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EXHIBIT 4.2
$175,000,000
KAISER ALUMINUM & CHEMICAL CORPORATION
(a Delaware corporation)
10 7/8% Senior Notes due 2006
PURCHASE AGREEMENT
October 17, 1996
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
SALOMON BROTHERS INC
BA SECURITIES, INC.
BEAR, STEARNS & CO. INC.
C/O MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281-1305
Ladies & Gentlemen:
Kaiser Aluminum & Chemical Corporation, a Delaware corporation (the
"Company") and the Guarantors (as defined below), confirm their agreement with
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"),
Donaldson, Lufkin & Jenrette Securities Corporation, Salomon Brothers Inc, BA
Securities, Inc. and Bear, Stearns & Co. Inc. (collectively, the "Initial
Purchasers," which term shall also include any initial purchaser substituted as
hereinafter provided in Section 11) with respect to the sale by the Company and
the purchase by the Initial Purchasers, acting severally and not jointly, of
$175,000,000 aggregate principal amount of the Company's 10 7/8% Senior Notes
due 2006 (the "Securities"). The payment of principal, premium, if any,
interest and additional interest on the Securities and all other obligations of
the Company under the Indenture will be unconditionally guaranteed, jointly and
severally, on a senior unsecured basis by Kaiser Alumina Australia Corporation,
Kaiser Finance Corporation, Alpart Jamaica Inc., Kaiser Jamaica Corporation,
Kaiser Micromill Holdings, LLC, Kaiser Sierra Micromills, LLC, Kaiser Texas
Micromill Holdings, LLC, and Kaiser Texas Sierra Micromills, LLC (collectively,
the "Guarantors" and, together with the Company, the "Issuers"). The
Securities are to be issued pursuant to an indenture to be dated as of October
23, 1996 (the "Indenture") among the Issuers and First Trust National
Association, as trustee (the "Trustee").
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Prior to the purchase and offering of the Securities by the Initial
Purchasers, the Company and the Initial Purchasers shall enter into an
agreement substantially in the form of Exhibit A hereto (the "Pricing
Agreement"). The Pricing Agreement may take the form of an exchange of any
standard form of written telecommunication among the Company and the Initial
Purchasers and shall specify such applicable information as is indicated in
Exhibit A hereto. The offering of the Securities will be governed by this
Purchase Agreement (this "Agreement"), as supplemented by the Pricing
Agreement. From and after the date of the execution and delivery of the
Pricing Agreement, this Agreement shall be deemed to incorporate the Pricing
Agreement.
This Agreement, the Pricing Agreement, the Indenture, the Securities,
the Exchange Notes (as defined below) and the Registration Rights Agreement (as
defined below) are referred to collectively as the "Operative Documents."
Capitalized terms used herein without definition have the respective meanings
specified in the Offering Memorandum (as defined below). Securities issued in
book-entry form will be issued to Cede & Co. as nominee of The Depository Trust
Company ("DTC") pursuant to a letter agreement, to be dated as of the Closing
Time (as defined in Section 2) (the "DTC Agreement"), among the Company, the
Trustee and DTC.
The Securities will be offered and sold to the Initial Purchasers
without registration under the Securities Act of 1933, as amended (the "Act"),
in reliance upon an exemption from the registration requirements of the Act.
The Company has prepared and delivered to each Initial Purchaser a preliminary
offering memorandum dated October 8, 1996 (the "Preliminary Offering
Memorandum") and has prepared and will deliver to each Initial Purchaser, on
the date hereof, copies of a final offering memorandum dated October 17, 1996
(the "Final Offering Memorandum"), each to be used by such Initial Purchaser in
connection with its solicitation of purchases of, or offering of, the
Securities, as contemplated herein. "Offering Memorandum" means, with respect
to any date or time referred to in this Agreement, the most recent offering
memorandum (whether the Preliminary Offering Memorandum or the Final Offering
Memorandum, together with any amendment or supplement to either such document),
including exhibits thereto and any documents incorporated therein by reference,
which has been prepared and delivered by the Company to the Initial Purchasers
in connection with their solicitation of purchases of, or offering of, the
Securities. The Company hereby confirms that it has authorized the use of the
Preliminary Offering Memorandum and the Offering Memorandum in connection with
the offer and resale of the Securities by the Initial Purchasers, as
contemplated herein.
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Offering Memorandum (or other references of like import) shall be deemed to
mean and include all such financial statements and schedules and other
information which is incorporated by reference in the Offering Memorandum and
all references in this Agreement to amendments or supplements to the Offering
Memorandum shall be deemed to mean and include the filing of any document under
the Securities and Exchange Act of 1934, as amended, (the "Exchange Act") which
is expressly incorporated by reference in the Offering Memorandum.
The Company understands that the Initial Purchasers propose to make an
offering of the Securities only on the terms and in the manner set forth in the
Offering Memorandum and Section 3 hereof, as soon as the Initial Purchasers
deem advisable after this Agreement has been executed and delivered, (i) to
persons in the United States whom the Initial Purchasers reasonably believe to
be qualified institutional buyers ("Qualified Institutional Buyers") as defined
in Rule 144A under the Act, as such rule may be amended from time to time
("Rule 144A"), in transactions under Rule 144A, (ii) to a limited number of
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other institutional "accredited investors" (as defined in Rule 501(a)(1), (2),
(3) and (7) under Regulation D of the Act ("Accredited Investors")) in private
sales exempt from registration under the Act and/or (iii) to non-U.S. persons
outside the United States to whom the Initial Purchasers reasonably believe
offers and sales of the Securities may be made in reliance upon Regulation S
under the Act ("Regulation S"), in transactions meeting the requirements of
Regulation S (such persons specified in clauses (i) through (iii) being
referred to collectively herein as the "Eligible Purchasers").
The Initial Purchasers and other holders of Securities (including
subsequent transferees) will be entitled to the benefits of the registration
rights agreement, to be dated as of October 23, 1996 (the "Registration Rights
Agreement"), among the Issuers and the Initial Purchasers, substantially in the
form attached hereto as Exhibit D.
Section 1. REPRESENTATIONS AND WARRANTIES.
(a) The Issuers represent and warrant to each Initial Purchaser as
of the date hereof and as of the Closing Time (as defined in Section 2 hereof)
as follows:
(i) No order or decree preventing the use of the
Preliminary Offering Memorandum or the Offering Memorandum or any
amendment or supplement thereto, or any order asserting that the
transactions contemplated by this Agreement are subject to the
registration requirements of the Act has been issued, and no
proceeding for that purpose has commenced or is pending or, to the
knowledge of the Company, is contemplated, in each case, by any
governmental authority.
(ii) As of their respective dates, the Preliminary
Offering Memorandum or any amendment or supplement thereto, and at all
times subsequent thereto up to and as of the Closing Time, the
Offering Memorandum, as amended or supplemented to such time, will not
contain an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading provided,
however, that the representations and warranties in this subsection
shall not apply to statements in or omissions from the Offering
Memorandum made in reliance upon and in conformity with information
furnished to the Company in writing by the Initial Purchasers
expressly for use in the Offering Memorandum. At the Closing Time,
the Indenture will comply in all material respects with the Trust
Indenture Act of 1939, as amended (the "1939 Act"), and the rules and
regulations of the Securities and Exchange Commission (the
"Commission") under the 1939 Act (the "1939 Act Regulations").
