periods may be in effect during any 360
consecutive day period exceed 179 days in the aggregate or (b)
will payments or distributions be prohibited by this Section 7(c)
if (i) any of the Company's 12- 3/4% Senior Subordinated Notes
due 2003 shall then be outstanding and (ii) payments and
distributions are not then prohibited under Sections 3.03 and
(if, at the time, there are any "Subsidiary Guarantors" (as such
term is defined in the Subordinated Indenture)) 16.04 of the
Subordinated Indenture. No default which existed or was
continuing on the date of the commencement of any Payment
Blockage Period with respect to Specified Senior Debt and was
known at the time of commencement thereof to the Agent under the
Credit Agreement shall be, or be made, the basis for the
commencement of a second Payment Blockage Period by the Agent
under the Credit Agreement whether or not within a period of 360
consecutive days, unless such default shall have been cured or
waived for a period of not less than 90 consecutive days. As
used herein, the term "Officers' Certificate" shall mean a
certificate of the Company signed on behalf of the Company by the
Chairman of the Board, the President or any Vice President and by
the Chief Financial Officer, the Controller, the Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary of
the Company.
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In the event that, notwithstanding the foregoing, the
Company shall make any payment or distribution of assets of the
Company of any kind or character, whether in cash, property or
securities, to the holder of this Note prohibited by the fore-
going provisions of this Section 7(c) (whether pursuant to the
terms of this Note or upon acceleration or otherwise, including
by way of or on account of a Claim, or the payment of principal
of or interest on this Note), then and in any such event such
payment or distribution shall, to the extent permitted by law, be
received and held in trust for the benefit of and be paid over
and delivered forthwith to the holders of the Senior Indebtedness
of the Company or their representative or representatives.
The provisions of this Section 7(c) shall not apply to
any payment with respect to which Section 7(b) would be appli-
cable.
(d) Except as provided in clause (b) or (c) above,
nothing contained in this Note shall affect the obligation of the
Company to make, or prevent the Company from making, at any time,
payments of principal or interest on this Note.
(e) The holder of this Note shall take such action as
may be necessary or appropriate to effectuate the subordination
as provided in this Section 7, including, without limitation, in
the event of any dissolution, winding up, liquidation or bank-
ruptcy reorganization of the Company (whether in bankruptcy,
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insolvency or receivership proceedings or upon a general assign-
ment for the benefit of creditors or any other similar remedy or
otherwise) tending towards liquidation of the business and assets
of the Company, the immediate filing of a claim for the unpaid
balance of this Note in the form required in such proceedings and
using its best efforts to cause such claim to be approved. If
the holder of this Note does not file a proper claim or proof of
debt in the form required in such proceedings prior to 30 days
before the expiration of the time to file such claim or claims,
the holders of Senior Indebtedness of the Company (or their
representative or representatives) are hereby authorized to file
an appropriate claim for and on behalf of the holder of this
Note. Nothing herein shall be deemed to authorize the holders of
Senior Indebtedness of the Company to authorize or consent to or
accept or adopt on behalf of the holder of this Note any plan of
reorganization, arrangement, adjustment or composition affecting
this Note or the rights of the holder of this Note, or to autho-
rize the holders of Senior Indebtedness of the Company to vote in
respect of the claim of the holder of this Note in any such
proceeding. In the event that the provisions of this Section 7
shall at the time prohibit payments to the holder of this Note,
no holder of this Note shall waive, forgive or cancel any
monetary obligation, or any claim before a bankruptcy court,
under or with respect to this Note or any Claim.
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(f) No right of any present or future holder of any Senior
Indebtedness of the Company to enforce subordination as provided
herein shall at any time in any way be prejudiced or impaired by
any act or failure to act on the part of the Company or by any
act or failure to act, in good faith, by any such holder, or by
any noncompliance by the Company with the terms of this Note,
regardless of any knowledge thereof which any such holder may
have or otherwise be charged with. The holders of Senior
Indebtedness of the Company may at any time and from time to
time, without the consent of or notice to the holder of this
Note, without incurring responsibility to the holder of this Note
and without impairing or releasing or otherwise affecting the
rights of any holder of Senior Indebtedness of the Company or the
respective liabilities or obligations of the Company or the
holder this Note or in any way altering or affecting any of the
provisions of this Section 7:
(1) change the amount, manner, place or terms of pay-
ment or change or extend the time of payment of or renew,
refinance, modify, alter or restructure the terms of the
Senior Indebtedness of the Company or any document or in-
strument evidencing or governing such Senior Indebtedness of
the Company in any manner or enter into or amend in any
manner any other agreement relating to Senior Indebtedness
of the Company or any security therefor;
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(2) sell, exchange, release or otherwise deal with any
property by whomsoever at any time pledged or mortgaged to
secure, or howsoever securing, Senior Indebtedness of the
Company and otherwise deal freely with the Company;
(3) release anyone (including any guarantor) liable in
any manner for the payment or collection of Senior Indebted-
ness of the Company;
(4) exercise or refrain from exercising any rights
against the Company and others (including any guarantor),
including releasing, selling or exchanging any security;
(5) apply any sums by whomsoever paid or however
realized to the Senior Indebtedness of the Company; or
(6) take any other action which otherwise might be
deemed to impair the rights of the holder of this Note.
