-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ga07/2PHeovpuwwniU7UJ1Jif0rZ//72QLVPXDPy4F3GyX68bpge0xwzVNCvCh4W 0h2NdLuixkIzxL6jhO8okQ== 0000928385-00-003382.txt : 20001215 0000928385-00-003382.hdr.sgml : 20001215 ACCESSION NUMBER: 0000928385-00-003382 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20001205 ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20001214 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KAISER GROUP INTERNATIONAL INC CENTRAL INDEX KEY: 0000856200 STANDARD INDUSTRIAL CLASSIFICATION: HAZARDOUS WASTE MANAGEMENT [4955] IRS NUMBER: 541437073 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-12248 FILM NUMBER: 789122 BUSINESS ADDRESS: STREET 1: 9300 LEE HWY CITY: FAIRFAX STATE: VA ZIP: 22031 BUSINESS PHONE: 7039343600 MAIL ADDRESS: STREET 1: 9300 LEE HWY CITY: FAIRFAX STATE: VA ZIP: 22031 FORMER COMPANY: FORMER CONFORMED NAME: ICF KAISER INTERNATIONAL INC DATE OF NAME CHANGE: 19930811 FORMER COMPANY: FORMER CONFORMED NAME: ICF INTERNATIONAL INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN CAPITAL & RESEARCH CORP /DE/ DATE OF NAME CHANGE: 19910314 8-K 1 0001.txt FORM 8-K U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): December 5, 2000 KAISER GROUP INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) Delaware File No. 1-12248 54-1437073 (State or other (Commission File (IRS Employer jurisdiction of Number) Identification No.) incorporation) 9302 Lee Highway Fairfax, Virginia 22031-1207 (Address of principal executive offices, including zip code) 703-934-3300 (Registrant's telephone number, including area code) INDEX
Page ---- ITEM 1. CHANGE OF CONTROL................................................ 1 ITEM 3. BANKRUPTCY OR RECEIVERSHIP....................................... 1 CONFIRMATION OF PLAN OF REORGANIZATION.................................... 1 KAISER HOLDINGS........................................................... 1 Successor Issuer; Disclaimer of Financial Information; Authorized Spokespersons............................................. 2 Forward-Looking Statements........................................... 2 SUMMARY OF PLAN OR REORGANIZATION AND RELATED MATTERS..................... 3 Summary of Classification of Claims and Treatment Under the Plan..... 3 Status of Claims - Distribution Dates................................ 4 New Preferred Stock and New Common Stock............................. 5 Distributions of Cash, New Preferred Stock, New Common Stock and KGP Put Rights................................................... 6 Trading of Old Common Stock Between Effective Date and Initial Distribution Date........................................ 9 Issuance, Registration of Owners and Trading of New Preferred Stock and New Common Stock................................................. 9 Possible Steps to Reduce Small Stock Holdings........................ 10 Information as to Assets and Liabilities of Kaiser Holdings.......... 10 BUSINESS OF KAISER HOLDINGS............................................... 11 Overview of Kaiser Holdings and Its Business Operations.............. 11 Recent History ...................................................... 11 Post-Confirmation Activities and Assets.............................. 11
DIRECTORS AND OFFICERS.................................................... 15 Directors............................................................ 15 Executive Officers................................................... 16 CAPITAL STRUCTURE OF KAISER HOLDINGS...................................... 17 Kaiser Holdings Certificate of Incorporation and Bylaws.............. 17 New Preferred Stock.................................................. 17 KGP Put Rights....................................................... 19 New Common Stock..................................................... 21 Registration Rights of Certain Holders of New Preferred Stock........ 22 Issuance, Registration of Owners and Trading of New Preferred Stock and New Common Stock................................................. 22 Exemption from Securities Act Registration........................... 23 CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN....................... 25 RISK FACTORS RELATING TO KAISER HOLDINGS.................................. 25 Risks Relating to Kaiser Holdings' Business.......................... 25 Risks Associated with the New Preferred Stock and New Common Stock... 27 Risk Factors Related to Estimates and Assumptions.................... 28 ITEM 7. EXHIBITS......................................................... 29 SIGNATURES................................................................ 29
-iii- ITEM 1. CHANGE OF CONTROL The confirmation and effective date of the Second Amended Plan of Reorganization of Kaiser Group International, Inc. ("Old Kaiser") and certain of its subsidiaries is described below in Item 3, which is incorporated herein by reference. The effectiveness of the Plan of Reorganization will result in a change of control of Old Kaiser, which will become 100% owned by Kaiser Group Holdings, Inc., a newly formed Delaware corporation ("Kaiser Holdings"). Kaiser Holdings will be deemed to be a "successor issuer" to Old Kaiser by virtue of Rule 12g-3(a) under the Securities Exchange Act of 1934. As described below, Kaiser Holdings will distribute cash, preferred stock and common stock to holders of certain allowed claims and equity interests in the Old Kaiser bankruptcy proceedings, including owners of Old Kaiser common stock. ITEM 3. BANKRUPTCY OR RECEIVERSHIP CONFIRMATION OF PLAN OF REORGANIZATION On December 5, 2000, the United States Bankruptcy Court for the District of Delaware entered an Order in Case Nos. 00-2263 to 00-2301 (GMS) (the "Bankruptcy Cases") confirming the Second Amended Plan of Reorganization (the "Plan") of Kaiser Group International, Inc. and its 38 subsidiaries that were Debtors-in- Possession in the proceeding. The order confirming the Plan is expected to become final at the close of business on December 15, 2000, at which time the Plan will become effective (the "Effective Date"). KAISER HOLDINGS In general terms, the Plan provides for the formation of a new holding company, Kaiser Holdings, which was organized in Delaware on December 6, 2000. Kaiser Holdings will own all of the outstanding stock of Old Kaiser, which in turn will own the stock of certain of its existing subsidiaries. Other subsidiaries may be owned directly by Kaiser Holdings. After the Effective Date, Kaiser Holdings will not be subject to the day- to-day supervision of the Bankruptcy Court. The Official Unsecured Creditors' Committee appointed by the Bankruptcy Court will no longer exist, and the affairs of Kaiser Holdings will be governed by its new Board of Directors and officers, described below. The Bankruptcy Court will retain jurisdiction over the resolution of claims that have been filed in the Bankruptcy Cases and over other matters described in the Plan and the Order confirming the Plan. Kaiser Holdings will not own any assets or have any employees, but will instead operate through its subsidiaries, including Old Kaiser. References herein to Kaiser Holdings refer to Kaiser Holdings and its subsidiaries. During the course of the Bankruptcy Cases, Old Kaiser disposed of most of its engineering operations. Immediately following the Effective Date, Kaiser Holdings' operations will be focused on the activities of (1) its Netherlands subsidiary, Kaiser Netherlands, B.V., in relation to a steel mini-mill in the Czech Republic, and (2) Kaiser- Hill Company, LLC, which is 50% owned by a subsidiary of Old Kaiser and performs a contract for the closure of the U.S. Department of Energy's Rocky Flats, Colorado site. Under the Plan, Kaiser Holdings will distribute cash, preferred stock ("New Preferred Stock") and common stock ("New Common Stock") to the holders of Allowed Class 4 Claims in the Bankruptcy Cases, including holders of Old Kaiser's senior subordinated notes due 2003 ("Old Subordinated Notes"), and will distribute New Common Stock to holders of common stock of Old Kaiser ("Old Common Stock") and other Equity Interests. As of the date hereof, the only Equity Interests of which Old Kaiser is aware are the Old Common Stock and the Claims asserted in the Bankruptcy Cases by the former shareholders of ICT Spectrum Constructors, Inc., which was acquired by Old Kaiser in 1998. The distribution of shares of New Preferred Stock and New Common Stock is exempt from Federal and state securities laws under Section 1145 of the Bankruptcy Code. At the Effective Date, Kaiser Holdings will not have any outstanding debt. Successor Issuer; Disclaimer of Financial Information; Authorized Spokespersons - ------------------------------------------------------------------------------- Kaiser Holdings will be deemed to be a "successor issuer" to Old Kaiser by virtue of SEC Rule 12g-3(a) under the Securities Exchange Act of 1934. Certain financial information, including forward-looking forecasts, were filed by Old Kaiser in connection with the Bankruptcy Cases. Kaiser Holdings believes that such financial information is stale and expressly disclaims such financial information, including the forecasts therein. Following the Effective Date, the only persons authorized to speak on behalf of Kaiser Holdings to the press, financial institutions, analysts, and investors will be the Kaiser Holdings' Chief Executive Officer and Chief Financial Officer. Forward-Looking Statements - -------------------------- From time to time, certain disclosures in reports and statements released by Kaiser Holdings, or statements made by its officers or directors, will be forward-looking in nature. These forward-looking statements may contain information related to Kaiser Holdings' intent, belief, or expectation with respect to contract awards and performance, potential acquisitions and joint ventures, cost-cutting measures or other matters. In addition, these forward- looking statements may contain a number of factual assumptions made by Kaiser Holdings regarding, among other things, future economic, competitive, and market conditions. Because the accurate prediction of any future facts or conditions may be difficult and involve the assessment of events beyond Kaiser Holdings' control, actual results may differ materially from those expressed or implied in such forward-looking statements. Kaiser Holdings is availing itself of the safe harbor provisions provided in the Private Securities Litigation Reform Act of 1995 by cautioning readers that forward-looking statements, including those that use words such as "believes," "anticipates," "expects," and "estimates," are subject to certain risks and uncertainties which could cause actual results of operations to differ -2- materially from expectations. These forward-looking statements may be contained in Kaiser Holdings' federal securities laws filings or in written or oral statements made by the Kaiser Holdings' officers and directors to press, potential investors, securities analysts, and others. Any such written or oral forward-looking statements should be considered in context with the risk factors discussed herein. SUMMARY OF PLAN OF REORGANIZATION AND RELATED MATTERS Summary of Classification of Claims and Treatment Under the Plan /1/ - ---------------------------------------------------------------- The Plan enables a restructuring of Old Kaiser's prepetition indebtedness and operations. The Plan divides the Claims of known creditors and Equity Interests into Classes and sets forth the treatment afforded to each Class. The table below sets forth the specific classification and treatment under the Plan of each of the Classified Claims against, and Equity Interests in, Old Kaiser.
Class Type of Claim or Equity Treatment Interest - -------------------------------------------------------------------------------- 1 Secured Claims The legal, equitable and contractual rights of the holders of Class 1 Claims remain unaltered by the Plan. 2 Senior Claims There are no claims which are acknowledged as senior claims. 3 Convenience Claims The legal, equitable and contractual rights of the holders of Allowed Class 3 Claims (in general, claims for $20,000 or less arising in the ordinary course of business) remain unaltered by the Plan.
______________ /1/ This summary contains only a brief and simplified description of the classification and treatment of Claims and Equity Interests under the Plan. This summary does not describe every provision of the Plan. Reference is made to the Plan (Exhibit 2 hereto) for a complete description of the classification and treatment of Claims and Equity Interests. -3-
Class Type of Claim or Equity Treatment Interest - -------------------------------------------------------------------------------------------------- 4 Other Unsecured Claims Holders of Allowed Class 4 Claims will receive (i) their pro rata portion of net cash proceeds from certain sales of Kaiser business assets completed during the Bankruptcy Cases, in increments of $55; (ii) one share of New Preferred Stock for each $100 of such holder's respective Allowed Class 4 Claim, but reduced by one share for each $55 of cash proceeds received; and (iii) one share of New Common Stock for each $100 of such holder's respective Allowed Class 4 Claim. Holders of the Old Subordinated Notes are holders of Class 4 Claims. 5 Equity Interests Holders of Allowed Class 5 Equity Interests will receive their pro rata portion of the number of shares of New Common Stock that represents 17.65% of the total number of shares of New Common Stock issued from time to time to holders of Allowed Class 4 Claims. Holders of Class 5 Equity Interests include holders of Old Common Stock and former stockholders of ICT Spectrum Constructors, Inc. who have timely filed Claims.
For the holder of a claim or interest to participate in a reorganization plan and receive the treatment offered to the class in which it is classified, its claim or equity interest must be "Allowed". Under the Plan, a Claim or Equity Interest that is "Allowed" means a Claim or Equity Interest: (a) proof of which was filed on or before August 15, 2000, the date designated by the Bankruptcy Court as the last date for filing proofs of claim with respect to such Claim or Equity Interest; or (b) that was scheduled by Old Kaiser as liquidated in amount and not disputed or contingent; and (c) in either case, as to which no objections to the allowance thereof has been filed within the applicable period of limitation fixed by the Bankruptcy Code, Bankruptcy Rules or an order of the Bankruptcy Court, or as to which any objection has been determined by a Final Order of the Bankruptcy Court allowing such Claim or Equity Interest in whole or in part. Status of Claims - Distribution Dates - ------------------------------------- The effectiveness of the Plan does not complete the bankruptcy process as to claims that have been filed in the Bankruptcy Cases. Old Kaiser objected to a number of these claims, and if such objections are not resolved by other means, they will ultimately be heard and determined by the Bankruptcy Court. Kaiser Holdings cannot predict with accuracy when the claims resolution process will be complete, but Kaiser Holdings expects that process to continue for at least the first six months of 2001. The Plan provides that the first distribution of cash, New Preferred Stock and New Common Stock will not be made until the approximately $414 million of claims initially filed -4- have been reduced to $225 million. Subject to that limitation in the Plan, other provisions of the Plan requiring reserves, and provisions of the Order confirming the Plan and agreements with specific claimants that require the reservation of cash pending the resolution of specific claims, distributions to holders of Allowed Claims will be made as determined by the Board of Directors of Kaiser Holdings. Old Kaiser has now filed objections to most of the claims as to which it intends to interpose an objection, but, as noted above, actual resolution of such claims objections is expected to extend well into 2001. Because of the factors outlined above, Kaiser Holdings does not expect to make an initial distribution of cash, New Preferred Stock and New Common Stock to holders of Allowed Claims and Equity Interests until after March 1, 2001. Kaiser Holdings presently expects that there will be more than one distribution during the course of 2001. New Preferred Stock and New Common Stock - ---------------------------------------- As indicated above, there are substantial uncertainties as to the amounts of Claims that ultimately will be Allowed in the Bankruptcy Cases. There are also substantial uncertainties as to the amount of cash that will be available to be distributed to holders of Allowed Claims. Both of these uncertainties are affected by matters outside the control of Kaiser Holdings. In particular, as more fully discussed below, these estimates are subject to significant uncertainties relating to the Nova Hut mini-mill project. Because of these uncertainties, it is not possible to predict with accuracy the number of shares of New Preferred Stock and New Common Stock that will ultimately be issued by Kaiser Holdings. Kaiser Holdings' current estimate is that the aggregate amount of Allowed Claims will be approximately $150 million, and that the amount of cash available for distribution in respect of Allowed Claims will be approximately $35 million. However, if Kaiser Netherlands is unable to resolve disputes with Nova Hut discussed below and receive a significant cash payment prior to the initial distribution date, less than $35 million of cash is expected be available for distribution. Based on the estimates referred to above, Kaiser Holdings anticipates that approximately 1,500,000 shares of New Preferred Stock and approximately 1,500,000 shares of New Common Stock will be issuable under the Plan to holders of Allowed Claims other than Old Common Stock and other Equity Interests. Prior to the actual issuance of the New Preferred Stock, Kaiser Holdings presently anticipates that the estimated $35 million of available cash will be used to reduce the number of shares of New Preferred Stock to be issued by approximately 636,364 shares, so that the number of shares of New Preferred Stock actually issued would be approximately 863,636. Under the Plan, holders of Old Common Stock and other Equity Interests will receive a number of shares of New Common Stock equal to 17.65% of the number of shares of New Common Stock issued from time to time to holders of Allowed Class 4 Claims. Based on the estimates and assumptions outlined above, approximately 264,750 shares of New Common Stock will ultimately be issued to holders of Equity Interests, which are primarily holders of Old Common Stock. Since there are approximately 24,400,000 shares of Old Common Stock outstanding, holders of Old Common Stock are expected to receive approximately one share of New Common Stock for each 100 shares of Old Common Stock. -5- At the present time Kaiser Holdings is unable to estimate the treatment of Equity Interests other than Old Common Stock. As noted above, the only other such Equity Interests of which Kaiser Holdings is aware are the claims of the former stockholders of ICT Spectrum Constructors, Inc. Kaiser Holdings expects that only a small percentage of the shares of New Common Stock will be issued to former ICT Spectrum shareholders. Because the number of shares of New Common Stock to be issued to holders of Old Common Stock and other Equity Interests is dependent on the number of shares of New Common Stock issued to holders of Allowed Class 4 Claims, additional whole shares of New Common Stock will be issued to former holders of Equity Interests from time to time as shares of New Common Stock are issued in respect of Allowed Class 4 Claims. Under the Plan, fractional shares of New Preferred Stock and New Common Stock will not be issued. Each holder of an Allowed Class 4 Claim or Allowed Equity Interest will receive the total number of whole shares of New Preferred Stock or New Common Stock to which it is entitled. Any remaining entitlement to fractions of shares of New Preferred Stock or New Common Stock will be treated by distributing unallocated shares of New Preferred Stock and New Common Stock to holders of Allowed Class 4 Claims and Allowed Equity Interests having the greatest fractional entitlements until all unallocated fractional shares of New Preferred Stock and New Common Stock have been distributed. The distribution of unallocated shares of New Preferred Stock and New Common Stock will likely not take place until the final distribution. Based on the estimates and assumptions outlined above, the number of shares of New Preferred Stock and New Common Stock outstanding after the completion of the distributions would be as follows:
Category of Holder New Preferred Stock New Common Stock - ------------------------------------ -------------------------------------- -------------------------------------- Holders of Allowed Claims 863,636 1,500,000 Holders of Allowed Equity Interests 0 264,750 -------- --------- Total 863,636 1,764,750
Distributions of Cash, New Preferred Stock, New Common Stock and KGP Put Rights - ------------------------------------------------------------------------------- In General The Plan provides that distributions to holders of Allowed Claims may not be made until the Debtors determine that Class 4 Allowed Claims and other Class 4 Claims for which a cash reserve is required under the Plan (in other words, Allowed and disputed Class 4 Claims) are less than $225 million. As a result, Kaiser Holdings does not expect to make initial distributions of (1) cash to Allowed Class 3 Convenience Claims, (2) cash, New Preferred Stock and New Common Stock to holders of Allowed Class 4 Claims (including holders of Old Subordinated Notes), and (3) New Common Stock to holders of Old Common Stock and other Equity -6- Interests, until after March 1, 2001. Moreover, no distribution will be made with respect to a disputed Claim until the dispute has been resolved by settlement or a final order of the Bankruptcy Court. When the initial distribution is made, the terms of the Plan require Kaiser Holdings to retain a number of shares of New Common Stock and New Preferred Stock, and an amount of cash in a reserve fund, such that the retained stock and cash will be sufficient to make subsequent payments and distributions to Claims that remain disputed as of the date of the initial distribution. The Plan permits Kaiser Holdings to seek from the Bankruptcy Court approval of reserves of stock and cash that would be lower than otherwise required by the terms of the Plan. Any cash remaining in the reserve fund after distributions to holders of Allowed Class 3 and Class 4 Claims will be used to redeem shares of New Preferred Stock. As noted above, fractional shares of New Preferred Stock and New Common Stock will not be issued under the Plan. The entitlement to fractions of shares of both New Preferred Stock and New Common Stock will be treated by distributing unallocated shares of New Preferred Stock and New Common Stock to holders of Allowed Class 4 Claims and Allowed Equity Interests having the greatest fractional entitlement until all unallocated fractional shares of New Preferred Stock and New Common Stock are distributed. Dividends on shares of New Preferred Stock issued under the Plan will not begin to accrue until the initial distribution date. Shares of New Preferred Stock distributed after the initial distribution date will be entitled to any dividends that would have accrued from and after the initial distribution date. On November 15, 2000 Kaiser Government Programs, Inc. ("KGP"), a subsidiary of Old Kaiser that was not a Debtor in the Bankruptcy Cases, completed an exchange offer with record holders of Old Subordinated Notes as of August 14, 2000. Such holders were offered an opportunity to surrender their rights under a guarantee of such Old Subordinated Notes previously issued by KGP (which, under the terms of the Order confirming the Plan, may no longer be enforced against KGP) in exchange for the right to cause KGP to repurchase shares of New Preferred Stock issued to them pursuant to the Plan if KGP receives certain proceeds from Kaiser-Hill Company, LLC ("KGP put rights"). The holders of approximately 99.4% of the principal amount of Old Subordinated Notes outstanding as of August 14, 2000 accepted the exchange offer. Until certificates representing the KGP put rights are distributed as more fully discussed below, the KGP put rights will trade together with the Old Subordinated Notes as a single unit. Accordingly, if a holder of Old Subordinated Notes who participated in the exchange offer elects to trade such Notes before certificates for the KGP put rights have been distributed, the holder's right to receive the certificate for the KGP put rights will transfer together with the Old Subordinated Notes. However, after certificates for the KGP put rights have been distributed, the KGP put rights will trade as a security separate from the Old Subordinated Notes, and under their own CUSIP number. Distribution Mechanics Distributions of (1) cash to holders of Allowed Class 3 Claims, (2) cash, New Preferred Stock and New Common Stock to holders of Allowed Class 4 Claims (other than holders of Old -7- Subordinated Notes) and (3) New Common Stock to holders of Allowed Equity Interests (other than holders of Old Common Stock) will be made to holders of those Claims and Equity Interests as reflected in the records of the Bankruptcy Court. Holders of Allowed Class 4 Claims in the form of Old Subordinated Notes will receive cash, New Preferred and New Common Stock in accordance with the terms of the Plan. Holders of Old Subordinated Notes as to which the KGP exchange offer was accepted will also receive certificates representing the KGP put rights. The number of KGP put rights represented by such certificates will correspond with the number of shares of New Preferred Stock distributed with respect to such Old Subordinated Notes. These distributions will be made to holders of Old Subordinated Notes following the initial distribution date. To the extent that Old Subordinated Notes are transferred before the initial distribution date, the transferee will be entitled to (1) all distributions under the Plan in respect of those Old Subordinated Notes and (2) receive a certificate representing the appropriate number of KGP put rights (assuming the Old Subordinated Notes holder participated in the KGP exchange offer). To the extent holders of Old Subordinated Notes hold certificates for such notes, no distributions will be made until such holders surrender the certificates for their Old Subordinated Notes to the Trustee under