(iii) When the Securities are issued and delivered pursuant
to this Agreement, such Securities will not be of the same class
(within the meaning of Rule 144A) as securities of the Company which
are listed on a national securities exchange registered under Section
6 of the Exchange Act, or quoted in a U.S. automated inter-dealer
quotation system. The Company has been advised that the Securities
have been designated PORTAL eligible securities in accordance with the
rules and regulations of the National Association of Securities
Dealers, Inc. (the "NASD").
(iv) Neither the Company nor any of its affiliates (as
defined in Rule 501(b) under the Act) has, directly or through any
agent, sold, offered for sale, solicited offers to buy or
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otherwise negotiated in respect of, any security (as defined in the
Act) which is or will be integrated with the sale of the Securities in
a manner that would require the registration of the Securities under
the Act.
(v) None of the Company or any of its affiliates (as such
term is defined in Rule 501(b) under the Act) or any person (other
than the Initial Purchasers, as to which the Company makes no
representation) acting on the Company's behalf has engaged, in
connection with the offering of the Securities, (A) in any form of
general solicitation or general advertising within the meaning of Rule
502(c) under the Act, (B) in any directed selling efforts within the
meaning of Rule 902 under the Act in the United States in connection
with the Securities being offered and sold pursuant to Regulation S
under the Act or (C) in any action which would violate applicable
state "blue sky" laws.
(vi) Assuming that the representations and warranties of
the Initial Purchasers contained in Section 3 are true, correct and
complete in all material respects and assuming compliance in all
material respects by the Initial Purchasers with their covenants in
Section 3, and assuming that the representations and warranties of the
Accredited Investors or non-U.S. persons set forth in the certificates
of such Accredited Investors or non-U.S. persons in the form set forth
in Annex A and Annex B, respectively, to the Offering Memorandum are
true and correct in all material respects as of the Closing Time, and
assuming compliance in all material respects by such Accredited
Investors or non-U.S. persons, as the case may be, with the agreements
in such certificates, it is not necessary in connection with the
offer, sale and delivery of the Securities to the Initial Purchasers
in the manner contemplated by, or in connection with the initial
resale of such Securities by the Initial Purchasers in the manner
contemplated by this Agreement to register the Securities under the
Act or to qualify any indenture in respect of the Securities under the
1939 Act.
(vii) The firm of accountants who certified the audited
financial statements and supporting schedules included in the Offering
Memorandum are independent public accountants with respect to the
Issuers within the meaning of the Act and the rules and regulations of
the Commission under the Act (the "1933 Act Regulations").
(viii) The consolidated financial statements and the notes
thereto included in the Offering Memorandum present fairly, in all
material respects, the financial position of the Company and its
subsidiaries as of the dates indicated and the results of their
operations and cash flows for the periods specified; except as
otherwise stated in the Offering Memorandum, the financial statements
have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis and the supporting schedules
included in the Offering Memorandum present fairly, in all material
respects, the information required to be stated therein.
(ix) Except as disclosed in the Offering Memorandum, since
the date of the most recent audited financial statements included
therein, (A) there has been no material adverse change in the
condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary
course of business, (B) there have been no transactions entered into
by the Company or any of its subsidiaries, other than those in the
ordinary course of business, which are material with respect to the
Company and its subsidiaries considered as one enterprise and
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(C) there has been no dividend or distribution of any kind declared,
paid or made by the Company on any class of its common stock that has
not been disclosed in the Offering Memorandum.
(x) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of Delaware
with corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Offering
Memorandum and is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure to so qualify could not reasonably be expected to have a
material adverse effect on the condition, financial or otherwise, or
the earnings, business affairs or business prospects of the Company
and its subsidiaries considered as one enterprise.
(xi) Each of the subsidiaries of the Company identified by
the Company in Exhibit B hereto (each, a "Significant Subsidiary" and
collectively, the "Significant Subsidiaries") has been duly organized,
is validly existing and, if applicable, is in good standing under the
laws of the jurisdiction of its organization, has corporate (or
partnership) power and authority to own, lease and operate its
properties and to conduct its business as described in the Offering
Memorandum and is duly qualified as a foreign corporation (or
partnership) to transact business and, if applicable, is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to so qualify or, if
applicable, be in good standing could not reasonably be expected to
have a material adverse effect on the condition, financial or
otherwise, or the earnings, business affairs or business prospects of
the Company and its subsidiaries considered as one enterprise. All of
the issued and outstanding capital stock of each Significant
Subsidiary that is a corporation has been duly authorized and validly
issued, is fully paid and non-assessable and the shares of capital
stock of each such Significant Subsidiary owned by the Company,
directly or through subsidiaries, are owned free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or
equity (collectively, "Liens"), except for (a) the pledge of all or a
portion of the shares of the capital stock of certain subsidiaries
owned by the Company to BankAmerica Business Credit, Inc., as Agent
under the credit agreement, dated as of February 15, 1994, by and
among the Company, Kaiser Aluminum Corporation ("KAC") and the
financial institutions named therein, as amended to date, (the "Credit
Agreement"), (b) non-material Liens that have arisen in the ordinary
course of business and (c) Liens in favor of joint-venture partners of
the Company with respect to certain Significant Subsidiaries.
(xii) All of the shares of issued and outstanding Common
Stock have been duly authorized and validly issued and are fully paid
and non-assessable; the Common Stock conforms in all material respects
to all statements relating thereto contained in the Offering
Memorandum; the Securities have been duly and validly authorized for
issuance and sale to the Initial Purchasers pursuant to this Agreement
and, when issued, authenticated and delivered pursuant to the
provisions of the Indenture and this Agreement against payment of the
consideration set forth in the Pricing Agreement, will be legal, valid
and binding obligations of the Company enforceable in accordance with
their terms and entitled to the benefits of the Indenture, except as
such enforceability may be limited by bankruptcy, insolvency,
moratorium, reorganization, fraudulent conveyance and similar laws and
court decisions relating to or affecting creditors' rights and
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remedies generally and general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or
law); and the Securities, the Exchange Notes (as defined in the
Registration Rights Agreement), the Registration Rights Agreement and
the Indenture conform in all material respects to all statements
relating thereto contained in the Offering Memorandum. As of the
Closing Date, the Exchange Notes will be duly authorized by the
Company and the Company has all requisite corporate power and
authority to execute, issue and deliver the Exchange Notes and to
incur and perform its obligations provided for herein and in the other
Operative Documents. Each Guarantor has all requisite power and
authority to incur and perform its obligations provided for herein and
in the other Operative Documents.
(xiii) The Exchange Notes, when executed, issued and
delivered by the Company in exchange for the Securities and
authenticated by the Trustee in accordance with the terms of the
Indenture, will be legal, valid and binding obligations of the Company
enforceable in accordance with their terms and entitled to the
benefits of the Indenture, except as such enforceability may be
limited by bankruptcy, insolvency, moratorium, reorganization,
fraudulent conveyance and similar laws and court decisions relating to
or affecting creditors' rights and remedies generally and general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or law).
