EXECUTION VERSION
Exhibit 2.3
PURCHASE AGREEMENT
------------------------------------
COMALCO ALUMINIUM LIMITED
AND
KAISER ALUMINUM & CHEMICAL CORPORATION
AND
KAISER ALUMINA AUSTRALIA CORPORATION
DATED AS OF SEPTEMBER 22 2004
TABLE OF CONTENTS
PAGE
1. Definitions and Interpretation............................................ 2
2. Purchase and Sale of Assets Sold.......................................... 19
3. Purchase Price for the Shares in QAL...................................... 19
4. Purchase Price for Kaiser Bauxite, Kaiser Alumina and Other Items......... 20
4A. Deposit................................................................... 21
5. Estimated Purchase Price.................................................. 22
6. Final Purchase Price...................................................... 25
7. Assumed Interests and Obligations......................................... 30
8. Closing................................................................... 32
9. Post Closing.............................................................. 36
10. Foreign Acquisitions and Takeovers Act.................................... 38
11. Other Conditions Precedent................................................ 39
12. Further Assurances and other Matters Relating to Conditions Precedent..... 45
13. Representations and Warranties by Kaiser and KACC......................... 51
14. Representations and Warranties by Buyer................................... 58
15. Indemnities............................................................... 61
16. Currency Conversions...................................................... 71
17. Governing Law; Submission................................................. 71
18. Termination............................................................... 73
19. Stamp Duties; Withholding Taxes........................................... 76
20. Costs..................................................................... 77
21. Other Interests........................................................... 77
22. Goods and Services Tax.................................................... 77
23. Disclosures............................................................... 79
24. Counterparts.............................................................. 79
25. Notices................................................................... 80
26. [Intentionally Omitted]................................................... 81
27. Entire Agreement.......................................................... 81
28. Assignment................................................................ 82
29. Amendment................................................................. 82
-i-
EXHIBIT INDEX
Exhibit Title
- ------- -----
A Kaiser Alumina
B Kaiser Bauxite
C QAL Net Working Capital
D Kaiser Alumina Sales Contracts
E Kaiser Assignment and Assumption Agreement
F KAII Assignment and Assumption Agreement
G Alumina Supply Agreement
H Tax Values of QAL Assets
I [Intentionally Omitted]
J-1 Knowledge of Kaiser and KACC
J-2 Knowledge of Buyer
K Document Escrow Agreement
L Assumed Interests and Obligations
M Form of Guarantee
N Bidding and Auction Procedures
Schedules
- ---------
13.1(j) Certain Matters Related to the Kaiser Alumina Sales
Contracts
13.1(r) Special Notices
13.2(e) Financial Statements of QAL
13.2(f) Conduct of Business of QAL
13.2(g) QAL Compliance with Laws
13.2(h) QAL Litigation
DATE September 22, 2004
PARTIES
1. COMALCO ALUMINIUM LIMITED, ABN 51 009 679 127, a Queensland
corporation, of 25th Floor, 12 Creek Street, Brisbane, Queensland,
Australia, (BUYER);
2. KAISER ALUMINUM & CHEMICAL CORPORATION, ABN 47 908 052 437, a
Delaware corporation, of Suite 2500, 5847 San Felipe, Houston,
Texas, USA (KACC); and
3. KAISER ALUMINA AUSTRALIA CORPORATION, ABN 15 009 757 546, a Delaware
corporation, of Suite 2500, 5847 San Felipe, Houston, Texas, USA
(KAISER).
Buyer, KACC and Kaiser are sometimes referred to herein collectively
as the PARTIES.
RECITAL
Buyer has agreed to purchase, and Kaiser and KACC have agreed to
sell, the Assets Sold (as hereinafter defined), and Buyer has agreed
to assume the Assumed Interests and Obligations (as hereinafter
defined), on the terms and conditions of this AGREEMENT.
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NOW THEREFORE, in consideration of the foregoing premises, and the respective
representations, warranties, covenants and agreements set forth herein, and
intending to be legally bound hereby, the Parties agree as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 In this Agreement, except as provided in Clause 22 or unless the context
otherwise requires the following terms have the meanings set forth below:
2001 ASSIGNMENT AND ASSUMPTION AGREEMENT means the Assignment and
Assumption Agreement - Consent, dated August 31, 2001, among the
Participants and QAL.
2001 PURCHASE AGREEMENT means the Purchase Agreement, dated June 15, 2001,
among Comalco, CAL, Kaiser and KACC.
ACT has the meaning set forth in Clause 10.1(a).
ADJUSTMENT DATE has the meaning set forth in Clause 9(a).
AGREEMENT BETWEEN PARENTS means the Agreement No. 1 Between Parents dated
as of February 15, 1990, among KACC, Comalco, RTL and others.
AGREEMENT COLLATERAL TO SHARE PURCHASE AGREEMENT means the Agreement
Collateral to Share Purchase Agreement dated October 14, 1982 between RTL,
KACC and Comalco.
ALQUEEN means Alcan Queensland Pty. Limited, a Queensland corporation.
ALUMINA PURCHASE PRICE has the meaning set forth in Clause 4.2.
ALUMINA SUPPLY AGREEMENT has the meaning set forth in Clause 8.3(e).
ASSETS SOLD means the Shares in QAL, the Kaiser Alumina and the Kaiser
Bauxite.
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ASSUMED DEBT ADJUSTMENT has the meaning set forth in Clause 3(b).
ASSUMED INTERESTS AND OBLIGATIONS means each interest, right and
obligation of Kaiser and KACC, as applicable, as at the Effective Date in,
to and under each of:
(a) the Participants Agreement, including their respective obligations
in respect of Bauxite Shipping Charge Credit Allowances;
(b) the Agreement Between Parents;
(c) the Gladstone Tolling Contracts, including their respective
obligations in respect of Credit Allowances, Alternative
Depreciation Credit Allowances and Gladstone Tolling Charge
Prepayments;
(d) all Gladstone Bauxite Supply Agreements;
(e) the QAL Financing Agreements;
(f) the Interest Reimbursement Agreement;
(g) Article 5.1 of the Agreement Collateral to Share Purchase Agreement;
(h) the 2001 Purchase Agreement; and
(i) the 2001 Assignment and Assumption Agreement;
but not including any obligations under such agreements to the extent such
obligations are to be paid or performed on or prior to the Effective Date.
AUCTION has the meaning set forth in the Bidding and Auction Procedures.
AUCTION TRANSACTION has the meaning set forth in Clause 18.1(b)(v).
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AUDITED FINANCIAL STATEMENTS means the financial statements of QAL as at
December 31, 2003 and for the year then ended, including a statement of
financial performance, a statement of financial position and a statement
of cash flows, all as audited by PriceWaterhouseCoopers.
AUSTRALIAN DOLLARS or A$ means lawful money of the Commonwealth of
Australia.
BACKUP BIDDER has the meaning set forth in the Bidding and Auction
Procedures.
BALANCE SHEET DATE means December 31, 2003.
BANKRUPTCY CASES means the cases of Kaiser, KACC and certain of their
affiliates under chapter 11 of the Bankruptcy Code, which have been
consolidated for procedural purposes only and are being administered
jointly by the Bankruptcy Court as Case No. 02-10429 (JKF).
BANKRUPTCY CODE means chapter 11 of title 11 of the United States Code (as
now in effect or hereafter amended).
BANKRUPTCY COURT means the United States Bankruptcy Court for the District
of Delaware.
BANKRUPTCY COURT HEARING has the meaning set forth in Clause 12.8.
BANKRUPTCY LAWS means the Bankruptcy Code, the Federal Rules of Bankruptcy
Procedure, as amended, and the local rules of the Bankruptcy Court.
BANKRUPTCY PLEADINGS means all pleadings relating to this Agreement filed
with the Bankruptcy Court by Kaiser, KACC or any other Person.
BASE SHARE PRICE means US$308,000,000.
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BASKET has the meaning set forth in Clause 15.11(a).
BAUXITE INVENTORY CHARGE means, in relation to each BOL Grade comprising
the Kaiser Bauxite (referred to as the RELEVANT BAUXITE for the purpose of
this definition), the aggregate of:
(a) the purchase price and any royalty payments paid or payable in
respect of the Relevant Bauxite under the Gladstone Bauxite Supply
Agreements, as most recently invoiced prior to the Effective Date,
or, if not invoiced prior to the Effective Date, as invoiced under
the preliminary invoices or preliminary royalty invoices (as
applicable) delivered under Clause 6.1(b)(iii); and
(b) the amount of the Bauxite Shipping Charges paid or payable by Kaiser
in respect of the Relevant Bauxite under the Participants Agreement
in cash (net of any applicable Bauxite Shipping Charge Credit
Allowances).
BIDDING AND AUCTION PROCEDURES means the bidding and auction procedures
attached to this Agreement as Exhibit N, as the same may be modified from
time to time by agreement of the Parties.
BIDDING AND AUCTION PROCEDURES ORDER has the meaning set forth in Clause
12.8.
BOL GRADE means that part of a Grade of bauxite that can be identified by
reference to the month of issue of a bill of lading in respect of it.
BREAKUP FEE has the meaning set forth in Clause 18.3.
BUSINESS DAY means a day on which the major trading banks are open for
business in New York, New York, Wilmington, Delaware and Houston, Texas,
USA.
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BUYER has the meaning set forth on the first page of this Agreement, or if
not Comalco, the Successful Bidder or Backup Bidder, as applicable.
BUYER ENTITY means an entity in respect of which Buyer is treated as a
division or part for the purposes of Tax.
BUYER INDEMNIFIED PARTIES has the meaning set forth in Clause 15.1.
BUYER INDEMNITY PAYMENT means any payment made or which may be required to
be made by Kaiser and/or KACC to the Buyer Indemnified Parties under
Clause 15.4.
BUYER'S PARENT means Comalco.
CAL means Comalco Aluminium Limited, ABN 51 009 679 127, a Queensland
corporation.
CLASS A ORDINARY SHARES has the meaning set forth in Clause 13.2(a).
CLASS B ORDINARY SHARES has the meaning set forth in Clause 13.2(a).
CLASS C ORDINARY SHARES has the meaning set forth in Clause 13.2(a).
CLASS D ORDINARY SHARES has the meaning set forth in Clause 13.2(a).
CLOSING has the meaning set forth in Clause 8.1.
CLOSING BALANCE SHEET has the meaning set forth in Clause 6.1(a)(i).
CLOSING DATE has the meaning set forth in Clause 8.1.
COMALCO means Comalco Limited, ABN 37 004 502 694, a Victorian
corporation.
COMALCO ALUMINA SUPPLY AGREEMENT has the meaning set forth in Clause 4.4.
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COMMENCEMENT DATE means the date of entry of the Sale Approval Order;
provided that if the Backup Bidder becomes the Buyer hereunder,
Commencement Date (including for purposes of Clauses 18.1(b)(i) and
18.1(c)(i)) means the date on which Kaiser and KACC notify the Backup
Bidder that it has become the Buyer in lieu of the Successful Bidder.
CONSORTIUM DOCUMENTS means:
(a) the Participants Agreement;
(b) the Agreement Collateral to Share Purchase Agreement;
(c) the Agreement Between Parents;
(d) the Gladstone Tolling Contracts;
(e) the Gladstone Bauxite Supply Agreements;
(f) the QAL Financing Agreements;
(g) the Constitution of QAL; and
(h) the 2001 Assignment and Assumption Agreement.
DE MINIMIS THRESHOLD has the meaning set forth in Clause 15.11(a).
DEFENDING PARTY has the meaning set forth in Clause 12.4.
DEPOSIT has the meaning set forth in Clause 4A.1.
DEPOSIT ESCROW AGENT means the escrow agent named in the Deposit Escrow
Agreement.
DEPOSIT ESCROW AGREEMENT means an escrow agreement relating to the
Deposit, by and among Kaiser, KACC, Buyer and Deposit Escrow Agent, to be
executed and delivered on
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or prior to the date on which Buyer is required to make the Deposit
pursuant to Clause 4A.1.
DIP FACILITY means the Post-Petition Credit Agreement, dated as of
February 12, 2002, as amended, among KACC, Kaiser Aluminum Corporation,
certain financial institutions party thereto and Bank of America, N.A., as
Agent.
DOCUMENT ESCROW AGENT means the escrow agent named in the Document Escrow
Agreement.
DOCUMENT ESCROW AGREEMENT means an escrow letter in the form of Exhibit K.
EFFECTIVE DATE means 11:59 p.m. at Gladstone, Queensland on the last day
of the calendar month in which the last of the conditions precedent
referred to in Clauses 10.1, 11.1, 11.2 and 11.3 is satisfied or duly
waived and on which the sale of the Assets Sold under this Agreement is to
take effect (or such later date requested by a Party and agreed to by the
other Parties prior to that date).
ESTIMATED BAUXITE RECEIVABLES has the meaning set forth in Clause 5.1(b).
ESTIMATED PURCHASE PRICE has the meaning set forth in Clause 5.1.
EXCESS ALUMINA means, in the event of Kaiser's termination of the Comalco
Alumina Supply Agreement pursuant to Article 4.3(f) thereof with effect
prior to December 31, 2005, the number of metric tonnes of alumina
produced at QAL's Gladstone plant after the Effective Date that would have
been delivered to Comalco under the Comalco Alumina Supply Agreement had
such agreement not been so terminated.
EXCESS KAISER ALUMINA CONSIDERATION means the US$ amount obtained by
calculating, for each calendar month in which delivery of Excess Alumina
would have been required
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under the Comalco Alumina Supply Agreement, an amount equal to 3.50% of
the product of (x) the forward LME price (in US$) on the Effective Date
for the calendar month prior to such calendar month for delivery, and (y)
the number of metric tonnes of Excess Alumina that would have been
delivered in such calendar month, and adding all such US$ amounts
together.
FINAL BAUXITE RECEIVABLES has the meaning set forth in Clause 6.1(c).
FINAL KAISER ALUMINA PRICE has the meaning set forth in Clause 6.1(b)(v).
FINAL KAISER BAUXITE PRICE has the meaning set forth in Clause 6.1(b)(iv).
FINAL ORDER means an order or judgment of the Bankruptcy Court, or other
court of competent jurisdiction, as entered on the docket in any
Bankruptcy Case or the docket of any other court of competent
jurisdiction, that has not been reversed, stayed, modified or amended, and
as to which the time to appeal or seek certiorari or move for a new trial,
reargument or rehearing has expired, and no appeal or petition for
certiorari or other proceedings for a new trial, reargument or rehearing
has been timely taken, or as to which any appeal that has been taken or
any petition for certiorari that has been timely filed has been withdrawn
or resolved by the highest court to which the order or judgment was
appealed or from which certiorari was sought or the new trial, reargument
or rehearing shall have been denied or resulted in no modification of such
order.
FINAL PURCHASE PRICE has the meaning set forth in Clause 6.2.
GENERAL TRUST DEED means the agreement identified as number 2 in Section
IV of Exhibit L.
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GLADSTONE BAUXITE SUPPLY AGREEMENTS means the agreements and other
documents identified in Section III of Exhibit L.
GLADSTONE CREDIT ALLOWANCES means Credit Allowances, Alternative
Depreciation Credit Allowances, Bauxite Shipping Charge Credit Allowances
and Alumina Delivery Charge Credit Allowances.