the governing Indenture, The Bank of New York, in accordance with written instructions that will be made available prior to the initial distribution date. The Plan provides that the Indenture for the Old Subordinated Notes is cancelled. As of the Effective Date of the Plan, Old Subordinated Notes will no longer represent a debt obligation of Old Kaiser. Instead, Old Subordinated Notes will then represent the right to receive (1) cash, New Preferred Stock and New Common Stock distributable to holders of Allowed Class 4 Claims under the Plan and (2) to the extent the holder of an Old Subordinated Note accepted the KGP exchange offer, or is a direct or indirect transferee from a holder of Old Subordinated Notes who accepted the KGP exchange offer, the appropriate number of KGP put rights. An initial distribution of shares of New Common Stock to holders of Old Common Stock will be made to owners of Old Common Stock as of the initial distribution date. To the extent that holders of Old Common Stock as of the initial distribution date hold certificates for such shares, rather than owning them in "street name", it will be necessary for holders of Old Common Stock to surrender their certificates for shares of Old Common Stock to the transfer agent for the Old Common Stock, First Chicago Trust Company, before shares of New Common Stock will be issued to such holders. Information concerning such matters will be made available to holders of Old Common Stock prior to the initial distribution date. Kaiser Holdings anticipates that there will be more than one distribution in respect to Allowed Class 4 Claims as, subsequent to the initial distribution date, holders of Class 4 Claims that are newly allowed receive cash, New Preferred Stock and New Common Stock in accordance with the Plan. Therefore, the respective percentages of the aggregate numbers of shares of ultimately outstanding New Preferred Stock and New Common Stock represented by shares issued as of the initial distribution date will decrease with the passage of time. Moreover, because the number of shares of New Common Stock ultimately to be issued to holders of Old Common Stock and other Equity Interests is based on a percentage (17.65%) of -8- the number of shares of New Common Stock ultimately issued to the holders of Allowed Class 4 Claims, additional shares of New Common Stock will be issuable from time to time to holders of Allowed Equity Interests (including holders of Old Common Stock) as shares of New Common Stock are issued after the initial distribution date to holders of newly Allowed Class 4 Claims. Such additional shares of New Common Stock will be issued to those persons who were holders of Old Common Stock as of the initial distribution date and to other Allowed Equity Interests as reflected in the records of the Bankruptcy Court. Trading of Old Common Stock Between Effective Date and Initial Distribution Date - -------------------------------------------------------------------------------- Kaiser expects that, following the Effective Date and until the initial distribution date, shares of Old Common Stock will continue to trade on the NASD's electronic bulletin board under the symbol "KSRG." However, as of the Effective Date of the Plan, shares of Old Common Stock will no longer represent shares of common stock of Old Kaiser. Instead, shares of Old Common Stock will then represent the right to receive the number of shares of New Common Stock ultimately distributable to holders of Old Common Stock under the Plan, including shares of New Common Stock distributed after the initial distribution date. As described above, the total number of shares of New Common Stock actually distributable with respect to shares of Old Common Stock cannot be determined with accuracy. However, based on the estimates and assumptions outlined above, each share of Old Common Stock will represent the right to receive a small fraction of a share of New Common Stock -- possibly as small as 1/100 of a share of New Common Stock for each share of Old Common Stock. Issuance, Registration of Owners and Trading of New Preferred Stock and New Common Stock - ---------------------------------------- Shares of New Preferred Stock and the New Common Stock will be issued as of the initial distribution date and on subsequent distribution dates, and the registration of owners of such stock will take place at such times. The distribution of certificates of shares of New Preferred Stock and New Common Stock to holders of Allowed Class 4 Claims and shares of New Common Stock to holders of Allowed Equity Interests who elect to receive actual certificates, rather than owning such shares in "street name", will take place shortly after the applicable distribution date. Shares of New Preferred Stock and New Common Stock distributable to holders of Allowed Claims and Allowed Equity Interests will not be tradable before the dates of actual distribution. Kaiser Holdings will attempt to cause the New Preferred Stock and New Common Stock to be tradeable on the NASD's electronic bulletin board. Details concerning any such trading availability, including the symbols for Kaiser Holdings' New Preferred Stock and New Common Stock, will be announced in connection with the initial distribution. The transfer agent for the New Preferred Stock and New Common Stock will be First Chicago Trust Company. Shares of New Preferred Stock and New Common Stock issued in connection with the initial distribution will represent only the number of shares actually distributed at that time, and will not include rights to additional shares of New Preferred Stock and New Common Stock to be issued in subsequent distributions. Therefore, shares of New Preferred Stock and New Common Stock purchased and sold after the initial distribution date will not carry with them the right to any additional shares. Shares of New Preferred Stock and New Common -9- Stock issued in subsequent distributions under the Plan will be made to holders of Allowed Class 4 Claims and Equity Interests (other than Old Common Stock) as reflected in the records of the Bankruptcy Court. Subsequent distributions to holders of Old Common Stock will be made to the record holders of Old Common Stock as of the initial distribution date. Possible Steps to Reduce Small Stock Holdings - --------------------------------------------- Kaiser Holdings believes that the distributions described above will result in there being many holders of a small number of shares of New Preferred Stock and New Common Stock. Kaiser Holdings may explore means by which it may purchase shares of Old Common Stock, New Preferred Stock or New Common Stock, either before or after the initial distribution date, in order to make its capital structure more cost-effective. This could include a cash sale alternative when shares of Old Common Stock are exchanged for shares of New Common Stock as described above, or a so-called "Odd-Lot Tender Offer." Information as to Assets and Liabilities of Kaiser Holdings - ----------------------------------------------------------- Kaiser Holdings is in the process of preparing a pro forma balance sheet as of the Effective Date that will show the estimated effect of the Plan consistent with the AICPA's Statement of Position 90-7, "Financial Reporting by Entities in Reorganization Under the Bankruptcy Code." The "fresh start accounting" balance sheet will be filed with the SEC on a Current Report on Form 8-K as soon as it is completed. Information as to the assets and liabilities of Old Kaiser as of September 30, 2000, which reflected the disposition of most of Old Kaiser's engineering operations but not the effects of the Plan, were included in the Old Kaiser's Quarterly Report on Form 10-Q as filed with the SEC on November 20, 2000. The financial statements in the Form 10-Q do not give effect to all adjustments to the carrying value of assets, or amounts and classification of liabilities, that might be necessary as a consequence of the Bankruptcy Cases. In addition, valuation methods used in Chapter 11 reorganization processes vary depending on the purpose for which they are prepared and may differ from methods used solely for purposes of generally accepted accounting principles, the basis on which the financial statements in the Form 10-Q were prepared. Accordingly, the values and assumptions used to set forth amounts in the financial statements in the Form 10-Q may not be indicative of the values and assumptions presented to or used by the Bankruptcy Court or ultimately reflected in Kaiser Holdings' financial statements. Valuations of Kaiser Holdings based on the financial statements in the Form 10-Q may be significantly different than valuations used by Kaiser Holdings in determining the amounts to be received, if any, by each class of creditor under the Plan. The financial statements in the Form 10-Q do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the classification of liabilities that might result from implementation of the Plan. -10- BUSINESS OF KAISER HOLDINGS Overview of Kaiser Holdings and Its Business Operations - ------------------------------------------------------- Prior to the sale of the business units comprising Old Kaiser's engineering operations, as described below, Old Kaiser was a global provider of engineering, construction management, and project and program management services. Kaiser Holdings owns a 50% interest in Kaiser-Hill Company, LLC, which serves as the general contractor for the closure of the U.S. Department of Energy's Rocky Flats Environmental Technology Site near Denver, Colorado. Kaiser Holdings also owns Kaiser Netherlands, B.V., which is performing a contract to construct a steel mini-mill in the Czech Republic for Nova Hut, a.s. Kaiser Holdings' principal executive office is located at 9302 Lee Highway, Fairfax, Virginia 22031. Its telephone number is (703) 934-3300. Recent History - -------------- The components of Old Kaiser's business underwent significant change during 1999 in an effort to restore Old Kaiser's financial condition, which had been severely damaged by substantial difficulties encountered in its execution of four large fixed-price contracts to construct nitric acid plants in 1998 and early 1999. The changes included the sale and divestiture of two of its operating groups, namely, its Environment and Facilities Management Group and 90% of its Consulting Group. Old Kaiser's non-divested and continuing activities then consisted of its engineering operations and its interest in Kaiser-Hill Company, LLC. As discussed below, both business units comprising most of Old Kaiser's engineering operations were sold during the pendency of the Bankruptcy Cases. Following mid-1999, Old Kaiser's engineering operations focused on serving clients in two categories: Infrastructure and Facilities, comprised of transit and transportation, facilities management, water/wastewater treatment and microelectronics and clean technology business lines; and Metals, Mining and Industry, comprised of alumina/aluminum, iron and steel and mining industry business lines. On July 17, 2000 the Bankruptcy Court approved, and on July 28, 2000 Old Kaiser concluded, the sale of the Old Kaiser Infrastructure and Facilities business unit to Tyco Group S.A.R.L., a subsidiary of Tyco International Ltd. This business unit is now operated as part of Tyco's Earth Tech subsidiary. On July 6, 2000, Old Kaiser executed a definitive transaction agreement calling for the sale of its Metals, Mining and Industry business unit (not including Kaiser Netherlands, B.V. and the Nova Hut project) to Hatch Associates, Inc. On August 17, 2000 the Bankruptcy Court approved, and as of August 18, 2000 Old Kaiser concluded, that transaction. Post-Confirmation Activities and Assets - --------------------------------------- Kaiser Holdings is presently engaged in the following principal activities: -11- . through its Netherlands subsidiary, an engineering and construction services contract for the construction of a steel mini-mill in the Czech Republic; . through Kaiser-Hill, performance of the contract to close the DOE's Rocky Flats site; and . holding of a minority ownership interest in Old Kaiser's Consulting Group that Old Kaiser sold in 1999 and notes issued in connection with that sale. These continuing activities and holdings are further described below. Kaiser Netherlands, B.V. Although Old Kaiser sold its Metals, Mining and Industry business unit to Hatch, it retained its Netherlands subsidiary, Kaiser Netherlands, B.V., which is performing a turnkey engineering and construction services contract for the construction of a steel mini-mill in the Czech Republic for Nova Hut. At the present time, the mini-mill project is mechanically complete. The contract with Nova Hut provides for a maximum of three possible performance tests. The first performance test was completed on November 13, 2000. Kaiser Netherlands believes that the first performance test was successful. However, Nova Hut has stated that the first test was not successful. To date, this dispute has not been resolved, and Kaiser Netherlands anticipates that it may be necessary to resort to legal proceeding to enforce its rights. This dispute, as well as the cost of a possible ongoing presence in Ostrava, Czech Republic, is expected to have a negative impact on the cash flow of Kaiser Netherlands and Kaiser Holdings. In connection with the Nova Hut project, Kaiser Holdings currently has outstanding an $11.1 million cash collateralized letter of credit, which is expected to remain in place for at least one year following the achievement of final acceptance of the mini-mill. There also exists a retention account in a bank in the Czech Republic that holds monies withheld from payments due to Old Kaiser and its subcontractors. Kaiser Netherlands' share of that retention account is estimated to be between $5 and $7 million. In addition, under the Nova Hut contract as it currently exists, Kaiser Netherlands believes that amounts payable to it include a $10 million fee due upon achievement of final acceptance. Under the terms of the transaction with Hatch, Hatch will be entitled to 20% of the fee, if any, paid to Kaiser Netherlands upon achievement of final acceptance. Given the existing disputes with Nova Hut and the fact that Nova Hut is experiencing financial difficulties, it is not possible to determine whether, or when, Kaiser Netherlands will be able to (1) collect the substantial fees Kaiser Netherlands believes is due to it from Nova Hut, (2) reclaim the Old Kaiser cash collateralizing the $11.1 million letter of credit, and (3) obtain release of the funds held in the retention account. Kaiser-Hill Company, LLC Kaiser-Hill is a Colorado limited liability company owned equally by Kaiser Holdings and CH2M Hill Companies Ltd. CH2M Hill designates three of the five members of Kaiser- -12- Hill's Board of Managers and Kaiser Holdings designates two. Kaiser Holdings is entitled to designate the chair of Kaiser-Hill's Board of Managers, provided that the person designated has significant experience with matters relating to Kaiser-Hill. Kaiser Holdings' interest in Kaiser-Hill continues to be held by Kaiser Group International, Inc. (through wholly-owned subsidiaries) and will be structurally segregated from all other assets of Kaiser Holdings. The scope of Kaiser-Hill's contract with the U.S. Department of Energy includes all elements of daily and long-term operations, as well as ultimate closure, of the DOE's Rocky Flats site in Denver, Colorado, including stabilizing and safely storing the plutonium removed from the site, cleaning up areas contaminated with hazardous and radioactive waste, and restoring much of the 6,000-acre site for future use by the public. Kaiser-Hill's prior contract with the DOE was scheduled to expire on September 30, 2000. On January 24, 2000, Kaiser-Hill was awarded the follow-on Rocky Flats contract pursuant to which Kaiser-Hill is providing services that will complete the restoration of the Rocky Flats site and close it to DOE occupation (the "Closure Contract"). The Closure Contract became effective February 1, 2000 and terminated the remaining period of the former contract as of January 31, 2000. The economic terms of the Closure Contract are significantly different from the former contract. In addition to continuing to earn revenue from the reimbursement of the actual costs of its services, Kaiser- Hill will also earn a performance fee based on a combination of the actual costs of completion and on the actual date of physical completion. Under the Closure Contract, Kaiser-Hill will be reimbursed for the costs it incurs to complete the site closure, currently estimated to range between $3.6 billion and $4.8 billion. The performance or incentive fee is expected to range from $150.0 million to $460.0 million, depending on Kaiser-Hill's ability to control the incurred costs at completion to within the targeted range and its ability to meet the closure goal any time between March 31, 2006 and March 31, 2007. If Kaiser-Hill attains physical completion above target cost and after March 31, 2007, the fee will be reduced by 30% of all contract costs incurred after such date, up to a maximum of $20.0 million. The level of success enjoyed by Kaiser-Hill in achieving closure of the Rocky Flats site on or before December 31, 2006, and the cost of achieving such closure, are likely to be the primary determinants of Kaiser Holdings' financial performance following the completion of the reorganization process. Other Assets and Activities In addition to its activities relating to the Nova Hut project and Kaiser- Hill, noted above, Kaiser Holdings owns a 10% interest in ICF Consulting Group, Inc., a privately-held entity, that was retained by Old Kaiser when it sold its Consulting Group in June 1999. Kaiser Holdings also holds approximately $6.6 million of notes issued to Old Kaiser in connection with that sale, which notes mature on June 25, 2006 and bear interest at a rate of 10 1/2% per annum. Amounts payable by ICF Consulting Group, Inc. on such notes are subject to (1) the rights of holders of ICF Consulting Group's senior lenders and (2) possible reduction as a result of indemnification claims asserted by ICF Consulting Group, Inc. pursuant to the agreements entered into by the parties at the time of Old Kaiser's sale of its Consulting Group. Kaiser Holdings has been -13- advised that ICF Consulting Group, Inc. is in technical default under the financial covenants in its senior credit agreement. As a result, as of the date hereof, Kaiser Holdings believes that ICF Consulting Group, Inc. may not be permitted by its senior lenders to make the approximate $750,000 interest payment due on December 31, 2000. Under the terms of the notes, overdue interest bears interest at 12 1/2% per annum. Kaiser Holdings' assets also include those subsidiaries that were not debtors in the Bankruptcy Cases. However, many of those subsidiaries are foreign entities and, except for Kaiser Netherlands, which is performing services for the Nova Hut project, and those subsidiaries related to Kaiser- Hill, subsidiaries that were not debtors in the Bankruptcy Cases do not have material value. It is anticipated that a number of such subsidiaries will be dissolved or otherwise cease to exist or become totally inactive. The Board of Directors of Kaiser Holdings will consider whether Kaiser Holdings will engage in any additional business activities. Among other things, it is anticipated that the Board of Directors will consider whether Kaiser Holdings should attempt to take advantage of Old Kaiser's successful history of performing in the government services market, both independently and through Kaiser-Hill, in order to develop a new revenue base. Kaiser Holdings has not yet made any decisions with respect to such future activities. Potential Liabilities Involving Clients and Third Parties In performing services for its clients, Kaiser Holdings could potentially be liable for breach of contract, personal injury, property damage, and negligence, including improper or negligent performance or design, failure to meet specifications, and breaches of express or implied warranties. The damages available to a client, should it prevail in its claims, are potentially large and could include consequential damages. Under Kaiser-Hill's contract with the DOE, Kaiser-Hill is not responsible for, and the DOE pays all costs associated with, any liability, including, without limitation, any claims involving strict or absolute liability and any civil fine or penalty, expense, or remediation cost, but limited to those of a civil nature, which may be incurred by, imposed on, or asserted against Kaiser- Hill arising out of any act or failure to act, condition, or exposure which occurred before Kaiser-Hill assumed responsibility on July 1, 1995 ("pre- existing conditions"). To the extent the acts or omissions of Kaiser-Hill constitute willful misconduct, lack of good faith, or failure to exercise prudent business judgment on the part of Kaiser-Hill's managerial personnel and cause or add to any liability, expense, or remediation cost resulting from pre- existing conditions, Kaiser-Hill is responsible, but only for the incremental liability, expense, or remediation caused by Kaiser-Hill. The Kaiser-Hill contract further provides that Kaiser-Hill will be reimbursed for the reasonable cost of bonds and insurance allocable to the Rocky Flats contract and for liabilities and expenses incidental to these liabilities, including litigation costs, to third parties not compensated by insurance or otherwise. There is an exception to this reimbursement provision applicable to liabilities caused by the willful misconduct, lack of good faith or failure to exercise prudent business judgment by Kaiser-Hill's managerial personnel. -14- Post-Confirmation Liabilities Kaiser Holdings has various obligations and liabilities from its continuing operations, including costs related to the performance of services on the Nova Hut project and general overhead expenses in connection with maintaining, operating and winding down the various entities comprising Kaiser Holdings. In addition, Kaiser Holdings has assumed certain post-retirement benefits due to former employees of Kaiser Engineers. Kaiser Holdings is in the process of evaluating, and developing a mechanism, to deal with this significant liability. Employees As of March 31, 2000, excluding Kaiser-Hill, Old Kaiser had approximately 1,340 employees, of which 700 were located in North America and 640 in numerous international sites. Kaiser-Hill had approximately 2,050 persons employed at the DOE's Rocky Flats site in Colorado. Nearly all of Old Kaiser's employees, other than the employees of Kaiser-Hill, were employed in the business units sold to Earth Tech and Hatch. At this time, Kaiser Holdings has approximately 20 employees, pending development of a business plan for Kaiser Holdings' ongoing operations. Properties Kaiser Holdings' headquarters are located at 9302 Lee Highway, Fairfax, Virginia 22031-1207, and its telephone number is (703) 934-3300. At this time, Kaiser Holdings expects that its only offices will be its headquarters location and a location in the Czech Republic as required for the Nova Hut project. Kaiser Holdings' office space is leased. DIRECTORS AND OFFICERS ---------------------- Set forth below is the name and age of, and summary background information concerning, the directors and executive officers of Kaiser Holdings. The officers of Kaiser Holdings are employed by Old Kaiser. Directors - --------- Jon B. Bennett, 44, Director of Kaiser Holdings, has been a Director of Information Management at Devens Reserve Forces Training Area, a Department of the Army installation, since 1998. Mr. Bennett was Systems Administrator and Analyst at the then Fort Devens from 1995 to 1997, and was the senior Budget Analyst at Fort Devens from 1990 to 1995. Mr. Bennett graduated from Bucknell University (B.A.). Bennett Management Corporation, which is controlled by Mr. Bennett's brother, James Bennett, is expected to be a significant holder of the New Preferred Stock and New Common Stock to be issued by Kaiser Holdings. John V. Koerber, 45, Director of Kaiser Holdings, has been a co-manager and research analyst since 1996 of various mutual funds focused on high yield securities and offered by The Dreyfus Corporation and its affiliated companies. Mr. Koerber served as Chairman of the -15- Official Unsecured Creditors Committee in the Old Kaiser Bankruptcy Cases. Mr. Koerber also has been the Chairman and Chief Executive Officer of Nu-Med, Inc. since 1994. From 1990 to 1996, Mr. Koerber was an independent consultant in the area of high yield, distressed and bankrupt debt securities. Mr. Koerber graduated from Yale University (A.B.) and Columbia University (M.B.A.). The Dreyfus Corporation is expected to be a significant holder of the New Preferred Stock and New Common Stock to be issued by Kaiser Holdings. James J. Maiwurm, 52, Chairman of the Board of Directors of Kaiser Holdings, was President and Chief Executive Officer of Old Kaiser from April 19, 1999 until the Effective Date, and served as Chairman of the Board of Directors of Old Kaiser from June 1999 until the Effective Date. Mr. Maiwurm serves on the Board of Managers of Kaiser-Hill. From August 1998 until elected as Old Kaiser's President and Chief Executive Officer, Mr. Maiwurm was a partner of Squire, Sanders & Dempsey L.L.P., Washington, D.C., and from 1990 to 1998 was a partner of Crowell & Moring LLP, Washington, D.C. Both law firms have served as counsel to Old Kaiser and continue to serve as counsel to Kaiser Holdings. Mr. Maiwurm is a member of the Board of Trustees of Davis Memorial Goodwill Industries, Washington, D.C., a non-profit entity, and the Boards of Directors of Workflow Management, Inc., an integrated graphic arts company providing documents, envelopes and commercial printing to businesses in North American, the stock of which is traded on the NASDAQ National Market System, and Cortez III Service Corporation, a privately-held government services provider. Mr. Maiwurm graduated from the College of Wooster (B.A.) and the University of Michigan (J.D.). It is not expected that Mr. Maiwurm will own any shares of New Preferred Stock or New Common Stock of Kaiser Holdings. Executive Officers - ------------------ John T. Grigsby, Jr., 60, is President and Chief Executive Officer of Kaiser Holdings. Mr. Grigsby is the President of John Grigsby and Associates, Inc., a firm which he founded in June 1984 to provide consulting assistance to financially distressed and reorganizing companies. In addition, Mr. Grigsby most recently has served as the Trustee for the Auto Works Creditors' Trust. Over the last ten years, Mr. Grigsby has served as chief executive officer of a number of financially distressed companies including Super Shops, Inc., Auto Parts Club, Inc., Reddi Brake, Rose Auto Stores-Florida, Inc. and Nationwise Automotive, Inc., as well as for a number of Chapter 11 Debtors, including Pro Set, Inc., Allis Chalmers Corporation and Thomson McKinnon Securities, Inc. It is not expected that Mr. Grigsby will own any shares of New Preferred Stock or New Common Stock of Kaiser Holdings. Marijo L. Ahlgrimm, 40, is the Executive Vice President, Chief Financial Officer and Secretary of Kaiser Holdings. Ms. Ahlgrimm had served as the Senior Vice President and Controller of Old Kaiser since December 1, 1997. From 1994 to 1997 Ms. Ahlgrimm was a vice president and the controller of BDM Technologies, Inc. It is not expected that Ms. Ahlgrimm will own any shares of New Preferred Stock or New Common Stock of Kaiser Holdings. -16- CAPITAL STRUCTURE OF KAISER HOLDINGS THE SECURITIES TO BE ISSUED BY KAISER HOLDINGS UNDER THE PLAN ARE BEING ISSUED UNDER EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND ANY LICENSING REQUIREMENTS OF STATE SECURITIES LAWS, AS PROVIDED IN SECTION 1145 OF THE BANKRUPTCY CODE. THESE SECURITIES MAY BE TRANSFERRED AND RESOLD WITHOUT RESTRICTION, EXCEPT TO THE EXTENT HELD BY CERTAIN PERSONS, INCLUDING PERSONS AFFILIATED WITH KAISER HOLDINGS. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES AUTHORITY HAS APPROVED THE SECURITIES TO BE ISSUED IN ACCORDANCE WITH THE PLAN. As part of the implementation of the Plan, Kaiser Holdings was created to serve as the parent holding company for all of Old Kaiser and its subsidiaries. Kaiser Holdings will be the issuer of the New Preferred Stock and New Common Stock to be distributed pursuant to the Plan. Kaiser Holdings Certificate of Incorporation and Bylaws - ------------------------------------------------------- The certificate of incorporation and bylaws of Kaiser Holdings are attached as Exhibits 3(i) and 3(ii) to this Current Report on Form 8-K. After the Effective Date, Kaiser Holdings may amend and restate its certificate of incorporation and bylaws as permitted by such documents and applicable state law. New Preferred Stock - ------------------- General The Kaiser Holdings certificate of incorporation authorizes the issuance of 2,000,000 shares of New Preferred Stock. As stated above, holders of Allowed Class 4 Claims are to receive shares of New Preferred Stock under the Plan. A holder of an Allowed Class 4 Claim will be entitled to receive one share of New Preferred Stock for each $100.00 of such holder's respective Allowed Class 4 Claim, reduced by one share for each $55 of cash distributed to such holder. Based on its current estimates of the aggregate amount of Allowed Class 4 Claims and cash available for distribution, Kaiser Holdings expects to issue approximately 863,636 shares of New Preferred Stock in accordance with the Plan. As discussed above, Kaiser Holdings does not anticipate that the initial distribution of shares of New Preferred Stock will take place until after March 1, 2001. For information concerning the registration and trading of New Preferred Stock, see "Issuance, Registration of Owners and Trading of New Preferred Stock and New Common Stock" below. The New Preferred Stock to be issued in accordance with the Plan will be the only outstanding shares of preferred stock of Kaiser Holdings on or shortly after the Effective Date, and it is not anticipated that other series of preferred stock will be issued in the foreseeable future. The certificate of incorporation of Kaiser Holdings and Delaware law permit the Board -17- of Directors to issue additional series of preferred stock, except that the Board of Directors may not authorize the issuance of any securities that rank senior to or on a parity with the New Preferred Stock without the consent of holders of at least two-thirds of the New Preferred Stock. Designation and Rank The New Preferred Stock is a series of authorized preferred stock designated as "Series 1 Redeemable Cumulative Preferred Stock," and has a par value of $0.01 per share. The New Preferred Stock will rank ahead of Kaiser Holdings' New Common Stock. Dividends Cumulative dividends on the New Preferred Stock will be payable on a quarterly basis either in cash at an annual rate of 7% of the liquidation preference per share or in additional shares of New Preferred Stock at an annual rate of 12% of the per share liquidation preference. Dividends will not begin to accrue on the New Preferred Stock until the initial distribution date. Dividends will not be paid to any affiliate of Kaiser Holdings on account of that affiliate's ownership of shares of New Preferred Stock. If Kaiser Holdings fails to pay a quarterly dividend when due, holders of New Preferred Stock will have the right to elect an additional director for each dividend payment missed, up to a maximum of two additional directors, but only until such dividend is paid or provided for in full. Liquidation Preference The New Preferred Stock will have a liquidation preference of $55 per share. Upon the liquidation or dissolution of Kaiser Holdings, each holder of New Preferred Stock (other than an affiliate of Kaiser Holdings) will be entitled to be paid this per share liquidation preference before any holders of New Common Stock or any other junior securities of Kaiser Holdings receive any payment for their shares. If, in a liquidation or dissolution setting, assets remaining after distribution to holders of debt and other obligations are insufficient to pay all holders of New Preferred Stock the per share liquidation preference, then such assets will be distributed on a proportionate basis to the holders of New Preferred Stock (other than affiliates of Kaiser Holdings) and any securities ranking on a parity with the New Preferred Stock. Redemption Kaiser Holdings will have the option to redeem the New Preferred Stock at any time, in whole or in part, at a redemption price of 100% of the liquidation preference per share plus all accrued and unpaid dividends. In addition, any net proceeds in excess of $3 million in a calendar year received by Kaiser Holdings or any of its direct or indirect subsidiaries from the disposition of assets to an unaffiliated party outside of the ordinary course of business must be used to redeem New Preferred Stock at a redemption price of 100% of the liquidation preference per share plus all accrued and unpaid dividends. Furthermore, Kaiser Holdings has pledged cash to support a letter of credit issued in connection with an engineering services contract being performed by Kaiser Netherlands relating to a steel mini-mill project in the Czech Republic. To the extent that such cash is released from this pledge and becomes available to Kaiser Holdings, -18- it must be used to redeem New Preferred Stock at a redemption price of 100% of the liquidation preference per share plus all accrued and unpaid dividends. All outstanding shares of New Preferred Stock are required to be redeemed by Kaiser Holdings on or before December 31, 2007, and if such redemption does not occur, holders of New Preferred Stock will be entitled to elect two-thirds of the directors of Kaiser Holdings. If shares of New Preferred Stock are held by any affiliate of Kaiser Holdings, those shares may not be redeemed pursuant to any of the redemption provisions otherwise applicable to the New Preferred Stock. Change of Control Offer Kaiser Holdings will be required to offer to purchase the New Preferred Stock at 100% of the liquidation preference per share plus all accrued and unpaid dividends in connection with a change of control of Kaiser Holdings. Voting Rights Holders of New Preferred Stock generally will be entitled to vote with holders of New Common Stock on all matters submitted to a vote of shareholders, with each share of New Preferred Stock being entitled to one-tenth of a vote. In addition, holders of New Preferred Stock will have the right to vote separately as a class to exercise their right to elect an additional director due to a failure to pay a quarterly dividend, to elect two-thirds of the directors if the New Preferred Stock is not redeemed by December 31, 2007, and to consent to the issuance of any senior or parity securities. The terms of the New Preferred Stock may not be materially and adversely modified without the consent of holders of at least two-thirds of the New Preferred Stock. If Kaiser Holdings or any of its affiliates holds any New Preferred Stock, they will not be entitled to vote that New Preferred Stock. KGP Put Rights/2/ - ----------------- In addition to the express terms of the New Preferred Stock contained in the certificate of incorporation, as summarized above, holders of Old Subordinated Notes were offered the opportunity to have a right to "put" their New Preferred Stock to KGP, which is the indirect 100% owner of Old Kaiser's interest in Kaiser-Hill. This opportunity was offered in exchange for the surrender of any remaining rights held by holders of Old Subordinated Notes as of August 14, 2000 under a guarantee previously issued by KGP. The exchange offer by KGP expired on November 15, 2000, and the holders of $124,303,000, or 99.4%, principal amount of the Old Subordinated Notes accepted the exchange offer. General; Purchase Triggering Events. The KGP put rights obligate KGP to purchase New Preferred Stock owned by a holder of the KGP put right, at the option of the then holder of a put, under three circumstances: ___________________ /2/ For a full statement of the terms and conditions of the puts, see the Put Agreement, the form of which is attached as Exhibit 4 to this Current Report on Form 8-K. -19- . if KGP receives net after-tax proceeds from any cash distributions from Kaiser-Hill that, on a quarterly basis, exceed 2.8 times the amount of cash required to pay all past accrued but unpaid cash dividends on the New Preferred Stock distributed to holders of Old Subordinated Notes pursuant to the Plan, plus the next scheduled quarterly cash dividend on New Preferred Stock; . if KGP receives net after-tax proceeds from any direct or indirect disposition of any interest in Kaiser-Hill; or . if KGP receives net after-tax proceeds from an extraordinary distribution from Kaiser-Hill. The KGP put rights will expire on December 31, 2007. Purchase Price; Pro Rata Purchase. KGP put rights may be exercised only as a result of a triggering event as described above. Upon exercise of a put, KGP will pay an exercising holder 100% of the liquidation preference of the New Preferred Stock that is the subject of the KGP put rights, plus all accrued and unpaid dividends on the New Preferred Stock. KGP will purchase shares of New Preferred Stock on a pro rata basis based upon the number of shares of New Preferred Stock as to which puts have been properly exercised, but only up to the amount of the available net after- tax proceeds from triggering events. KGP will not purchase any fractional shares. Exercise Procedures. The Bank of New York will act as depositary and paying agent with respect to the KGP put rights. The depositary will distribute certificates evidencing the KGP put rights with respect to Old Subordinated Notes as to which the exchange offer was accepted. The number of KGP put rights represented by such certificates will correspond with the number of shares of New Preferred Stock distributed with respect to Old Subordinated Notes. The depositary will receive from KGP all net after-tax proceeds from the triggering events described above and will hold such proceeds for the irrevocable benefit of holders of KGP put rights until distributed upon the exercise of KGP put rights. The depositary will disseminate to holders of KGP put rights a notice of each triggering event, and holders wishing to exercise KGP put rights will have 30 days to deliver a prescribed form of notice to the depositary and tender any New Preferred Stock certificate held by them. KGP put rights will not become exercisable more frequently than every 12 months unless the cumulative amount of available net after-tax proceeds from triggering events is at least $3 million. The depositary will report to KGP the aggregate number of shares of New Preferred Stock as to which KGP put rights have been properly exercised in respect of a triggering event, and within five business days after receipt of that report, KGP will deliver to the depositary a report setting forth the aggregate amount payable to each holder that has properly exercised KGP put rights, together with information regarding the number of shares of New Preferred Stock, if any, that has not been purchased from each holder and with respect to which each holder's put remains unexercised. -20- The depositary will promptly issue payment of the purchase price payable to each holder, together with new KGP put rights certificates evidencing the number of shares of New Preferred Stock, if any, as to which each holder's put remains unexercised, and shall cause new stock certificates to be issued evidencing any remaining number of shares of New Preferred Stock held by an exercising holder. Transferability. KGP put rights will be transferable on the register to be maintained for the puts, except that puts shall cease to be transferable if KGP determines that any further transfer would require registration of the puts as a class of securities under the Securities Exchange Act of 1934. Kaiser Holdings does not presently plan to arrange for trading of the KGP put rights on the NASD electronic bulletin board or otherwise. New Common Stock - ---------------- The Kaiser Holdings certificate of incorporation authorizes the issuance of 3,000,000 shares of New Common Stock. As stated above, holders of Allowed Class 4 Claims and Allowed Class 5 Equity Interests are to receive shares of New Common Stock under the Plan. Kaiser Holdings will issue to holders of Allowed Class 4 Claims one share of New Common Stock for each $100.00 of such holder's respective Allowed Class 4 Claim. As discussed above, Kaiser Holdings does not anticipate that the initial distribution of shares of New Common Stock will take place until after March 1, 2001. For information concerning the registration and trading of New Common Stock, see "Registration of Owners, and Trading, of New Preferred Stock and New Common Stock" below. Holders of Allowed Class 5 Equity Interests will receive their pro rata portion of New Common Shares representing 15% of the aggregate amount of New Common Shares to be outstanding following distributions to holders of Allowed Class 4 Claims and Allowed Class 5 Equity Interests. This outcome will be accomplished by issuing to each holder of an Allowed Class 5 Equity Interest its pro rata portion of the number of shares of New Common Stock that represents 17.65% of the total number of shares of New Common Stock issued from time to time to holders of Allowed Class 4 Claims All shares of New Common Stock to be issued in accordance with the Plan will, at issuance, be duly authorized, fully paid and non-assessable. The holders of such shares will have no preemptive or other rights to subscribe for additional shares. The New Common Stock will have a par value of $0.01 per share. Based on its current estimates of the aggregate amount of Allowed Class 4 Claims and cash available for distribution, Kaiser Holdings expects to issue approximately 1,764,750 shares of New Common Stock to holders of Allowed Class 4 Claims and Allowed Class 5 Equity Interests. Old Kaiser never paid cash dividends on its Old Common Stock. Kaiser Holdings anticipates that for the foreseeable future no cash dividends will be paid on the New Common Stock and that Kaiser Holdings' earnings will be utilized to redeem New Preferred Stock or retained for use in the business. The Board of Directors of Kaiser Holdings will determine its -21- dividend policy based on its results of operations, payment of dividends on, and redemption of, New Preferred Stock, financial condition, capital requirements, and other circumstances. Registration Rights of Certain Holders of New Preferred Stock - ------------------------------------------------------------- The Plan provides that Major Stockholders (defined as holders of 10% or more of the outstanding shares of New Preferred Stock or New Common Stock, or a person who is an "affiliate" of Kaiser Holdings as defined under the Federal securities laws) have certain registration rights. In general, a Major Stockholder may request Kaiser Holdings to register under the Securities Act of 1933 the sale of all, but not less than all, of the New Preferred Stock and/or New Common Stock owned by the Major Stockholder. Upon request for such a registration from a Major Stockholder, Kaiser Holdings is required to give notice to other Major Stockholders and use its best efforts to cause a registration statement to become effective as expeditiously as possible and maintain such registration statement current for a period of 12 months. Major Stockholders are not entitled to request registration until one year after the Effective Date, and Kaiser Holdings is not obligated to file a registration statement in response to a request from a Major Stockholder until such time as Kaiser Holdings is eligible to use Form S-3 under the Securities Act of 1933 for such a secondary offering. Kaiser Holdings is not required to effect more than one registration for Major Stockholders during any twelve-month period. These registration rights expire on December 31, 2007. The Plan also contemplates that Major Stockholders will have "piggyback" registration rights in connection with a proposed underwritten public offering of Kaiser Holdings New Common Stock or New Preferred Stock solely for cash and for its own account. The terms of the Plan relating to the registration rights of Major Stockholders have customary terms, conditions and exceptions. Issuance, Registration of Owners and Trading of New Preferred Stock and New Common Stock - -------------------- Shares of New Preferred Stock and New Common Stock will be issued as of the initial distribution date and on subsequent distribution dates, and the registration of owners of such stock will take place at such times. The distribution of certificates of shares of New Preferred Stock and New Common Stock to holders of Allowed Class 4 Claims and shares of New Common Stock to holders of Allowed Equity Interests who elect to receive actual certificates, rather than owning such shares in "street name", will take place shortly after the applicable distribution date. Shares of New Preferred Stock and New Common Stock distributable to holders of Allowed Claims will not be tradable before the dates of actual distribution. Kaiser Holdings will attempt to cause the New Preferred Stock and New Common Stock to be tradeable on the NASD's electronic bulletin board. Details concerning any such trading availability, including the symbols for Kaiser Holdings' New Preferred Stock and New Common Stock, will be announced in connection with the initial distribution. The transfer agent for the New Preferred Stock and New Common Stock will be First Chicago Trust Company. -22- Shares of New Preferred Stock and New Common Stock issued in connection with the initial distribution will represent only the number of shares actually distributed at that time, and will not include rights to additional shares of New Preferred Stock and New Common Stock to be issued in subsequent distributions. Therefore, shares of New Preferred Stock and New Common Stock purchased and sold after the initial distribution date will not carry with them the right to any additional shares. Shares of New Preferred Stock and New Common Stock issued in subsequent distributions under the Plan will be made to holders of Allowed Class 4 Claims and Equity Interests (other than Old Common Stock) as reflected in the records of the Bankruptcy Court. Subsequent distributions to holders of Old Common Stock will be made to the record holders of Old Common Stock as of the initial distribution date. If the trading price of the New Preferred Stock or New Common Stock is less than $5.00 per share at a time when Kaiser Holdings' net tangible assets total less than $5,000,000, trading in the New Preferred Stock or New Common Stock will also be subject to the requirements of Rule 15g-9 promulgated under the Securities Exchange Act of 1934, as amended. Under such rule, broker/dealers who recommend such low-priced securities to persons other than established customers and accredited investors must satisfy special sales practice requirements, including a requirement that they make an individualized written suitability determination for the purchaser and receive the purchaser's written consent before the transaction. The Securities Enforcement Remedies and Penny Stock Reform Act of 1990 also requires additional disclosure in connection with any trades involving a stock defined as a "penny stock" (generally, according to recent regulations adopted by the Securities and Exchange Commission, any equity security not traded on an exchange or quoted on the NASDAQ Small Cap Market that has a market price of less than $5.00 per share, subject to certain exceptions), including the delivery, before any penny stock transaction, of a disclosure schedule explaining the penny stock market and the risks associated with such stock. Such requirements could have the effect of severely limiting the market liquidity of the New Preferred Stock or New Common Stock. Exemption From Securities Act Registration - ------------------------------------------ The Plan contemplates the issuance of New Preferred Stock and New Common Stock to holders of Allowed Claims and Allowed Equity Interests. Section 1145 of the Bankruptcy Code creates certain exemptions from the registration and licensing requirements of federal and state securities laws with respect to the issuance and distribution of securities by a debtor under a plan or reorganization to holders of claims or equity interests wholly or principally in exchange for those claims or equity interests. Issuance of New Preferred Stock and New Common Stock Under the Plan With respect to the New Preferred Stock and New Common Stock to be issued pursuant to the Plan, Kaiser Holdings is relying on the exemption from the registration requirements of the Securities Act of 1933 ("Securities Act") (and the equivalent state securities or "blue sky" laws) provided by Section 1145(a)(1) of the Bankruptcy Code. Generally, Section 1145(a)(1) of the Bankruptcy Code exempts the issuance of securities from the requirements of the Securities Act and the equivalent state securities and "blue sky" laws if the following conditions are satisfied: (a) the securities are issued by a debtor, an affiliate participating in a joint plan of reorganization with the debtor, or a successor of the debtor under a plan of reorganization; (b) the recipients of -23- the securities hold a claim against, an equity interest in, or a claim for an administrative expense against, the debtor; and (c) the securities are issued entirely in exchange for the recipient's claim against or equity interest in the debtor, or are issued "principally" in such exchange and "partly" for cash or property. Kaiser Holdings believes that the issuance of securities contemplated by the Plan will satisfy the aforementioned requirements and therefore is exempt from federal and state securities laws, although as discussed below, under certain circumstances, subsequent transfers of such securities may be subject to registration requirements under such securities laws. Subsequent Transfer of Securities Issued Under the Plan The securities issued pursuant to the Plan may be resold by the holders of such securities without restriction unless, as more fully described below, any such holder is deemed to be an "underwriter" with respect to such securities, as defined in Section 1145(b)(1) of the Bankruptcy Code. Generally, Section 1145(b)(1) of the Bankruptcy Code defines an "underwriter" as any person who (a) purchases a claim against, or equity interest in, a bankruptcy case, with a view towards the distribution of any security to be received in exchange for such claim or equity interest; (b) offers to sell securities issued under a bankruptcy plan on behalf of the holders of such securities; (c) offers to buy securities issued under a bankruptcy plan from persons receiving such securities, if the offer to buy is made with a view towards distribution of such securities; or (d) is an issuer as contemplated by Section 2(11) of the Securities Act. Although the definition of the term "issuer" appears in Section 2(4) of the Securities Act, the reference contained in Section 1145(b)(1) of the Bankruptcy Code to Section 2(11) of the Securities Act purports to include as "underwriters" all persons who, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with, an issuer of securities. "Control" (as such term is defined in Rule 405 of Regulation C under the Securities Act) means the direct or indirect possession of the power to direct or cause the direction of the policies of a person, whether through the ownership of voting securities, by contract or otherwise. Accordingly, an officer or director of a reorganized debtor (or its successor) under a plan of reorganization may be deemed to be a "control person," particularly if such management position is coupled with the ownership of a significant percentage of the debtor's (or successor's) voting securities. Moreover, the legislative history of Section 1145 of the Bankruptcy Code suggests that a creditor who owns at least 10% of the voting securities of a reorganized debtor may be presumed to be a "control person." The foregoing summary discussion is general in nature and has been included in this Current Report on Form 8-K solely for informational purposes. Kaiser Holdings makes no representations concerning, and does not provide any opinion or advice with respect to, the securities law and bankruptcy law matters described above. In light of the complex and subjectively interpretive nature of whether a particular recipient or securities under the Plan may be deemed to be an "underwriter" within the meaning of Section 1145(b)(1) of the Bankruptcy Code or an "affiliate" or "control person" under applicable federal and state securities laws and, consequently, the uncertainty concerning the availability of exemptions from the registration requirements of the Securities Act and equivalent state securities and "blue sky" laws, Kaiser Holdings encourages potential recipients of securities pursuant to the Plan to consider carefully and consult with their own counsel with respect to these and related matters. -24- CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN The Disclosure Statement dated August 28, 2000 distributed