(xiv) Neither the Company nor any of its Significant
Subsidiaries is in violation of its charter or partnership agreement,
as the case may be, or in default in the performance or observance of
any obligation, agreement, covenant or condition contained in any
indenture, mortgage, loan agreement or note or in any other material
contract, lease or other instrument to which the Company or any of its
Significant Subsidiaries is a party or by which it or any of them may
be bound, or to which any of the property or assets of the Company or
any of its Significant Subsidiaries is subject, except for defaults
that could not reasonably be expected to have a material adverse
effect on the condition, financial or otherwise, or the earnings,
business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise. The execution, delivery
and performance of the Operative Documents and the consummation of the
transactions contemplated herein and therein have been duly authorized
by all necessary corporate action and do not, as of the date hereof or
the Closing Time, conflict with or constitute a breach of, or default
under, or result in the creation or imposition of any Lien, charge or
encumbrance upon any property or assets of the Company or any of its
Significant Subsidiaries pursuant to any material contract, indenture,
mortgage, loan agreement, note, lease or other instrument to which the
Company or any of its Significant Subsidiaries is a party or by which
it or any of them may be bound, or to which any of the property or
assets of the Company or any of its Significant Subsidiaries is
subject, nor does such action violate, as of the date hereof or the
Closing Time, the provisions of the charter, by-laws, operating
agreement or other organizational documents, as the case may be, of
the Company or any of its Significant Subsidiaries or any applicable
law, administrative regulation or administrative or court decree
entered against or applicable to the Company or any of its Significant
Subsidiaries.
(xv) Except as referred to in the Offering Memorandum, no
labor dispute with the employees of the Company or any of its
Significant Subsidiaries exists or, to the knowledge of the Company,
is imminent, other than routine disciplinary and grievance matters.
The Company is not aware (without any independent verification) of any
existing or imminent labor disturbance by the employees of any of its
principal suppliers, manufacturers or contractors which could
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reasonably be expected to result in any material adverse change in the
condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise.
(xvi) There is no action, suit or proceeding before or by
any court or governmental agency or body, domestic or foreign, now
pending, or, to the knowledge of the Company, threatened, against or
affecting the Company or any of its subsidiaries which is required to
be disclosed and is not so disclosed, in the Preliminary Offering
Memorandum or Offering Memorandum, or which could result, singly or in
the aggregate, in a material adverse effect on the condition,
financial or otherwise, or the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one
enterprise or which could reasonably be expected to materially and
adversely affect the consummation of this Agreement, the Pricing
Agreement, the Registration Rights Agreement or the Indenture.
(xvii) The Company and its Significant Subsidiaries own or
possess licenses or other rights to use, or can acquire the same on
reasonable terms, the patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems
or procedures), trademarks, service marks and trade names presently
employed by them in connection with the business now operated by them,
and neither the Company nor any of its Significant Subsidiaries has
received any written notice of infringement of or conflict with
asserted rights of others with respect to any of the foregoing which,
singly or in the aggregate, could reasonably be expected to result in
any material adverse change in the condition, financial or otherwise,
or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise.
(xviii) No authorization, approval or consent of any court or
governmental authority or agency is legally necessary in connection
with the issuance and sale of the Securities to the Initial Purchasers
hereunder or the consummation by the Issuers of any of the other
transactions contemplated hereby, except such as may be required in
connection with (A) the registration under the Act of the Securities
or the Exchange Notes pursuant to the Registration Rights Agreement
(including any filing with the NASD), (B) the qualification of the
Indenture under the 1939 Act in connection with the registration of
the Securities or the Exchange Notes pursuant to the Registration
Rights Agreement and (C) qualifications or authorizations by state
securities or "blue sky" laws in connection with the offer and sale of
the Securities or the Exchange Notes pursuant to the Operative
Documents.
(xix) The Company and its Significant Subsidiaries possess
such certificates, authorizations or permits issued by the appropriate
state, federal or foreign regulatory agencies or bodies necessary to
conduct the business now operated by them, and neither the Company nor
any of its Significant Subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such
certificate, authorization or permit which, singly or in the
aggregate, could reasonably be expected to materially and adversely
affect the condition, financial or otherwise, or the earnings,
business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise.
(xx) The Company and its Significant Subsidiaries have
good title to all properties owned by them that are material to the
Company and its Significant Subsidiaries considered as
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one enterprise, in each case free and clear of all Liens, encumbrances
and defects except (a) as do not materially interfere with the use
made and proposed to be made of such properties, (b) as referred to in
the Offering Memorandum (including the Notes to the Financial
Statements included therein) or (c) as could not reasonably be
expected to materially and adversely affect the condition, financial
or otherwise, or the earnings, business affairs or business prospects
of the Company and its subsidiaries considered as one enterprise.
(xxi) Other than as set forth in the Registration Rights
Agreement, there are no holders of securities of the Company who have
the right to request the Company to register securities held by them
under the Act.
(xxii) The Securities and the guarantee thereof by the
Guarantors rank and will rank senior in right and priority of payment
to unsecured indebtedness of each of the Issuers that, by its terms,
is expressly subordinated to the Securities and the guarantee thereof
by the Guarantors, and on parity in right and priority of payment with
all other unsecured senior indebtedness of each of the Issuers, in
each case, that is outstanding on the date hereof or that may be
incurred hereafter.
(xxiii) Except as disclosed in the Offering Memorandum, the
Company and its Significant Subsidiaries are in material compliance
with all applicable existing federal, state, local and foreign laws
and regulations relating to protection of human health or the
environment or imposing liability or standards of conduct concerning
any Hazardous Material (as hereinafter defined) ("Environmental
Laws"), and to the Company's best knowledge, after due inquiry, there
are no circumstances that may prevent or interfere with such
compliance in the future except, in each case, where such
noncompliance, singly or in the aggregate, could not reasonably be
expected to have a material and adverse effect on the condition,
financial or otherwise, or the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one
enterprise. The term "Hazardous Material" means (a) any "hazardous
substance" as defined by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, (b) any "hazardous
waste" as defined by the Resource Conservation and Recovery Act, as
amended, (c) any petroleum or petroleum product, (d) any
polychlorinated biphenyl and (e) any pollutant or contaminant or
hazardous, dangerous, or toxic chemical, material, waste or substance
regulated under or within the meaning of any other Environmental Law.
(xxiv) Except as disclosed in the Offering Memorandum,
neither the Company nor any of its Significant Subsidiaries has
received any written notice from any person or entity alleging
potential liability (including, without limitation, potential
liability for investigatory costs, cleanup costs, governmental
response costs, natural resources damages, property damages, personal
injuries, or penalties) of the Company or any of its Significant
Subsidiaries arising out of, based on or resulting from (a) the
presence or release into the environment of any Hazardous Material at
any location, whether or not owned by the Company or any of its
Significant Subsidiaries or (b) any violation or alleged violation of
any Environmental Law, except, in each case, where such potential
liability, singly or in the aggregate, could not reasonably be
expected to have a material and adverse effect on the condition,
financial or otherwise, or the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one
enterprise.
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(xxv) Except as disclosed in the Offering Memorandum, to
the best knowledge of the Issuers after due inquiry, there are no past
or present actions, activities, circumstances, conditions, events or
incidents, including, without limitation, the release, emission,
discharge or disposal of any Hazardous Material, that could reasonably
be expected to form the basis under any Environmental Law of any
liability of, or requirement to take (or refrain from taking) any
action by, (a) the Company or any of its Significant Subsidiaries or
(b) any person or entity whose liability for any claim the Company or
any of its Significant Subsidiaries has retained or assumed either
contractually or by operation of law, except, in each case, where such
liability or requirement to take (or refrain from taking) action,
singly or in the aggregate, could not reasonably be expected to have a
material and adverse effect on the condition, financial or otherwise,
or the earnings, business affairs or business prospects of the Company
and its subsidiaries considered as one enterprise.