GLADSTONE TOLLING CONTRACTS means the agreements and other documents
identified in Section II of Exhibit L.
GOVERNMENTAL ENTITY means any federal, state, local, municipal, foreign or
other government or any provincial, departmental or political subdivision
thereof, or any entity, body or authority exercising or entitled to
exercise any administrative, executive, judicial, legislative, policy,
regulatory or taxing authority or power of any nature, or any court,
department, commission, board, bureau, agency, instrumentality or
administrative body of any of the foregoing, including any arbitral body.
GRADE means any one of the following grades of bauxite supplied under the
Gladstone Bauxite Supply Agreements:
(a) trihydrate bauxite;
(b) Grade `A' monohydrate bauxite;
(c) Grade `C' monohydrate bauxite; and
(d) Grade `D' monohydrate bauxite.
GST AMOUNT means the amount payable by Buyer to Kaiser under Clause 22.3
in consequence of Buyer's purchase of the Kaiser Bauxite and the Kaiser
Alumina reduced by the amount payable by Kaiser to Buyer under Clause 22.3
in consequence of the
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assumption by Buyer of Gladstone Credit Allowances. For the purposes of
the meaning of GST Amount, no amount shall be payable by Kaiser to Buyer
under Clause 22.3 in consequence of the assumption by Buyer of Gladstone
Credit Allowances if before the Closing Date the Commissioner of Taxation
issues a final ruling or similar final determination which, in the
reasonable opinion of Buyer, would result in no GST (as defined for the
purposes of Clause 22) being imposed on that assumption.
INDEMNIFICATION CLAIM has the meaning set forth in Clause 15.12(a).
INDEMNIFIED PARTY has the meaning set forth in Clause 15.12(a).
INDEMNIFYING PARTY has the meaning set forth in Clause 15.12(a).
INTEREST REIMBURSEMENT AGREEMENT means the (i) Financing Agreement dated
as of March 30, 2001 among QAL, Kaiser, KACC, Pechiney Limited, Pechiney,
CAL, Comalco, Alqueen and Alcan Inc., (ii) the Addendum to Financing
Agreement, dated July 24, 2003, among QAL, Kaiser, KACC, Pechiney Limited,
Pechiney, CAL, Comalco, Alqueen and Alcan Inc. and (iii) the Addendum No.
2 to Financing Agreement, dated July 24, 2003, among QAL, Kaiser, KACC,
Pechiney Limited, Pechiney, CAL, Comalco, Alqueen and Alcan Inc.
KACC has the meaning set forth on the first page of this Agreement.
KACC SHARE IN QAL means the Class A Ordinary Share in QAL held by KACC in
trust for Kaiser.
KAII means Kaiser Aluminium International, Inc.
KAII ASSIGNMENT AND ASSUMPTION AGREEMENT has the meaning set forth in
Clause 7.4(b).
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KAISER has the meaning set forth on the first page of this Agreement.
KAISER ALUMINA means the alumina produced by QAL for the account of Kaiser
and/or KACC at calcination on or prior to the Effective Date. A pro forma
calculation of the Kaiser Alumina, assuming the Closing occurred on
December 31, 2003 is contained in Exhibit A.
KAISER ALUMINA SALES CONTRACTS has the meaning set forth in Clause 7.2.
KAISER ASSIGNMENT AND ASSUMPTION AGREEMENT has the meaning set forth in
Clause 7.4(a).
KAISER BAUXITE means each BOL Grade delivered to Kaiser under its
Gladstone Bauxite Supply Agreements and not processed into Kaiser Alumina
by QAL on or prior to the Effective Date (whether on board ship, in stock
or in process) determined on the basis on which Exhibit B has been
prepared.
KAISER ENTITY means an entity in respect of which Kaiser is treated as a
division or part for the purposes of Tax.
KAISER INDEMNIFIED PARTIES has the meaning set forth in Clause 15.2.
KAISER INDEMNITY PAYMENT means any payment made or which may be required
to be made by Buyer to Kaiser under Clause 15.6.
KAISER SHARES IN QAL means 442,399 of the Class A Ordinary Shares in QAL
held and beneficially owned by Kaiser.
KAISER'S SHARE OF QAL'S BORROWINGS means, at any time, the aggregate
principal amount which would be payable by Kaiser as Gladstone Tolling
Charge Prepayments (or, in the case of any Gladstone Tolling Charge
Prepayment not denominated in US Dollars,
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converted to US Dollars at its US Dollar Equivalent on the date two
Business Days prior to the Effective Date) if the maturity of the
aggregate principal amount of all borrowings by QAL evidenced by
Debentures were accelerated pursuant to section 7.02 of the General Trust
Deed.
KNOWLEDGE, with respect to Kaiser and KACC, means the actual knowledge,
information and belief of the individuals listed on Exhibit J-1 having
made all reasonable inquiries, and with respect to Buyer, means the actual
knowledge, information and belief of the individuals listed on Exhibit J-2
having made all reasonable inquiries.
LENDER CONSENT has the meaning set forth in Clause 11.1(d).
LIABILITY means all costs, claims, charges, losses, damages, expenses,
penalties and liabilities of any kind whether actual, contingent or
prospective, including any reduction, limitation or restriction in the
ability of a Person to claim a Tax Offset Item.
LIBOR means the overnight rate displayed on the Reuters screen LIBOR01
page on the Effective Date (or, if that rate is not displayed on the
Effective Date, the last such rate displayed prior to the Effective Date),
applicable to US Dollars.
LIEN means, with respect to any property or asset, any mortgage, lien,
claim, pledge, security interest or other encumbrance thereon.
LME means the average London Metal Exchange 3-month price for 99.7%
aluminum ingot in US Dollars per metric tonne for the calendar month
immediately preceding the month in which the Effective Date occurs as
reported by Platt's Metal Week. If the LME ceases to be published, the
Parties shall agree on a substitute index intended to reflect the market
price of primary aluminum ingot on a basis essentially similar to the LME.
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NOTICE OF CLAIM has the meaning set forth in Clause 15.12(a)(i).
ORDINARY SHARES has the meaning set forth in Clause 13.2(a).
PARENT GUARANTEE means a guarantee and indemnity in the form of Exhibit M.
PARTICIPANTS AGREEMENT means the agreements and other documents identified
in Section I of Exhibit L.
PARTICIPANTS CONSENT means the consent of the parties to the Participants
Agreement (other than Kaiser and KACC) to the transfer of the Shares in
QAL and the assumption and assignment of the Assumed Interests and
Obligations pursuant to Section 30(D) of the Participants Agreement.
PARTIES has the meaning set forth on the first page of this Agreement.
PAYEE has the meaning set forth in Clause 22.4.
PECHINEY LIMITED means Aluminium Pechiney Australia Pty. Limited, a New
South Wales corporation.
PERSON means any individual, corporation, trust, partnership, limited
liability company, unincorporated body or other entity.
PRELIMINARY KAISER ALUMINA PRICE has the meaning set forth in Clause
5.1(c).
PRELIMINARY KAISER BAUXITE PRICE has the meaning set forth in Clause
5.1(b).
PRIOR TAX has the meaning set forth in Clause 15.6(a).
PROCEEDINGS has the meaning set forth in Clause 12.4.
QAL means Queensland Alumina Limited, ABN 98 009 725 044.
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QAL FINANCING AGREEMENTS means the agreements and other documents
identified in Section IV of Exhibit L.
QAL NET WORKING CAPITAL means the amount of the net working capital of QAL
on the Effective Date determined in accordance with the accounting
standards applied to the Audited Financial Statements and otherwise on the
basis on which Exhibit C has been prepared, by reference to the Closing
Balance Sheet.
QAL NET WORKING CAPITAL ADJUSTMENT has the meaning set forth in Clause
3(a).
QAL PURCHASE PRICE has the meaning set forth in Clause 3.
RECIPIENT has the meaning set forth in Clause 22.3(a)(i).
RTL means Rio Tinto Limited, a Victorian corporation formerly known as CRA
Limited.
SALE APPROVAL MOTION means the motion seeking approval of the Sale
Approval Order, as described in Clause 12.10.
SALE PROCESS AND APPROVAL MOTION has the meaning set forth in Clause 12.7.
SALE APPROVAL ORDER has the meaning set forth in Clause 12.10.
SET-OFF AMOUNT means, where (i) Buyer has been notified by Kaiser and KACC
that it is the Backup Bidder pursuant to the Bidding and Auction
Procedures and is subsequently notified by Kaiser and KACC that they wish
to consummate the Transaction with Buyer in lieu of the Successful Bidder,
and (ii) the Base Share Price is equal to or greater than US$400,000,000,
an amount equal to US$2,000,000 for each full 30 calendar day period
(reduced pro rata for any lesser number of calendar days), beginning on
the date that is 151 calendar days following the date of entry of the Sale
Approval Order (as such term is
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defined in the Bidding and Auction Procedures) and ending on the Effective
Date (inclusive of both such dates).
SHARES IN QAL means the Kaiser Shares in QAL and the KACC Share in QAL.
SUCCESSFUL BIDDER has the meaning set forth in the Bidding and Auction
Procedures.
SUPPLIER has the meaning set forth in Clause 22.3(a)(i).
TAX means any tax, duty, charge or levy imposed now or at any future date
under the laws of Australia or any other country, including income tax,
capital gains tax, payroll tax, fringe benefits tax, PAYG liability, sales
tax, GST, customs duty and stamp duty, and also includes any associated
penalties, fines or interest.
TAX INVOICE has the meaning assigned to such term in the A New Tax System
(Goods and Services Tax) Act 1999 (Cth).
TAX OFFSET ITEM means any deduction, loss, credit, rebate, allowance,
refund, set-off or other relief which may reduce, limit or defer a
liability to Tax.
TAX REFUND has the meaning set forth in Clause 15.6(b).
TAX RETURN means any return, declaration, report, claim for refund,
information return or other document (including any related or supporting
estimates, elections, schedules, statements or information) filed or
required to be filed in connection with the determination, assessment or
collection of any Tax or the administration of any legislation relating to
any Tax.
TITLE CLAIMS means legal proceedings brought in any court of competent
jurisdiction that is not a United States federal or state court seeking
(i) damages from Buyer, or (ii) to impose a Lien upon the Shares in QAL,
or (iii) to challenge or divest Buyer's legal or
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beneficial ownership of the Shares in QAL, if success in such proceedings
would render any of the representations and warranties made by Kaiser or
KACC in Clauses 13.1(a) to (c) not being true and correct in all material
respects on the date of this Agreement or on and as of the Closing Date.
TRADE PRACTICES ACT means the TRADE PRACTICES ACT 1974 (Cth).
TRANSACTION means the sale of the Assets Sold, the assumption of the
Assumed Interests and Obligations and other liabilities, and the other
transactions contemplated by this Agreement.
TREASURER has the meaning set forth in Clause 10.1(a).
TWENTY SECOND SUPPLEMENTAL TRUST DEED means the agreement identified as
number 3 in Section IV of Exhibit L.
UNISTAR ALUMINA SALES CONTRACT means the agreement identified as number 3
on Exhibit D.
UNISTAR PAYMENT has the meaning set forth in Clause 4.3.
US DOLLARS or US$ means lawful money of the United States of America.
US DOLLAR EQUIVALENT means, as at any date, the equivalent in US Dollars
of an amount in Australian dollars converted at the rate displayed at or
about 10:30 am (Melbourne time) on such date on the Reuters screen HSRA
page.
WORKING CAPITAL CEILING AMOUNT means A$35,000,000.
WORKING CAPITAL FLOOR AMOUNT means A$15,000,000.
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1.2 In this Agreement, unless the context otherwise requires, capitalized
terms not otherwise defined herein have the meanings assigned to such
terms in the Participants Agreement.
1.3 Headings are for convenience only and do not affect interpretation. The
following rules apply unless the context requires otherwise.
(a) The singular includes the plural and conversely.
(b) A gender includes all genders.
(c) If a word or phrase is defined, its other grammatical forms have a
corresponding meaning.
(d) A reference to a person, corporation, trust, partnership, limited
liability company or unincorporated body or other entity includes
any of them.
(e) A reference to a Clause, Exhibit or Schedule is a reference to a
Clause of, or an Exhibit or Schedule to, this Agreement. Disclosures
made in any Clause, Exhibit or Schedule that are responsive to the
requirements of any other Clause, Exhibit or Schedule are deemed to
be incorporated therein by reference.
(f) A reference to an agreement or document (including a reference to
this Agreement) is to the agreement or document as amended, varied,
supplemented, novated or replaced.
(g) A reference to a party to this Agreement or another agreement or
document includes the party's successors and permitted substitutes
or assigns.
(h) A reference to legislation or to a provision of legislation includes
a modification, amendment or re-enactment of it, a legislative
provision substituted for it and a rule, regulation or statutory
instrument issued under it.
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(i) A reference to WRITING includes a facsimile transmission and any
means of reproducing words in a tangible and permanently visible
form.
(j) The term INCLUDING means including without limitation.
2. PURCHASE AND SALE OF ASSETS SOLD
Subject to, and on the basis of, the representations, warranties and
agreements contained in this Agreement, Buyer agrees to purchase from
Kaiser and KACC, and Kaiser and KACC agree to sell to Buyer, the Assets
Sold with effect from the Effective Date. For the avoidance of doubt, the
intention of the Parties is that all incidents of ownership, including
income, expenses and other results of operations represented by Kaiser's
and KACC's proportionate ownership interest in QAL, except for certain
specific financial arrangements set forth in this Agreement, shall be
vested in Kaiser and KACC prior to the Effective Date and shall be vested
in Buyer from and after the Effective Date.
3. PURCHASE PRICE FOR THE SHARES IN QAL
The purchase price for the Shares in QAL (the QAL PURCHASE PRICE) will be
the Base Share Price, adjusted as follows:
(a) plus or minus the US Dollar Equivalent (determined on the date two
Business Days prior to the date payment adjustment is to be made
under Clause 9) of 20% of the amount by which the actual QAL Net
Working Capital (computed in accordance with Clause 6):
(i) exceeds the Working Capital Ceiling Amount; or
(ii) is less than the Working Capital Floor Amount; and
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(If the actual QAL Net Working Capital exceeds the Working
Capital Ceiling Amount, an amount equal to 20.0% of such
excess amount will be added to the Base Share Price in
computing the QAL Purchase Price. If the actual QAL Net
Working Capital is less than the Working Capital Floor Amount,
an amount equal to 20.0% of such difference will be deducted
from the Base Share Price in computing the QAL Purchase Price
(QAL NET WORKING CAPITAL ADJUSTMENT).)
(b) plus the US Dollar amount, if any, by which Kaiser's Share of QAL's
Borrowings immediately prior to the Effective Date (including
obligations classified as current portion of long term debt) is less
than US$60,000,000, determined on a dollar-for-dollar basis (ASSUMED
DEBT ADJUSTMENT).
4. PURCHASE PRICE FOR KAISER BAUXITE, KAISER ALUMINA AND OTHER ITEMS
4.1 The purchase price per dry metric tonne for the Kaiser Bauxite will be the
aggregate of the Bauxite Inventory Charge for each BOL Grade comprising
the Kaiser Bauxite, calculated on the assumption that bauxite is processed
into alumina on a `first in first out' basis for each BOL Grade and on the
basis on which Exhibit B has been prepared.