to creditors and stockholders of Old Kaiser pursuant to order of the Bankruptcy Court includes a discussion of the material federal income tax consequences of the Plan to Kaiser Holdings and certain holders of Claims. The Disclosure Statement can be accessed via the internet at www.deb.uscourts.gov. That discussion was based on the provisions of the Internal Revenue Code of 1986, as amended, final, temporary, and proposed Treasury regulations thereunder, and administrative and judicial interpretations thereof, all as in effect as of the date of the Disclosure Statement. There can be no assurance that the Internal Revenue Service will not take a contrary view, and no ruling from the Internal Revenue Service or opinion of counsel has been or will be sought as to the federal income tax consequences of the Plan. The description in the Disclosure Statement did not include all matters that may be relevant to any particular holder and could be affected by the specific facts and circumstances pertaining to such holder. RISK FACTORS RELATING TO KAISER HOLDINGS The restructuring of Old Kaiser through the bankruptcy process involves a significant degree of risk, and this Current Report on Form 8-K and certain disclosures and reports or statements to be released by Kaiser Holdings or statements to be made by its officers or directors will contain forward-looking statements that involve risks and uncertainty. Kaiser Holdings' actual results could differ materially from those anticipated in such forward-looking statements as a result of a variety of factors, including those set forth in the following risk factors and elsewhere in this Current Report on Form 8-K. Risks Relating to Kaiser Holdings' Business - ------------------------------------------- Kaiser Holdings Will Be Dependent on Kaiser-Hill's Performance and Nova Hut Project Kaiser Holdings' long-term future profitability will be dependent, to a significant extent, on Kaiser-Hill's performance under its Closure Contract with DOE. Kaiser-Hill serves as the general contractor at DOE's Rocky Flats Environmental Technology Site near Denver, Colorado. Rocky Flats is a former DOE nuclear weapons production facility. Kaiser-Hill's contract with the DOE includes a performance fee based upon a combination of the actual costs to complete the site closure and the actual date of completion of the closure. If Kaiser-Hill fails to complete within the target cost for the project and fails to complete the project by March 31, 2007, Kaiser Hill's fee will be reduced by 30% of the costs incurred after the target date, up to a maximum of $20 million. In the shorter term, as discussed above, Kaiser Holdings' profitability and cash flow will be dependent, to a significant extent, on the resolution of disputes relating to Kaiser Netherlands' performance under its fixed-price contract for turnkey engineering and construction services relating to a steel mini-mill in the Czech Republic for Nova Hut and on the ability of Nova Hut, which is in financial difficulty, to pay for such services. -25- Risks From Special Federal Regulations Because Kaiser-Hill provides the Federal government with nuclear energy and defense- related services, it and a number of its employees are required to have and maintain security clearances from the Federal government. There can be no assurance that the required security clearances will be obtained and maintained in the future. In addition, Kaiser-Hill is subject to foreign ownership, control and influence regulations imposed by the Federal government and designed to prevent the release of classified information to contractors subject to foreign ownership, influence and control. There can be no assurance that foreign ownership, influence and control concerns will not affect the ability of Kaiser-Hill to maintain its DOE contract. Potential Substantial Liabilities and Costs Associated With Kaiser-Hill's DOE Contract Under the DOE contract, Kaiser-Hill is responsible for, and DOE will not pay for costs associated with, liabilities caused by the willful misconduct or lack of good faith of Kaiser-Hill's managerial personnel or the failure to exercise prudent business judgment by Kaiser-Hill's managerial personnel. If Kaiser-Hill were found liable for any of these reasons, the associated costs could be substantial. Absence of a Business Plan Beyond Kaiser-Hill and Nova Hut Project Apart from the risks associated with Kaiser-Hill's performance under its Closure Contract with the DOE, the performance of Kaiser Netherlands on the Nova Hut project, and Nova Hut's ability to pay Kaiser Netherlands, Kaiser Holdings' long-term future profitability will be dependent, to a significant extent, on its ability to develop a business plan for ongoing operations. It is possible that Kaiser Holdings' ongoing business plan will be limited to performing the Nova Hut project and participating in the activities of Kaiser-Hill. It is also possible that the Board of Directors of Kaiser Holdings will consider whether Kaiser Holdings should attempt to take advantage of its successful history of performing in the government services market, both independently and through Kaiser-Hill, in order to develop a new revenue base. Ability to Obtain Performance Guaranties Given Old Kaiser's history, Kaiser Holdings may not be able to obtain satisfactory contract performance guaranty mechanisms, such as performance bond and letters of credit, at all or on satisfactory terms, to the extent such mechanisms are needed for new or existing projects. Uncertainties Beyond Kaiser Holdings' Control A number of other uncertainties may adversely impact Kaiser Holdings' future operations including, without limitation, economic recession, adverse regulatory agency actions, acts of God, or similar circumstances. Many of these factors will be substantially beyond Kaiser Holdings' control, and a change in any factor or combination of factors could have a material adverse effect on Kaiser Holdings' financial condition, cash flows, and results of operations. -26- Uncertainties Concerning Adequacy of Funds There can be no assurance that Kaiser Holdings will be able to continue to generate sufficient funds to meet its obligations, notwithstanding the significant improvements in Kaiser Holdings' operations and financial condition. Although Kaiser Holdings' expects to generate sufficient funds to meet its working capital needs for the foreseeable future, its ability to gain access to additional capital, if needed, cannot be assured. Risks Associated with the New Preferred Stock and New Common Stock - ------------------------------------------------------------------ No Trading Market The New Preferred Stock and New Common Stock (collectively, the "New Securities") are new issues of securities for which there are currently no established trading markets. There can be no assurance that a trading market for any of the New Securities will develop. The absence of a trading market will adversely affect the liquidity of the New Securities and it may be difficult to sell these securities. Kaiser Holdings does not intend to apply for listing of the New Securities on any national securities exchange or for quotation through any over-the-counter market other than the NASD's electronic bulletin board, and there is no assurance that Kaiser Holdings will be able to obtain listing or quotation of the New Preferred Stock or New Common Stock. If New Securities are traded, they may trade at a substantial discount from their face or liquidation value. Any discount could depend upon a number of factors, including: . the market demand for the New Securities; . the market for similar securities; . the financial condition and performance of Kaiser Holdings; . prevailing dividend and interest rates generally in the financial markets; and . general economic conditions. -27- Ability to Pay Liquidation Preference and Dividends Depends on Financial Condition Kaiser Holdings' obligations to the holders of its debt and other creditors will take priority over its obligations to the holders of the New Preferred Stock. Under Delaware law, Kaiser Holdings may not redeem the New Preferred Stock for its stated liquidation preference if at that time its remaining assets are not sufficient to pay its outstanding obligations or if that redemption would impair its capital. No Likelihood of Dividends on New Common Stock Old Kaiser never paid dividends on its Old Common Stock, and Kaiser Holdings anticipates that it will retain all earnings for use in its business rather than paying cash dividends on the New Common Stock in the foreseeable future. Risk Factors Related to Estimates and Assumptions - ------------------------------------------------- As with any plan of reorganization or other financial transaction, there are certain risk factors that must be considered. All risk factors cannot be anticipated, some events will develop in ways that were not foreseen, and many or all of the assumptions that have been used in connection with this Current Report on Form 8-K and the Plan will not be realized exactly as assumed. Some or all of such variations may be material. Holders of Allowed Claims and Equity Interests should be aware of some of the principal risks associated with Old Kaiser's reorganization: . The total amount of all Claims filed in the Bankruptcy Cases may be materially in excess of the estimated amounts of Allowed Claims assumed in the development of the Plan. Accordingly, the amount and timing of the distributions that will ultimately be received by any particular holder of an Allowed Claim in any Class may be materially and adversely affected should the assumptions be exceeded as to any Class. . There are substantial uncertainties relating to the resolution of disputes between Kaiser Netherlands and Nova Hut concerning the Nova Hut mini-mill project and Nova Hut's financial capacity to pay the substantial amounts Kaiser Holdings believes is due to Kaiser Netherlands. . Due to delays in confirmation of the Plan, uncertainties concerning the Nova Hut mini-mill project and other factors, the amount of cash available for distribution under the Plan may be less than previously anticipated. -28- ITEM 7. EXHIBITS Exhibit 2 Second Amended Plan of Reorganization of Kaiser Group International, Inc., et al. ----- Exhibit 3(i) Certificate of Incorporation of Kaiser Group Holdings, Inc. Exhibit 3(ii) Bylaws of Kaiser Group Holdings, Inc. Exhibit 4 Form of Put Agreement relating to preferred stock of Kaiser Group Holdings, Inc. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized. KAISER GROUP INTERNATIONAL, INC. (Registrant) /s/ James J. Maiwurm ------------------------------------------ James J. Maiwurm Chairman, President and Chief Executive Officer Date: December 14, 2000 -29- EX-2 2 0002.txt EXHIBIT 2 Exhibit 2 UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE - ------------------------------------ ) In re: ) ) Chapter 11 KAISER GROUP INTERNATIONAL, ) INC. et al., ) ) Case Nos. 00-2263 to 00-2301 (GMS) Debtors. ) ) (Jointly Administered) ) ) - ------------------------------------ SECOND AMENDED PLAN OF REORGANIZATION Kaiser Group International, Inc. and its affiliated debtor subsidiaries,1 debtors and debtors in possession hereby propose the following joint plan of reorganization, which shall supersede any plan previously filed by the undersigned in these proceedings: ARTICLE 1 DEFINITIONS 1.01 Terms Defined in the Plan. Capitalized terms used in the Plan shall ------------------------- have the respective meanings specified in Exhibit A to the Plan. - ----------------------------- 1 The affiliated debtor subsidiaries are EDA, Incorporated, Kaiser/Georgia Wilson, Inc., Kaiser Engineers Massachusetts, Inc., Kaiser Technology Holdings, Inc., Kaiser Advanced Technology, Inc., Tudor Engineering Company, Cygna Group, Inc., Liability Risk Management, Inc., Kaiser Europe, Inc., Kaiser Engineers Group, Inc., International Waste Energy Systems, Inc., Henry J. Kaiser Company, Kaiser Engineers, Inc., ICF Kaiser Advanced Technology of New Mexico, Inc., Kaiser Engineers & Builders, Inc., Kaiser Engineers Corporation, Kaiser Engineers International, Inc., Kaiser Engineers (California) Corporation, KE Services Corporation, Kaiser Engineers of Michigan, Inc., Kaiser Engineers and Constructors, Inc., Kaiser Overseas Engineering, Inc., KE Livermore, Inc., Kaiser Engineers Pacific, Inc., Kaiser Hanford Company, Phase Linear Systems Incorporated, Kaiser R.G.P. No. 1, Inc., Henry J. Kaiser Development Corporation, Inc., Global Trade & Investment, Inc., HBG Hawaii, Inc., HBG International, Inc., Kaiser Holdings Unlimited, Inc., American Venture Investments Incorporated, American Venture Holdings, Inc., Excell Development Construction, Inc., Kaiser Leasing Corporation, Inc., Kaiser DPI Holding Co., Inc., and Cygna Consulting Engineers and Project Management, Inc. -1- 1.02 Terms Defined in the Bankruptcy Code. Capitalized terms used in the ------------------------------------ Plan which are not defined in Exhibit A to the Plan but which are defined in the Bankruptcy Code shall have the respective meanings specified in the Bankruptcy Code. 1.03 Rules of Interpretation. For purposes of the Plan: (i) whenever it ----------------------- appears appropriate from the context, each term, whether stated in the singular or the plural, shall include both the singular and the plural; (ii) any reference in the Plan to a contract, instrument, release or other agreement or document being in a particular form or on particular terms and conditions means such document substantially in such form or substantially on such terms and conditions; (iii) any reference in the Plan to an existing document or exhibit means such document or exhibit, as it may have been or may be amended, modified or supplemented; (iv) the words "herein," "hereof," "hereto," "hereunder" and others of similar import refer to the Plan in its entirety rather than to only a particular portion of the Plan; and (v) the rules of construction set forth in Section 102 of the Bankruptcy Code shall apply, except to the extent inconsistent with the express provisions of this Section 1.03 of the Plan. 1.04 Exhibits. Exhibits to the Plan may be amended from time to time, and -------- amended Exhibits may be filed with the Bankruptcy Court from time to time, but in no event later than five (5) business days before the initial date set for the hearing on the confirmation of the Plan or such other date as may be authorized by the Bankruptcy Court. Current copies of Exhibits may be obtained by reference to the Bankruptcy Court's files or shall be provided to parties in interest upon written request to the Debtors. 1.05 Time Periods. Bankruptcy Rule 9006(a) applies to the computation of ------------ any period of time prescribed or allowed by the Plan, and Bankruptcy Rules 9006(b) and 9006(c) apply respectively to the enlargement or reduction of any period of time prescribed or allowed by the Plan. ARTICLE 2 PAYMENT OF ADMINISTRATIVE EXPENSES, TAX CLAIMS AND CERTAIN UNCLASSIFIED CLAIMS 2.01 Administrative Expenses. Except as otherwise provided in Section 2.02 ----------------------- of the Plan, administrative expenses of the kind specified in Section 507(a)(1) of the Bankruptcy Code, including obligations for goods and services arising after the Filing Date in the ordinary course of the Debtors' business, shall be paid by the Debtors in the ordinary course of their business, (i) in Cash, on the Distribution Date, or (ii) in accordance with the commercial credit terms extended by the creditor of such obligations or (iii) otherwise as required by law. 2.02 Fees of Professionals. Professionals employed at the expense of the --------------------- estate of the Debtors and entities which may be entitled to an allowance of fees and expenses from the estate of the Debtors pursuant to Sections 503(b)(2) through 503(b)(6) of the Bankruptcy Code shall be paid by the Debtors, in Cash, as soon as practicable after the order approving such allowance of compensation or reimbursement of expenses becomes a Final Order. All professional fees for services rendered in connection with the Bankruptcy Cases and the Plan after the Confirmation -2- Date including, without limitation, those relating to the occurrence of the Effective Date, the prosecution of causes of action preserved under the Plan, and the resolution of disputed Claims, are to be paid by the Debtors upon receipt of an invoice for such services, or on such other terms as the Debtors may agree to, without the need for further Bankruptcy Court authorization or entry of a Final Order. If the Debtors and any professional cannot agree on the amount of post-Confirmation Date fees and expenses to be paid to such professional, such amount is to be determined by the Bankruptcy Court. 2.03 Tax Claims. Allowed Unsecured Claims of governmental units of the ---------- kinds specified in Section 507(a)(8) of the Bankruptcy Code shall be paid by the Debtors, in Cash, on the Distribution Date or, if the Debtors so elect, in Cash, over a period not exceeding six years after the respective dates of assessment of such Claims. Such deferred payments shall be in the aggregate equal to one hundred percent (100%) of such respective Allowed Claims plus interest thereon from the Effective Date, at a rate determined by the Bankruptcy Court to be in compliance with Section 1129(a)(9)(C) of the Bankruptcy Code; provided, however, that Debtors retain the right to prepay any such Allowed Claim, or any remaining balance of such Allowed Claim, in full or in part, at any time on or after the Effective Date without premium or penalty. 2.04 Other Priority Claims. Except as otherwise provided in this ARTICLE 2 --------------------- of the Plan, Allowed Unsecured Claims of the kinds specified in Sections 507(a) of the Bankruptcy Code shall be paid by the Debtors, in Cash, on the Distribution Date or on such later date as they become due and payable in accordance with their respective terms. ARTICLE 3 CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS 3.01 Secured Claims. Class 1 shall consist of all Secured Claims -------------- 3.02 Unsecured Claims. Unsecured Claims shall comprise the following ---------------- Classes: (a) Senior Claims. Class 2 shall consist of Unsecured Claims, if any, ------------- (i) that constitute Senior Indebtedness as defined in the Old Indenture for the Old Subordinated Notes, and (ii) that are not Class 3 Claims. (b) Convenience Claims. Class 3 shall consist of Unsecured Claims ------------------ that are Convenience Claims. (c) Other Unsecured Claims. Class 4 shall consist of Unsecured Claims ---------------------- other than those Claims in Class 2 and Class 3. 3.03 Equity Interests. Class 5 shall consist of Equity Interests. ---------------- 3.04 Disputes as to Class 3 Classification. With respect to any creditor ------------------------------------- designated by the Debtors as a member of Class 3, if the Bankruptcy Court determines that such creditor may not be appropriately included in Class 3 and that such inclusion violates the provisions of the -3- Bankruptcy Code and renders the Plan unconfirmable, then such creditor will automatically be deemed to be a member of Class 4 and not a member of Class 3. ARTICLE 4 TREATMENT OF CLASSES OF CLAIMS AND EQUITY INTERESTS 4.01 Treatment of Secured Claims. Class 1 Claims are not Impaired. The --------------------------- legal, equitable and contractual rights of the holders of the Class 1 Allowed Claims shall remain unaltered by the Plan. 4.02 Treatment of Senior Claims. Class 2 Claims are Impaired. In full -------------------------- settlement, release and discharge of all Class 2 Claims, the Debtors shall, on the Distribution Date, distribute to the holders of Class 2 Allowed Claims New Senior Notes in a principal amount of one hundred percent (100%) of their respective Class 2 Allowed Claims. 4.03 Treatment of Convenience Claims. Class 3 Claims are not Impaired. The ------------------------------- legal, equitable and contractual rights of the holders of Class 3 Allowed Claims shall remain unaltered by the Plan. 4.04 Treatment of Other Unsecured Claims. Class 4 Claims are Impaired. In ----------------------------------- full settlement, release and discharge of all Class 4 Claims, the Debtors shall, on the Distribution Date, distribute to the holders of Class 4 Allowed Claims: (a) their Pro Rata share of Cash distributions of Asset Sale Proceeds, if any, distributed in increments of Fifty-Five Dollars ($55.00) and in reduction of the shares of New Preferred Stock otherwise to be issued as provided in Section 4.04(b) of the Plan; (b) one share of New Preferred Stock for each One Hundred Dollars ($100.00) of such holder's respective Class 4 Allowed Claim, provided however, that such number of shares shall be reduced by one share for each Fifty-Five Dollars ($55.00) of Cash distributed to such holder pursuant to Section 4.04(a) of the Plan; and (c) one share of New Common Stock for each One Hundred Dollars ($100.00) of such holder's respective Class 4 Allowed Claim. 4.05 Treatment of Equity Interests. Class 5 Equity Interests are Impaired. ----------------------------- In full settlement, release and discharge of all Class 5 Allowed Equity Interests, the Debtors shall, on the Distribution Date, distribute to the holders of Class 5 Allowed Equity Interests their Pro Rata portion of an aggregate number of shares of New Common Stock, which amount represents seventeen and sixty-five one-hundredths percent (17.65%) of the total number of shares of New Common Stock issued from time to time to holders of Class 4 Allowed Claims. -4- 4.06 Warrants, Stock Options and Similar Rights. Each holder of a warrant ------------------------------------------ or stock option to purchase shares of Old Common Stock that is exercisable may elect to exercise such warrant or stock option on or before the Confirmation Date and upon such exercise shall be treated as a holder of Old Common Stock for all distributions and other purposes under the Plan. Holders of any such warrant or stock option shall receive no other distribution under the Plan in respect of such warrant or stock option and on the Effective Date any unexercised warrant or stock option shall be cancelled, void and of no further force or effect. Stock Purchase Rights, to the extent not triggered and exercised by their terms as of the Confirmation Date, shall receive no distribution under the Plan in respect of such unexercised Stock Purchase Rights and on the Effective Date any unexercised Stock Purchase Rights shall be cancelled, void and of no further force or effect. 4.07 Subordination Rights. The classification and treatment all Claims and -------------------- Equity Interests under the Plan take into consideration all contractual, legal, and equitable subordination rights, whether arising under general principles of equitable subordination, Sections 510(b) and 510(c) of the Bankruptcy Code or otherwise, that a holder of a Claim or Equity Interest may have against other Claim or Equity Interest holders with respect to any distribution made in accordance with the Plan. As of the Effective Date, all contractual, legal, or equitable subordination rights that a holder of a Claim or Equity Interest may have with respect to any distribution to be made in accordance with the Plan are discharged and terminated, and all actions related to the enforcement of such subordination rights are permanently enjoined. Distributions under the Plan are not subject to payment to any beneficiaries of such terminated subordination rights, or to levy, garnishment, attachment, or other legal process by any beneficiary of such terminated subordination rights. 4.08 Withholding Taxes. The Debtors may deduct any applicable federal or ----------------- state withholding taxes from any distributions made pursuant to the Plan. 4.09 Fractional Shares of New Stock. Fractional shares of New Stock shall ------------------------------ not be issued. On the Distribution Date, each holder of an Allowed Claim or Allowed Equity Interest shall receive the total number of whole shares of New Stock to which it is entitled. Any remaining entitlement to fractions of shares of New Stock shall be treated by distributing unallocated shares of New Stock to the holders of Allowed Claims or Allowed Equity Interests having the greatest fractional entitlements until all unallocated shares of New Stock have been distributed. 4.10 Set Offs. The Debtors may, but shall not be required to, set off or -------- recoup against any Claim and the payments or other distributions to be made pursuant to the Plan in respect of such Claim, claims of any nature whatsoever which the Debtors may have against the holder of such Claim to the extent such claims may be set off or recouped under applicable law, but neither the failure to do so nor the allowance of any Claim hereunder shall constitute a waiver or release by the Debtors, of any such claim or counterclaim that they may have against such holder. 4.11 Cram-Down. If any Impaired Class fails to accept the plan by the --------- requisite statutory majorities, the Debtors reserve the right to confirm the Plan by a "cram-down" of such non-accepting Class pursuant to Section 1129(b) of the Bankruptcy Code. In the event the Bankruptcy Court declines to impose a "cram-down" on a non-accepting Class unless certain modifications are made to the terms and conditions of such Class' treatment under the Plan, the Debtors reserve the right, without re-solicitation to the extent permitted by the Bankruptcy Code -5- and the Bankruptcy Rules, to propose any such modifications and to confirm the Plan as modified by the required modification. ARTICLE 5 IMPLEMENTATION OF THE PLAN 5.01 Prepackaged Plan. The Plan is intended as a prepackaged plan of ---------------- reorganization, to implement the terms of financial proposals contained in a Term Sheet and Agreement between Kaiser and certain holders of Class 4 Claims acting through the Committee. 