(xxvi) The Company has not, directly or indirectly, paid or
delivered any fee, commission or other sum of money or item or
property, however characterized, to any finder, agent, government
official or other party, in the United States or any other country,
which is in any manner related to the business or operations of the
Company, which the Company knows or has reason to believe to have been
illegal under any federal, state or local laws of the United States or
any other country having jurisdiction, and the Company has not
participated, directly or indirectly, in any boycotts or other similar
practices in contravention of law affecting any of its actual or
potential customers.
(xxvii) The Indenture has been duly authorized by the Issuers
and is in a form that meets the requirements for qualification under
the 1939 Act, and when duly executed and delivered by the Issuers
(assuming the due execution and delivery thereof by the Trustee), will
constitute a legal, valid and binding agreement of the Issuers,
enforceable against the Issuers in accordance with its terms, except
as such enforceability may be limited by bankruptcy, insolvency,
moratorium, reorganization, fraudulent conveyance and similar laws and
court decisions relating to or affecting creditors' rights and
remedies generally and general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or
law); this Agreement and the Pricing Agreement and, as of the Closing
Time, the Registration Rights Agreement, have each been duly
authorized, executed and delivered by the Company and the Guarantors,
as applicable, and each constitutes a legal, valid and binding
agreement of the Company and the Guarantors, as applicable,
enforceable against the Company and the Guarantors, as applicable, in
accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, moratorium, reorganization,
fraudulent conveyance and similar laws and court decisions relating to
or affecting creditors' rights and remedies generally and general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or law).
(xxviii) The Company is not required to deliver the
information relating to the Company specified in Rule 144A(d)(4) in
connection with the resale of the Securities.
(xxix) Set forth on Exhibit C hereto is a list of each
employee pension benefit plan that is described in Section 3(2) of
ERISA and is not exempt under Section 4(b) of ERISA and which is
intended to meet the requirements of Section 401(a) of the Code, and
any employee welfare benefit plan that is described in Section 3(1) of
ERISA and is not exempt under Section
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4(b) of ERISA and which is wholly or partially funded by a trust, with
respect to which the Company or any corporation considered an
affiliate of the Company within the meaning of Section 407(d)(7) of
ERISA (an "Affiliate") is a party in interest or disqualified person.
The execution and delivery of this Agreement, the other Operative
Documents and the sale of the Securities to be purchased by the
Eligible Purchasers will not involve any non-exempt prohibited
transaction within the meaning of Section 406 of ERISA or Section 4975
of the Code. The representation made by the Company in the preceding
sentence is made in reliance upon and subject to the accuracy of, and
compliance with, the representations and covenants made or deemed made
by the Eligible Purchasers as set forth in the Offering Memorandum
under the Section entitled "Notice to Investors."
(b) Any certificate required hereunder, which is signed by any
officer of the Issuers and delivered to the Initial Purchasers or to counsel
for the Initial Purchasers, shall be deemed a representation and warranty by
the Issuers to each Initial Purchaser as to the matters covered thereby.
Section 2. SALE AND DELIVERY TO THE INITIAL PURCHASERS; CLOSING.
(a) On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Company
agrees to sell to each Initial Purchaser, severally and not jointly, and each
Initial Purchaser, severally and not jointly, agrees to purchase from the
Company, at the price set forth in the Pricing Agreement, the principal amount
of Securities set forth in Schedule A hereto opposite the name of such Initial
Purchaser (except as otherwise provided in the Pricing Agreement), plus any
additional principal amount of Securities which such Initial Purchaser may
become obligated to purchase pursuant to the provisions of Section 11 hereof.
The initial offering price of the Securities, the purchase price to be paid by
the several Initial Purchasers for the Securities, the interest rate on the
Securities and the redemption price for the Securities have each been
determined and set forth in the Pricing Agreement, dated the date hereof.
(b) Payment of the purchase price and delivery of certificates
evidencing the Securities shall be made at the office of Kramer, Levin,
Naftalis & Frankel, 919 Third Avenue, New York, New York, or at such other
place as shall be agreed upon by the Initial Purchasers and the Company, at
10:00 A.M. on October 23, 1996, or such other time not later than two business
days after such date as shall be agreed upon by the Initial Purchasers and the
Company (such time and date of payment and delivery being herein called the
"Closing Time"). Payment shall be made to the Company by wire transfer of
immediately available funds to the order of the Company, against delivery of
certificates evidencing the Securities to the Initial Purchasers. The
certificates representing the Securities shall be registered in the name of
Cede & Co. pursuant to the DTC Agreement and shall be made available for
examination and packaging by the Initial Purchasers not later than 10:00 A.M.
New York City time on the last business day prior to the Closing Time.
Section 3. RESALE OF THE SECURITIES.
(a) The Initial Purchasers have advised the Company that they
propose to offer the Securities for resale upon the terms and conditions set
forth in this Agreement and in the Offering Memorandum. Each Initial Purchaser
hereby represents and warrants (as to itself only) to, and agrees with, the
Company
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that it (i) is a Qualified Institutional Buyer, (ii) has not and will not
solicit offers for, or offer or sell, the Securities by means of any form of
general solicitation or general advertising (as those terms are used in
Regulation D under the Act) or in any manner involving a public offering within
the meaning of Section 4(2) of the Act and has not and will not engage in any
directed selling efforts within the meaning of Rule 902 under the Act in the
United States in connection with the Securities being offered and sold pursuant
to Regulation S under the Act, (iii) is not purchasing with a view to or for
offer or sale in connection with any distribution that would be in violation of
federal or state law and (iv) will solicit offers for such Securities pursuant
to Rule 144A, Regulation S or resales not involving a public offering, as
applicable, only from, and will offer, sell or deliver the Securities, as part
of the offering contemplated by the Offering Memorandum, only to (A) persons in
the United States whom the Initial Purchasers reasonably believe to be
Qualified Institutional Buyers or, if any such person is buying for one or more
institutional accounts for which such person is acting as fiduciary or agent,
only when such person has represented to the Initial Purchasers that each such
account is a Qualified Institutional Buyer, to whom notice has been given that
such sale or delivery is being made in reliance on Rule 144A, and, in each
case, in transactions under Rule 144A, (B) a limited number of other
institutional investors whom the Initial Purchasers reasonably believe to be
Accredited Investors that are purchasing for their own accounts or for the
account of an Accredited Investor for investment purposes and not with a view
to, or for offer or sale in connection with, any distribution of the Securities
in violation of the Act and (C) non-U.S. persons outside the United States to
whom the Initial Purchasers reasonably believe offers and sales of the
Securities may be made in reliance upon Regulation S under the Act in
transactions meeting the requirements of Regulation S; provided, however, that
with respect to clauses (B) and (C), each such transfer of Securities is
effected by the delivery to such purchaser of Securities in definitive form and
registered in its name (or its nominee's name) on the books maintained by the
Trustee; provided, further, however, that with respect to clauses (B) and (C),
such institutional investors and non-U.S. persons shall be required to complete
and deliver a certificate in the form of Annex A and Annex B, respectively, to
the Offering Memorandum to the Initial Purchasers prior to the confirmation of
any order.