4.2 The purchase price for the Kaiser Alumina will be 12.5% of LME per metric
tonne, calculated on the basis on which Exhibit A was prepared (the
ALUMINA PURCHASE PRICE).
4.3 If the Effective Date occurs on or before Kaiser's shipment of 36,800
metric tonnes of alumina during the fourth quarter of 2004 under the
Unistar Alumina Sales Contract, Buyer will pay to Kaiser at the Closing
US$1,786,000. If the Effective Date occurs after shipment of a portion
(but less than all) of such 36,800 metric tonnes of alumina, Buyer will
pay to Kaiser at the Closing US$1,050,000 plus an amount equal to US$20
Page 20
multiplied by the number of metric tonnes of alumina remaining to be
shipped during 2004 under such contract. If the Effective Date occurs
after shipment of such 36,800 metric tonnes of alumina but prior to
Kaiser's shipment of all or a portion of 105,000 metric tonnes of alumina
during 2005 under such contract, Buyer will pay to Kaiser an amount equal
to US$10 multiplied by the number of metric tonnes of alumina remaining to
be shipped during 2005 under such contract. The amount determined in
accordance with this Article 4.3 is referred to herein as the UNISTAR
PAYMENT.
4.4 If Kaiser notifies Comalco on or before the Effective Date that Kaiser
has elected to terminate the Kaiser Alumina Sales Agreement identified as
item number 1 on Exhibit D (the COMALCO ALUMINA SUPPLY AGREEMENT) pursuant
to Article 4.3(f) thereof such that the effective date of termination is
prior to December 31, 2005, Buyer will pay the Excess Kaiser Alumina
Consideration to Kaiser.
4A. DEPOSIT
4A.1 Within two business days after the entry of the Bidding and Auction
Procedures Order, Buyer shall make a good faith deposit in the amount of
US$29,000,000. If (i) there is no Auction, on the first Business Day after
entry of the Sale Approval Order, or (ii) there is an Auction and Buyer is
the Successful Bidder, on the first Business Day after completion of the
Auction, or (iii) if there is an Auction and Buyer is the Backup Bidder,
on the first Business Day after the Commencement Date (as applicable to
the Backup Bidder), then in any such case Buyer shall pay an additional
deposit of US$11,000,000, for a total deposit of US$40,000,000
(collectively, the DEPOSIT). Buyer shall make the Deposit via wire
transfer of immediately available funds to the account set forth in the
Page 21
Deposit Escrow Agreement. Application of the Deposit shall be subject to
the terms and provisions of this Agreement and the Deposit Escrow
Agreement.
4A.2. Upon the Closing, KACC and Buyer shall deliver a joint written notice to
the Deposit Escrow Agent directing the release of the Deposit to Sellers
for application to the payment of the Estimated Purchase Price and Kaiser
shall deliver a written notice to the Document Escrow Agent directing the
release of the Documents in accordance with paragraph 3(b) of the Document
Escrow Agreement.
4A.3. Upon termination of this Agreement pursuant to Clause 18.1(b)(ii), KACC
and Buyer shall deliver a joint written notice to the Deposit Escrow Agent
directing the release of the Deposit to the Sellers as liquidated damages
and Kaiser shall deliver a written notice to the Document Escrow Agent
directing the release and destruction of the Documents in accordance with
paragraph 3(b) of the Document Escrow Agreement.
4A.4. Upon termination of this Agreement pursuant to any provision other than
Clause 18.1(b)(ii), KACC and Buyer shall deliver a joint written notice to
the Deposit Escrow Agent directing the release of the Deposit to the Buyer
and Kaiser shall deliver a written notice to the Document Escrow Agent
directing the release and destruction of the Documents in accordance with
paragraph 3(b) of the Document Escrow Agreement.
5. ESTIMATED PURCHASE PRICE
5.1 On the Closing Date, Buyer will pay to Kaiser, by wire transfer of
immediately available funds, an amount on account of the purchase price
for the Assets Sold (the ESTIMATED PURCHASE PRICE) equal to:
(a) in respect of the Shares in QAL, the Base Share Price, less the
Deposit, less the Set-Off Amount (if any); plus
Page 22
(b) in respect of the Kaiser Bauxite, A$6,000,000 (converted to US
Dollars at its US Dollar Equivalent on the date two Business Days
prior to the Closing Date); provided, however, that at least 10 days
prior to the Effective Date Kaiser and KACC shall deliver to Buyer a
written statement in the form of Exhibit B stating the estimated
Australian dollar amount of the Kaiser Bauxite as of the Effective
Date (the PRELIMINARY KAISER BAUXITE PRICE) offset by a reasonable
estimate of the amount due including GST (as defined for the
purposes of Clause 22) to Buyer for bauxite invoiced but not paid
(the ESTIMATED BAUXITE RECEIVABLES) and the amount stated in such
written statement, if different, will be substituted for such
A$6,000,000 amount; plus
(c) in respect of the Kaiser Alumina, US$6,000,000; provided, however,
that at least 10 days prior to the Effective Date, Kaiser and KACC
shall deliver to Buyer a written statement which states the number
of metric tonnes of Kaiser Alumina that Kaiser and KACC estimate
will exist on the Effective Date, calculated on the basis on which
Exhibit A was prepared, multiplied by an amount in US$ equal to the
Alumina Purchase Price (the PRELIMINARY KAISER ALUMINA PRICE) and
the amount stated in such written statement, if different, will be
substituted for such US$6,000,000 amount; plus
(d) on account of the GST Amount, A$1,800,000 (converted to US Dollars
at its US Dollar Equivalent on the date two Business Days prior to
the Closing Date); provided, however, that at least 10 days prior to
the Effective Date Kaiser and KACC shall deliver to Buyer a written
statement updating the estimated GST Amount to reflect any changes
to the estimated Preliminary Kaiser Bauxite Price
Page 23
in Clause 5.1(b) and the estimated Preliminary Kaiser Alumina Price
in Clause 5.1(c), such written statement to also contain an estimate
of the balance of the Gladstone Credit Allowances as at the
Effective Date unless at least 10 days prior to the Effective Date,
Buyer has delivered a written statement to Kaiser and KACC stating
that the Commissioner of Taxation has issued a final ruling or
similar final determination which, in Buyer's opinion results in no
GST (as defined for the purposes of Clause 22) being imposed on that
assumption. The estimated GST Amount determined from such written
statements will be substituted for such A$1,800,000 amount. (For the
purpose of estimating the GST Amount included in this Clause 5.1(d)
to be A$1,800,000, it is assumed that the GST payable by Kaiser to
Buyer under Clause 22.3 in consequence of the assumption by Buyer of
the Gladstone Credit Allowances is zero.); plus
(e) A$0 as an estimate of the amount payable in respect of the QAL Net
Working Capital Adjustment referred to in Clause 3(a); provided
however that at least 10 days prior to the Effective Date Kaiser and
KACC shall deliver to Buyer a written statement specifying the
amount of the QAL Net Working Capital Adjustment that would be made
if the Effective Date had occurred on the last day of the previous
calendar month and the amount stated in such written statement, if
different, will be substituted for such A$0 amount; plus
(f) US$0 as an estimate of the amount payable in respect of the Assumed
Debt Adjustment referred to in Clause 3(b); plus
(g) the Unistar Payment, if applicable, plus any GST payable in
accordance with Clause 22, if applicable; plus
Page 24
(h) the Excess Kaiser Alumina Consideration, if applicable, plus any GST
payable in accordance with Clause 22, if applicable.
5.2 The Estimated Purchase Price will bear interest from, but not including,
the Effective Date to, and including, the day immediately preceding the
Closing Date, calculated at LIBOR.
6. FINAL PURCHASE PRICE
6.1 As soon as practicable, and in any event within 30 days, following the
Effective Date:
(a) the Parties will cause QAL to prepare and deliver to the Parties:
(i) a balance sheet for QAL as at the Effective Date (the CLOSING
BALANCE SHEET) containing line items, notes and schedules
similar to those included in the Audited Financial Statements,
but in any event setting forth specifically the amount of the
Gladstone Credit Allowances and, to the extent practicable,
prepared in accordance with Australian generally accepted
accounting principles without giving effect to any changes
therein that may have occurred after December 31, 2003, and on
a basis consistent with the Audited Financial Statements;
(ii) a computation of each BOL Grade comprising the Kaiser Bauxite
as at the Effective Date, detailing each BOL Grade and
relevant delivery months and whether such bauxite is in
stockpile, in transit or in process (in the form of Exhibit
B);
(iii) [INTENTIONALLY OMITTED];
Page 25
(iv) a computation of the QAL Net Working Capital as at the
Effective Date (in the form of Exhibit C); and a computation
of the amount of the QAL Net Working Capital Adjustment
calculated in the manner set forth in Clause 3(a);
(v) a computation of Kaiser's Share of QAL's Borrowings
immediately prior to the Effective Date;
(vi) a computation of the Assumed Debt Adjustment; and
(vii) a computation of the component referred to in paragraph (b) of
the definition of Bauxite Inventory Charge for each BOL Grade
comprising the Kaiser Bauxite, determined in accordance with
such paragraph (b) and Clause 4.1, showing the amount paid and
the amount payable in respect of the Kaiser Bauxite (in the
form in Exhibit B).
All computations in this Clause 6.1(a) shall be set out in
reasonable detail and, as applicable, include particulars of the
applicable Bauxite Shipping Charges. In addition, Kaiser, KACC and
Buyer will jointly request that QAL make all computations as of the
Effective Date on the basis that the Effective Date will be treated
as if it were a financial year end date of QAL. Any costs charged by
QAL in preparing the Closing Balance Sheet and computations referred
to in this Clause 6.1(a) will be borne equally by Kaiser and Buyer.
(b) Kaiser will prepare (or cause to be prepared) and deliver to Buyer:
(i) a computation of the component referred to in paragraph (a) of
the definition of Bauxite Inventory Charge for each BOL Grade
comprising
Page 26
the Kaiser Bauxite, determined in accordance with that
paragraph and Clause 4.1 (in the form of Exhibit B), such
computation to be set out in reasonable detail and to include
particulars of the BOL Grades comprising the Kaiser Bauxite;
(ii) a computation of the GST Amount, such computation to be set
out in reasonable detail;
(iii) all preliminary invoices and preliminary royalty invoices
relating to Kaiser Bauxite which are delivered by CAL to
Kaiser or KACC prior to the Effective Date and, where
relevant, if the month in which the Effective Date occurs is
not the last month in a calendar quarter, a preliminary
royalty invoice in respect of the period since the end of the
preceding calendar quarter until the end of the month in which
the Effective Date occurs, which invoices will be used in the
calculation referred to in Clause 6.1(c); and
(iv) a calculation of the Kaiser Bauxite as of the Effective Date
in the form of Exhibit B, which shall indicate, based upon the
principles contained in Clause 4.1 and this Clause 6 and
otherwise on a basis consistent with the calculation of the
Preliminary Kaiser Bauxite Price set forth in Clause 5.1, the
final purchase price for the Kaiser Bauxite (the FINAL KAISER
BAUXITE PRICE). If the Final Kaiser Bauxite Price exceeds the
Preliminary Kaiser Bauxite Price, Buyer will pay Kaiser an
amount equal to the difference as part of the payment
adjustment to be made under Clause 9. If the Preliminary
Kaiser Bauxite Price exceeds the Final Kaiser Bauxite Price,
Page 27
Kaiser will pay Buyer an amount equal to the difference as
part of the payment adjustment to be made under Clause 9;
(v) a calculation of the Kaiser Alumina as of the Effective Date
in the form of Exhibit A, based on information contained in
the "blue book" of QAL financial and operating information
prepared by QAL management for the month ending on the
Effective Date, which shall indicate, based upon the
principles contained in this Clause 6, the final purchase
price for the Kaiser Alumina (the FINAL KAISER ALUMINA PRICE).
If the Final Kaiser Alumina Price exceeds the Preliminary
Kaiser Alumina Price, Buyer will pay Kaiser an amount equal to
the difference as part of the payment adjustment to be made
under Clause 9. If the Preliminary Kaiser Alumina Price
exceeds the Final Kaiser Alumina Price, Kaiser will pay Buyer
an amount equal to the difference as part of the payment
adjustment to be made under Clause 9; and
(vi) a computation of the amount by which the QAL Net Working
Capital Adjustment computed by QAL in accordance with Clause
6.1(a)(iv) exceeds or is less than the estimated amount
thereof determined in accordance with Clause 5.1(e). If the
amount of the QAL Net Working Capital Adjustment as so
computed exceeds the estimated amount paid pursuant to Clause
5.1(e), Buyer shall pay an amount equal to the difference to
Kaiser and KACC as part of the payment adjustment to be made
under Clause 9. If the amount of the QAL Net Working Capital
Adjustment as so computed is less than the estimated amount
paid
Page 28
pursuant to Clause 5.1(e), Kaiser and KACC shall pay an amount
equal to the difference to Buyer as part of the adjustment to
be made under Clause 9.
(c) Buyer will prepare (or cause to be prepared) and deliver to Kaiser a
computation of the amount due including GST (as defined for purposes
of Clause 22) to Buyer from Kaiser as at the Effective Date for
bauxite invoiced but not paid (the FINAL BAUXITE RECEIVABLES), such
computation to be set out in reasonable detail. If the Final Bauxite
Receivables exceeds the Estimated Bauxite Receivables, Kaiser will
pay Buyer an amount equal to the difference as part of the payment
adjustment to be made under Clause 9. If the Estimated Bauxite
Receivables exceeds the Final Bauxite Receivables, Buyer will pay
Kaiser an amount equal to the difference as part of the payment
adjustment to be made under Clause 9.
6.2 The final purchase price for the Assets Sold and the GST Amount (the FINAL
PURCHASE PRICE), will be computed in accordance with Clauses 3, 4, 5.1 and
22 based on the Closing Balance Sheet and on the computations and invoices
delivered under Clause 6.1. For the avoidance of doubt, the Parties agree
that there will be no purchase price adjustment due to implementation of
changes in Australian accounting standards that may have occurred after
December 31, 2003, including without limitation any such changes described
in the Note appearing in Exhibit C.
6.3 If there is any dispute between the Parties as to the content or
methodology of the Closing Balance Sheet or any computation delivered or
to be made under this Clause 6, either Buyer or Kaiser may refer the
matter to QAL's independent, external auditors. Any determination made by
QAL's independent, external auditors will be conclusive and
Page 29
binding on the Parties (in the absence of manifest error). The costs of
any such determination will be borne equally by Kaiser and Buyer.
7. ASSUMED INTERESTS AND OBLIGATIONS
7.1 In connection with the sale of the Shares in QAL, with effect on and from
the Effective Date, Kaiser and KACC hereby agree to assign to Buyer, and
Buyer hereby agrees to accept and assume, all of the Assumed Interests and
Obligations; it being understood that there are no cure amounts owed with
respect to the agreements comprising the Assumed Interests and
Obligations. To the extent that any cure amounts shall be determined to be
due and owing pursuant to Section 365 of the Bankruptcy Code, Kaiser and
KACC shall pay any such cure amounts.