5.02 Substantive Consolidation. The Plan shall be implemented through a ------------------------- substantive consolidation of the assets and liabilities of the Debtors. The Confirmation Order shall contain findings supporting and conclusions providing for substantive consolidation for purposes of distribution on the terms set forth in this Section 5.02 of the Plan. The substantive consolidation of the assets and liabilities and properties of the Debtors shall have the effects set forth in this Section 5.02 of the Plan. (a) The Bankruptcy Cases shall be consolidated into the case of Kaiser as a single consolidated case. All property of the estate of each Debtor shall be deemed to be property of the consolidated estates. (b) All Claims against each estate shall be deemed to be Claims against the consolidated estates, any proof of claim filed against one or more of Debtors shall be deemed to be a single claim filed against the consolidated estates, and all duplicate proofs of claim for the same claim filed against more than one Debtor shall be deemed expunged. (c) No distributions under the Plan shall be made on account of Claims based upon intercompany obligations between or among Debtors and between Debtors and their non-Debtor affiliates and all such intercompany obligations shall be eliminated as of the Effective Date and shall not be otherwise treated or affected by the Plan. (d) All equity interests owned by one Debtor in another Debtor or in an affiliate shall remain outstanding after the Confirmation Date and shall not be affected by the confirmation of the Plan. (e) Except as specifically provided herein, all guarantees by one Debtor in favor of any other Debtors shall be eliminated, and no distributions under this Plan shall be made on account of Claims based upon such guarantees. (f) For purposes of determining the availability of the right of setoff under Section 553 of the Bankruptcy Code, Debtors shall be treated as one consolidated entity so that, subject to the other provisions of Section 553, -6- debts due to any of Debtors may be set off against the debts of any other of Debtors. (g) Substantive consolidation shall not merge or otherwise affect the separate legal existence of each Debtor for licensing, regulatory or other purposes, other than with respect to distribution rights under this Plan. (h) Substantive consolidation shall have no effect on valid, enforceable and unavoidable liens, except for liens that secure a Claim that is eliminated by virtue of substantive consolidation and liens against collateral that are extinguished by virtue of substantive consolidation. (i) Substantive consolidation shall not have the effect of creating a Claim in a Class different from the Class in which a Claim would have been placed in the absence of substantive consolidation. (j) Substantive consolidation shall not effect any applicable date(s) for purposes of pursuing any avoidance actions or other actions reserved to the Debtors pursuant to Section 5.07 of the Plan. (k) Substantive consolidation shall not impact or otherwise affect provisions in the Plan which provide that specific entities comprising the Debtors shall be liable on specific obligations under the Plan. 5.03 Ownership of the Reorganized Debtors. On the Effective Date, ------------------------------------ simultaneous with the elimination of the Old Common Stock held by holders of Class 5 Equity Interests, Kaiser shall issue 100 shares of common stock to Kaiser Holdings, which shall become the sole shareholder of Kaiser as of the Effective Date. In addition, on the Effective Date, Kaiser shall transfer to Kaiser Holdings the shares of direct subsidiaries of Kaiser other than Kaiser Government Programs, Inc. 5.04 Vesting of Assets. Except as provided in Section 5.03 or elsewhere in ----------------- the Plan, on the Effective Date the assets of each of the Debtors' bankruptcy estates shall vest in the respective Debtors free and clear of all liens and other encumbrances. After the Effective Date, the reorganized Debtors may operate their businesses and may buy, use, acquire and dispose of their assets, free of any restrictions contained in the Bankruptcy Code. 5.05 Kaiser Government Programs Transactions. Contemporaneously with the --------------------------------------- implementation of the Plan, Kaiser Government Programs is expected to consummate an exchange offer with the holders of Old Subordinated Notes. In such transaction, Kaiser Government Programs will exchange its commitment, under certain circumstances, to purchase shares of New Preferred Stock held by such holders in return for the rights held by such holders under a guarantee issued by Kaiser Government Programs. 5.06 Operations of Reorganized Debtors. On and after the Effective Date, --------------------------------- the reorganized Debtors will continue to operate their businesses and will implement the terms of the Plan. -7- 5.07 Causes of Actions. Debtors shall be the only parties authorized to ----------------- object to Claims and Equity Interests, and to pursue actions to recover preferences, fraudulent conveyances, and other causes of action recoverable under Section 550 of the Bankruptcy Code. Unless Debtors consent, or unless otherwise ordered by the Bankruptcy Court, no other party shall have the right or obligation to pursue any such actions. Notwithstanding confirmation of the Plan and except as otherwise provided in ARTICLE 13 of the Plan, all such actions and any other claims, rights or causes of action in favor of the Debtors shall be preserved and maintained for the benefit of the reorganized Debtors. 5.08 Continuation of Stays. Unless otherwise provided in the Plan or the --------------------- Confirmation Order, all injunctions or stays in effect pursuant to Sections 105 or 362 of the Bankruptcy Code or otherwise and in effect on the Confirmation Date shall remain in full force and effect until the Effective Date. 5.09 Cancellation of Existing Agreements. Notwithstanding Section 9.01 of ----------------------------------- the Plan, on the Effective Date (i) the Old Subordinated Notes and all warrants or options to purchase Old Common Stock and (ii) the obligations of the Debtors under the Old Indenture or any and all other agreements, indentures, deeds, guarantees and/or certificates of designations governing, securing, guaranteeing or relating to the Old Securities, as the case may be, shall be discharged. 5.10 Treatment of Guarantees Related to Kaiser-Hill. Notwithstanding ---------------------------------------------- Section 11.01 of the Plan or Section 1141 of the Bankruptcy Code, Kaiser's obligations to (i) the United States Department of Energy under its Performance Guaranty Agreement relating to the performance by Kaiser-Hill Company LLC under Contract DE-AC34-00RF1904 (Rocky Flats Closure Contract), and (ii) Bank of America N.A. under its Parent Company Letter Agreement dated November 2, 1999 relating to the performance by Kaiser-Hill Company LLC under a Business Loan Security Agreement dated as of November 2, 1999, shall not be discharged or otherwise effected by confirmation of the Plan, but shall remain in full force and effect notwithstanding such confirmation. Such obligations shall be assumed by Kaiser Holdings as of the Effective Date. ARTICLE 6 PROVISIONS FOR TREATMENT OF DISPUTED CLAIMS AND DISPUTED EQUITY INTERESTS 6.01 Objections to and Estimation of Claims. The Debtors shall object to -------------------------------------- the allowance of Claims and Equity Interests with respect to which it disputes liability in whole or in part. All objections shall be litigated to a Final Order; provided, however, that the Debtors may compromise and settle, withdraw or resolve by any other method approved by the Bankruptcy Court, any objections to Claims or Equity Interests. In addition, the Debtors may, at any time, request that the Bankruptcy Court estimate any contingent Claim pursuant to Section 502(c) of the Bankruptcy Code regardless of whether the Debtors have previously objected to such Claim. Unless otherwise ordered by the Bankruptcy Court, the Debtors shall serve and file any objections to Claims and Equity Interests as soon as practicable, but in no event later than the date that distributions would otherwise be made to holders of such Claims or Equity Interests under the Plan. -8- 6.02 Plan Reserves. On the Distribution Date, after calculating ------------- distributions to holders of Claims and Interests under the Plan, the Debtors shall retain such number of shares of New Common Stock and such New Preferred Stock and shall retain and set aside in the Reserve Fund an amount in Cash, such that the aggregate of such retained New Securities and the aggregate balance of the Reserve Fund (exclusive of any interest earned thereon) shall be sufficient to make all payments and distributions which may be subsequently required by Section 6.03 of the Plan, or such lesser number and amount as may be approved by the Bankruptcy Court from time to time. Cash held by the Debtors in the Reserve Fund shall be invested in accordance with the requirements contained in Section 6.05 of the Plan. 6.03 Subsequently Allowed Claims or Interests. Subsequent to the ---------------------------------------- Distribution Date when a Claim or Interest shall become an Allowed Claim or Allowed Interest, the Debtors shall, as soon as practicable: (a) Pay to the holder of such Allowed Claim, from the Reserve Fund, Cash in an amount equal to the Cash distributions which would have previously been made to such holder by the Debtors, if such Allowed Claim had been an Allowed Claim eligible for distribution on the initial Distribution Date; and (b) Distribute to the holder of such Allowed Claim or Allowed Interest: (i) such amount of New Securities as would have been previously distributed to such holder if such Allowed Claim or Allowed Interest had been an Allowed Claim or Allowed Interest eligible for distribution on the initial Distribution Date; and (ii) an amount equal to any dividends or other payments which would have accrued in respect of such New Securities after the initial Distribution Date. 6.04 Disallowed Claims. Subsequent to the initial Distribution Date, when a ----------------- Claim or portion of a Claim shall become disallowed by a Final Order, the Debtors shall transfer from the Reserve Fund to their general funds an amount of Cash equal to the amount which would have been required to be distributed pursuant to Section 6.03 of the Plan had such disallowed Claim or portion of a Claim been an Allowed Claim. 6.05 Investment of Reserve Fund. Amounts held in the Reserve Fund shall be -------------------------- invested by the Debtors in: (i) direct obligations of, or obligations secured by, the United States of America; (ii) obligations of any agency or corporation which is or may hereafter be created by or pursuant to an act of the Congress of the United States as an agency or instrumentality thereof; and (iii) certificates of deposit or other demand deposits at any bank or trust company which has, at the time such investment is made, a capital stock and surplus aggregating at least Twenty Five Million Dollars ($25,000,000). 6.06 Interest Earnings. On the last day of each calendar month after the ----------------- Distribution Date, the Debtors shall transfer to their general funds all interest earned on the Reserve Fund since the last day of the preceding calendar month. -9- 6.07 Payments and Distributions on Disputed Claims. No partial payments and --------------------------------------------- no partial distributions shall be made with respect to a disputed Claim or disputed Equity Interest until the resolution of such disputes by settlement or Final Order. As soon as practicable after a disputed Claim or disputed Equity Interest becomes an Allowed Claim or Equity Interest, the holder of such Allowed Claim or Equity Interest shall receive all payments and distributions to which such holder is then entitled under the Plan. 6.08 Treatment of Cash Reserves for Disputed Class 4 Claims. Any Cash ------------------------------------------------------ reserved for holders of disputed Claims shall, to the extent that such disputed Claims are disallowed or reduced, thereafter be deemed "Net Cash Proceeds" as provided in the Certificate of Incorporation of Kaiser Holdings and used to redeem shares of New Preferred Stock as provided therein. 6.09 Class 5 Distributions with Respect to Disputed Class 4 Claims. In ------------------------------------------------------------- addition to the distributions made as described in Section 6.07, as soon as practicable after a disputed Class 4 Claim becomes an Allowed Class 4 Claim, the Debtors shall distribute to the holders of Class 5 Allowed Equity Interests their Pro Rata portion of the additional shares of New Common Stock issuable as a result of the distributions made to such holder of an Allowed Class 4 Claim, provided, however, that the Debtors shall not be required to make a further distribution under this Section 6.09 more often than once in every six months. ARTICLE 7 CLAIMS OR EQUITY INTERESTS BASED UPON INSTRUMENTS OR SECURITIES 7.01 Record Holders of Old Securities. Distributions to the holders of -------------------------------- Claims or Equity Interests based on Old Securities shall be made to the owner of record on the Distribution Date. Except as otherwise provided herein, the reorganized Debtors and any transfer or distribution agent shall be entitled to treat the record holder of Old Securities as the sole holder of any Claim or Equity Interest evidenced thereby for purposes of all notices, payments or other distributions under the Plan. No notice of any transfer of any such Old Security shall be binding on the reorganized Debtors or any transfer or distribution agent, unless such transfer has been properly registered in accordance with the provisions of the governing indenture or agreement at least ten (10) business days prior to the day on which any such notice is given or any such payment or other distribution is made. If there is any dispute regarding the identity of the person entitled to receive payment or distribution in respect of a claim or interest under the Plan, no payment or distribution need be made in respect of such claim or interest until the dispute is resolved by the Bankruptcy Court pursuant to a Final Order. 7.02 Allowed Amount of Claims Based on Old Subordinated Notes. A Claim in -------------------------------------------------------- the aggregate principal amount of $125 million, plus accrued interest through the Filing Date at the rate provided in the Old Indenture for the Old Subordinated Notes, shall be allowed on account of all Claims based on Old Subordinated Notes. Notwithstanding Section 7.01 of the Plan, distributions under ARTICLE 4 of the Plan with respect to the Old Subordinated Notes shall be made to the Old Indenture Trustee on account of such aggregate Allowed Claims. Such amounts -10- shall be further distributed to individual holders of Allowed Claims based on Old Subordinated Notes as provided in this ARTICLE 7. 7.03 Treatment of Claims Based on Old Subordinated Notes. All holders of --------------------------------------------------- Claims based on Old Subordinated Notes shall surrender their respective Old Subordinated Notes to their respective Old Indenture Trustee in accordance with the written instructions of Kaiser and such Old Indenture Trustee. Upon surrender of such Old Subordinated Notes, the Old Indenture Trustee shall (i) cancel such Old Subordinated Notes and deliver such cancelled Old Subordinated Notes to Kaiser, and (ii) distribute to the holders of such Allowed Claims their Pro Rata share of the Cash and New Securities distributable on account of such Allowed Claim as described in ARTICLE 4 of the Plan. 7.04 Surrender of Old Subordinated Notes. No distribution shall be made to ----------------------------------- holders of Claims based on Old Subordinated Notes until such time as such holders shall have surrendered or be deemed to have surrendered their Old Subordinated Notes in accordance with this ARTICLE 7. 7.05 Lost Instruments. Any holder of a Claim based on Old Subordinated ---------------- Notes that have been lost, stolen, mutilated or destroyed shall, in lieu of surrendering such Old Subordinated Notes as provided in this ARTICLE 7, deliver (i) evidence reasonably satisfactory to the respective Old Indenture Trustee and/or Kaiser, of the loss, theft, mutilation or destruction of such Old Subordinated Notes and (ii) such security or indemnity as may be reasonably required by the Old Indenture Trustee or Kaiser, to save each of them harmless with respect thereto. Upon compliance with this Section 7.05 by a holder of a Claim based on Old Subordinated Notes, such holder shall, for all purposes under the Plan, be deemed to have surrendered its Old Subordinated Notes. 7.06 Unsurrendered Instruments. Any holder of a Claim based on Old ------------------------- Subordinated Notes, which shall not have surrendered, or be deemed to have surrendered, its Old Subordinated Notes within two (2) years after the Confirmation Date shall receive no distributions on such Claim under the Plan and shall be forever barred from asserting any claim thereon. Thereupon, the respective Old Indenture Trustee shall return to Kaiser the portion of the New Securities distributed to it pursuant to ARTICLE 4 of the Plan allocable to such non-surrendering holders of Claims based on Old Subordinated Notes. Upon the return of such funds by the Old Indenture Trustee, such Old Indenture Trustee shall have no further responsibility regarding the distributions otherwise required to be made by it pursuant to ARTICLE 4 of the Plan. 7.07 Cancellation of Old Indenture. Except for (i) distributions for the ----------------------------- benefit of holders of Claims based on Old Subordinated Notes under the Plan, and (ii) payment or reimbursement obligations owed by Kaiser to the Old Indenture Trustee for the Old Subordinated Notes, which obligations shall be satisfied and performed as Class 3 Claims, the rights and obligations of all parties under the Old Indenture and the Old Subordinated Notes issued thereunder shall be terminated and cancelled as of the Effective Date and all holders of Old Subordinated Notes will be deemed to have released all such claims against the Old Indenture Trustee, Debtors and all of Debtors' affiliates. -11- ARTICLE 8 CONDITIONS TO CONFIRMATION AND EFFECTIVENESS OF THE PLAN 8.01 Conditions to Confirmation. The confirmation of the Plan by the -------------------------- Bankruptcy Court shall be subject to, and conditioned upon, (i) the Confirmation Order being entered in form and substance reasonably acceptable to the Debtors and the Committee, (ii) to the extent that the Plan has been amended or modified by the Debtors in any material respect, such modifications shall have been approved by the Committee, which approval shall not have been unreasonably withheld, and (iii) aggregate Claims based on Old Subordinated Notes shall have become Allowed Claims as provided in Section 7.02 of the Plan. 8.02 Conditions to Effectiveness. The effectiveness of the Plan shall be --------------------------- subject to, and conditioned upon, (i) the Confirmation Order becoming a Final Order, (ii) no request for revocation of the Confirmation Order under Section 1144 of the Bankruptcy Code having been made, or, if made, remaining pending, (iii) the Debtors retaining sufficient Cash on the Effective Date to make required distributions to holders of Allowed Claims on the Distribution Date, (iv) the Debtors receiving all regulatory approvals and all other material approvals, permits, authorization, consents, licenses, and agreements from other third parties necessary or appropriate to permit the transactions contemplated by the Plan and any related agreements and to permit the Debtors to carry on its business after the Effective Date in a manner consistent in all material respects with the manner in which it was carried on before the Effective Date. 8.03 Effect of Failure of Conditions. Notwithstanding entry of the ------------------------------- Confirmation Order, if each of the conditions set forth in Section 8.02 of the Plan has not been satisfied or duly waived by the Debtors (with the approval of the Committee, which approval shall not have been unreasonably withheld) within 60 days after the Confirmation Date, then upon motion by the Debtors or any party in interest made before the time that each of the conditions has been satisfied or duly waived, the order confirming the Plan may be vacated by the Bankruptcy Court; provided, however, that notwithstanding the filing of such a motion, the Confirmation Order shall not be vacated if each of the conditions set forth in Section 8.02 of the Plan is either satisfied or duly waived before the Bankruptcy Court enters an order granting the relief requested in such motion. If the Confirmation Order is vacated pursuant to this Section 8.03 of the Plan, the Plan shall be void and of no effect. -12- ARTICLE 9 EXECUTORY CONTRACTS 9.01 Assumption of Executory Contracts. Any and all leases and executory --------------------------------- contracts of the Debtors not expressly rejected by the Debtors pursuant to order of the Bankruptcy Court entered on or before the Confirmation Date shall be deemed assumed pursuant to the provisions of Sections 365 and 1123 of the Bankruptcy Code upon the entry of the Confirmation Order. 9.02 Cure of Defaults on Assumed Contracts. The Debtors believe that, ------------------------------------- except as otherwise specifically set forth on Exhibit B to the Plan, they are current in the performance of the executory contracts and unexpired leases to be assumed under the Plan. As such, the Debtors have determined that there are no amounts to be paid as a condition to assumption of the executory contracts and unexpired leases under Section 365(b) of the Bankruptcy Code. (a) Any objection to the assumption of any executory contract or unexpired lease and any proof of claim asserting that there are amounts or defaults that must be paid or cured as a condition to the assumption of any executory contract or unexpired lease must be filed with the Bankruptcy Court and delivered to the attorneys for the Debtors on or before the date and time set by the Court as the last date and time on which to file and deliver objections to the confirmation of the Plan. (b) The holder of any such objections or cure claim shall be forever estopped from asserting such objection or claim if not so timely filed and delivered. The Debtors reserve the right to reject any executory contract or unexpired lease with respect to which any such objection or claim is filed. (c) The Bankruptcy Court will resolve any such objection at the hearing on the confirmation of the Plan. Any such claim shall be treated as a disputed administrative expense under the Plan and shall be reviewed and, where appropriate, objected to by the Debtors and thereafter resolved in accordance with the Bankruptcy Code and the Bankruptcy Rules. (d) Any unpaid amounts or uncured defaults that must be paid or cured as a condition of assumption under Section 365(b), will be paid by the Debtors promptly after the amount of such claim has been determined by as Final Order. A determination by the Court of the amount of such a Claim will bar the assertion of any additional Claim that was or could have been asserted for defaults or unpaid amounts under such executory contract or unexpired lease. 9.03 Executory Contracts Expressly Rejected. Set forth on Exhibit B to the -------------------------------------- Plan is a schedule of those executory contracts or unexpired leases that Debtors intend to reject upon confirmation of the Plan provided that the sublicense of the Grand Paroisse Process and Technical Information contained in Engineering, Procurement and Construction Agreement effective November 1, 1996 between PCS Nitrogen Fertilizer L.P. and ICF Kaiser Engineers, -13- Inc. and Henry J. Kaiser Company, Inc. is not executory and is not rejected. 9.04 Compensation and Benefit Programs. All employment and severance --------------------------------- policies, and all compensation and benefit plans, policies, and programs of Kaiser applicable generally to its employees or retirees and the employees or retirees of its subsidiaries, including, without limitation, all savings plans, retirement plans, health care plans, disability plans, severance benefit plans, incentive plans, and life, accidental death, and dismemberment insurance plans, are treated as executory contracts under the Plan and shall be assumed pursuant to the provisions of Sections 365 and 1123 of the Bankruptcy Code upon the entry of the Confirmation Order. 9.05 Approval of Assumption or Rejection. Entry of the Confirmation Order ----------------------------------- shall constitute: (i) approval, pursuant to Section 365(a) of the Bankruptcy Code, of the assumption of the executory contracts and unexpired leases assumed pursuant to Section 9.01 of the Plan; and (ii) approval pursuant to Section 365(a) of the Bankruptcy Code, of the rejection of executory contracts and unexpired leases rejected in accordance with Section 9.03 of the Plan. Notwithstanding anything contained herein to the contrary, the Debtors hereby retain the right to add or delete any executory contract or unexpired lease that is designated for assumption or rejection at any time prior to the Confirmation Date, upon notice to parties affected by such change. 9.06 Post-Petition Date Contracts and Leases. Executory contracts and --------------------------------------- unexpired leases entered into and other obligations incurred after the Petition Date by the Debtors shall be performed by the Debtors in the ordinary course of business. 