In connection with sales outside the United States, the Initial
Purchasers represent and warrant to and agree with the Company and the
Guarantors that they will not offer, sell or deliver Securities to, or for the
account or benefit of, U.S. persons (within the meaning of Regulation S under
the Act) (i) as part of the Initial Purchasers' distribution at any time or
(ii) otherwise until forty (40) days after the later of the commencement of the
offering and the Closing Time, and they will send to each dealer to whom they
sell such Securities during such period a confirmation or other notice setting
forth the restrictions on offers and sales of the Securities within the United
States or to, or for the account or benefit of, U.S. persons.
Section 4. COVENANTS OF THE ISSUERS.
The Issuers covenant with each Initial Purchaser as follows:
(a) The Company will furnish to the Initial Purchasers and counsel
for the Initial Purchasers, without charge, such number of copies of the
Preliminary Offering Memorandum and the Offering Memorandum and any amendments
or supplements thereto as the Initial Purchasers and their counsel may
reasonably request and will notify each Initial Purchaser of any filing made by
the Issuers of information relating to the offering of the Securities with any
securities exchange or any other regulatory body in the United States or any
other jurisdiction.
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(b) The Company will give the Initial Purchasers notice of its
intention to prepare any amendment or supplement to the Preliminary Offering
Memorandum or any amendment or supplement to the Offering Memorandum and
furnish the Initial Purchasers with copies of any such amendment or supplement
a reasonable amount of time prior to use, and not distribute any such amendment
or supplement or use any such Preliminary Offering Memorandum or Offering
Memorandum to which the Initial Purchasers shall reasonably object.
(c) If any event shall occur as a result of which it is necessary,
in the reasonable opinion of counsel for the Initial Purchasers, to amend or
supplement the Offering Memorandum in order to make the Offering Memorandum not
misleading in light of the circumstances existing at the time it is delivered
to a purchaser, the Company will, as promptly as practicable, amend or
supplement the Offering Memorandum (in form and substance reasonably
satisfactory to counsel for the Initial Purchasers) so that, as so amended or
supplemented, the Offering Memorandum will not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances existing at the time it is
delivered to a purchaser, not misleading and the Company will furnish to the
Initial Purchasers a reasonable number of copies of such amendment or
supplement.
(d) The Company will endeavor, in cooperation with the Initial
Purchasers, to qualify the Securities for offering and sale under the
applicable securities laws of such states and other jurisdictions of the United
States as the Initial Purchasers may designate; provided, however, that none of
the Issuers shall be obligated to qualify as a foreign corporation in any
jurisdiction in which it is not so qualified or to take any action that would
subject it to general consent to service of process in any jurisdiction in
which it is not now so subject or to subject itself to general taxation in any
such jurisdiction in which it is not now so subject. In each jurisdiction in
which the Securities have been so qualified, the Company will file such
statements and reports as may be required by the laws of such jurisdiction to
continue such qualification in effect for so long as may be required by
applicable law.
(e) The Company will, so long as any Securities or Exchange Notes
are outstanding and during any period in which the Company is not subject to
Section 13 or 15(d) of the Exchange Act, furnish to holders of Securities and
prospective purchasers of Securities designated by such holders, upon request
of such holders or such prospective purchasers, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Act to permit compliance with
Rule 144A in connection with resales of the Securities.
(f) The Company will use its reasonable best efforts in
cooperation with the Initial Purchasers to (i) permit the Securities to be
eligible for clearance and settlement through DTC and (ii) permit the
Securities to be designated as PORTAL securities in accordance with the rules
and regulations of the NASD.
(g) The Company will apply the net proceeds received by it from
the sale of the Securities as set forth in the Offering Memorandum under "Use
of Proceeds."
(h) Neither the Company nor any of its affiliates (as defined in
Rule 501(b) under the Act) will solicit any offer to buy or offer or sell the
Securities or the Exchange Notes by means of any form of general solicitation
or general advertising (as such terms are used in Regulation D under the Act),
or by means of any directed selling efforts (as defined in Rule 902 under the
Act) in the United States in connection with the Securities being offered and
sold pursuant to Regulation S or in any manner involving
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a public offering within the meaning of Section 4(2) of the Act prior to the
effectiveness of a registration statement with respect to the Securities or the
Exchange Notes, as applicable.
(i) Neither the Company nor any of its affiliates (as defined in
Rule 501(b) under the Act) will offer, sell or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Act) which
could be integrated with the sale of the Securities in a manner that would
require the registration of the Securities under the Act.
(j) The Company has complied and will comply with or is exempt
from all of the provisions of that certain Florida act relating to disclosure
of doing business with Cuba, codified as Section 517.075 of the Florida
statutes, and all regulations promulgated thereunder relating to issuers doing
business in Cuba.
(k) Each Issuer has complied and will comply with its agreements
in the Registration Rights Agreement, and all agreements set forth in the
representation letters of the Company to DTC relating to the approval of the
Securities by DTC for "book-entry" transfer.
Section 5. PAYMENT OF EXPENSES.
The Issuers will pay all expenses incident to the performance of their
obligations under this Agreement, including (i) the preparation and printing,
and delivery to the Initial Purchasers of copies of the Preliminary Offering
Memorandum, the Offering Memorandum and any amendments or supplements thereto,
(ii) the preparation, issuance and delivery of the Securities and the Exchange
Notes to the Initial Purchasers, (iii) the fees and disbursements of the
Issuers' counsel and accountants, (iv) the fees and expenses of the Trustee,
including any fees and disbursements of counsel for the Trustee not paid by the
Trustee, in connection with the Indenture, the Securities and the Registration
Rights Agreement, (v) any fees payable in connection with the rating of the
Securities and Exchange Notes, (vi) the expenses in connection with the
qualification of the Securities under securities laws in accordance with the
provisions of Section 4(d) hereof, including filing fees and the reasonable
fees and disbursements of counsel for the Initial Purchasers in connection
therewith and in connection with the preparation of preliminary and final "blue
sky" surveys, (vii) the printing and delivery to the Initial Purchasers of
copies of the "blue sky" surveys and (viii) all expenses and listing fees in
connection with the application for designation of the Securities as PORTAL
securities and to permit the Securities and the Exchange Notes, as applicable,
to be eligible for clearance through DTC.
If this Agreement is terminated by the Initial Purchasers in
accordance with the provisions of Section 6 or Section 10(a)(i) hereof, the
Issuers shall reimburse the Initial Purchasers for all of their out-of-pocket
expenses, including the reasonable fees and disbursements of counsel for the
Initial Purchasers.
Section 6. CONDITIONS OF INITIAL PURCHASERS' OBLIGATIONS.
The obligations of the Initial Purchasers hereunder are subject to the
accuracy in all material respects of the representations and warranties of the
Issuers herein contained, to the performance in all material respects by the
Issuers of their obligations hereunder and to the following further conditions:
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(a) At the Closing Time the Initial Purchasers shall have
received:
(1) The favorable opinion, dated as of the
Closing Time, of Kramer, Levin, Naftalis & Frankel, counsel
for the Issuers, in form and substance satisfactory to counsel
for the Initial Purchasers, to the effect set forth in Exhibit
E hereto.
(2) The favorable opinion, dated as of the
Closing Time, of Anthony R. Pierno, Esq., General Counsel of
the Company, in form and substance satisfactory to counsel for
the Initial Purchasers, to the effect set forth in Exhibit F
hereto.
(3) The favorable opinion, dated as of the
Closing Time, of Latham & Watkins, counsel for the Initial
Purchasers, in form and substance satisfactory to you.