7.2 Additionally, as of the Effective Date, Kaiser and KACC will cause KAII to
assign to Buyer, and Buyer will assume all of KAII's obligations under the
contracts listed on Exhibit D attached hereto (KAISER ALUMINA SALES
CONTRACTS) subject to third party consents or acknowledgements in
accordance with Clause 11.1(e); it being understood that there are no cure
amounts owed with respect to the Kaiser Alumina Sales Contracts. To the
extent that any cure amounts shall be determined to be due and owing
pursuant to Section 365 of the Bankruptcy Code, Kaiser and KACC shall pay
any such cure amounts. The Parties agree, however, that the rights
assigned to Buyer under this Clause 7.2 shall not include the right to
receive payment on trade receivables in respect of alumina inventory
shipped prior to the Effective Date. In the event that Buyer receives
payment in respect of any such trade receivables, it shall as soon as
practicable remit such payment to KAII. Kaiser and KACC will cause KAII to
ensure that no amendments are made to the Kaiser Alumina Sales Contracts
without obtaining the prior written consent of Buyer;
Page 30
provided, however that no provision of this Clause 7.2 shall prohibit
either Kaiser or KACC from taking actions in the ordinary course of
business with respect to any such agreement or document so long as the
economic effect of such actions does not extend beyond the Effective Date.
7.3 It is agreed, for the avoidance of doubt, that no consideration is payable
by Buyer to Kaiser in respect of any rights forming part of the Assumed
Interests and Obligations or under Kaiser Alumina Sales Contracts agreed
to be assigned to Buyer under this Agreement or assigned to Buyer under
the Kaiser Assignment and Assumption Agreement and the KAII Assignment and
Assumption Agreement, as applicable.
7.4 The assignments and assumptions described in this Clause 7 will be made:
(a) in respect of Clause 7.1, under an assignment and assumption
agreement in the form of Exhibit E (the KAISER ASSIGNMENT AND
ASSUMPTION AGREEMENT) to be delivered on the Closing Date; and
(b) in respect of Clause 7.2, under an assignment and assumption
agreement in the form of Exhibit F (the KAII ASSIGNMENT AND
ASSUMPTION AGREEMENT) to be delivered on the Closing Date.
7.5 Kaiser and KACC agree with the Buyer that between the date of execution of
this Agreement and the Effective Date:
(a) neither of them will, and they will procure that KAII does not,
enter into any new contracts for the sale of Kaiser Alumina in
addition to those listed in Exhibit D; and
Page 31
(b) neither of them will agree to any amendments being made to, or to
any of the underlying documents which evidence, the Assumed
Interests and Obligations without the prior written approval of the
Buyer;
if the economic effect of any such new contracts or amendments would
extend beyond the Effective Date.
8. CLOSING
8.1 The closing (the CLOSING) of the sale of the Assets Sold and the
assumption of the Assumed Interests and Obligations will occur on the
Effective Date if the Effective Date is a Business Day, or on the Business
Day immediately following the Effective Date if the Effective Date is not
a Business Day, at 11:00 am at the offices of Sullivan & Cromwell LLC, 125
Broad Street, New York, New York, unless Buyer and Kaiser agree otherwise.
The actual date on which the Closing is to occur is referred to as the
CLOSING DATE.
8.2 (a) Each of Kaiser and KACC (and Buyer, if it is a Participant or an
affiliate of a Participant) will in the period between the date of
signing this Agreement and the Closing Date use its commercially
reasonable efforts to ensure that QAL conducts its business in the
ordinary course of business consistent with past practices.
(b) Each of KACC and Kaiser will ensure that deliveries of alumina by
QAL to Kaiser under Article 17 of the Participants Agreement are
made so as to ensure that on the Effective Date there is a positive
quantity of Kaiser Alumina.
Page 32
8.3 On the Closing Date:
(a) Kaiser will deliver to Buyer:
(i) a share certificate in respect of the Kaiser Shares in QAL;
(ii) an instrument of transfer of the Kaiser Shares in QAL in
registrable form duly executed by Kaiser and dated as of the
Effective Date; and
(iii) Tax Invoices as defined in the A New Tax System (Goods and
Services Tax) Act 1999 (Cth) (TAX INVOICE) in respect of the
taxable supplies made by Kaiser under this Agreement.
(b) KACC will deliver to Buyer:
(i) a share certificate for the KACC Share in QAL;
(ii) an instrument of transfer of the KACC Share in QAL in
registrable form duly executed by KACC and dated as of the
Effective Date; and
(iii) the Confidentiality Agreements referred to in Clause 12.13.
(c) Buyer will deliver to Kaiser a Tax Invoice in respect of Buyer's
assumption of the Gladstone Credit Allowances, if applicable.
(d) The Parties will deliver the Kaiser Assignment and Assumption
Agreement, as specified in Clause 7.4(a).
(e) Buyer and KACC or its designee will deliver the Alumina Supply
Agreement (the ALUMINA SUPPLY AGREEMENT), in the form of Exhibit G;
(f) Buyer will deliver and KACC will procure KAII to deliver, the KAII
Assignment and Assumption Agreement as specified in Clause 7.4(b).
Page 33
(g) Buyer will procure Buyer's Parent to deliver the Parent Guarantee.
(h) Kaiser and KACC will, by memorandum referred to in Article 40(a) of
the Constitution of QAL, remove from office each director of QAL
which they have appointed pursuant to such Article 40(a).
(i) KACC will deliver the assignment of all of KACC's rights and the
delegation of all of KACC's obligations under each of the
Confidentiality Agreements to Buyer.
(j) the Parties shall deliver, in form and substance reasonable
satisfactory to Buyer:
(i) the assignments to, and assumption by Buyer and/or Buyer's
Parent, as applicable, of all the obligations of Kaiser and
KACC, respectively, under the QAL Financing Agreements (other
than obligations to be paid or performed prior to the
Effective Date); and
(ii) the assignments to, and assumption by Buyer and/or Buyer's
Parent, as applicable, of all the obligations of Kaiser and
KACC under the documents and other agreements listed on
Exhibit L, and the documents and other agreements identified
in Clauses (b), (f), (g), (h) and (i) of the definition of
Assumed Interests and Obligations and, in the case of KAII,
the Kaiser Alumina Sales Contracts.
(k) Upon the taking of the actions referred to in Clauses 8.3(a) to (j):
(i) Buyer will deliver to Kaiser the Estimated Purchase Price
(with interest as applicable) in US Dollars by wire transfer
of immediately available funds
Page 34
to the account(s) notified to Buyer by Kaiser no later than
three Business Days prior to the Closing Date; and
(ii) KACC and Buyer will instruct the Deposit Escrow Agent to
release the Deposit in accordance with Section 1.2 of the
Deposit Escrow Agreement.
8.4 All the actions taken as required by Clause 8.3 will be deemed to be taken
simultaneously on the Closing Date, and no one such action will be deemed
to be completed until all such actions are completed. No such action will
have effect, and the Closing will be deemed not to have occurred, until
Kaiser has received verification of receipt of the amounts mentioned in
Clauses 8.3(k). On receipt of such verification, Kaiser will immediately
notify Buyer and will instruct the Document Escrow Agent to release the
documents held by it in escrow.
8.5 The documents mentioned in Clause 8.3 will, after delivery under Clause
8.3, be held in escrow by the Document Escrow Agent, until released as
contemplated by Clause 8.4 and provided for in the Document Escrow
Agreement.
8.6 Once the Closing has occurred as contemplated by Clause 8.4, it will be
deemed to have occurred as of the Effective Date.
8.7 At Buyer's request, Kaiser and KACC will do all other acts and things
reasonably within their power to have Buyer registered as the holder of
the Shares in QAL on the Closing Date. As between Kaiser, KACC and Buyer,
ownership of the Shares in QAL will, if the Closing occurs, be transferred
to Buyer with effect as of the Effective Date notwithstanding that the
legal transfer of the Shares in QAL may be registered by QAL at a later
date.
Page 35
8.8 Following entry of the Sale Approval Order, the Parties will as promptly
as practicable, and will use their respective commercially reasonable
efforts to cause QAL to, do all other acts and things necessary or
advisable such that, as of the Effective Date, all third party consents in
respect of the agreements and other documents identified in Exhibit L and
the agreements and other documents identified in Clauses (b), (f), (g),
(h) and (i) of the definition of Assumed Interests and Obligations shall
have been obtained.
9. POST CLOSING
(a) The Final Purchase Price for the Assets Sold including the final GST
Amount, will be computed as provided in Clause 6.2 and any payment
adjustment necessary to reflect the aggregate net differences
between:
(i) the Base Share Price and the QAL Purchase Price (which
includes the QAL Net Working Capital Adjustment and the
Assumed Debt Adjustment);
(ii) the Preliminary Kaiser Bauxite Price and the Final Kaiser
Bauxite Price, as provided in Clause 6.1(b);
(iii) the Preliminary Kaiser Alumina Price and the Final Kaiser
Alumina Price; and
(iv) the Estimated Bauxite Receivables and the Final Bauxite
Receivables;
will, subject to Clause 9(b), be made by Kaiser or Buyer, as
applicable, following written demand therefor sent no earlier than
the date 30 days after the Effective Date, or, if that is not a
Business Day, on the next Business Day (the ADJUSTMENT DATE). If the
final GST Amount determined in accordance with Clause 6.1(b)(ii)
Page 36
differs from the amount paid under Clause 5.1(d), then the Parties
will issue GST adjustment notes as may be necessary to enable them
to satisfy their respective GST obligations on the Adjustment Date.
(b) In the event of a dispute being referred to QAL's independent,
external auditors as provided in Clause 6.3, any necessary payment
adjustment with respect to the amount disputed will be made on the
date seven days after the final determination of such dispute by
QAL's independent, external auditors, or if that is not a Business
Day, on the next Business Day.
(c) For the purposes of determining differences under paragraph (a) any
amount computed or expressed in Australian Dollars will be converted
to its US Dollar Equivalent on the date which is two Business Days
prior to the Adjustment Date.
(d) As between Buyer and Kaiser, Buyer will be responsible for paying
any Bauxite Shipping Charges referred to in Exhibit B.
(e) [INTENTIONALLY OMITTED]
(f) If the Final Purchase Price including the final GST Amount
determined in accordance with Clause 9(a) exceeds the Estimated
Purchase Price, Buyer shall pay the undisputed amount of such
difference by wire transfer in immediately available funds to an
account designated by Kaiser no later than 10 Business Days after
Kaiser's written demand for such payment. If the Final Purchase
Price including the final GST Amount is less than the Estimated
Purchase Price, Kaiser shall pay the undisputed amount of such
difference to Buyer by wire transfer in immediately available funds
no later than 10 Business Days after Buyer's written
Page 37
demand for such payment. Neither Kaiser nor Buyer may make a demand
for payment of such difference, written or otherwise, prior to the
expiration of the time period referenced in Clause 9(a). Payment of
any disputed amounts related to the determination of the Final
Purchase Price including the final GST Amount shall be governed by
the provisions of Clause 9(b).
10. FOREIGN ACQUISITIONS AND TAKEOVERS ACT
10.1 Except for this Clause 10 and the other Clauses referred to in Clause
10.3, the provisions of this Agreement will not be binding unless and
until either:
(a) the Treasurer of the Commonwealth of Australia (the TREASURER) has
not made an order under Part II of the Foreign Acquisitions and
Takeovers Act 1975 (Cth) (the ACT) (other than an interim order
under Section 22 of the Act which has expired) within the time limit
specified in Section 26 of the Act; or
(b) a notice in writing is issued by or on behalf of the Treasurer
(without any term or condition which Buyer considers unacceptable)
stating or to the effect that the Australian Government does not
object to Buyer entering into this Agreement or acquiring an
interest in the Shares in QAL, (whichever first occurs) in respect
of a notice given by Buyer under that Act in relation to this
Agreement.
10.2 Buyer will give the notice by it under the Act in relation to this
Agreement mentioned in Clause 10.1 within 10 Business Days after the date
of execution of this Agreement.
10.3 Except for this Clause 10, and Clauses 1, 17, 18.3, 19, 20, 21, 22, 23,
24, 25, 27, 28 and 29, the provisions of this Agreement will be null and
void and of no further effect if this Agreement does not become binding
under this Clause.
Page 38
11. OTHER CONDITIONS PRECEDENT
11.1 The obligations of the Parties to consummate the transactions contemplated
by this Agreement will be subject to the fulfillment on or prior to the
Closing Date of the following conditions precedent (except to the extent
they are waived by both Buyer and Kaiser and KACC):
(a) the obtaining of:
(i) written advice from the Australian Competition and Consumer
Commission that it does not propose to intervene in the
transfer of the Shares in QAL;
(ii) approvals, consents or authorisations from Governmental
Entities under applicable competition legislation (such as the
US Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended), or other applicable laws or regulations that may
limit or restrict the ability of the Parties to consummate the
transactions contemplated by this Agreement, if any; and
(iii) any approvals, consents or authorisations of Governmental
Entities for the transactions contemplated by this Agreement
made necessary by a change in applicable law after the date of
the Agreement, except where the failure to obtain any such
authorisation would not be reasonably likely to have,
individually or in the aggregate, a material adverse effect on
the ability of the Parties to consummate the transactions
contemplated by this Agreement or on the value of the Shares
in QAL or the interests and rights included in the Assumed
Interests and Obligations, the Alumina Supply Agreement or in
the Kaiser Alumina Sales Contracts, taken as a whole;
Page 39
(b) the Sale Approval Order shall have been entered and not stayed;
(c) there shall be no order, writ, injunction or decree of any
Governmental Entity on any of the Parties prohibiting, and there
shall be no actions, suits or proceedings pending in, before or by
any Governmental Entity (other than an action, suit or proceeding
which Buyer determines, in good faith and after consultation with
external counsel, is without merit), seeking to prohibit, or
challenging the validity of, the transactions contemplated by this
Agreement;
(d) consents to the transactions contemplated by this Agreement
necessary under the DIP Facility (the LENDER CONSENT) shall have
been obtained;
(e) consents or acknowledgements from the other parties thereto that are
necessary, if any, under the Kaiser Alumina Sales Contracts shall
have been obtained; and
(f) the Participants Consent shall have been received.