9.07 Bar Date. All proofs of claim with respect to claims arising from the -------- rejection of any contract or unexpired lease shall be filed with the Bankruptcy Court and served on counsel for the Debtors no later than thirty (30) days after the Confirmation Date. Any claim not filed within such date shall be forever barred from assertion against the Debtors and their respective estates. ARTICLE 10 ORGANIZATION OF KAISER HOLDINGS 10.01 Certificate of Incorporation and ByLaws. The Certificate of --------------------------------------- Incorporation and ByLaws of Kaiser Holdings shall be as set forth in Exhibit C to the Plan. 10.02 Board of Directors. The initial board of directors of Kaiser Holdings ------------------ shall consist of the persons described in the Disclosure Statement dated as of the date of the Plan or otherwise identified in materials filed with the Bankruptcy Court not less than ten (10) days prior to the Confirmation Date. 10.03 Corporate Actions. On the Effective Date, the operation of Kaiser ----------------- Holdings shall become the general responsibility of its Board of Directors, subject to, and in accordance with, its Certificate of Incorporation and Bylaws. After the Effective Date, if Kaiser Holdings proposes to take an action that would require shareholder approval, but such approval may not be readily solicited because the distribution of the New Common Stock under the Plan has not been -14- completed, then, in lieu of shareholder approval, Kaiser Holdings may seek Bankruptcy Court approval of such action upon notice to all parties who are entitled to a distribution of New Common Stock under the Plan. Upon Bankruptcy Court approval, Kaiser Holdings shall be authorized to take such action. ARTICLE 11 DISCHARGE 11.01 Discharge. Confirmation of the Plan shall discharge the Debtors from --------- any debt that arose before the Confirmation Date, and any debt of a kind specified in Section 502(g), 502(h) or 502(i) of the Bankruptcy Code, whether or not: (a) a proof of claim based upon such debt is filed or deemed filed under Section 501 of the Bankruptcy Code; (b) a Claim based upon such debt is allowed under Section 502 of the Bankruptcy Code; or (c) the holder of a Claim based upon such debt has accepted the Plan. ARTICLE 12 RETENTION OF JURISDICTION 12.01 Retention of Jurisdiction. The Bankruptcy Court shall retain ------------------------- exclusive jurisdiction of these proceedings for the following purposes, inter ----- alia: - ---- (a) to determine any and all pending applications, adversary proceedings and contested matters; (b) to determine any and all objections to the allowance of Claims and Equity Interests; (c) to determine any and all applications for allowance of compensation and reimbursement of expenses; (d) to determine any and all controversies and disputes arising under or in connection with the Plan and such other matters as may be provided for in the Confirmation Order; (e) to effectuate payments under and performance of the provisions of the Plan; (f) to enter such orders as may be appropriate in the event the Confirmation Order is for any reason stayed, reversed, revoked, modified or vacated; -15- (g) to determine the Debtor's motion, if any, to modify the Plan in accordance with Section 1127 of the Bankruptcy Code; (h) to issue such orders in aid of execution of the Plan, to the extent authorized by Section 1142 of the Bankruptcy Code; (i) to consider any modifications of the Plan, to cure any defect or omission, or to reconcile any inconsistency in any order of the Bankruptcy Court, including, without limitation, the order confirming the Plan; (j) to hear and determine disputes arising in connection with the interpretation, implementation, or enforcement of the Plan and any related documents; (k) to hear and determine any issue for which the Plan or any related document requires a Final Order of the Bankruptcy Court; (l) to enter a final decree closing the Bankruptcy Case; and (m) to determine any other matter not inconsistent with Chapter 11 of the Bankruptcy Code. ARTICLE 13 RELEASES 13.01 Releases by Holders of Claims and Equity Interests. As of the -------------------------------------------------- Effective Date, in consideration for the obligations of the Debtors and the reorganized Debtors under the Plan and other contracts, instruments, releases, agreements or documents to be entered into or delivered in connection with the Plan, (i) each holder of a Claim or Equity Interest that votes in favor of the Plan and (ii) to the fullest extent permissible under applicable law, as such law may be extended or interpreted subsequent to the Effective Date, each entity that has held, holds or may hold a Claim or Equity Interest or at any time was a creditor or stockholder of any of the Debtors and that does not vote on the Plan will be deemed to forever release, waive and discharge all claims (including derivative claims), obligations, suits, judgments, damages, demands, debts, rights, causes of action and liabilities (other than the right to enforce the Debtors' or the reorganized Debtors' obligations under the Plan and the contracts, instruments, releases, agreements and documents delivered thereunder or contracts assumed by the Debtors in connection therewith), whether liquidated or unliquidated, fixed or contingent, matured or unmatured, known or unknown, foreseen or unforeseen, then existing or thereafter arising in law, equity or otherwise, that are based in whole or in part on any act, omission, transaction or other occurrence taking place on or prior to the Effective Date in any way relating to a Debtor, the Bankruptcy Cases or the Plan that such entity has, had or may have against any Debtor, the members of the Committee and each of their respective present or former directors, officers, employees, attorneys, accountants, underwriters, investment bankers, financial advisors and agents, acting in such capacity (which release will be in addition to the discharge of Claims and termination of -16- Equity Interests provided in the Plan and under the Confirmation Order and the Bankruptcy Code). 13.02 Releases by the Debtors. As of the Effective Date, for good and ----------------------- valuable consideration, each of the Debtors in their individual capacities and as a debtor in possession will be deemed to forever release, waive and discharge any present or former officer, director or employee of any of the Debtors, the members of the Committee and each of their respective present or former directors, officers, employees, attorneys, accountants, underwriters, investment bankers, financial advisors and agents, acting in such capacity, for and from any and all claims (including derivative claims), obligations, suits, judgments, damages, demands, debts, rights, rights of setoff (except as otherwise expressly provided in Section 13.03 of the Plan), causes of action and liabilities, whether liquidated or unliquidated, fixed or contingent, matured or unmatured, known or unknown, foreseen or unforeseen, then existing or thereafter arising in law, equity or otherwise, that are based in whole or in part on any act, omission, transaction, event or other occurrence taking place on or prior to the Effective Date (excluding the right to enforce the terms of the Plan and the contracts, instruments, releases, agreements and documents delivered thereunder). 13.03 Limitations on Releases. The release set forth in Section 13.01 of ----------------------- the Plan shall not apply to claims (i) based on gross negligence, willful misconduct or fraud, and (ii) by holders of Claims or Equity Interests that have voted against the Plan or have objected to such release. The release set forth in Section 13.02 of the Plan shall not apply to claims (i) based on gross negligence, willful misconduct or fraud, (ii) for indebtedness of any released party to any of the Debtors for funds advanced to such released party, (iii) which are currently asserted in a case or proceeding brought by any Debtors and currently pending against such released party, and (iv) which are asserted solely as a set-off or counterclaim with respect to a Claim asserted by such released party, provided, however, that the amount of the set-off or counterclaim that is not released shall not exceed the aggregate amount of such released party's asserted Claim against the Debtors. 13.04 Savings Clause. If and to the extent that the Bankruptcy Court -------------- concludes that the Plan cannot be confirmed with any portion of the releases provided for herein, then the Plan may be confirmed with such portion excised so as to give effect as much as possible to the foregoing releases without preventing confirmation of the Plan. ARTICLE 14 REGISTRATION RIGHTS 14.01 Scope and Effect. The provisions of this ARTICLE 14 shall be ---------------- applicable with respect to any person or entity who or which shall become a Major Stockholder by virtue of the distribution of New Common Stock or New Preferred Stock (together, the "New Stock") under this Plan to such person or entity or the subsequent ownership thereof. Major Stockholders shall have only such rights as are provided in this ARTICLE 14 respecting the subject matter hereof and, to the extent they avail themselves of such rights, Major Stockholders shall be deemed to have agreed to and shall be bound by the provisions of this ARTICLE 14. -17- 14.02 Requests for Registration. Subject to the provisions of this Section ------------------------- 14.02, a Major Stockholder may request in writing that Kaiser Holdings register all, but not less than all, of the New Common Stock and/or New Preferred Stock owned by the Major Stockholder. Subject to the provisions of this Section 14.02, upon receipt of such a written request, Kaiser Holdings shall (i) promptly give written notice of such request to each other Major Stockholder, (ii) promptly prepare and file a registration statement under the Securities Act covering the New Stock that is the subject of such request and, subject to the provisions of this Section 14.02, all other shares of New Stock requested to be included in such registration statement by each other Major Stockholder by written notice given to Kaiser Holdings within 30 days after Kaiser Holdings' written notice to them, and (iii) use its best efforts to cause such registration statement to become effective as expeditiously as possible and, for other than an underwritten offering, maintain such registration statement current for 12 months. (a) In connection with the registration of New Stock, Kaiser Holdings agrees to use its best efforts to register or qualify the New Stock for offer or sale under state securities or Blue Sky laws of such jurisdictions in which Major Stockholders shall reasonably request; provided, however, that no qualification shall be required in any jurisdiction where, as a result thereof, Kaiser Holdings would be subject to service of general process or to taxation as a foreign corporation doing business in such jurisdiction to which it is not then subject. (b) If a requested registration involves an underwritten public offering in which the obligation of the underwriters is to take all of the shares to be sold if any are taken, other Major Stockholders may include shares of New Stock in such registration only to the extent that such inclusion will not interfere with the successful public offering and sale of the New Stock requested to be registered by the initial requesting Major Stockholder. (In connection with the registration of New Stock in an underwritten offering, Kaiser Holdings agrees to enter into a cross-indemnity agreement, in customary form, with each underwriter, if any, and each Major Stockholder included in such registration statement.) (c) If in the good faith judgment of the managing underwriter of such public offering, the inclusion of all shares of New Stock requested for inclusion by other Major Stockholders would so interfere with the successful public offering and sale of the securities requested to be registered by the initial requesting Major Stockholder, the number of shares of New Stock requested to be included by other Major Stockholders shall be reduced pro rata or, if necessary in such managing underwriter's good faith judgment, shall not be included in the registration. (d) No Major Stockholder shall be entitled to make a request for registration pursuant to this Section 14.02 until one year from the Effective Date, and no Major Stockholder shall be entitled to make more than one request for -18- registration for the New Common Stock and/or the New Preferred Stock so held pursuant to this Section 14.02. (e) Kaiser Holdings shall not be obligated to file a registration statement under the Securities Act in response to a request from a Major Stockholder unless and until such time as Kaiser Holdings is eligible to use Form S-3 to register the New Stock in the context of a secondary offering (but Kaiser Holdings agrees for the benefit of the Major Stockholders to timely make all required filings under the Exchange Act to such end), and Kaiser Holdings shall not be required to effect more than one registration pursuant to this Section 14.02 in any twelve-month period. (f) The registration rights provided by this Section 14.02 shall expire on December 31, 2007. All reasonable fees, costs and expenses in connection with a registration effected under this Section 14.02, including (without limitation) all federal and state registration, filing and qualification fees, printing expenses, fees and expenses of counsel and accountants for Kaiser Holdings, shall be borne by Kaiser Holdings. The Major Stockholders shall bear their pro rata share of any underwriting discount and commission, and any fees and disbursements of legal counsel and accountants hired by them in connection with such registration. Notwithstanding the foregoing, Kaiser Holdings shall not be required to file a registration statement to include New Stock pursuant to this Section 14.02 if independent counsel, reasonably satisfactory to the Major Stockholders, renders an opinion to Kaiser Holdings that the New Stock proposed to be disposed of may be transferred pursuant to the provisions of Rule 144 under the Securities Act or otherwise without registration under the Securities Act. 14.03 Public Information. With a view to making available to the Major ------------------ Stockholders the benefits of Rule 144 promulgated under the Securities Act and any other rule or regulation of the SEC that may at any time permit a Major Stockholder to sell securities of Kaiser Holdings to the public without registration or pursuant to a registration on Form S-3, Kaiser Holdings agrees to: (a) make and keep public information available, as those terms are understood and defined in SEC Rule 144, commencing 90 days after the Effective Date and so long as Kaiser Holdings remains subject to the periodic reporting requirements under Section 13 or 15(d) of the Exchange Act; (b) file with the SEC in a timely manner all reports and other documents required of Kaiser Holdings under the Securities Act and the Exchange Act; and (c) furnish to any Major Stockholder, so long as accurate and so long as the Major Stockholder owns any New Stock, forthwith upon request (i) a -19- written statement by Kaiser Holdings that it has complied with the reporting requirements of SEC Rule 144, the Securities Act and the Exchange Act, (ii) a copy of the most recent annual or quarterly report of Kaiser Holdings and such other reports and documents so filed by Kaiser Holdings, and (iii) such other information as may be reasonably requested in availing any Major Stockholder of any rule or regulation of the SEC which permits the selling of any such securities without registration. 14.04 Registration by Kaiser Holdings. If at any time after the ------------------------------- distribution of New Stock pursuant to this Plan and prior to December 31, 2007, Kaiser Holdings shall determine to file a registration statement under the Securities Act (on a form that can be used for a secondary distribution other than Form S-4 or Form S-8) in connection with a proposed underwritten public offering of Kaiser Holdings New Common Stock or New Preferred Stock solely for cash and for its own account, Kaiser Holdings shall give each Major Stockholder written notice of such determination. (a) Within 30 days after the giving of such notice by Kaiser Holdings, any Major Stockholder may request in writing that Kaiser Holdings include in such registration all or any portion of the shares of New Common Stock or New Preferred Stock, as the case may be, owned by such Major Stockholder. Kaiser Holdings will cause all shares of New Common Stock or New Preferred Stock, as the case may be, which are the subject of such a request from a Major Stockholder to be included in such registration, subject to the provisions of this Section 14.04. (b) All shares of New Common Stock or New Preferred Stock owned by a requesting Major Stockholder and included in such registration shall be included in the underwriting on the same terms and conditions as the securities otherwise being sold through the underwriters. (c) If, however, in the good faith judgment of the managing underwriter of such public offering, the inclusion of all shares of New Common Stock or New Preferred Stock, as the case may be, requested for inclusion by Major Stockholders would interfere with the successful public offering and sale of the securities being offered by Kaiser Holdings, the number of shares of New Common Stock or New Preferred Stock, as the case may be, requested to be included by Major Stockholders shall be reduced pro rata or, if necessary in such managing underwriter's good faith judgment, shall not be included in the registration. (d) All of the reasonable fees, costs and expenses of a registration pursuant to this Section 14.04, including (without limitation) all federal and state registration, filing and qualification fees, printing expenses, fees and expenses of counsel and accountants for Kaiser Holdings, shall be borne by Kaiser Holdings, except that any Major Stockholder having shares of New Common Stock or New Preferred Stock, as the case may be, included -20- in any such registration shall bear its pro rata share of any underwriting discount and commission and shall bear any fees and disbursements of legal counsel and accountants hired by such Major Stockholder in connection with such registration. 14.05 Indemnification. --------------- (a) Kaiser Holdings will indemnify and hold harmless each Major Stockholder having shares of New Common Stock or New Preferred Stock included in a registration pursuant to this ARTICLE 14, together with each of its officers, partners and directors and each person controlling such Major Stockholder (within the meaning of Section 15 of the Securities Act), from and against all claims, losses, damages, costs and expenses to which any of them may become subject under the Securities Act, state securities laws or otherwise, arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in any registration statement, any prospectus or any other related document, or arising out of or based upon any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that Kaiser Holdings shall not be liable in any such case to the extent that any such claim, loss, damage, cost or expense arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission based upon information furnished to Kaiser Holdings by any Major Stockholder or any officer, partner, director or controlling person of a Major Stockholder. (b) Each Major Stockholder shall, severally and not jointly, if shares of New Common Stock or New Preferred Stock owned by it are included in a registration which is the subject of this ARTICLE 14, based pro rata on the number of each Major Stockholder's shares included in the registration, indemnify and hold harmless Kaiser Holdings and each of its officers and directors and each person controlling Kaiser Holdings (within the meaning of Section 15 of the Securities Act), and each other Major Stockholder with shares of New Common Stock or New Preferred Stock included in any such registration, together with the officers and directors of and each person controlling such other Major Stockholder (within the meaning of Section 15 of the Securities Act), from and against all claims, losses, damages, costs and expenses to which any of them may become subject under the Securities Act, state securities laws or otherwise, arising out of or based upon an untrue statement or alleged untrue statement of a material fact contained in any registration statement, any prospectus or any other related document, or arising out of or based upon any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that such Major Stockholder shall be liable in any such case only to the extent -21- that the untrue statement or alleged untrue statement or omission or alleged omission is based upon information furnished to Kaiser Holdings by such Major Stockholder specifically for use in such registration. (c) Promptly after receipt by an indemnified party under Section 14.05(a) or Section 14.05(b) of the Plan of notice of the commencement of any action involving the subject matter of the foregoing indemnity provisions, such indemnified party shall, if a claim is to be made against the indemnifying party pursuant to the provisions of Section 14.05(a) or Section 14.05(b) of the Plan, notify the indemnifying party of the commencement thereof, but the omission to so notify the indemnifying party shall not relieve it from any liability which it may have to an indemnified party. The indemnifying party shall have the right to participate in and, to the extent that it may wish, singly or jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its election to so assume the defense thereof, the indemnifying party shall not be liable to such indemnified party pursuant to the provisions of said subsections (a) or (b) for any legal or other expense subsequently incurred by such indemnified party in connection with the defense thereof. No indemnifying party shall be liable to an indemnified party for any settlement of any action or claim without the consent of the indemnifying party, which consent may not be unreasonably withheld. ARTICLE 15 MISCELLANEOUS 15.01 Headings. The headings used in the Plan are inserted for convenience -------- only and neither constitute a portion of this Plan nor in any manner affect the construction of the provisions of this Plan. 15.02 Severability. Should any provision in the Plan be determined to be ------------ unenforceable following the Effective Date, such determination shall in no way limit or affect the enforceability and operative effect of any and all other provisions of the Plan. 15.03 Governing Law. Except to the extent that the Bankruptcy Code or other ------------- federal law is applicable, the rights, duties and obligations arising under the Plan shall be governed by, and construed and enforced in accordance with, the laws of the State of Virginia. 15.04 Successors and Assigns. The rights, duties and obligations of any ---------------------- person named or referred to in the Plan shall be binding upon, and shall inure to the benefit of, the successors and assigns of such person. -22- 15.05 Revocation of the Plan. The Debtors reserve the right to revoke and ---------------------- withdraw the Plan prior to the Confirmation Date. If the Debtors revoke or withdraw the Plan, then the Plan shall be deemed null and void and nothing contained herein shall be deemed to constitute a waiver or release of any claims by or against the Debtors or any other person or to prejudice in any manner the rights of the Debtors or any person in any further proceedings involving the Debtor. 15.06 Survival of Indemnification Obligations. The obligations of Kaiser or --------------------------------------- the other Debtors to indemnify present or former directors, officers, agents, employees and representatives, pursuant to their certificates of incorporation and bylaws and applicable statutes, in respect of all future actions, suits and proceedings against any of such officers, directors, agents, employees and representatives, based upon any act or omission related to service with or for or on behalf of the Kaiser or the other Debtors, shall not, with respect to any such party that is bound by or otherwise agrees to the releases contained in Section 13.01 of the Plan, be discharged or impaired by confirmation or consummation of the Plan but shall survive unaffected by the reorganization contemplated by the Plan and shall be performed and honored by Kaiser Holdings and the reorganized Debtors regardless of such confirmation, consummation and reorganization. Such surviving indemnity obligations shall not include claims by present or former directors, officers, agents, employees and representatives currently named as defendants in any actions, suits or proceedings pending as of the Petition Date. 15.07 Effectuating Documents; Further Transactions; Timing. Each of the ---------------------------------------------------- officers of the Debtors shall be deemed to be authorized under resolutions of the respective Debtors' boards of directors to execute, deliver, file or record such contracts, instruments, releases and other agreements or documents, and to take such action(s) as may be necessary or appropriate to effectuate and further evidence the terms and conditions of the Plan and any securities issued pursuant to the Plan. All transactions that are required to occur on the Effective Date under the terms of the Plan shall be deemed to have occurred simultaneously. 15.08 Exemption from Transfer Taxes. Pursuant to Section 1146(c) of the ----------------------------- Bankruptcy Code, the issuance, transfer or exchange of equity securities, or other estate property under the Plan shall not be subject to any stamp, real estate, transfer, mortgage, recording or other similar tax. 15.09 Exculpation. Neither the Debtors nor any of their directors, ----------- officers, employees, advisors, affiliates or agents shall have or incur any liability to any holder of a Claim or Equity Interest for any act or omission in connection with or arising out of, confirmation or consummation of the Plan or the administration of the Plan or property to be distributed under the Plan, except for willful misconduct or gross negligence, and in all respects, shall be entitled to rely upon the advice of counsel with respect to their duties and responsibilities under the Plan. 15.10 Binding Effect. The Plan shall be binding upon, and shall inure to -------------- the benefit of the Debtors, the holders of all Claims and Equity Interests and their respective successors and assigns. -23- 15.11 Modification of Payment Terms. The Debtors reserve the right to ----------------------------- modify the treatment of any Allowed Claim in any manner adverse only to the holder of such Claim at any time after the Effective Date upon the prior written consent of the holder whose Allowed Claim treatment is being adversely affected. 15.12 Notices. Any notice required or permitted to be provided under the ------- Plan shall be in writing and served by: (a) certified mail, return receipt requested, postage prepaid; (b) hand delivery; or (c) reputable overnight carrier service, freight prepaid, to be addressed as follows: If to the Debtors, to: Kaiser Group International, Inc. 9300 Lee Highway Fairfax, VA 22031 Attention: Chief Executive Officer Fax: (703) 934-3199 with a copy to: G. Christopher Meyer Squire, Sanders & Dempsey L.L.P. 4900 Key Tower 127 Public Square Cleveland, OH 44114-1304 Fax: (216) 479-8776 15.13 Dissolution of Official Committees. Except as otherwise provided in ---------------------------------- any order of the Bankruptcy Court, on the Effective Date, any official committees of the holders of Claims or Equity Interests shall be dissolved and the members of any such committees shall thereupon be released and discharged of and from all further authority, duties, responsibilities and obligations related to and arising from and in connection with the Bankruptcy Cases, except for the preparation and filing of applications for payment of professionals. 15.14 Post-Confirmation Fees And Reports. Unless otherwise ordered by the ---------------------------------- Bankruptcy Court, the Debtors shall be responsible for the timely payment of all fees incurred pursuant to Section 1930 of Title 28 to the United States Code. Unless otherwise ordered by the Bankruptcy Court, the Debtors also shall file with the court, and serve on the U.S. Trustee, a quarterly financial report for each quarter (or portion thereof) that the Bankruptcy Cases remain open, in a format prescribed by the U.S. Trustee in accordance with the guidelines of the Office of the U.S. Trustee. -24- Fairfax, Virginia KAISER GROUP INTERNATIONAL, INC. November 15, 2000 By: /s/ James J. Maiwurm ------------------------------- James J. Maiwurm Chairman, President and Chief Executive Officer -25- SUMMARY OF EXHIBITS -------------------