(b) At the Closing Time there shall not have been, since
the date hereof or since the respective dates as of which information
is given in the Offering Memorandum, any material adverse change in
the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary
course of business, and the Initial Purchasers shall have received a
certificate of the President or a Vice President and the chief
financial or chief accounting officer of each of the Issuers, dated as
of the Closing Time, to the effect that (i) there has been no such
material adverse change, (ii) the representations and warranties in
Section 1 of this Agreement are true and correct in all material
respects with the same force and effect as though expressly made at
and as of the Closing Time, and (iii) the Issuers have complied in all
material respects with all agreements in this Agreement and satisfied
all conditions in this Agreement on their part to be performed or
satisfied at or prior to the Closing Time. As used in this Section
6(b), the term "Offering Memorandum" means the Offering Memorandum in
the form first used to confirm sales of the Securities.
(c) At the time of the execution of this Agreement, the
Initial Purchasers shall have received from Arthur Andersen LLP a
letter dated such date, in form and substance reasonably satisfactory
to the Initial Purchasers to the effect that (i) they are independent
public accountants with respect to the Company and its subsidiaries
within the meaning of the Act and the 1933 Act Regulations, (ii) it is
their opinion that the consolidated financial statements included in
the Offering Memorandum and covered by their opinions therein comply
as to form in all material respects with the applicable accounting
requirements of the Act and the 1933 Act Regulations, (iii) based upon
limited procedures set forth in detail in such letter, nothing has
come to their attention which causes them to believe that (A) the
unaudited consolidated financial statements of the Company and its
subsidiaries included in the Offering Memorandum do not comply as to
form in all material respects with the applicable accounting
requirements of the Act and the 1933 Act Regulations or are not
presented in conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the audited
consolidated financial statements included in the Offering Memorandum,
(B) at September 30, 1996 there was any change in the capital stock or
long-term debt of the Company and its subsidiaries consolidated or any
decreases in consolidated net current assets or net assets as compared
with the amounts shown in the June 30, 1996 unaudited consolidated
balance sheet included in the Offering Memorandum, or, during the
period from July 1, 1996 to September 30, 1996 there were any
decreases, as compared with the corresponding period in the preceding
year, in consolidated net
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sales or in net income, except in all instances for changes or
decreases that the Offering Memorandum discloses have occurred or may
occur or (C) at a specified date not more than five days prior to the
date of this Agreement, there has been any change in the capital stock
or long-term debt of the Company and its subsidiaries consolidated or
any decreases in consolidated net current assets or net assets as
compared with the amounts shown in the June 30, 1996 unaudited
consolidated balance sheet included in the Offering Memorandum or, for
the period from June 30, 1996 to a specified date not more than five
days prior to the date of this Agreement, there were any decreases, as
compared with the corresponding period in the preceding year, in
consolidated net sales or in net income except in all instances for
changes or decreases that the Offering Memorandum discloses have
occurred or may occur and (iv) in addition to the examination referred
to in their opinions and the limited procedures referred to in clause
(iii) above, they have carried out certain specified procedures, not
constituting an audit, with respect to certain amounts, percentages
and financial information which are included in the Offering
Memorandum and which are specified by the Initial Purchasers, and have
found such amounts, percentages and financial information to be in
agreement with the relevant accounting, financial and other records of
the Company and its subsidiaries identified in such letter.
(d) At the Closing Time the Initial Purchasers shall have
received from Arthur Andersen LLP a letter, dated as of the Closing
Time, to the effect that they reaffirm the statements made in the
letter furnished pursuant to subsection (c) of this section, except
that the specified date referred to shall be a date not more than five
days prior to the Closing Time.
(e) At the Closing Time counsel for the Initial
Purchasers shall have been furnished with such documents and opinions
as they may reasonably require for the purpose of enabling them to
pass upon the issuance and sale of the Securities as herein
contemplated and related proceedings, or in order to evidence the
accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained. All
proceedings taken by the Company in connection with the issuance and
sale of the Securities as herein contemplated shall be reasonably
satisfactory in form and substance to the Initial Purchasers and
counsel for the Initial Purchasers.
(f) Subsequent to the execution of this Agreement, no
downgrading shall have occurred in the rating accorded any of the
Company's debt securities by Standard & Poor's Corporation or Moody's
Investors Service, and neither such organization shall have publicly
announced that it has under surveillance or review, with possible
negative implications, its rating accorded any of the Company's debt
securities, if in the reasonable judgment of the Initial Purchasers
any such development is so material and adverse as to make it
impracticable or inadvisable to consummate the sale and delivery of
the Securities by the Initial Purchasers as contemplated in the
Offering Memorandum.
(g) The Issuers and the Trustee shall have entered into
the Indenture and the Issuers and the Initial Purchasers shall have
entered into the Registration Rights Agreement.
(h) The Final Offering Memorandum shall have been printed
and copies distributed to the Initial Purchasers not later than 9:00
a.m., New York City time, on October 18, 1996, or such later date and
time as the Initial Purchasers may approve in writing.
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If any condition specified in this section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be
terminated by the Initial Purchasers by notice to the Company at any time at or
prior to the Closing Time, and such termination shall be without liability of
any party to any other party.
Section 7. INDEMNIFICATION.
(a) The Issuers agree to indemnify and hold harmless each Initial
Purchaser, each officer or director of an Initial Purchaser and each person, if
any, who controls any Initial Purchaser within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act and each officer and director of such
control person as follows:
(i) Against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, arising out of any untrue
statement of a material fact contained in any Preliminary Offering
Memorandum, or the Final Offering Memorandum (or any amendment or
supplement thereto), or the omission or alleged omission therefrom of
a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading;
(ii) Against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission; provided that (subject to Section 7(d) below) any such
settlement is effected with the written consent of the Company; and
(iii) Against any and all expense whatsoever, as incurred
(including, subject to Section 7(c) hereof, the fees and disbursements
of counsel chosen by Merrill Lynch), reasonably incurred in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or
(ii) above;
provided, however, that (A) this indemnity agreement shall not apply to any
loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Company by the Initial Purchasers through Merrill Lynch expressly for use in
the Preliminary Offering Memorandum and/or Final Offering Memorandum (or any
amendment or supplement thereto) and (B) with respect to any untrue statement
or omission or alleged untrue statement or omission made in any Preliminary
Offering Memorandum, this indemnity shall not inure to the benefit of any
indemnified party to the extent that such loss, liability, claim, damage or
expense of the indemnified party results from the fact that the Initial
Purchasers sold Securities to a person to whom there was not sent or given by
the Initial Purchasers or on the Initial Purchasers' behalf at or prior to the
written confirmation of sale of the Securities to such person a copy of the
Final Offering Memorandum, if required by law to have been delivered, if the
Final Offering Memorandum would have cured the defect giving rise to such loss,
liability, claim, damage or expense.
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(b) Each Initial Purchaser severally agrees to indemnify and hold
harmless the Issuers, each officer and director of the Issuers, and each
person, if any, who controls the Issuers within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act and each officer and director of such
control person against any and all loss, liability, claim, damage and expense
whatsoever described in the indemnity contained in subsection (a) of this
Section, as incurred, but only with respect to untrue statements or omissions,
or alleged untrue statements or omissions, made in any Offering Memorandum in
reliance upon and in conformity with written information furnished to the
Issuers by such Initial Purchaser through Merrill Lynch expressly for use in
Offering Memorandum.