11.2 Buyer's obligations to consummate the transactions contemplated by this
Agreement will (unless waived by Buyer) be conditional upon the following:
(a) the representations and warranties of Kaiser and KACC in Clause 13
being true and correct in all material respects on the date of this
Agreement and on and as of the Effective Date with the same force
and effect as if made on and as of that date, except for:
(i) changes contemplated by this Agreement;
(ii) those representations and warranties which address matters
only as of a particular date (which shall be true and correct
as of such date); or
Page 40
(iii) to the extent that failure of a representation and warranty
(which was not actually known by Kaiser or KACC to be
incorrect on the date of execution of this Agreement) to be so
true and correct as of the Effective Date would not be
reasonably likely to have, individually or in the aggregate, a
material adverse effect on the ability of Kaiser and KACC to
consummate the transactions contemplated by this Agreement or
on (x) the value of the Shares in QAL, (y) the interests and
rights included in the Assumed Interests and Obligations,
taken as a whole, or (z) the Kaiser Alumina Sales Contracts,
taken as a whole,
and each of Kaiser and KACC having delivered to Buyer a certificate
to that effect, dated as of the Effective Date, signed by a
principal financial or accounting officer of Kaiser and KACC in form
and substance reasonably satisfactory to Buyer;
(b) each of Kaiser and KACC having performed or complied with all
provisions of this Agreement to be performed or complied with by it
on or prior to the Closing Date except where the failure to so have
performed or complied would not be reasonably likely to have,
individually or in the aggregate, a material adverse effect on (w)
the ability of Kaiser or KACC to consummate the transactions
contemplated in this Agreement, (x) the value of the Shares in QAL,
(y) the interests and rights included in the Assumed Interests and
Obligations, taken as a whole, or (z) the interests and rights under
the Kaiser Alumina Sales Contracts, taken as a whole;
Page 41
(c) since the date hereof, there not having occurred any material
adverse change in the business of QAL (including its assets) except
for any changes:
(i) resulting from changes in general economic or market
conditions or changes that generally affect:
(A) the production of and market for alumina and/or
aluminium generally; or
(B) businesses of the same type as the business conducted by
QAL; or
(ii) in the general level of expenditures required, necessary or
desirable to be made in the operation of the business of QAL
as it is currently being carried on;
(d) the directors of QAL having duly resolved (subject only to
production of the documents referred to in Clause 8.3(a)(i) and (ii)
and 8.3(b)(i) and (ii), the payment of stamp duty on the documents
referred to in Clauses 8.3(a)(ii) and 8.3(b)(ii) and the occurrence
of the Closing) to register the transfer of the Shares in QAL, to
cancel the existing share certificates for the Shares in QAL, and to
issue a new share certificate for the Shares in QAL in the name of
Buyer;
(e) no administrator having been appointed for QAL, no step preliminary
to the appointment of an administrator having been taken, no
application or order having been made or proceedings commenced or
resolution having passed or proposed in a notice of meeting or
application having been made to the court for the winding up,
deregistration or dissolution of QAL, nor shall QAL have entered
into any arrangement, compromise or composition with or assignment
for the benefit of its
Page 42
creditors and QAL shall not be insolvent within the meaning of
Section 95A of the Corporations Act 2001 of Australia; and
(f) receipt (in form and substance reasonably satisfactory to Buyer) of:
(i) all consents required from the General Trustee and/or the
Special Trustee (as defined in the Twenty Second Supplemental
Trust Deed) for the delivery of the Kaiser Assignment and
Assumption Agreement;
(ii) consents to the assignment to, and assumption by the Buyer
and/or Buyer's Parent, as applicable, of all the obligations
of Kaiser and KACC, respectively, under the QAL Financing
Agreements (other than obligations to be paid or performed
prior to the Effective Date); and
(iii) such other consents as Buyer deems reasonably necessary for
the assignment to, and assumption by the Buyer and/or Buyer's
Parent, as applicable, of all the obligations of Kaiser and
KACC under the documents and other agreements listed on
Exhibit L, and the documents and other agreements identified
in Clauses (b), (f), (g), (h) and (i) of the definition of
Assumed Interests and Obligations and, in the case of KAII,
the Kaiser Alumina Sales Contracts.
11.3 Kaiser's and KACC's obligations to consummate the transactions
contemplated by this Agreement will (unless waived by Kaiser) be
conditional upon the following:
(a) the representations and warranties of Buyer contained in Clause 14
being true and correct in all material respects on the date of this
Agreement, and on and as of the Effective Date as if made on and as
of that date, except for:
Page 43
(i) changes contemplated by this Agreement;
(ii) those representations and warranties which address matters
only as of a particular date (which shall be true and correct
as of such date); or
(iii) to the extent that failure of a representation and warranty
(which was not actually known by Buyer to be incorrect on the
date of execution of this Agreement) to be so true and correct
as of the Effective Date would not be reasonably likely to
have, individually or in the aggregate, a material adverse
effect on the ability of Buyer to consummate the transactions
contemplated by this Agreement, or on the value of the
consideration to be received by Kaiser and KACC under this
Agreement,
and Buyer having delivered to Kaiser a certificate to that effect,
dated as of the Effective Date, signed by a principal financial or
accounting officer of Buyer in form and substance reasonably
satisfactory to KACC;
(b) Buyer having performed or complied with all provisions of this
Agreement to be performed or complied with by it on or prior to the
Closing Date except where the failure to so have performed or
complied would not be reasonably likely to have, individually or in
the aggregate, a material adverse effect on the ability of Buyer to
consummate the transactions contemplated in this Agreement, or on
the value of the consideration to be received by Kaiser and KACC
under this Agreement; and
Page 44
(c) Buyer shall have paid to Kaiser, via wire transfer of immediately
available funds, an amount equal to the Estimated Purchase Price,
and Kaiser shall have received the Deposit from the Deposit Escrow
Agent; and
(d) receipt of:
(i) all consents required from the General Trustee and/or the
Special Trustee (as defined in the Twenty Second Supplemental
Trust Deed) for the delivery of the Kaiser Assignment and
Assumption Agreement;
(ii) consents, in form and substance reasonably satisfactory to
Kaiser and KACC, to the assignment to, and assumption by the
Buyer and/or Buyer's Parent, as applicable, of all the
obligations of Kaiser and KACC, respectively, under the QAL
Financing Agreements (other than obligations to be paid or
performed prior to the Effective Date); and
(iii) such other consents as Kaiser, KACC and KAII deem reasonably
necessary for the assignment to, and assumption by the Buyer
and/or Buyer's Parent, as applicable, of all the obligations
of Kaiser and KACC under the documents and other agreements
listed on Exhibit L, and the documents and other agreements
identified in Clauses (b), (f), (g), (h) and (i) of the
definition of Assumed Interests and Obligations and, in the
case of KAII, the Kaiser Alumina Sales Contracts.
12. FURTHER ASSURANCES AND OTHER MATTERS RELATING TO CONDITIONS PRECEDENT
12.1 Each of the Parties will use its commercially reasonable efforts to
procure the satisfaction of all conditions precedent applicable to such
Party, and will use its commercially
Page 45
reasonable efforts to assist the other Parties in procuring the
satisfaction of all conditions precedent applicable to such other Parties.
12.2 Each Party will use its commercially reasonable efforts to obtain, as
promptly as practicable, all approvals, consents and authorisations of all
Governmental Entities that may be or become necessary for its execution
and delivery of, and the performance of its obligations pursuant to, this
Agreement (including those referred to in Clauses 10.1 and 11.1(a))
including responding to any inquiries, requests for additional information
or other communications received from any Governmental Entity in
connection with any such approvals, consents and authorisations.
12.3 Notwithstanding that a Party is not a Party which is obliged to use its
commercially reasonable efforts to obtain an approval, consent or
authorisation referred to in Clause 12.2, it will, to the extent
reasonably requested, cooperate with the Parties which are so obliged with
a view to obtaining such approval, consent or authorisation.
12.4 If prior to Closing any actions, suits or proceedings commenced against
any Party (DEFENDING PARTY) or any other party, in any court, before or by
any Governmental Entity, or before any arbitrator, seek to prohibit, or
challenging the validity of, any of the transactions contemplated by this
Agreement (PROCEEDINGS):
(a) the Defending Party will diligently and in good faith defend the
Proceedings against it and the Parties will co-operate in the
defense of the Proceedings;
(b) if the Proceedings are against a party other than a Party, the
Parties will cooperate with a view to the Proceedings being properly
defended; and
Page 46
(c) all reasonable legal costs and expenses incurred by any Party (after
consultation with the other Parties) in performing its obligations
under paragraph (a) or (b) will be borne equally between the
Parties, except that KACC and Kaiser shall bear all of their own
costs and expenses and any costs and expenses of KAII related to
obtaining the entry of the Sale Process and Approval Motion, the
Sale Approval Motion and the Sale Approval Order.
12.5 Each Party will take all necessary action to cause the conditions
precedent referred to in Clauses 11.1, 11.2 and 11.3 to be satisfied as
promptly as practicable, but in any event such that the Effective Date
occurs no later than February 1, 2005.
12.6 Buyer will apply to the Australian Competition and Consumer Commission for
the written advice referred to in Clause 11.1(a)(i) within 10 Business
Days after the date of execution of this Agreement.
12.7 Promptly after execution of this Agreement, KACC and Kaiser shall file a
motion with the Bankruptcy Court (the SALE PROCESS AND APPROVAL MOTION)
(which shall be if necessary an expedited or emergency motion) seeking,
among other things, (i) approval of the Bidding and Auction Procedures,
(ii) authorizing the sale of the Assets Sold and the other transactions
contemplated by this Agreement to the Successful Bidder or Backup Bidder
in the event of an Auction or to Buyer without conducting an Auction if no
Qualified Bid is received and (iii) scheduling a hearing on the approval
of the Sale Approval Order. The terms and conditions of the Sale Process
and Approval Motion shall be reasonably satisfactory to Kaiser, KACC and
Buyer.
12.8 Promptly after the filing of the Sale Process and Approval Motion, KACC
and Kaiser shall use their commercially reasonable efforts to obtain a
hearing (the BANKRUPTCY COURT
Page 47
HEARING) thereon at the earliest permissible date on which the Bankruptcy
Court will hear the matter but in any event no later than September 27,
2004. Upon obtaining a hearing date, KACC and Kaiser shall give notice of
the Sale Process and Approval Motion and the Bankruptcy Court Hearing as
and when required by applicable provisions of the Bankruptcy Laws and
orders of the Bankruptcy Court. KACC and Kaiser shall promptly deliver to
Buyer a copy of that notice and shall provide Buyer with copies of any and
all objections or other Bankruptcy Pleadings relating to the Sale Process
and Approval Motion promptly after KACC and Kaiser's receipt thereof. KACC
and Kaiser shall use their commercially reasonable efforts to obtain the
prompt entry of an order of the Bankruptcy Court approving the Bidding and
Auction Procedures (the BIDDING AND AUCTION PROCEDURES ORDER) in form and
substance reasonably acceptable to Kaiser, KACC and Buyer. Buyer shall use
commercially reasonable efforts to assist KACC and Kaiser with responding
to, and providing evidence with respect to, objections or challenges to
the transactions contemplated by this Agreement.
12.9 Upon completion of the Auction, if Buyer is not the Successful Bidder or
the Backup Bidder, Buyer hereby consents and agrees that (i) this
Agreement may be terminated by Kaiser and KACC at any time thereafter as
provided in Clause 18.1(b)(v) and (ii) the Auction Transaction may be
consummated by Kaiser and KACC with the Successful Bidder or the Backup
Bidder on the terms agreed pursuant to the Bidding and Auction Procedures,
subject only to payment of the Breakup Fee as provided in Clause 18.3 and
the Bidding and Auction Procedures Order; provided, however, that if Buyer
is a party to the Participants Agreement, nothing in this Clause 12.9 or
otherwise in this Agreement shall constitute or be deemed to constitute a
waiver of the Buyer's consent rights under
Page 48
Article 30(D) of the Participants Agreement or any rights pursuant to
Section 365 of the Bankruptcy Code, including the right to demand adequate
assurance of future performance from other parties to any assigned
contract to which Buyer is a party.
12.10 If Buyer is the Successful Bidder, or if Kaiser and KACC do not receive
any competing bids that conform to the Bidding and Auction Procedures,
Kaiser and KACC will promptly seek the entry of an order of the Bankruptcy
Court, the terms and conditions of which shall be reasonably satisfactory
to Kaiser, KACC and Buyer (the SALE APPROVAL ORDER), which shall provide,
among other things, that (i) the transfers of the Assets Sold by Kaiser
and KACC to Buyer pursuant to this Agreement (A) are legal, valid and
effective transfers of the Assets Sold, (B) vest or will vest Buyer with
all right, title and interest of Kaiser and KACC in and to the Assets Sold
and to the other transactions contemplated by this Agreement free and
clear of any claims (as that term is defined in Section 101(5) of the
Bankruptcy Code), interests, obligations, rights, mortgages, pledges,
security interests, liens, charges, judgments, demands and other
encumbrances (including any right of setoff, recoupment, netting or
deduction accrued up to the Closing Date), whether absolute or contingent,
matured or not mature, in law or in equity pursuant to Section 363(f) of
the Bankruptcy Code, except as specifically provided or contemplated
herein, and (C) constitute transfer for reasonably equivalent value and
fair consideration under the Bankruptcy Code; (ii) the transactions
contemplated in this Agreement are undertaken by Buyer and Kaiser and KACC
at arm's length, without collusion, and in good faith in accordance with
the provisions of Sections 363 and 365, including Section 363(m) of the
Bankruptcy Code; (iii) Kaiser and KACC have complied with the notice
requirements of Rules 2002, 6004, 5005 and 9014 of the Federal Rules of
Page 49
Bankruptcy Procedure and any applicable rules of the Bankruptcy Court with
respect to the transactions contemplated by this Agreement; and (iv)
Kaiser and KACC have satisfied all the requirements of, and are
authorized, pursuant to Section 363(b) and 365 of the Bankruptcy Code, to
enter into this Agreement and consummate the transactions contemplated
herein.
12.11 If in accordance with the Bidding Procedures, Buyer is determined to be
the Successful Bidder, Kaiser and KACC shall (A) actively support, not
oppose, and not object to, and use their commercially reasonable efforts
to seek and obtain the approval of the Sale Approval Order and (B)
cooperate with Buyer and its representatives in connection with seeking
entry of the Sale Approval Order. Buyer shall use commercially reasonable
efforts to assist Kaiser and KACC with responding to, and providing
evidence with respect to, objections or challenges to the transactions
contemplated by this Agreement.
12.12 Buyer, on the one hand, and KACC and Kaiser, on the other hand, shall, in
respect of QAL, Kaiser's and KACC's ownership interest therein or the
transactions contemplated by the Agreement:
(a) provide each other with any assistance that may reasonably be
requested by any of them in connection with the preparation of any
Tax Return, audit or other examination by any taxing authority or
judicial or administrative proceedings relating to liability for
Taxes in respect of QAL, the respective ownership interests of the
Parties therein and the transactions contemplated by this Agreement,
(b) each retain and provide the others with any records or other
information that may be relevant to that Tax Return, audit,
examination or proceeding, and
Page 50
(c) provide each other with any final determination of any such audit,
examination or proceeding that affects any amount required to be
shown on any Tax Return of the other for any period.
Without limiting the generality of the foregoing, Buyer, on the one hand,
and KACC and Kaiser, on the other hand, shall retain, until the applicable
statutes of limitations (including any extensions) have expired, copies of
all records or information that may be relevant to Tax Returns filed by
any other Party for all Tax periods or portions thereof ending before or
including the Closing Date.
12.13 KACC has previously entered into certain confidentiality agreements with
Persons (including Buyer) that expressed interest in consummating the
Transaction (collectively, the CONFIDENTIALITY AGREEMENTS). Copies of all
such Confidentiality Agreements, redacted in order not to disclose the
names of the other parties thereto, have been provided to Buyer. Between
the date of this Agreement and the Closing Date, KACC shall not enter into
any additional such Confidentiality Agreements except pursuant to the
Bidding and Auction Procedures. Any additional Confidentiality Agreements
must be substantially in the form of the existing Confidentiality
Agreements. Upon the occurrence of the Closing, KACC shall assign to Buyer
all of its rights and delegate all of its obligations under each of such
Confidentiality Agreements, and Buyer shall accept such assignment of
rights and shall assume and perform all of such obligations of KACC under
each of such Confidentiality Agreements.