- ---------------------------------------------------------------------------------------------------------------------- Exhibit Document Plan Reference(s) - ---------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------- A Definitions 1.01 - ---------------------------------------------------------------------------------------------------------------------- B Executory Contracts 9.03 - ---------------------------------------------------------------------------------------------------------------------- C Certificate of Incorporation and 10.01 Bylaws of Kaiser Holdings - ----------------------------------------------------------------------------------------------------------------------
-26- EXHIBIT A DEFINITIONS ----------- "Allowed" shall mean, with respect to any Claim or Equity Interest, a Claim or - --------- Equity Interest, proof of which was filed on or before the date, if any, designated by the Bankruptcy Court as the last date for filing proofs of claim with respect to such Claim or Equity Interest, or that has been or hereafter is scheduled by the Debtors as liquidated in amount and not disputed or contingent and, in either case, a Claim or Equity Interest as to which no objections to the allowance thereof has been filed within the applicable period of limitation fixed by the Bankruptcy Code, Bankruptcy Rules or an order of the Bankruptcy Court, or as to which any objection has been determined by a Final Order of the Bankruptcy Court allowing such Claim or Equity Interest in whole or in part. "Asset Sale Proceeds" shall mean, as of any date, the net Cash proceeds held by - --------------------- the Debtor from sales of assets made by the Debtors during the Bankruptcy Cases pursuant to Section 363(b) of the Bankruptcy Code, together with interest earnings on such proceeds during the period between the Effective Date and the Distribution Date, after provision for (i) all legal, title and recording tax expenses, commissions and other fees and expenses incurred, and all Federal, state, foreign and local taxes required to be paid or accrued as a liability under generally accepted accounting principles, as a consequence of such sales, and (ii) Cash distributions required pursuant to the Plan, and (iii) amounts reasonably required by the Debtors for working capital purposes, after taking into account Debtors' revenues and other sources of working capital. "Bankruptcy Cases" shall mean the bankruptcy case(s) commenced in the Bankruptcy - ------------------ Court by any of the Debtors. "Bankruptcy Code" shall mean the Bankruptcy Reform Act of 1978, as amended, - ----------------- Title 11, United States Code. "Bankruptcy Court" shall mean the court in the District of Delaware conferred - ------------------ with authority over the Debtor's Chapter 11 case or the court so authorized with respect to any proceedings in connection therewith for the purpose of such proceedings. "Bankruptcy Rules" shall mean the Bankruptcy Rules as in effect on the Petition - ------------------ Date, together with local rules adopted by the Bankruptcy Court, or such similar rules as may be in effect from time to time in the Bankruptcy Court. "Cash" shall mean cash, cash equivalents, and other readily marketable - ------ securities or instruments. "Claim" shall mean any claim against the Debtors as defined in the Bankruptcy - ------- Code which has not been disallowed by an order of the Bankruptcy Court or for which an order of disallowance of the Bankruptcy Court has been reversed on appeal by a Final Order of an appellate court. A-1 "Class" shall mean any group of holders of Claims or Equity Interests as - ------- specified in ARTICLE 3 of the Plan. "Committee" shall mean the unofficial noteholders' committee that prior to the - ----------- commencement of the Bankruptcy Cases negotiated and approved the terms of the Plan, and if it is representative of the interests of the holders of Old Subordinated Notes and other creditors of the Debtors, the Official Unsecured Creditors' Committee appointed during the Bankruptcy Cases. "Confirmation Date" shall mean the date on which the Confirmation Order is - ------------------- entered. "Confirmation Order" shall mean the order entered by the Bankruptcy Court - -------------------- confirming the Plan in accordance with the provisions of Chapter 11 of the Bankruptcy Code. "Convenience Claims" shall mean Unsecured Claims of creditors for liabilities - -------------------- which would otherwise be Class 4 Claims but which either (i) are for $20,000 or less or which have been reduced to $20,000 at least ten days prior to the Distribution Date by written election of such creditors in form and substance satisfactory to the Debtors, or (ii) were incurred by the Debtors for the purchase of products or services in the ordinary course of business of the Debtors by creditors which have been identified by Debtors as vendors which are expected to continue to provide Debtors with products or services important to the Debtors' operations after the Confirmation Date. "Debtors" shall mean, collectively, Kaiser and its affiliates that are debtors - --------- in the Bankruptcy Cases and, from and after the Effective Date, shall include Kaiser Holdings or any other successor to Kaiser or the other Debtors under the Plan. "Distribution Date" shall mean the later of (i) the fifth business day after the - ------------------- Effective Date, and (ii) the date on which Debtors determine that the aggregate of Class 4 Allowed Claims and other Class 4 Claims for which a Cash reserve is required pursuant to Section 6.02 of the Plan has been reduced to less than $225 million, provided, however, that notwithstanding the amount of Class 4 Claims, the Distribution Date shall occur no later than one hundred twenty (120) days after the Effective Date, unless such period is extended by the Bankruptcy Court at the Debtors' request and for cause shown. "Effective Date" shall mean the first business day after the latter of (i) the - ---------------- tenth day after entry the Confirmation Order and (ii) the date on which the conditions in Section 8.02 of the Plan have been satisfied or been waived in accordance with that Section. "Equity Interest" shall mean any rights of holders of issued and outstanding - ----------------- shares of Old Common Stock or other equity securities of Kaiser in respect thereof, together with (i) any rights of holders of options, warrants or other rights to acquire such shares of Old Common Stock or equity securities of Kaiser as of the Filing Date, and (ii) any claim arising from rescission of a purchase or sale of any such security, or for damages arising from the purchase or sale of any such security, or for reimbursement or contribution on account of any such claim. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. - -------------- A-2 "Filing Date" shall mean the date of the filing by the Debtors of their - ------------- voluntary petitions commencing the Bankruptcy Cases. "Final Order" shall mean an order as to which (i) any appeal that has been taken - ------------- has been finally determined or dismissed, or (ii) the time for filing a notice of appeal or petition for certiorari has expired and no notice of appeal or petition for certiorari has been timely filed. "Impaired" shall mean, with respect to any Claim, Equity Interest or Class, the - ---------- condition or effects described in Section 1124 of the Bankruptcy Code. "Kaiser" shall mean Kaiser Group International, Inc., a Delaware corporation - -------- and, from and after the Effective Date, shall include Kaiser Holdings or any other successor to Kaiser under the Plan. "Kaiser Government Programs" shall mean Kaiser Government Programs, Inc., a - ---------------------------- Delaware corporation and wholly owned subsidiary of Kaiser that is not a debtor in any of the Bankruptcy Cases. "Kaiser Holdings" shall mean Kaiser Group Holdings, Inc., a Delaware - ----------------- corporation. "Major Stockholder" shall mean a holder of 10% or more of the outstanding shares - ------------------- of New Common Stock, or a holder of 10% or more of the outstanding shares of New Preferred Stock, or a person who is an "affiliate" (as defined in the Securities Act) of Kaiser Holdings. "New Common Stock" shall mean the common stock of Kaiser Holdings, including the - ------------------ shares issued pursuant to ARTICLE 4 of the Plan. "New Preferred Stock" shall mean the Series 1 Redeemable Cumulative Preferred - --------------------- Stock of Kaiser Holdings, having the terms set forth in the Certificate of Incorporation attached as Exhibit C the Plan, including the shares issued pursuant to ARTICLE 4 of the Plan. "New Securities" shall mean the New Senior Notes, New Preferred Stock, and the - ---------------- New Common Stock, collectively. "New Senior Notes" shall mean Kaiser Holdings' 12% Senior Notes due 2005, issued - ------------------ pursuant to ARTICLE 4 of the Plan. "New Stock" shall mean the New Common Stock and the New Preferred Stock, - ----------- collectively. "Old Common Stock" shall mean the common stock, par value $.01 per share, of - ------------------ Kaiser. "Old Indenture" shall mean the Indenture for the Old Subordinated Notes dated - --------------- January 11, 1994, as amended. "Old Indenture Trustee" shall mean The Bank of New York, as the trustee under - ----------------------- the Old Indenture. A-3 "Old Securities" shall mean the Old Subordinated Notes, and the Old Common - ---------------- Stock, collectively. "Old Subordinated Notes" shall mean the Kaiser's 12% Senior Subordinated Notes - ------------------------ due 2003, issued pursuant to an indenture dated January 11, 1994, as amended. "Plan" shall mean the Amended Plan of Reorganization dated August 17, 2000, - ------ filed by the Debtors, together with the exhibits thereto, either in their present form or as altered, amended or modified from time to time. "Pro Rata" shall mean, with respect to an amount of Cash or New Securities to be - ---------- distributed to the holder of an Allowed Claim or Allowed Equity Interest of a particular class on a particular date, the same proportion that such Allowed Claim or Allowed Equity Interest bears to the aggregate of all Claims or Equity Interests of that particular class on that particular date. "Reserve Fund" shall mean the reserve fund established pursuant to Section 6.02 - -------------- of the Plan. "SEC" shall mean the Securities and Exchange Commission. - ----- "Secured Claim" shall mean a Claim secured by a valid and unavoidable lien on or - --------------- security interest in property of the Debtors, to the extent of the value of such lien or security interest. "Securities Act" shall mean the Securities Act of 1933, as amended. - ---------------- "Stock Purchase Rights" shall mean the right of any holder of Old Common Stock - ----------------------- to purchase additional shares of Old Common Stock under the terms and conditions set forth in the Shareholders Rights Plan adopted effective January 31, 1992, as amended. "Unsecured Claim" shall mean a Claim to the extent of the amount of such Claim - ----------------- which (i) is not secured by any valid and unavoidable lien on or security interest in property of the Debtors, or (ii) is greater than the value of any valid and unavoidable lien on or security interest in property of the Debtors which secures such Claim. A-4 EXHIBIT B EXECUTORY CONTRACTS ------------------- Contracts to be Cured and Assumed - ---------------------------------
- ---------------------------------------------------------------------------------------------------------------------- PARTY TO CONTRACT DESCRIPTION OF CONTRACT CURE REQUIRED, IF ANY - ---------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------
Contracts to be Rejected - ------------------------
- ---------------------------------------------------------------------------------------------------------------------- PARTY TO CONTRACT DESCRIPTION OF CONTRACT - ---------------------------------------------------------------------------------------------------------------------- Breckenridge VII Investment Corp. Real Property Lease c/o Merin Summa Godman, Inc. 5808 Breckenridge Parkway, Suites B-D 4010 Boy Scout Blvd., Suite 550 Tampa, FL 33610 Tampa, FL 33603 Attn: Property Mgt. - ---------------------------------------------------------------------------------------------------------------------- Crystal Springs Water Bottled Water Agreement - Fairfax VA location P.O. Box 3229 Lancaster, PA 17604 - ---------------------------------------------------------------------------------------------------------------------- DANKA Maintenance agreements for copiers s/n 7662734 & 9047441 P.O. Box 740989 Atlanta, GA 30374-0969 - ---------------------------------------------------------------------------------------------------------------------- El Dorado Nitrogen Company Construction contracts P.O. Box 419082 St. Louis, MO 63141-1782 - ---------------------------------------------------------------------------------------------------------------------- The Fred EZRA Company Brokerage Fee Engagement Letter 8300 Greensboro Drive, Suite 1040 McLean, VA 22102 Attn: David C. Kinney - ---------------------------------------------------------------------------------------------------------------------- Marco Antonia Herling Letter Agreement dated January 28, 1997 offering a Edificio Monumental compensation package from David Watson Avenida Frontes de Melo, 51-2-D 100 Lisbon - ----------------------------------------------------------------------------------------------------------------------
B-1
- ---------------------------------------------------------------------------------------------------------------------- Marco Antonio Herling Agreement dated October 10, 1977 regarding the payment Av. Do Lago, No 146B r/c B of commission Portugal 2765 Estoril Portugal - ---------------------------------------------------------------------------------------------------------------------- ICT Spectrum, Constructors, Inc. Agreement and Plan of Merger dated February 5, 1998 - ---------------------------------------------------------------------------------------------------------------------- Network Access Solutions DSL Provider Agreement 100 Carpenter Drive Sterling, VA 20164 - ---------------------------------------------------------------------------------------------------------------------- Norstan Communications Telecommunications Maintenance Contract SDS 12-0976 P.O. Box 66 Minneapolis, MN 55486-0976 - ---------------------------------------------------------------------------------------------------------------------- NPD Trading, Inc. Consulting Agreement on NOVA-HUT Suite 4170 9 West 57th Street New York, New York 10019 - ---------------------------------------------------------------------------------------------------------------------- OCE-USA,Inc. Term Rental Agreement dated November 20,1997 8450 North Cumberland Ave. Chicago, Illinois 60556 - ---------------------------------------------------------------------------------------------------------------------- PCS Nitrogen, Inc. -Engineering, Procurement and Construction 3175 Lenox Park Boulevard, Suite 400 Agreement effective November 1, 1996 (Debtors Memphis, Tennessee 38115 do not believe that those terms of the contract which have been fully performed are executory) - ---------------------------------------------------------------------------------------------------------------------- Siemans Communications, Inc. Telecommunications Maintenance Contract 2070 Chain Bridge Road, Suite 600 Vienna, VA 22162 - ---------------------------------------------------------------------------------------------------------------------- Sprint Telecommunications Maintenance Contract P.O. Box Charlotte, NC 28296-0031 - ---------------------------------------------------------------------------------------------------------------------- Touch America Telecommunications Maintenance Contract 130 North Main Bulte, MT 59701 - ---------------------------------------------------------------------------------------------------------------------- Transwestern Carey Winston Lease Administration Service Agreement 6700 Rockfedge Drive, Suite 400-A Bethesda, MD 20817 Attn: Stephen Layton, Director - ---------------------------------------------------------------------------------------------------------------------- Transwestern Carey Winston Lease Administration Service Agreement Suite 400-A 6700 Rockledge Drive Bethesda, MD 20817 - ---------------------------------------------------------------------------------------------------------------------- Transwestern Carey Winston Brokerage Fee Engagement Letter 8614 Westwood Center Drive, Suite 800 Vienna, VA 22182 Attn: Ed Clark - ---------------------------------------------------------------------------------------------------------------------- UB Transit Systems, Ltd., Nippon Sharyon, Ltd., Development Agreement for elevated light rail transit Transportation & Transit Associations, Inc. system in Bangalor, India - ----------------------------------------------------------------------------------------------------------------------
B-2 EXHIBIT C CERTIFICATE OF INCORPORATION OF KAISER GROUP HOLDINGS, INC. FIRST: Name. The name of this corporation is Kaiser Group Holdings, Inc. ---- (the "Corporation"). SECOND: Registered Office and Agent. The address of the Corporation's --------------------------- registered office in the State of Delaware is to be located at 1013 Centre Road, in the City of Wilmington, County of New Castle, State of Delaware 19805-1297. Its registered agent at such address is Corporation Service Company. THIRD: Purpose. The purpose of the Corporation is to engage in any lawful ------- act or activity for which corporations may be organized under the Delaware General Corporation Law, as amended from time to time (the "DGCL"). FOURTH: Capital Stock. ------------- Section 4.1. Authorized Shares. The total number of shares of stock which ----------------- the Corporation shall have authority to issue is 5,000,000, 3,000,000 of which shall be shares of Common Stock with a par value of $0.01 per share and 2,000,000 of which shall be shares of Preferred Stock with a par value of $0.01 per share. The Corporation shall not issue any non-voting equity securities. Section 4.2. Preferred Stock. --------------- (a) Board Authorized to Fix Terms. The Board of Directors is ----------------------------- authorized, subject to limitations prescribed by law, by resolution or resolutions to provide for the issuance of shares of Preferred Stock in one or more series, and, by filing a certificate when required by the applicable law of the State of Delaware, to establish from time to time the number of shares to be included in each such series and to fix the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations or restrictions thereof. The authority of the Board with respect to each series shall include, but not be limited to, determination of the following: (i) the number of shares constituting that series, including the authority to increase or decrease such number, and the distinctive designation of that series; C-1 (ii) the dividend rate on the shares of that series, whether dividends shall be cumulative, and, if so, the date or dates from which they shall be cumulative and the relative rights of priority, if any, in the payment of dividends on shares of that series; (iii) the voting rights, if any, of the shares of that series in addition to the voting rights provided by law and the terms of any such voting rights; (iv) the terms and conditions, if any, upon which shares of that series shall be convertible or exchangeable for shares of any other class or classes of stock of the Corporation or other entity, including provision for adjustment of the conversion or exchange rate upon the occurrence of such events as the Board of Directors shall determine; (v) the right, if any, of the Corporation to redeem shares of that series and the terms and conditions of such redemption, including the date or dates upon or after which they shall be redeemable and the amount per share payable in case of redemption, which amount may vary according to different conditions and different redemption dates; (vi) the obligation, if any, of the Corporation to retire shares of that series pursuant to a retirement or sinking fund or fund of a similar nature for the redemption or purchase of shares of that series and the terms and conditions of such obligation; (vii) the rights of the shares of that series in the event of voluntary or involuntary liquidation, dissolution or winding up of the Corporation, and the relative rights of priority, if any, in the payment of shares of that series; and (viii) any other rights, preferences and limitations of the shares of that series as may be permitted by law. (b) Dividend Preference. Dividends on outstanding shares of ------------------- Preferred Stock shall be paid or declared and set apart for payment before any dividends shall be paid or declared and set apart for payment on shares of Common Stock with respect to the same dividend period. (c) Relative Liquidation Preference. If, upon any voluntary or ------------------------------- involuntary liquidation, dissolution or winding up of the Corporation, the assets available for distribution to holders of shares of Preferred Stock of all series shall be insufficient to pay such holders the full preferential amount to which they are entitled, then such assets shall be distributed ratably among the shares of all series of Preferred Stock in accordance with their respective priorities and preferential amounts (including unpaid cumulative dividends, if any) payable with respect thereto. (d) Reissuance of Preferred Stock. Subject to the conditions or ----------------------------- restrictions on issuance set forth in the resolution or resolutions adopted by the Board of Directors providing for the issue of any series of shares of Preferred Stock, shares of Preferred Stock of any series that have been redeemed or repurchased by the Corporation (whether through the operation of a sinking fund or otherwise) or that, if convertible or exchangeable, have been converted or exchanged in accordance with their terms, shall be retired and have the status of authorized and C-2 unissued shares of Preferred Stock of the same series and may be reissued as a part of the series of which they were originally a part or may, upon the filing of an appropriate certificate with the Delaware Secretary of State, be reissued as part of a new series of shares of Preferred Stock to be created by resolution or resolutions of the Board of Directors or as part of any other series of shares of Preferred Stock. Section 4.3. Series 1 Redeemable Cumulative Preferred Stock. The ---------------------------------------------- designations, dividend rate, redemption provisions, voting powers, rights on liquidation, dissolution or winding up, and other preferences and relative, participating, optional or other special rights of the Corporation's Series 1 Redeemable Cumulative Preferred Stock, par value $0.01 per share, and the qualifications, limitations or restrictions thereof, are as follows: 1. Designation. The designation of the series of Preferred Stock ----------- created and authorized hereby shall be "Series 1 Redeemable Cumulative Preferred Stock" (the "Series 1 Preferred Stock"), consisting of 2,000,000 shares. The par value of the Series 1 Preferred Stock shall be $0.01 per share, which value does not represent a determination by the Board of Directors for the purposes of the capital accounts. 2. Rank. The Series 1 Preferred Stock shall, with respect to ---- dividend rights and rights on liquidation, winding up and dissolution, rank prior to the Common Stock, par value $0.01 per share, of the Corporation (the "Common Stock"). (All equity securities of the Corporation to which the Series 1 Preferred Stock ranks prior, including the Common Stock, are collectively referred to herein as the "Junior Securities," all equity securities of the Corporation with which the Series 1 Preferred Stock ranks on a parity are collectively referred to herein as the "Parity Securities" and all equity securities of the Corporation (other than convertible debt securities) to which the Series 1 Preferred Stock ranks junior, whether with respect to dividends or upon liquidation, dissolution, winding-up or otherwise, are collectively referred to herein as the "Senior Securities.") The Series 1 Preferred Stock shall be subject to the creation of Junior Securities, Parity Securities and Senior Securities. 