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure
to so notify an indemnifying party shall not relieve such indemnifying party
from any liability hereunder to the extent it is not materially prejudiced as a
result thereof and in any event shall not relieve it from any liability which
it may have otherwise than on account of this indemnity agreement. In the case
of parties indemnified pursuant to Section 7(a) above, counsel to the
indemnified parties shall be selected by Merrill Lynch, and, in the case of
parties indemnified pursuant to Section 7(b) above, counsel to the indemnified
parties shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution has been sought under this Section 7 or Section
8 hereof (whether or not the indemnified parties are actual or potential
parties thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act by or on behalf of any indemnified party.
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that, unless such indemnifying party is
contesting the payment of such fees and expenses in good faith, it shall be
liable for any settlement of the nature contemplated by Section 7(a)(ii)
effected without its written consent if (i) such settlement is entered into
more than 90 days after receipt by such indemnifying party of the aforesaid
request, (ii) such indemnifying party shall have received written notice of all
of the terms of such settlement at least 60 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
Section 8. CONTRIBUTION.
If the indemnification provided for in Section 7 hereof is for any
reason unavailable to or insufficient to hold harmless an indemnified party in
respect of any losses, liabilities, claims, damages
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and expenses referred to therein, then each indemnifying party shall contribute
to the aggregate amount of such losses, liabilities, claims, damages and
expenses incurred by such indemnified party, as incurred (i) in such proportion
as is appropriate to reflect the relative benefits received by the Issuers on
the one hand and the Initial Purchasers on the other hand from the offering of
the Securities pursuant to this Agreement or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Issuers on the one hand and of the
Initial Purchasers on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations
The relative benefits received by the Issuers on the one hand
and the Initial Purchasers on the other hand in connection with the offering of
the Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Issuers and the total discounts received by the Initial Purchasers, bear to
the aggregate initial offering price of the Securities.
The relative fault of the Issuers on the one hand and the
Initial Purchasers on the other hand shall be determined by reference to, among
other things, whether any such untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by the Issuers or by the Initial Purchasers and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The Issuers and the Initial Purchasers agree that it would not
be just and equitable if contribution pursuant to this Section 8 were
determined by pro rata allocation (even if the Initial Purchasers were treated
as one entity for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to above in this
Section 8. The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this Section
8 shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 8, no Initial
Purchaser shall be required to contribute any amount in excess of the amount by
which the total price at which the Securities offered by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such Initial Purchaser has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 8, each person, if any, who
controls an Initial Purchaser within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, and each officer or director of an Initial
Purchaser and any such control person shall have the same rights to
contribution as such Initial Purchaser, and each person, if any, who controls
the Issuers within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, and each director or officer of an Issuer and any such
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control person shall have the same rights to contribution as the Issuers. The
Initial Purchasers' respective obligation to contribute pursuant to this
Section 8 are several in proportion to the principal amount of Securities set
forth opposite their respective names in Schedule A hereto and not joint.
Section 9. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY.
All representations, warranties and agreements contained in this
Agreement and the Pricing Agreement, or contained in certificates of officers
of the Issuers submitted pursuant hereto, shall remain operative and in full
force and effect as of the respective dates thereof, regardless of any
investigation made by or on behalf of any Initial Purchaser or controlling
person, or by or on behalf of the Issuers, and shall survive delivery of the
Securities to the Initial Purchasers.
Section 10. TERMINATION OF AGREEMENT.
(a) The Initial Purchasers may terminate this Agreement, by notice
to the Company, at any time at or prior to the Closing Time (i) if there has
been, since the time of execution of this Agreement or since the respective
dates as of which information is given in the Offering Memorandum, any material
adverse change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary course of
business, or (ii) if there has occurred any material adverse change in the
financial markets in the United States, Europe or elsewhere, any new outbreak
of hostilities or escalation thereof or other calamity or crisis, or any change
or development involving a prospective change in national or international
political, financial or economic conditions or currency exchange rates or
exchange rate controls, in each case the effect of which is such as to make it,
in the judgment of the Initial Purchasers, impracticable to market the
Securities or to enforce contracts for the sale of the Securities, or (iii) if
trading in the securities of the Company or KAC has been suspended or limited
by the Commission, or if trading generally on the American Stock Exchange or
the New York Stock Exchange or in the NASDAQ National Market System has been
suspended or limited or minimum or maximum prices for trading have been fixed,
or maximum ranges for prices have been required, by any of said exchanges or by
such system or by order of the Commission, the National Association of
Securities Dealers, Inc. or any other governmental authority, or (iv) if a
general banking moratorium has been declared by either Federal, New York, Texas
or California authorities.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except
as provided in Sections 5 hereof, provided that Sections 1, 7 and 8 hereof
shall survive such termination and remain in full force and effect.
Section 11. DEFAULT BY ONE OR MORE OF THE INITIAL PURCHASERS.
If one or more of the Initial Purchasers shall fail at the Closing
Time to purchase the Securities which it or they are obligated to purchase
under this Agreement and the Pricing Agreement (the "Defaulted Securities"),
the remaining Initial Purchaser or Initial Purchasers shall have the right,
within 24 hours thereafter, to purchase or to make arrangements for any other
initial purchasers to purchase all, but not less than all, of the Defaulted
Securities in such amounts as may be agreed upon and upon the
19
20
terms herein set forth. If, however, the remaining Initial Purchaser or
Initial Purchasers shall not have completed such arrangements within such
24-hour period, then:
(a) if the number of Defaulted Securities does not exceed
10% of the Securities, the nondefaulting Initial Purchasers shall be
obligated to purchase the full amount thereof in the proportions that
their respective underwriting obligations hereunder bear to the
underwriting obligations of all non-defaulting Initial Purchasers; or
(b) if the number of Defaulted Securities exceeds 10% of
the Securities, this Agreement shall terminate without liability on
the part of any non-defaulting Initial Purchaser.
No action taken pursuant to this section shall relieve any defaulting
Initial Purchaser from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement, the non-defaulting Initial Purchasers or the
Company shall have the right to postpone the Closing Time for a period not
exceeding five business days in order to effect any required changes in the
Offering Memorandum or in any other documents or arrangements.
The Initial Purchasers shall also have the right to amend Schedule A
hereto by making such substitutions or corrections as indicated in the Pricing
Agreement.
Section 12. NOTICES.
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed or transmitted by any
standard form of telecommunication. Notices to the Initial Purchasers shall be
directed to the Initial Purchasers in care of Merrill Lynch at Merrill Lynch
World Headquarters, North Tower, World Financial Center, New York, New York
10281-1305, attention of Theodore D. Sands, Managing Director, telecopy number
(212) 449-3150, with a copy to Latham & Watkins, 885 Third Avenue, New York,
New York 10022, attention of Beth R. Neckman, Esq., telecopy number (212)
751-4864; notices to the Issuers shall be directed to the Company at 5847 San
Felipe, Suite 2600, Houston, Texas 77057, attention of John T. La Duc, telecopy
number (713) 267-3710 or Anthony R. Pierno, Esq., telecopy number (713)
267-3702, with a copy to Kramer, Levin, Naftalis & Frankel, 919 Third Avenue,
New York, New York 10022, attention of Howard A. Sobel, Esq., telecopy number
(212) 688-2119.
Section 13. PARTIES.