13. REPRESENTATIONS AND WARRANTIES BY KAISER AND KACC
13.1 Kaiser and KACC each represents and warrants to the Buyer as follows:
Page 51
(a) each of Kaiser and KACC has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Delaware, except where the failure to be in good standing
will not adversely affect the ability of Kaiser and KACC to perform
all of their respective obligations hereunder, and, following
receipt of all necessary approvals of the Bankruptcy Court, will
have duly authorized, executed and delivered this Agreement and will
have all necessary power and authority to perform all of its
obligations hereunder;
(b) Subject to receipt of consents under the DIP Facility, Kaiser is the
legal and beneficial owner, free from Liens, of the Kaiser Shares in
QAL (except as otherwise provided in the Consortium Documents),
Kaiser will be the legal and beneficial owner, free from Liens, of
the Kaiser Shares in QAL, the Kaiser Bauxite and the Kaiser Alumina
on the Effective Date (except as otherwise provided in the
Consortium Documents), Kaiser will, if the Closing occurs, transfer
to Buyer legal and beneficial ownership of the Kaiser Shares in QAL,
the Kaiser Bauxite and the Kaiser Alumina, and there are no
outstanding options, warrants or other rights to subscribe for or
acquire from Kaiser the Kaiser Shares in QAL, the Kaiser Bauxite and
the Kaiser Alumina (except as otherwise provided in the Consortium
Documents);
(c) Subject to receipt of consents under the DIP Facility, KACC is the
legal owner and Kaiser is the beneficial owner, free from Liens, of
the KACC Share in QAL (except as otherwise provided in the
Consortium Documents), KACC will be the legal owner and Kaiser will
be the beneficial owner, free from Liens, of the KACC Share in QAL
on the Effective Date (except as otherwise provided in the
Page 52
Consortium Documents), KACC and Kaiser will, if the Closing occurs,
transfer to Buyer legal and beneficial ownership of the KACC Share
in QAL, and there are no outstanding options, warrants or other
rights to subscribe for or acquire from KACC or Kaiser the KACC
Share in QAL (except as otherwise provided in the Consortium
Documents);
(d) Kaiser and KACC are the beneficial owners, free from Liens (except
as otherwise provided in the Consortium Documents), of their
respective interests in the agreements and other documents
identified on Exhibit L and in Clauses (b), (f), (g), (h) and (i) of
the definition of Assumed Interests and Obligations and Kaiser and
KACC will, if the Closing occurs, transfer to Buyer good title to
the extent of the Assumed Interests and Obligations;
(e) neither the execution, delivery or performance of this Agreement by
Kaiser or KACC or the agreements referred to in Clauses 8.3(d), (e)
and (f) by Kaiser, KACC or KAII, nor the consummation by Kaiser,
KACC or KAII of the transactions contemplated hereby or thereby,
will
(i) assuming all necessary approvals, consents or authorisations
from Governmental Entities referred to in Clauses 11.1(a) and
11.1(b) are obtained, conflict with, violate or result in a
breach of any material judgment, decree, award or order of any
court, other competent tribunal or arbitrator applicable to
Kaiser, KACC or KAII; or
(ii) conflict with, or result in a breach of, any provision of the
charter or by-laws of Kaiser or KACC or of any material
agreement, contract or commitment to which Kaiser, KACC or
KAII is a party or by which it is
Page 53
bound, or constitute a default thereunder (assuming the
receipt of the Lender Consent), which conflict, breach or
default would impair its ability to comply with the material
terms and conditions of this Agreement or the agreements
referred to in Clauses 8.3(d), (e) and (f) or to consummate
the transactions contemplated hereby or thereby;
(f) there are no actions, suits, proceedings or governmental
investigations pending or, to the Knowledge of either Kaiser or
KACC, threatened against or affecting Kaiser, KACC or KAII which
might reasonably be expected to impair materially their respective
ability to comply with the terms and conditions of this Agreement or
the agreements referred to in Clauses 8.3(d), (e) or (f) or to
consummate the transactions contemplated hereby or thereby.
(g) Kaiser has:
(i) a Project Percentage of 20.0%;
(ii) an Initial Plant Call Capacity Percentage of 31.1198%;
(iii) a First Expanded Plant Call Capacity Percentage of 12.2593%;
(iv) a Second Expanded Plant Call Capacity Percentage of 15.0884%;
(v) a Third Expanded Plant Call Capacity Percentage of 16.5408%;
and
(vi) a Fourth Expanded Plant Call Capacity Percentage of 20.0%;
(h) Exhibit H sets out information supplied by QAL to Kaiser as to
the written down tax values of QAL's assets as of December 31, 2003
(in relation to the Assumed Interests and Obligations) in respect of
each Plant in accordance with Appendix B
Page 54
of the Participants Agreement, and to the Knowledge of Kaiser,
Exhibit H is accurate in all material respects;
(i) neither Kaiser nor KACC is in material default in the
performance of any of its material obligations under the
agreements and other documents identified on Exhibit L and in
Clauses (b), (f), (g), (h) and (i) of the definition of
Assumed Interests and Obligations, including its obligations
to make or guarantee advances to QAL on open book account or
pay Gladstone Credit Allowances;
(j) Except as disclosed in Schedule 13.1(j), KAII is not in breach
of, or in default under, any of the Kaiser Alumina Sales
Contracts, and, to the Knowledge of KACC and Kaiser, no other
party to a Kaiser Alumina Sales Contract is in breach thereof
or default thereunder, except where any such breaches or
defaults would not have, individually or in the aggregate, a
material adverse effect on the benefits to be realized by
KAII, or the obligations of KAII under, the Kaiser Alumina
Sales Contracts.
(k) Kaiser has no Working Capital Loans or Improvement Notes;
(l) since January 1, 2003, Kaiser has not elected to use the
delivery method referred to in Article 13(C)(ii) of the
Participants Agreement;
(m) there is no current reduction by Kaiser of the rate at which
QAL is to toll bauxite into alumina for it under Article 14(A)
of the Participants Agreement, and Kaiser has not currently
elected to take Available Option Tonnage under Article 14(C)
of the Participants Agreement;
Page 55
(n) Kaiser has not incurred any Standby Tonnage which may
currently be recalled under Article 16(A) of the Participants
Agreement;
(o) Kaiser has not requested any Alumina Delivery Special
Facilities under Article 17(L) of the Participants Agreement
in respect of which Alumina Delivery Charges are currently
payable;
(p) Kaiser has given no notice under Article 21 of the
Participants Agreement;
(q) Kaiser has given no notice under Article 34(A) of the
Participants Agreement;
(r) Kaiser is not a Defaulting Participant and, except as set
forth on Schedule 13.1(r), it has not received any Special
Notice from QAL under Article 35 of the Participants
Agreement; and
(s) there is no current dispute between QAL and Kaiser or KACC
under or in respect of the Gladstone Agreements.
13.2 With respect to QAL, each of Kaiser and KACC represents and warrants to
Buyer, to its Knowledge, as follows:
(a) as of the date of this Agreement, the authorized capital stock
of QAL consists of (i) 442,400 Class A ordinary shares (CLASS
A ORDINARY SHARES), (ii) 473,122 Class B ordinary shares
(CLASS B ORDINARY SHARES), (iii) 442,400 Class C ordinary
shares (CLASS C ORDINARY SHARES), and (iv) 854,078 Class D
Ordinary Shares (CLASS D ORDINARY SHARES and, together with
the Class A Ordinary Shares, Class B Ordinary Shares and Class
C Ordinary Shares, the ORDINARY SHARES);
(b) all of the Ordinary Shares have been issued and are
outstanding and fully paid;
Page 56
(c) there are no outstanding subscriptions, options, rights, warrants,
convertible securities or other agreements or commitments obligating
QAL to issue any additional shares of capital stock of any class or
any other securities of any kind;
(d) QAL does not own, directly or indirectly, any capital stock or
equity securities or have any direct or indirect equity ownership
interest in any Person;
(e) attached as Schedule 13.2(e) are the Audited Financial Statements of
QAL. The Audited Financial Statements (x) have been prepared in
accordance with the books and records of QAL, (y) are presented in
accordance with the Corporations Act 2001 in Australia, Accounting
Standards and other mandatory financial reporting requirements in
Australia, and the Corporations Regulations 2001, and (z) give a
true and fair view, as required by the Corporations Act 2001, of the
financial position of QAL as at December 31, 2003, and of its
performance for the year ended on that date;
(f) since the Balance Sheet Date, except as listed or described on
Schedule 13.2(f), (i) QAL has not conducted its business in a manner
outside the ordinary course of business in any material respect, and
(ii) no event has occurred that would reasonably be expected to have
a material adverse effect on the business, assets or condition
(financial or otherwise) of QAL;
(g) except as listed or described on Schedule 13.2(g), QAL's conduct of
its business is in compliance with all applicable legislation,
except where noncompliance would not reasonably be expected to have,
individually or in the aggregate, a material adverse effect on the
business of QAL (including its assets);
Page 57
(h) except as listed or described on Schedule 13.2(h), there are no
civil, criminal or administrative actions or suits pending or
threatened against QAL, arising out of or relating to the conduct of
QAL's business or otherwise pertaining to or affecting the Assets
Sold that would reasonably be expected to have, individually or in
the aggregate, a material adverse effect on the business of QAL
(including its assets), if decided adversely.
13.3 In addition to the express limitations on certain of the representations
and warranties of Kaiser and KACC herein as being to their Knowledge, all
of Kaiser and KACC's representations and warranties in this Agreement are
limited and qualified, and the ability of Buyer to bring any claim under
this Agreement whether under Clause 15.1 or otherwise, are prohibited by
matters which were disclosed to Buyer or came to the Knowledge of Buyer
prior to the execution of this Agreement as a result of Buyer's
investigation of the Assets Sold, the Assigned Interests and Obligations
or the Kaiser Alumina Sales Contracts.
13.4 Without affecting Clause 15.1, no claim may be made by Buyer in respect of
any representation or warranty by Kaiser or KACC contained in this
Agreement, or the certificate required by Clause 11.2(a), after the date
twelve (12) months after the Effective Date.
14. REPRESENTATIONS AND WARRANTIES BY BUYER
14.1 Buyer represents and warrants to and agrees with Kaiser and KACC as
follows:
(a) Buyer has been duly incorporated and is validly existing as a
corporation under the laws of Queensland and has duly authorized,
executed and delivered this
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Agreement and has all necessary power and authority to perform all
of its obligations hereunder.
(b) neither the execution, delivery or performance of this Agreement or
the agreements referred to in Clauses 8.3(d), (e) and (f) by Buyer,
nor the consummation by Buyer of the transactions contemplated
hereby or thereby, will
(i) assuming all necessary approvals, consents or governmental
authorisations from Governmental Entities referred to in
Clause 10.1 and Clause 11.1(a) are obtained, conflict with,
violate or result in a breach of any judgment, decree, award
or order of any court, other competent tribunal or arbitrator
applicable to Buyer; or
(ii) conflict with, or result in a breach of, any of the terms,
conditions or provisions of the organizational documents of
Buyer, or of any agreement, contract or commitment to which
Buyer is a party or by which it is bound, or constitute a
default thereunder, which conflict, breach or default would
materially impair its ability to comply with the material
terms and conditions of this Agreement or the agreements
referred to in Clause 8.3(d), (e) and (f) or to consummate the
transactions contemplated hereby or thereby;
(c) there are no actions, suits, proceedings or governmental
investigations pending or, to the Knowledge of Buyer, threatened
against or affecting Buyer which might reasonably be expected to
impair materially its ability to comply with the terms and
conditions of this Agreement or the agreements referred to in
Clauses 8.3(d), (e) and (f) or to consummate the transactions
contemplated hereby or thereby; and
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(d) to the best Knowledge of Buyer, no administrator has been appointed
to Buyer, no step preliminary to the appointment of an administrator
has been taken, no application or order has been made or proceedings
commenced or resolution been passed or proposed in a notice of
meeting or application been made to the court for the winding up,
deregistration or dissolution of Buyer, nor has Buyer entered into
any arrangement, compromise or composition with or assignment for
the benefit of its creditors and Buyer is not insolvent within the
meaning of Section 95A of the Corporations Act 2001 of Australia.
14.2 Buyer acknowledges that: (a) Buyer or its representatives have been
furnished with all information regarding Kaiser, KACC, QAL, QAL's
business, the Assets Sold, the Assumed Interests and Obligations and the
Kaiser Alumina Sales Contracts that Buyer has requested; (b) Buyer has had
an opportunity to make any inspections of QAL's facilities that Buyer has
desired and to ask questions of and receive answers from Kaiser, KACC and
their respective representatives regarding Kaiser, KACC, QAL, QAL's
business, the Assets Sold, the Assumed Interests and Obligations and the
Kaiser Alumina Sales Contracts; and (c) EXCEPT AS EXPRESSLY SET FORTH IN
THIS AGREEMENT, THERE ARE NO REPRESENTATIONS OR WARRANTIES OF ANY KIND
(INCLUDING ANY REPRESENTATIONS OR WARRANTIES AS TO THE QUALITY OR FITNESS
OF THE ASSETS SOLD FOR THEIR INTENDED PURPOSES OR ANY PARTICULAR PURPOSE),
EXPRESSED OR IMPLIED, WITH RESPECT TO KAISER, KACC, QAL, QAL'S BUSINESS,
THE ASSETS SOLD, THE ASSUMED INTERESTS AND OBLIGATIONS OR THE KAISER
ALUMINA SALES CONTRACTS. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING,
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KAISER AND KACC MAKE NO REPRESENTATIONS OR WARRANTIES WITH RESPECT TO (I)
ANY PROJECTIONS, ESTIMATES OR BUDGETS DELIVERED TO OR MADE AVAILABLE TO
BUYER OR ITS REPRESENTATIVES RELATING TO THE FUTURE RESULTS OF OPERATIONS,
CASH FLOWS OR FINANCIAL CONDITION (OR ANY COMPONENT OF ANY OF THEM) OF QAL
OR QAL'S BUSINESS OR (II) ANY OTHER INFORMATION OR DOCUMENTS MADE
AVAILABLE TO BUYER OR ITS REPRESENTATIVES REGARDING KAISER, KACC, QAL,
QAL'S BUSINESS, THE ASSETS SOLD, THE ASSUMED INTERESTS AND OBLIGATIONS OR
THE KAISER ALUMINA SALES CONTRACTS. Buyer further acknowledges that this
Agreement is subject to any applicable order or act of the Bankruptcy
Court.
14.3 Buyer has unencumbered cash on hand or has or will have credit
arrangements with financially responsible third parties, or a combination
thereof, in an aggregate amount sufficient, when combined with the
Deposit, to enable it to pay the Final Purchase Price including the final
GST Amount and all fees and expenses payable by it in connection with this
Agreement and the transactions contemplated hereby.