No compromise, alteration, amendment, modification,
extension, renewal or other change of, or waiver, consent or
other action in respect of, any liabilities or obligation under
or in respect of, or of any of the terms, covenants or conditions
of any indenture or other instrument under which any Senior
Indebtedness of the Company is outstanding or of such Senior
Indebtedness of the Company, whether or not in accordance with
the provisions of any applicable document, shall in any way alter
or affect any of the provisions of this Section 7. As long as
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the Credit Agreement is in effect, no amendment to, or any waiver
of the provisions of, this Section 7 which adversely affects the
rights of the holders of Senior Indebtedness of the Company under
this Section 7 shall be effective against the holders of Senior
Indebtedness of the Company who have not consented thereto.
(g) If payment of the Note is accelerated because of an
event of default as provided in Section 6 of this Note, the
Company shall promptly notify the Agent under the Credit Agree-
ment of the acceleration. The Company may not pay the Note until
five Business Days after the Agent under the Credit Agreement
receives such notice (if any Specified Senior Debt remains
outstanding) and thereafter may pay this Note only if this Note
otherwise permits the payment at that time.
(h) The term "Senior Indebtedness of the Company"
shall mean (i) all monetary obligations of the Company under the
Credit Agreement, including all related notes, collateral docu-
ments, and guarantees, in each case, as any of the same has been
or may be amended, supplemented, restated or otherwise modified
from time to time (in each case in whole or in part) and any
refundings, refinancings, replacements or restructurings of such
monetary obligations that individually or in the aggregate
provide, at one time, the source of repayment for at least fifty
percent of the then outstanding aggregate amount of all monetary
obligations of the Company under the Credit Agreement.
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8. All powers and remedies given to the holder of this
Note shall, to the extent permitted by law, be deemed cumulative
and not exclusive of any thereof or of any other powers and
remedies available to the holder of this Note, by judicial pro-
ceedings or otherwise, to enforce the performance or observance
of the covenants and agreements contained in this Note, and no
delay or omission of the holder of this Note to exercise any
right or power accruing upon any default hereunder shall impair
any such right or power, or shall be construed to be a waiver of
any such default or an acquiescence therein.
9. This Note shall be binding upon the Company and its
successors and assigns, and the terms and provisions of this Note
shall inure to the benefit of Payee, the holders of Senior
Indebtedness of the Company and their respective successors and
assigns, including subsequent holders hereof.
10. The terms and provisions of this Note are sever-
able, and if any term or provision shall be determined to be
superseded, illegal, invalid or otherwise unenforceable in whole
or in part pursuant to applicable law by a governmental authority
having jurisdiction, such determination shall not in any manner
impair or otherwise affect the validity, legality or enforce-
ability of that term or provision in any other jurisdiction or
any of the remaining terms and provisions of this Note in any
jurisdiction.
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11. Presentment for payment, notice of dishonor, pro-
test, notice of protest and any other notice are hereby waived.
This Note shall be governed by, and construed in accordance with,
the internal laws of the State of New York without regard to
principles of conflict of laws.
12. No amendment, modification or waiver of any term
or provision of this Note, nor consent to any departure by the
Company herefrom, shall be effective unless the same shall be in
writing and signed by the holder of this Note, and then such
waiver, modification or consent shall be effective only in the
specific instance and for the specific purpose for which given.
13. Nothing in this Note, expressed or implied, shall
give or be construed to give any person, firm or corporation,
other than the parties hereto and the holders of Senior Indebted-
ness of the Company, any legal or equitable right, remedy or
claim under or in respect of this Note, or under any covenant,
condition or provision herein contained; all its covenants,
conditions and provisions being for the sole benefit of the
Company, the holder of this Note and the holders of Senior
Indebtedness of the Company.
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IN WITNESS WHEREOF, the Company has caused this Note to
be executed and delivered to the Payee on the date and year first
above written.
KAISER ALUMINUM & CHEMICAL
CORPORATION
By:
--------------------------
Name: Byron L. Wade
Title: Vice President,
Secretary, and
Deputy General
Counsel
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