This Agreement and the Pricing Agreement shall each inure to the
benefit of and be binding upon the Initial Purchasers and the Issuers and their
respective successors. Nothing expressed or mentioned in this Agreement or the
Pricing Agreement is intended or shall be construed to give any person, firm or
corporation, other than the Initial Purchasers and the Issuers and their
respective successors, and the controlling persons, officers, and directors
referred to in Sections 7 and 8 hereof and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or the Pricing Agreement or any provision herein or
therein contained. This Agreement and the Pricing
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Agreement and all conditions and provisions hereof and thereof are intended to
be for the sole and exclusive benefit of the Initial Purchasers and the Issuers
and their respective successors, and such controlling persons, officers and
directors and their heirs and legal representatives, and for the benefit of no
other person, firm or corporation. No purchaser of Securities from any Initial
Purchaser shall be deemed to be a successor by reason merely of such purchase.
Section 14. GOVERNING LAW AND TIME.
This Agreement and the Pricing Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York without
giving effect to principles of conflict of laws. Specified times of day refer
to New York City time.
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If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement among the Initial Purchasers and the Issuers in accordance with its
terms.
Very truly yours,
KAISER ALUMINUM & CHEMICAL CORPORATION
By: /s/ JOHN T. LA DUC
------------------------------------
Name: John T. La Duc
Title: Vice President
KAISER ALUMINA AUSTRALIA CORPORATION
By: /s/ JOHN T. LA DUC
------------------------------------
Name: John T. La Duc
Title: Vice President
KAISER FINANCE CORPORATION
By: /s/ JOHN T. LA DUC
------------------------------------
Name: John T. La Duc
Title: Vice President
ALPART JAMAICA INC.
By: /s/ JOHN T. LA DUC
------------------------------------
Name: John T. La Duc
Title: Vice President
KAISER JAMAICA CORPORATION
By: /s/ JOHN T. LA DUC
------------------------------------
Name: John T. La Duc
Title: Vice President
KAISER MICROMILL HOLDINGS, LLC
By: /s/ JOHN T. LA DUC
------------------------------------
Name: John T. La Duc
Title: Manager
23
KAISER SIERRA MICROMILLS, LLC
By: /s/ John T. LaDuc
------------------------------------
Name: John T. LaDuc
Title: Vice President
KAISER TEXAS MICROMILL HOLDINGS, LLC
By: /s/ John T. LaDuc
------------------------------------
Name: John T. LaDuc
Title: Vice President
KAISER TEXAS SIERRA MICROMILLS, LLC
By: /s/ John T. LaDuc
------------------------------------
Name: John T. LaDuc
Title: Vice President
Confirmed and Accepted,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
SALOMON BROTHERS INC
BA SECURITIES, INC.
BEAR, STEARNS & CO. INC.
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Pascal A. Maeter
-----------------------------------------
Name: Pascal A. Maeter
Title: Vice President
24
SCHEDULE A
Principal
Initial Purchaser Amount
- ----------------- ---------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated . . . . . . . . . . . . . . . . . . . . . . . . . $78,750,000
Donaldson, Lufkin & Jenrette
Securities Corporation . . . . . . . . . . . . . . . . . . . . $35,000,000
Salomon Brothers Inc . . . . . . . . . . . . . . . . . . . . . . . . . . . . $35,000,000
BA Securities, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $13,125,000
Bear, Stearns & Co. Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . $13,125,000
-----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $175,000,000
============
25
EXHIBIT A
$175,000,000
KAISER ALUMINUM & CHEMICAL CORPORATION
(A DELAWARE CORPORATION)
10 7/8% SENIOR NOTES DUE 2006
PRICING AGREEMENT
October 17, 1996
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
SALOMON BROTHERS INC
BA SECURITIES, INC.
BEAR, STEARNS & CO. INC.
c/o MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281-1305
Ladies & Gentlemen:
Reference is made to the Purchase Agreement, dated October 17, 1996
(the "Purchase Agreement"), relating to the purchase by the several Initial
Purchasers named in Schedule A thereto of $175,000,000 aggregate principal
amount of 10 7/8% Senior Notes due 2006 (the "Securities") of Kaiser Aluminum &
Chemical Corporation, a Delaware corporation (the "Company").
Pursuant to Section 2 of the Purchase Agreement, the Company agrees
with each Initial Purchaser as follows:
1. The initial offering price of the Securities shall be
99.5% of the principal amount thereof.
2. The purchase price to be paid by the several Initial
Purchasers shall be 97.0% of the principal amount thereof.
3. The interest rate on the Securities shall be 10 7/8%
per annum.
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4. The redemption price for Securities redeemed at the
option of the Company (expressed as percentages of principal amount),
if redeemed during the 12 month period beginning October 15 of the
years indicated, shall be:
Year Percentage
---- ----------
2001 105.437%
2002 103.625%
2003 101.813%
2004 and thereafter 100.000%
The amount payable upon redemption of Securities shall include the
redemption price shown above, together with accrued and unpaid interest to the
date fixed for redemption.
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Very truly yours,
KAISER ALUMINUM & CHEMICAL CORPORATION
By: /s/ John T. LaDuc
------------------------------------
Name: John T. LaDuc
Title: Vice President
Confirmed and Accepted,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
SALOMON BROTHERS INC
BA SECURITIES, INC
BEAR, STEARNS & CO. INC.
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Pascal A. Maeter
--------------------------------------
Name: Pascal A. Maeter
Title: Vice President
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EXHIBIT B
SIGNIFICANT SUBSIDIARIES
Kaiser Alumina Australia Corporation
Kaiser Finance Corporation
Alpart Jamaica Inc.
Kaiser Jamaica Corporation
Kaiser Micromill Holdings, LLC
Kaiser Sierra Micromills, LLC
Kaiser Texas Micromill Holdings, LLC
Kaiser Texas Sierra Micromills, LLC
Alumina Partners of Jamaica
Anglesey Aluminium Limited
Kaiser Aluminium International, Inc.
Kaiser Aluminum & Chemical of Canada Limited
Kaiser Bauxite Company
Kaiser Jamaica Bauxite Company
Queensland Alumina Limited
Volta Aluminium Company Limited
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EXHIBIT C
BENEFIT PLANS
Kaiser Aluminum Erie Die Sinkers Pension Plan
Kaiser Aluminum Erie Pension Plan
Kaiser Aluminum Erie SUB Plan
Kaiser Aluminum Hourly Employee Savings Plan
Kaiser Aluminum Inactive Pension Plan
Kaiser Aluminum Los Angeles Extrusion Pension Plan
Kaiser Aluminum Mulberry Pension Plan
Kaiser Aluminum Non-Exempt SUB Plan
Kaiser Aluminum Oxnard Pension Plan
Kaiser Aluminum Pension Plan
Kaiser Aluminum Salaried Employee Stock Ownership Plan
Kaiser Aluminum Salaried Employee Retirement Plan
Kaiser Aluminum Sherman Pension Plan
Kaiser Aluminum SUB Plan
Kaiser Aluminum Supplemental Savings and Retirement Plan
Kaiser Aluminum Tulsa Pension Plan
Kaiser Aluminum USWA Employee Stock Ownership Plan
Kaiser Center Garage Pension Plan
Kaiser Center Security Guard Pension Plan
The MAXXAM Pension Plan
The MAXXAM Savings Plan
The Pacific Lumber Company Retirement Plan
30
EXHIBIT D
REGISTRATION RIGHTS AGREEMENT