14.4 Without affecting Clause 15.2, no claim may be made by Kaiser or KACC in
respect of any representation and warranty by Buyer contained in this
Agreement, or the certificate required by Clause 11.3(a), after the date
eighteen (18) months after the Effective Date.
15. INDEMNITIES
15.1 Each of Kaiser and KACC hereby indemnifies and agrees to hold harmless
Buyer and its officers, directors, partners, managers, members,
representatives, employees, agents, successors and assigns (BUYER
INDEMNIFIED PARTIES) from and against all Liabilities
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(including reasonable legal fees and expenses, accounting fees and
investigation costs) arising directly or indirectly from or in connection
with:
(a) any failure by Kaiser or KACC to perform or comply with this
Agreement or the Kaiser Assignment and Assumption Agreement, or any
failure by KAII to perform or comply with the KAII Assignment and
Assumption Agreement; or
(b) any breach by Kaiser or KACC of any representation or warranty in
Clause 13.
No claim may be made under this Clause 15.1 after the date eighteen (18)
months after the Effective Date or with respect to performance or
compliance with this Agreement, the Kaiser Assignment and Assumption
Agreement, or the KAII Assignment and Assumption Agreement, the date on
which such performance or compliance is required by the terms thereof, if
later.
15.2 Buyer hereby indemnifies and agrees to hold harmless Kaiser and KACC and
their respective officers, directors, partners, managers, members,
representatives, employees agents, successors and assigns (including any
creditors and creditors' representatives pursuant to the Bankruptcy Cases)
(KAISER INDEMNIFIED PARTIES) from and against all Liabilities (including
reasonable legal fees and expenses, accounting fees and investigation
costs) arising directly or indirectly from or in connection with:
(a) any failure by Buyer to perform or fully comply with this Agreement
(other than Liabilities governed by Clause 15.3); or
(b) any breach by Buyer of any representation or warranty in Clause 14.
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No claim may be made under this Clause 15.2 after the date eighteen (18)
months after the Effective Date or with respect to performance or
compliance with this Agreement, the date on which such performance or
compliance is required by the terms hereof, if later.
15.3 Buyer hereby indemnifies and agrees to hold the Kaiser Indemnified Parties
harmless from and against all Liabilities (including reasonable legal fees
and expenses, accounting fees and investigation costs) arising directly or
indirectly from any breach by Buyer, on or after the Effective Date of any
of its obligations under the Kaiser Assignment and Assumption Agreement or
the KAII Assignment and Assumption Agreement, or the failure of Buyer to
pay, discharge or perform any of the obligations included in the Assumed
Interests and Obligations. It is expressly understood and agreed that the
indemnity obligation set forth in this Clause 15.3 will survive forever,
regardless of any applicable statute of limitations or otherwise.
15.4 Each of Kaiser and KACC hereby indemnifies and agrees to hold the Buyer
Indemnified Parties harmless from any Liability (including reasonable
legal fees and expenses, accounting fees and investigation costs) incurred
by Buyer after the Effective Date in respect of any Tax payable by QAL in
relation to the operations, acts or omissions of QAL before the Effective
Date (except to the extent the Tax was accrued in the accounts of QAL as
at the Effective Date or was otherwise taken into account by QAL before
the Effective Date), but only to the extent that the Liability relates to
Buyer's purchase of the Shares in QAL or the Assumed Interests and
Obligations.
15.5 If an amount payable under Clause 15.4:
(a) arises because of a reduction in QAL's ability to fully claim a Tax
Offset Item at one time, but QAL can claim the Tax Offset Item at
different points in time; or
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(b) relates to the payment of Tax by QAL for which it can claim a Tax
Offset Item,
then the amount payable under Clause 15.4 will be reduced by an amount
calculated by discounting the Tax Offset Item which QAL can claim,
multiplied by the applicable corporate tax rate, to its net present value
at the time for payment under Clause 15.4 at LIBOR and apportioning that
amount to reflect Buyer's purchase of the Shares in QAL, the Assumed
Interests and Obligations, or the Kaiser Alumina Sales Contracts.
15.6 If:
(a) QAL has paid Tax on or before the Effective Date in relation to
operations, acts or omissions on or before the Effective Date (PRIOR
TAX); and
(b) after the Effective Date, QAL receives a refund of any Prior Tax
paid (TAX REFUND),
then Buyer will pay Kaiser an amount representing the benefit to Buyer of
the Tax Refund, but only to the extent that the benefit relates to Buyer's
purchase of the Shares in QAL or the Assumed Interests and Obligations and
only to the extent that the Tax Refund was not disclosed in the accounts
of QAL as at the Effective Date.
15.7 In addition to any Buyer Indemnity Payment under Clause 15.4, Kaiser will
pay, and KACC will ensure that Kaiser pays, to Buyer a once-only gross up
payment equal to the additional income or capital gains taxes payable by
Buyer or a Buyer Entity as a result of its receipt of the Buyer Indemnity
Payment or any additional income or capital gains taxes that would have
been payable by Buyer or a Buyer Entity had a Tax Offset Item not been
applied by Buyer or the Buyer Entity to reduce or limit a liability to
such tax.
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15.8 In addition to any Kaiser Indemnity Payment under Clause 15.6, Buyer will
pay to Kaiser a once-only gross up payment equal to the additional income
or capital gains taxes payable by Kaiser or a Kaiser Entity as a result of
its receipt of the Kaiser Indemnity Payment or any additional income or
capital gains taxes that would have been payable by Kaiser or a Kaiser
Entity had a Tax Offset Item not been applied by Kaiser or the Kaiser
Entity to reduce or limit a liability to such tax.
15.9 The calculations required for the purposes of Clauses 15.4 to 15.8
inclusive will be prepared by QAL's independent, external tax accountants
and submitted to Kaiser and Buyer for review. If Kaiser or Buyer dispute
any such calculation, they will confer to try to resolve the dispute. If
Kaiser and Buyer cannot resolve such dispute, Kaiser and Buyer will refer
the matter to an agreed firm of tax accountants (or if they do not agree,
and at the request of Buyer or Kaiser, to a firm of tax accountants
practicing nationally in Australia or internationally nominated by the
President of the Institute of Chartered Accountants in Australia or his
nominee) to act as an independent expert. Any determination made by the
independent expert will be conclusive and binding on the Parties (in the
absence of manifest error). The costs of the original calculations and any
subsequent determination will be borne equally by Kaiser and Buyer.
15.10 Any payment required by Clauses 15.4 to 15.9 inclusive will be made 30
days after the final determination of any such payment, or if that is not
a Business Day, on the next Business Day. No cash payment will be made to
a Party under Clauses 15.4 to 15.9 unless and then only to the extent that
the cumulative amount owing to it under Clauses 15.4 to 15.9 inclusive,
net of the cumulative amount owing by it under Clauses 15.4 to 15.9
inclusive, exceeds US$1,000,000. For that purpose, any such
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payment will be converted to US Dollars at its US Dollar Equivalent on the
date two Business Days prior to the date on which it is to be paid.
15.11 Notwithstanding anything to the contrary contained in this Agreement:
(a) no Buyer Indemnified Party shall be entitled to receive any amount
in respect of breaches of representations and warranties made by
Kaiser or KACC in Clause 13.1(d) to (s) (inclusive) and Clause 13.2
of this Agreement except to the extent, and only to the extent, that
(i) the amount of such Liabilities in respect of a single inaccuracy
or breach exceeds US$250,000 (DE MINIMIS THRESHOLD) and (ii) the
aggregate amount of all such Liabilities incurred by the Buyer
Indemnified Parties, exclusive of any and all such Liabilities for
which indemnification is not available as a result of Clause (i),
exceeds US$500,000 (BASKET), in which case Kaiser and KACC will only
be liable for that excess. The aggregate liability of Kaiser and
KACC with respect to Liabilities incurred by Buyer Indemnified
Parties as a result of breaches of representations and warranties
made by Kaiser or KACC in (i) Clause 13.1(a) to (c) other than Title
Claims, (ii) Clause 13.1(d) to (s) (inclusive) and (iii) Clause 13.2
shall not exceed US$10,000,000. The aggregate liability of Kaiser
and KACC with respect to Liabilities incurred by Buyer Indemnified
Parties as a result of breaches of representations and warranties
made by Kaiser and KACC in Clause 13.1(a) to (c) in respect of Title
Claims shall not exceed the Final Purchase Price (excluding any GST
payable on relevant supplies).
(b) no Buyer Indemnified Party shall be entitled to indemnification from
Kaiser or KACC for any Liabilities (i) unless and until Buyer and
its affiliates have
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pursued to final conclusion all claims for insurance available with
respect to those Liabilities and (ii) to the extent of the amount of
insurance recovered by Buyer or its affiliates with respect to those
Liabilities.
(c) no Kaiser Indemnified Party shall be entitled to receive any amount
in respect of breaches of representations and warranties made by
Buyer in this Agreement except to the extent, and only to the
extent, that (i) the amount of Liabilities in respect of a single
inaccuracy or breach exceeds the De Minimis Threshold and (ii) the
aggregate amount of all Liabilities incurred by the Kaiser
Indemnified Parties, exclusive of any and all Liabilities for which
indemnification is not available as a result of Clause (i), exceeds
the Basket amount, in which case Buyer will only be liable for that
excess. The aggregate liability of Buyer with respect to Liabilities
incurred by Kaiser Indemnified Parties as a result of breaches of
representations and warranties shall not exceed US$10,000,000.
(d) no Kaiser Indemnified Party shall be entitled to indemnification
from Buyer for any Liabilities (i) unless and until Kaiser and its
affiliates have pursued to final conclusion all claims for insurance
available with respect to those Liabilities and (ii) to the extent
of the amount of insurance recovered by Kaiser or its affiliates
with respect to those Liabilities.
15.12 (a) If a Party (an INDEMNIFIED PARTY) becomes aware after the Effective
Date of any fact, circumstance or matter which gives rise to or
could give rise to a claim by such Indemnified Party against any
other Party (an INDEMNIFYING PARTY) under any indemnity in this
Clause 15 (an INDEMNIFICATION CLAIM) the Indemnified Party will:
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(i) promptly give the Indemnifying Party a notice (NOTICE OF
CLAIM) full details of the fact, circumstance or matter giving
rise to the Indemnification Claim, and the Indemnified Party's
calculation or estimation of the loss suffered;
(ii) until giving the Notice of Claim, take reasonable steps to
mitigate any loss which does or may give rise to a claim
against the Indemnified Party for which indemnification may be
sought;
(iii) not make any admission of liability, agreement or compromise
with any person in relation to the fact, circumstance or
matter without first consulting with and obtaining the
approval of the Indemnifying Party (such approval not to be
unreasonably withheld);
(iv) give the Indemnifying Party and its professional advisers
reasonable assistance to enable it and its professional
advisers to assess the fact, circumstance or matter and its
consequences and the loss suffered by the Indemnified Party;
and
(v) at the Indemnifying Party's expense, take all action in good
faith and with due diligence that the Indemnifying Party
(acting reasonably and in consultation with the Indemnified
Party) directs to avoid, remedy or mitigate the consequences
of the fact, circumstances or matter including disputing,
defending, appealing or compromising legal proceedings.
(b) The Indemnifying Party will indemnify the Indemnified Party against
any Liability incurred by the Indemnified Party in respect of action
taken by the
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Indemnified Party at the direction of the Indemnifying Party under
Clause 15.12(a)(v).
(c) Delay by an Indemnified Party to give a Notice of Claim to the
Indemnifying Party as required under Clause 15.12(a)(i) shall not
relieve the Indemnifying Party from any liability that it may have
to an Indemnified Party hereunder to the extent the Indemnifying
Party is not prejudiced by such delay.
(d) A Notice of Claim shall be given by the Buyer Indemnified Parties
with respect to all Indemnification Claims satisfying the De Minimis
Threshold, whether or not the Basket has been reached.
(e) The Indemnified Party will furnish to the Indemnifying Party such
information (in reasonable detail) it may have with respect to such
Indemnification Claim (including copies of any summons, complaint or
other pleading that may have been served on it and any written
claim, demand, invoice, billing or other document evidencing or
asserting the same).
(f) In the event any Indemnification Claim set forth in the Notice of
Claim is a claim asserted against an Indemnified Party by a third
party, the Indemnifying Party will be entitled to meaningfully
participate in the defense of such claim and, upon delivery by the
Indemnifying Party to the Indemnified Party of written notice, the
Indemnifying Party may assume and control the defense thereof with
counsel of its choice, and thereafter the Indemnifying Party will
not be liable to the Indemnified Party hereunder for any fees of
other counsel subsequently accrued by the Indemnified Party in
connection with the defense thereof. In the event a Notice of Claim
is delivered under this Clause 15, the Indemnifying Party and the
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Indemnified Party will cooperate fully with each other in connection
with the defense, negotiation or settlement of the Indemnification
Claim covered by such Notice of Claim. If the Indemnifying Party
assumes the defense of an action, (i) the Indemnified Party will be
entitled to participate therein at its sole cost and expense and
(ii) no settlement or compromise thereof may be effected by the
Indemnified Party without the consent of the Indemnifying Party,
such consent not to be unreasonably withheld. If the Indemnifying
Party does not assume the defense of an action, no compromise or
settlement thereof may be effected at the expense of the
Indemnifying Party without the consent of the Indemnifying Party,
such consent not to be unreasonably withheld.
15.13 No Indemnifying Party shall have any liability under any provision of this
Agreement for any Liabilities to the extent, but only to the extent, that
such Liabilities relate to actions taken or omitted to be taken by the
Indemnified Party after the Closing to the extent the Indemnified Party
knew or reasonably should have known that its actions taken or omitted to
be taken could reasonably be expected to give rise to Liabilities, and in
no event shall any Indemnifying Party be liable for punitive,
consequential, special, indirect, incidental or exemplary damages, whether
for lost profits, lost revenues, injury to property, injury to reputation,
loss of data, loss of use or otherwise.
15.14 Each Indemnified Party acknowledges and agrees that the sole and exclusive
remedy of its respective Indemnified Parties from and after the Closing
with respect to Liabilities and any and all claims for any breach or
liability under this Agreement or any other agreement, instrument or
certificate executed or entered into in connection herewith or otherwise
relating to the subject matter of this Agreement and the transactions
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contemplated hereby shall be solely in accordance with, and limited by,
the indemnification provisions set forth in this Clause 15. In furtherance
of the foregoing, each Indemnified Party hereby waives on its own behalf
and on behalf of each other applicable Buyer Indemnified Party, to the
fullest extent permitted under applicable legislation, any and all rights,
claims and causes of action it or they may have against the Indemnifying
Parties and their respective officers, directors, partners, managers,
members, representatives, employees, agents, successors and assigns
(including, in the case of Kaiser and KACC, the creditors and creditors'
representatives pursuant to the Bankruptcy Cases) arising under or based
upon any legislation.
16. CURRENCY CONVERSIONS
Where any amount under this Agreement is computed or expressed in
Australian Dollars, for the purposes of any payment or adjustment that
amount will be converted to its US Dollar Equivalent on the date two
Business Days prior to the time for payment or adjustment as provided for
in this Agreement.
17. GOVERNING LAW; SUBMISSION
17.1 The governing law of this Agreement is the internal law of the State of
New York, USA, without regard to principles of conflict of laws.
17.2 (a) The Bankruptcy Court will have jurisdiction over any dispute arising
out of or related to the transactions contemplated by this Agreement
through the date of entry of the order approving the final decree in
the last of the Bankruptcy Cases to be resolved. The parties to this
Agreement consent to the exclusive jurisdiction of the Bankruptcy
Court (and of the appropriate appellate courts therefrom) in any
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such dispute or action related thereto, and irrevocably waive, to
the fullest extent permitted by applicable legislation, any
objection that they may now or hereafter have to the laying of the
venue of any such dispute in the Bankruptcy Court or that any such
dispute brought in the Bankruptcy Court has been brought in an
inconvenient forum.
(b) Subject to the consent to the jurisdiction of the Bankruptcy Court
described in Clause 17.2(a), each of the Parties irrevocably submits
to the non-exclusive jurisdiction of the United States District
Court for the Southern District of the State of New York, or if such
court refuses to accept or does not have subject matter
jurisdiction, then to the Supreme Court of the State of New York
sitting in the County of New York, and the appellate courts having
jurisdiction of appeals from such courts, over any dispute arising
out of or relating to this Agreement or any of the transactions
contemplated hereby (but not in respect of any other matter) and
each Party hereby irrevocably agrees that (without prejudice to the
jurisdiction of any other court) all claims in respect of such
dispute or any action related thereto may be heard and determined in
such courts. The Parties hereby irrevocably waive, to the fullest
extent permitted by applicable law, any objection which they may now
or hereafter have to the laying of venue of any such dispute brought
in such court or any defense of inconvenient forum for the
maintenance of such dispute. Each of the Parties hereto agrees that
a judgment in any such dispute may be enforced in other
jurisdictions by suit on the judgment or in any other manner
provided by applicable law.
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(c) Each of the Parties hereto hereby consents to process being served
by any Party to this Agreement in any suit, action or proceeding by
the mailing of a copy thereof in accordance with the provisions of
Clause 25.
18. TERMINATION
18.1 This Agreement may be terminated and the transactions contemplated hereby
may be abandoned at any time prior to the Closing:
(a) By mutual written consent of Kaiser and KACC, on the one hand, and
Buyer, on the other hand.
(b) By Kaiser and KACC upon written notice to Buyer, (i) if the Closing
has not occurred on or before 150 days after the Commencement Date
for any reason other than a material breach of this Agreement by
Kaiser or KACC, (ii) so long as neither Kaiser nor KACC is then in
material breach of any of their respective representations,
warranties or covenants in this Agreement, if Buyer is in material
breach of any of its representations, warranties or covenants
contained in this Agreement and such breach shall be incapable of
being cured, or if capable of being cured, shall not have been cured
within 30 calendar days following delivery to Buyer of written
notice of such breach (specifying in reasonable detail the claimed
breach and demand of its cure or satisfaction), (iii) if termination
is directed pursuant to an order of the Bankruptcy Court or
permitted pursuant to the terms of the Bidding and Auction
Procedures, (iv) if the Sale Approval Order has not become a Final
Order by (A) the date that is 30 calendar days after the date on
which Sale Approval Order is entered, provided that such termination
right can only be exercised until the 40th calendar day after the
Sale Approval Order is
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entered, or (B) such later date as is agreed to in writing by the
Parties; or (v) if Buyer is not the Successful Bidder pursuant to
the Bidding and Auction Procedures and Kaiser and KACC determine to
enter into the Transaction with the Successful Bidder (such
transaction, an AUCTION TRANSACTION); it being expressly understood
that, even in the circumstance contemplated by clause (v), if Buyer
is the Backup Bidder, Buyer shall remain bound by the terms of this
Agreement until the earlier of (A) delivery by KACC and Kaiser to
Buyer of a written termination notice in accordance with this Clause
18.1(b), or (B) delivery by Buyer to Kaiser and KACC of a
termination notice in accordance with Clause 18.1(c)(v). Buyer
hereby acknowledges that in the circumstance contemplated by clause
(v) of the immediately preceding sentence, (i) KACC and Kaiser may,
prior to any termination of this Agreement by Kaiser and KACC under
Clause 18.1(b)(v) (but without prejudice to Buyer's right to
terminate this Agreement under Clause 18.1(c)(v)), enter into an
agreement with the Successful Bidder with respect to the Auction
Transaction and (ii) KACC and Kaiser are not required to deliver to
Buyer a written termination notice until the consummation of the
Auction Transaction.
(c) By Buyer, upon written notice to Kaiser and KACC, (i) if the Closing
has not occurred on or before 150 days after the Commencement Date
for any reason other than a material breach of this Agreement by
Buyer, (ii) so long as Buyer is not then in material breach of any
of its representations, warranties or covenants contained in this
Agreement, if Kaiser or KACC are in material breach of any of their
respective representations, warranties or covenants contained in
this
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Agreement and such breach shall be incapable of being cured, or if
capable of being cured, shall not have been cured within 30 calendar
days following delivery to Kaiser and KACC of written notice of such
breach (specifying in reasonable detail the claimed breach and
demand of its cure or satisfaction), (iii) if termination is
directed pursuant to an order of the Bankruptcy Court or permitted
pursuant to the terms of the Bidding and Auction Procedures, (iv) if
the Sale Approval Order has not become a Final Order by (A) the date
that is 30 calendar days after the date on which the Sale Approval
Order is entered, provided that such termination right can only be
exercised until the 40th calendar day after the Sale Approval Order
is entered, or (B) such later date as is agreed to in writing by the
Parties; or (v) if Buyer is the Backup Bidder and Kaiser and KACC
have not within 160 days after the date the Sale Approval Order is
entered notified the Backup Bidder that it has become the Buyer in
lieu of the Successful Bidder; provided that in such event the Buyer
shall not be entitled to receive a Breakup Fee; (vi) if the Bidding
and Auction Procedures are not approved by court order by the
earlier of (A) the date on which the final Bankruptcy Court hearing
to approve the Bidding and Auction Procedures is held, or (B)
October 15, 2004; or (vii) if the Breakup Fee is not approved by
court order by the earlier of (A) the date on which the final
Bankruptcy Court hearing to approve the Bidding and Auction
Procedures is held, or (B) October 15, 2004.
18.2 In the event of the termination of this Agreement pursuant to Clause 18.1,
this Agreement, except for the provisions of this Clause 18.2 and Clauses
1, 17, 18.3, 19, 20, 21, 22, 23, 24, 25, 27, 28 and 29, will forthwith
become null and void and have no effect,
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without any liability on the part of any Party to this Agreement or their
respective affiliates. Nothing in this Clause 18 will, however, relieve
any Party to this Agreement of liability for breach of this Agreement
occurring prior to that termination or for breach of any provision of this
Agreement which specifically survives termination hereunder. Moreover,
notwithstanding the termination of this Agreement, the Deposit Escrow
Agreement shall remain in full force and effect in accordance with its
terms, including with respect to the distributions of the escrow funds
held thereunder. Nothing in this Agreement shall require that the
Bankruptcy Court approve the termination of this Agreement in order for
such termination to be effective.
18.3 Subject to the provisions of any applicable order of the Bankruptcy Court,
unless this Agreement is terminated pursuant to Clause 18.1(b)(ii) or
18.1(c)(v) hereof, if Kaiser and KACC subsequently consummate an Auction
Transaction with the Successful Bidder or Backup Bidder (other than Buyer
or an affiliate of Buyer), Kaiser and KACC shall pay to Buyer promptly
(and, in any event, within five Business Days) following the consummation
of such Auction Transaction an amount equal to US$11,000,000 (the BREAKUP
FEE), and any GST payable in accordance with Clause 22, if applicable.
18.4 The Breakup Fee and any associated GST until paid in full shall constitute
an administrative expense of Kaiser's and KACC's bankruptcy estates in
their Bankruptcy Cases under Sections 503(b) and 507(a)(i) of the
Bankruptcy Code and shall be paid to the Buyer as and when due as
described in Clause 18.3.
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19. STAMP DUTIES; WITHHOLDING TAXES
19.1 Any stamp duties or like taxes payable on, or in connection with, or any
transaction pursuant to, this Agreement will be borne in full by Buyer
along with any associated penalties, fines, or interest.
19.2 All payments by Buyer to Kaiser or KACC under this Agreement shall be net
of any deduction or withholding for or on account of any Australian
withholding Tax in respect of capital or revenue gains, that Buyer is
required by law to collect and remit to the Australian Taxation Office,
and Buyer is not required to pay any amount to Kaiser or KACC for or on
account of any such Tax deducted or withheld. The Parties acknowledge and
agree that the amount of assumed Gladstone Credit Allowances subject to
such withholding Tax, if any, shall be calculated in accordance with
Clause 6.1(a)(i).
20. COSTS
Each Party shall bear its own costs in connection with the negotiation,
preparation and execution of this Agreement.
21. OTHER INTERESTS
Nothing in this Agreement affects any rights or obligations which any
Party may have against, or to, any other Party other than as set forth
herein or (if the Closing occurs) as set forth in the Kaiser Assignment
and Assumption Agreement, the KAII Assignment and Assumption Agreement and
as provided for in the Alumina Supply Agreement.
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22. GOODS AND SERVICES TAX
22.1 Words or expressions used in this Clause 22 which are defined in the A New
Tax System (Goods and Services Tax) Act 1999 (Cth) or, if not so defined,
then which are defined in the Trade Practices Act 1974 (Cth), have the
same meaning in this Clause.
22.2 The Parties acknowledge that all amounts payable under, or in connection
with, this Agreement are expressed on a GST exclusive basis.
22.3 (a) Despite any other provision in this Agreement:
(i) if a Party (in this clause, a SUPPLIER) makes a Taxable Supply
to another Party (RECIPIENT) under or in connection with this
Agreement (including a Taxable Supply under or in connection
with Exhibits E and F as executed); and
(ii) GST is imposed on the Taxable Supply;
then the Recipient must pay to the Supplier the amount
expressed in this Agreement as payable for that Taxable Supply
plus an additional amount in respect of the GST payable by the
Supplier on that Taxable Supply, or where no amount is
expressed to be payable, an additional amount equal to the GST
payable by Supplier on that Taxable Supply.
(b) The amount of GST which is payable with respect to any GST exclusive
consideration must be paid to the Supplier by the Recipient without
requirement for demand, at the same time as the GST exclusive
consideration is payable or to be provided.
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22.4 If an amount that would otherwise be payable under this Agreement is
calculated by reference to or otherwise relates to a cost, expense or
other amount incurred by a Party (PAYEE), then that amount will be reduced
by the amount of any Input Tax Credit to which the Payee is entitled in
respect of that amount. The Payee will be assumed to be entitled to a full
Input Tax Credit unless it demonstrates that its entitlement is otherwise
prior to the date on which the payment must be made.
22.5 The Supplier will provide a Tax Invoice and any necessary adjustment notes
and, if reasonably requested by the Recipient, reasonable evidence that
the Supplier is registered for GST. Any payment under this Clause 22 shall
be conditioned upon the receipt by Recipient of a Tax Invoice or tax
adjustment note, as applicable.
22.6 If any Party is required to pay an amount to another Party under this
Agreement, then it will be entitled to set-off any amount payable to it by
the other Party under Clause 22.3 against such amount.
22.7 If an additional amount is paid by the Recipient pursuant to Clause
22.3(a) (the GST SUM) and it is subsequently determined by the
Commissioner of Taxation (at the request of any Party or otherwise) that
the supply to which the GST sum relates is not a Taxable Supply, the
Supplier must immediately refund the GST sum to the Recipient.
23. DISCLOSURES
23.1 The Parties acknowledge that certain disclosures in relation to the terms
of this Agreement will be required in connection with the filing of or
obtaining Bankruptcy Court approval of the Sale Approval Motion or the
Sale Approval Order, and the Parties will cooperate in respect of such
disclosure.
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23.2 The Parties will cooperate as to the timing and contents of the media
releases in respect of this Agreement previously agreed by the Parties to
be issued promptly after execution of this Agreement.
24. COUNTERPARTS
This Agreement may be executed in any number of counterparts. All
counterparts will be taken to constitute one instrument.
25. NOTICES
Any notice or other communication required or permitted to be given under
the terms of this Agreement must be faxed or delivered to the other Party
at the address shown below and will be effective and deemed received:
(a) if faxed, when received;
(b) if delivered via overnight courier service, on the day delivered; or
(c) if personally delivered, when delivered:
If to KACC or Kaiser, to:
KAISER ALUMINUM & CHEMICAL CORPORATION
Suite 2500
5847 San Felipe
Houston, Texas 77057
Attention: General Counsel
Facsimile: 1 (713) 267-3702
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with copies (which shall not constitute notice) to:
JONES DAY
2727 North Harwood
Dallas, Texas 75201
Attention: Tony Stewart, Esq.
Facsimile: 1 (214) 969-5100
and
OFFICIAL COMMITTEE OF UNSECURED CREDITORS OF KAISER
ALUMINUM & CHEMICAL CORPORATION
c/o Akin Gump Strauss Hauer & Feld LLP
590 Madison Avenue
New York, New York 10022
Attention: Lisa G. Beckerman, Esq.
Facsimile: 1 (212) 872-1002
If to Buyer:
COMALCO ALUMINIUM LIMITED
25th Floor
12 Creek Street
Brisbane, Queensland 4000 Australia
Attention: Corporate Secretary
Facsimile: 61 7 3867 1651
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or to such other person(s) at such address or addresses as may be
designated by written notice to the other Parties.
26. [INTENTIONALLY OMITTED]
27. ENTIRE AGREEMENT
This Agreement and the Confidentiality Agreement executed by the Buyer as
of 18 February 2004 and the Deposit Escrow Agreement constitute the entire
agreement of the Parties hereto with respect to the subject matter hereof
and supersede all prior agreements and undertakings, both written and
oral, between the Parties with respect to the subject matter hereof.
28. ASSIGNMENT
This Agreement may not be assigned without the express written consent of
KACC and Buyer (which consent may be granted or withheld in the sole
discretion of KACC or Buyer, as applicable).
29. AMENDMENT
This Agreement may not be amended or modified except by an instrument in
writing signed by, or on behalf of, the Parties.
EXECUTED
Each attorney executing this Agreement states that he or she has no notice of
revocation or suspension of his or her power of attorney.
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BUYER
SIGNED for and on behalf of COMALCO ALUMINIUM LIMITED by its appointed attorney
in the presence of:
/s/Allen Isaacson - Attorney In Fact
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ATTORNEY'S SIGNATURE
Allen Isaacson
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PRINT NAME
KACC
SIGNED for and on behalf of KAISER ALUMINUM & CHEMICAL CORPORATION by its duly
authorized officer in the presence of:
/s/Edward F. Houff
- ------------------------------------------------------
OFFICER'S SIGNATURE
Edward F. Houff - Vice President
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PRINT NAME AND TITLE
KAISER
SIGNED for and on behalf of KAISER ALUMINA AUSTRALIA CORPORATION by its duly
authorized officer in the presence of:
/s/Edward F. Houff
- ------------------------------------------------------
OFFICER'S SIGNATURE
Edward F. Houff - Vice President
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PRINT NAME AND TITLE