3. Dividends. --------- (a) The holders of the shares of Series 1 Preferred Stock shall be entitled to receive, out of funds legally available for the payment of dividends, cumulative annual dividends paid in cash at a rate of 7.0% of the Liquidation Preference Per Share (as defined in Section 4(a)), or paid in additional shares of Series 1 Preferred Stock at a rate of 12.0% of the Liquidation Preference Per Share, with the form of payment being in the sole discretion of the Corporation. Dividends paid in additional shares of Series 1 Preferred Stock may be paid from either authorized but unissued shares or shares that are owned by the Corporation. As relates to a quarterly dividend that the Corporation elects to pay in shares of Series 1 Preferred Stock, the number of shares to be distributed to a holder of Series 1 Preferred Stock shall be calculated by multiplying the number of shares held by that holder by 12% of the Liquidation Preference per Share and dividing the result by four, except that no fractional shares shall be issued and in lieu of fractional shares, the holder shall be entitled to receive a cash payment equal to the fractional interest otherwise issuable multiplied by $55. C-3 (b) Dividends shall be payable in quarterly payments in arrears on April 30, July 31, October 31 and January 31 of each year (each such date, a "dividend payment date"), commencing with the first dividend payment date following the Transaction Date (as defined in Section 5(a)), in preference to dividends on the Junior Securities. Such dividends shall be payable to the holders of the Series 1 Preferred Stock who are holders of record on the record date fixed by the Board of Directors (each such date, a "dividend payment record date"). Except as provided in Section 3(d), each of such quarterly dividends shall be fully cumulative and shall accrue (whether or not declared), without interest, from the previous dividend payment date. Dividends payable for the first dividend period and any partial dividend period shall be calculated on the basis of a 360-day year and the actual number of days elapsed in the period for which payable. (c) All dividends paid with respect to shares of the Series 1 Preferred Stock pursuant to Section 3(a) shall be paid pro rata to the holders --- ---- entitled thereto. (d) If any dividends are not paid in full upon the shares of the Series 1 Preferred Stock and any other Parity Securities, all dividends declared and paid upon shares of the Series 1 Preferred Stock and any other Parity Securities shall be declared and paid pro rata so that the amount of dividends declared per share of the Series 1 Preferred Stock and such Parity Securities shall in all cases bear to each other the same ratio that accrued dividends per share on the Series 1 Preferred Stock and such Parity Securities bear to each other. (e) (i) Holders of shares of the Series 1 Preferred Stock shall be entitled to receive the dividends provided for in Section 3(a) hereof in preference to and in priority over any dividends upon any of the Junior Securities. (ii) So long as any shares of the Series 1 Preferred Stock are outstanding, the Board of Directors shall not declare, and the Corporation shall not pay, or set apart for payment, any dividend on any of the Junior Securities, or call for or pay, or set apart for payment money for a sinking or other similar fund, for the repurchase, redemption or other retirement of, any Junior Securities or any warrants, rights or options exercisable for or convertible into any of the Junior Securities (other than (a) purchases or redemptions pursuant to or in accordance with employee benefit plans, employee stock subscriptions and stock option agreements entered into between the Corporation and certain of its or its subsidiaries' directors, officers and employees, and (b) the repurchase, redemption or other retirement of any Series 1 Preferred Stock made pursuant to the requirements of Section 5(a) hereof), or make any distribution in respect of the Junior Securities, either directly or indirectly, and whether in cash, obligations or other property (other than distributions or dividends in Junior Securities to the holders of Junior Securities), and shall not permit any corporation or other entity directly or indirectly controlled by the Corporation to purchase or redeem any of the Junior Securities or any warrants, rights, calls or options exercisable for or convertible into any of the Junior Securities (other than (x) purchases or redemptions pursuant to or in accordance with employee benefit plans, employee stock subscriptions and stock option agreements entered into between the Corporation and certain of its or its subsidiaries' directors, officers and employees) unless prior to or concurrently with such declaration, payment, setting apart for payment, repurchase, redemption or other retirement or distribution, as the case may be, all accrued and unpaid dividends on shares of the Series 1 Preferred Stock not paid on the dates provided for in C-4 Section 3(a) hereof (including accrued dividends not paid by reason of the terms and conditions of Section 3(a) or Section 3(d) hereof) shall have been or be paid. (f) Holders of shares of the Series 1 Preferred Stock at the close of business on a dividend payment record date shall be entitled to receive the dividend payable on such shares unless such shares shall have been redeemed prior to such dividend payment date. (g) Notwithstanding anything to the contrary contained in this Section 3, in the event that any entity affiliated with the Corporation becomes a holder of shares of Series 1 Preferred Stock as the result of the required purchase of such shares from cash distributions or proceeds related to Kaiser-Hill Company LLC, in accordance with the provisions of an agreement with other holders of Series 1 Preferred Stock, such affiliated entity shall not be entitled to receive any dividends to which it otherwise would be entitled as a holder of Series 1 Preferred Stock. The preceding sentence shall not operate so as to increase the pro rata dividends payable to non-affiliated holders of Series 1 Preferred Stock, which dividends shall continue to be calculated in accordance with the provisions of this Section 3 on the basis of all holders of outstanding Series 1 Preferred Stock, including the affiliated entity and as if the affiliated entity was entitled to receive such dividends. For purposes of this Certificate of Incorporation, an entity shall be deemed to be "affiliated" with the Corporation or an "affiliated entity" of the Corporation if it directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the Corporation. (h) To the extent permitted or required by applicable law, the Corporation will treat the Series 1 Preferred Stock as debt for federal income tax and other tax purposes and will treat dividends paid on the Series 1 Preferred Stock as interest expense for federal income tax and other tax purposes. 4. Liquidation Preference. ---------------------- (a) In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, the holders of shares of Series 1 Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders an amount in cash equal to the Liquidation Preference Per Share plus all accrued but unpaid dividends thereon to the date of voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation for each share outstanding before any payment shall be made or any assets distributed to the holders of any of the Junior Securities. For purposes of this Certificate of Incorporation, the "Liquidation Preference Per Share" shall mean cash in the amount of $55.00 per share. If the assets of the Corporation are not sufficient to pay in full the liquidation payments payable to the holders of outstanding shares of the Series 1 Preferred Stock and any Parity Securities, then the holders of all such shares shall share ratably in such distribution of assets in accordance with the amount which would be payable on such distribution if the amounts to which the holders of outstanding shares of Series 1 Preferred Stock and the holders of outstanding shares of such Parity Securities are entitled were paid in full. Except as provided in this Section 4(a), holders of the Series 1 Preferred Stock shall not be entitled to any distribution in the event of liquidation, dissolution or winding up of the affairs of the Corporation. C-5 (b) For the purposes of this Section 4, neither the voluntary sale, conveyance, lease, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all of the property or assets of the Corporation nor the consolidation or merger of the Corporation with or into one or more other corporations nor the consolidation or merger of one more corporations with or into the Corporation shall be deemed to be a voluntary or involuntary liquidation, dissolution or winding up. (c) Notwithstanding anything to the contrary contained in this Section 4, in the event that any entity affiliated with the Corporation becomes a holder of shares of Series 1 Preferred Stock as the result of the required purchase of such shares from cash distributions or proceeds related to Kaiser-Hill Company LLC, in accordance with the provisions of an agreement with other holders of Series 1 Preferred Stock, such affiliated entity shall not be entitled to be paid any amounts in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, provided that any such nonpayment to any affiliated entity shall not operate so as to increase the payments to which non-affiliated holders of Series 1 Preferred Stock would otherwise be entitled in accordance with the provisions of this Section 4, which payments shall be calculated as if the affiliated entity was entitled to receive payments in the event of the voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation. 5. Redemption; Repurchase Upon Change of Control. --------------------------------------------- (a) Voluntary Redemption by the Corporation. The Corporation may --------------------------------------- redeem at its option the Series 1 Preferred Stock, at any time in whole or from time to time in part after the Transaction Date (as defined in this Section 5(a)), at a redemption price per share equal to 100% of the Liquidation Preference Per Share, plus all accrued but unpaid dividends thereon to the date of redemption, to the extent the Corporation shall have funds legally available for such payment, except that the Corporation shall not be permitted to redeem any shares of Series 1 Preferred Stock that are held by any entity affiliated with the Corporation. As used herein, the term "Transaction Date" shall mean the date of initial issuance of the Series 1 Preferred Stock. (b) Redemption Upon Disposition of Assets. (i) In the event that ------------------------------------- the Corporation or any Subsidiary (as such term is defined in Section 5(e) hereof) of the Corporation engages in any Asset Disposition (as defined in this Section 5(b)), the Corporation shall apply, or cause such Subsidiary to apply, 100% of the Net Cash Proceeds (as defined in this Section 5(b)) of such Asset Disposition to redeem Series 1 Preferred Stock (other than Series 1 Preferred Stock held by any entity that is affiliated with the Corporation) at a redemption price per share equal to 100% of the Liquidation Preference Per Share, plus all accrued and unpaid dividends thereon to the date of redemption. (ii) For purposes of this Section 5(b), "Asset Disposition" means any sale, lease, transfer or other disposition (or series of related sales, leases, transfers or dispositions that are part of a common plan) (each, for purposes of this definition, referred to as a "disposition") of shares of a Subsidiary of the Corporation or of any other property or other assets by the Corporation or any Subsidiary of the Corporation, including any disposition by C-6 means of a merger, consolidation or similar transaction, other than (A) a disposition as between the Corporation and a Subsidiary or between Subsidiaries of the Corporation, (B) a disposition of inventory or collection of receivables in the ordinary course of business, (C) a disposition of obsolete or worn out equipment or equipment that is no longer useful in the conduct of the business of the Corporation and its Subsidiaries and that is disposed of in each case in the ordinary course of business, (D) dispositions of property for net proceeds which, when taken collectively with the net proceeds of any other such dispositions under this clause (D) that were consummated since the beginning of the calendar year in which such disposition is consummated, do not exceed $3 million. (iii) For purposes of this Section 5(b), "Net Cash Proceeds" means cash payments received (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise, but only as and when received, but excluding any other consideration received in the form of assumption of indebtedness or other obligations relating to the properties or assets subject to an Asset Disposition) from an Asset Disposition, in each case net of (A) all legal, title and recording tax expenses, commissions and other fees and expenses incurred, and all Federal, state, foreign and local taxes required to be paid or accrued as a liability under GAAP, as a consequence of such Asset Disposition, (B) all distributions and other payments required to be made to any person owning a beneficial interest in assets subject to sale or minority interest holders in Subsidiaries or joint ventures as a result of such Asset Disposition, (C) the deduction of appropriate amounts to be provided by the seller as a reserve, in accordance with GAAP and as reasonably determined by the Board of Directors of the Corporation, against any liabilities associated with the assets disposed of in such Asset Disposition, and (D) any portion of the purchase price from an Asset Disposition placed in escrow (whether as a reserve for adjustment of the purchase price, for satisfaction or indemnities in respect of such Asset Disposition or otherwise in connection with such Asset Disposition), provided, however, that upon the termination of such escrow, Net Cash Proceeds shall be increased by any portion of funds therein released to the Corporation or any Subsidiary. (c) Redemption Relating to Certain Nova Hut Project Funds. The ----------------------------------------------------- Corporation's subsidiary, Kaiser Netherlands, B.V., is performing a certain contract for engineering and related services pertaining to a steel mini-mill project owned by Nova Hut, a.s. in Ostrava, Czech Republic. In the event that cash pledged by the Corporation in support of a certain letter of credit issued in connection with such project is released from such pledge so it becomes available to the Corporation and not restricted to use in connection with such project, the Corporation shall use all of such cash to redeem shares of Series 1 Preferred Stock (other than Series 1 Preferred Stock held by any entity affiliated with the Corporation) at a redemption price per share equal to 100% of the Liquidation Preference Per Share, plus all accrued and unpaid dividends thereon to the date of redemption. In addition, certain amounts due to Kaiser Netherlands, B.V. under the contract governing such project have been retained and are held in an escrow account in the Czech Republic. In the event amounts due to Kaiser Netherlands, B.V. and retained in such account are released to Kaiser Netherlands, B. V. and become available to the Corporation and not restricted to use in connection with such project, then if and to the extent that the Board of Directors determines, in its sole discretion, that such redemption would be C-7 financially prudent, the Corporation shall cause such amounts to be used to redeem Series 1 Preferred Stock (other than Series 1 Preferred Stock held by any entity affiliated with the Corporation) at a redemption price per share equal to 100% of the Liquidation Preference Per Share, plus all accrued and unpaid dividends thereon to the date of redemption. (d) Redemption Pro Rata, etc. (i) So long as any shares of the ------------------------ Series 1 Preferred Stock are outstanding, any repurchase, redemption or other retirement of any Parity Securities or any warrants, rights or options exercisable for or convertible into any of the Parity Securities (other than the repurchase, redemption or other retirement of debentures or other debt securities that are convertible or exchangeable into any Parity Securities) must be made on a pro rata basis with the Series 1 Preferred Stock so that the total redemption prices of the shares redeemed of Series 1 Preferred Stock and such Parity Securities shall in all cases bear to each other the same ratio that the total redemption prices of all shares outstanding on the applicable date of Series 1 Preferred Stock and such Parity Securities bear to each other, unless prior to or concurrently with such repurchase, redemption or other retirement, as the case may be, all accrued and unpaid dividends on shares of the Series 1 Preferred Stock not paid on the dates provided for in Section 3(a) hereof (including accrued dividends not paid by reason of the terms and conditions of Section 3(a) or Section 3(c) hereof) shall have been or be paid. (ii) Shares of Series 1 Preferred Stock that have been issued and reacquired in any manner, including shares purchased or redeemed or exchanged, shall be retired by action of the Corporation's Board of Directors and shall not be reissued as part of any series of the Preferred Stock. (iii) In the event that fewer than all the outstanding shares of Series 1 Preferred Stock are to be redeemed, the number of shares to be redeemed shall be determined by the Board of Directors and the shares to be redeemed shall be selected pro rata, except that in any redemption of fewer than --- ---- all the outstanding shares of Series 1 Preferred Stock, the Corporation may redeem all shares held by any holders of a number of shares not to exceed 100, including all shares held by holders who, after giving effect to such redemption, would hold less than 100 shares, as may be specified by the Corporation. (iv) In the event the Corporation shall redeem shares of Series 1 Preferred Stock, written notice of such redemption shall be given by first-class mail, postage prepaid mailed not less than 30 days nor more than 60 days prior to the redemption date (on which date the Corporation shall pay the redemption price for each share of Series 1 Preferred Stock properly submitted for redemption), to each holder of record of the shares to be redeemed at such holder's address as the same appears on the stock register of the Corporation; provided, however, that no failure to give such notice nor any defect therein - -------- ------- shall affect the validity of the proceeding for the redemption of any shares of Series 1 Preferred Stock to be redeemed except as to the holder to whom the Corporation has failed to give said notice or except as to the holder whose notice was defective. Each such notice shall state: (i) the redemption date; - (ii) the number of shares of Series 1 Preferred Stock to be redeemed and, if -- less than all the shares held by such holder are to be redeemed from such holder, the number of shares to be redeemed from such holder or the method by which the number of shares to be redeemed will be determined; (iii) the --- redemption price; (iv) the place or places where certificates for such shares -- are to be C-8 surrendered for payment of the redemption price; and (v) that dividends on the shares to be redeemed will cease to accrue on such redemption date. The Board of Directors shall be authorized to establish such other reasonable procedures for redemption and payment of the redemption price that are not inconsistent with the foregoing provisions. (v) Notice having been mailed as aforesaid, from and after the redemption date (unless default shall be made by the Corporation in providing money for the payment of the redemption price of the shares called for redemption) dividends on the shares of Series 1 Preferred Stock so called for redemption shall cease to accrue and said shares shall no longer be deemed to be outstanding and all rights of the holders thereof as stockholders of the Corporation (except the right to receive from the Corporation the redemption price and any accrued and unpaid dividends) shall cease. Upon surrender in accordance with said notice of the certificates for any shares to be redeemed (properly endorsed or assigned for transfer, if the Board of Directors shall so require and the notice shall so state), such shares shall be redeemed by the Corporation at the redemption price aforesaid plus any accrued and unpaid dividends. In case fewer than all the shares represented by any such certificate are redeemed, a new certificate shall be issued representing the unredeemed shares without cost to the holder hereof. (e) Repurchase in Connection with a Change of Control. (i) If a ------------------------------------------------- Change of Control (as defined below) shall occur, each holder of Series 1 Preferred Stock (other than an entity affiliated with the Corporation) shall have the right to require the Corporation to repurchase all or any part (but not any fractional shares) of that holder's Series 1 Preferred Stock pursuant to the offer described below (the "Change of Control Offer"). In the Change of Control Offer, the Corporation shall offer a payment in cash equal to 100% of the Liquidation Preference Per Share repurchased (the "Change of Control Payment") plus all accrued but unpaid dividends thereon to the date of repurchase. Within 30 days following any Change of Control, the Corporation shall mail a notice to each holder of Series 1 Preferred Stock (other than an entity affiliated with the Corporation) describing the transaction or transactions that constitute the Change of Control and offering to repurchase Series 1 Preferred Stock on the date specified in such notice, which date shall be no earlier than 30 days and no later than 60 days from the date such notice is mailed (the "Change of Control Payment Date"), pursuant to the procedures required by this Certificate of Incorporation and described in such notice. The Corporation shall comply with the requirements of federal and state securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of the Series 1 Preferred Stock as a result of a Change of Control. To the extent that the provisions of any securities laws or regulations conflict with this Section 5(e), the Corporation shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 5(e) by virtue of such conflict. On the Change of Control Payment Date, the Corporation shall, to the extent lawful: (x) accept - for payment all Series 1 Preferred Stock or portions thereof properly tendered pursuant to the Change of Control Offer; (y) deposit with the persons appointed - by the Corporation to act as the paying agent (the "Paying Agent") an amount equal to the Change of Control Payment in respect of all Series 1 Preferred Stock or portions thereof so tendered; and (z) deliver or cause to be delivered - to an agent appointed by the Corporation (the "Transfer Agent") the Series 1 Preferred Stock so accepted together with an officers' certificate stating the Liquidation Preference Per Share or portions thereof (plus all accrued but unpaid dividends thereon to the date of repurchase) being purchased by the C-9 Corporation. The Paying Agent shall promptly mail to each holder of Series 1 Preferred Stock so tendered the Change of Control Payment for such Series 1 Preferred Stock, and the Transfer Agent shall promptly authenticate and mail (or cause to be transferred by book-entry) to each such holder of Series 1 Preferred Stock a new certificate representing the Series 1 Preferred Stock equal in Liquidation Preference Per Share (which certificate shall include the right to any accrued but unpaid dividends) to any unpurchased portion of the Series 1 Preferred Stock surrendered, if any. The Corporation shall publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. The Corporation shall not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Certificate of Incorporation applicable to a Change of Control Offer made by the Corporation and purchases all Series 1 Preferred Stock validly tendered and not withdrawn under such Change of Control Offer. Notwithstanding the provisions of this Section 5(e), nothing in this Section 5(e) shall operate (or be deemed to operate) to prevent the Corporation from redeeming in accordance with the provisions of Section 5(a) any shares of Series 1 Preferred Stock in advance of any Change of Control, or following any Change of Control, with respect to any shares not tendered pursuant to this Section 5(e). (ii) For purposes of Section 5(e), "Change of Control" means the occurrence of any of the following: (v) the sale, lease, conveyance or other - disposition of all or substantially all of the Corporation's assets as an entirety or substantially as an entirety to any Person or "group" (within the meaning of section 13(d)(3) of the Exchange Act) in one or a series of transactions taking place after the issuance of the Series 1 Preferred Stock, provided that a transaction where the holders of all classes of Common Equity of - -------- the Corporation immediately prior to such transaction own, directly or indirectly, more than 50% of the aggregate voting power of all classes of Common Equity of such Person or group immediately after such transactions shall not be a Change of Control; (w) the acquisition by the Corporation and any of its - Subsidiaries of 50% or more of all classes of Common Equity of the Corporation in one transaction or a series of related transactions; (x) the approval by the - Corporation of a Plan of Liquidation of the Corporation; or (y) any transaction - or series of transactions taking place after the Transaction Date (as a result of a tender offer, merger, consolidation or otherwise) that results in, or that is in connection with, (I) any Person, including a "group" (within the meaning - of section 13(d)(3) of the Exchange Act) that includes such Person, acquiring "beneficial ownership" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% or more of the aggregate voting power of all classes of Common Equity of the Corporation or any Person that possesses "beneficial ownership" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% or more of the aggregate voting power of all classes of Common Equity of the Corporation, or (II) less than 50% (measured by -- the aggregate voting power of all classes) of the Corporation's Common Equity being registered under section 12(b) or 12(g) of the Exchange Act. (iii) For purposes of Section 5(e), the following terms shall have the respective meanings as follow: C-10 "Capital Stock" of any Person means any and all shares, rights to purchase, warrants or options (whether or not currently exercisable), participations or other equivalents of or interests in (however designated) the equity (including without limitation common stock, preferred stock and partnership and joint venture interests) of such Person. "Common Equity" of any Person means all Capital Stock of such Person that is generally entitled to (x) vote in the election of directors - of such Person or (y) if such Person is not a corporation, vote or otherwise - participate in the selection of the governing body, partners, managers or others that will control the management and policies of such Person. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Person" means any individual, corporation, partnership, joint venture, incorporated or unincorporated association, joint-stock company, trust, unincorporated organization or government or other agency or political subdivision thereof or other entity of any kind. "Plan of Liquidation," with respect to any Person, means a plan that provides for, contemplates or the effectuation of which is preceded or accompanied by (whether or not substantially contemporaneously, in phases or otherwise): (x) the sale, lease, conveyance or other disposition of all or - substantially all of the assets of such Person otherwise than as an entirety or substantially as an entirety; and (y) the distribution of all or substantially - all of the proceeds of such sale, lease, conveyance or other disposition and all or substantially all of the remaining assets of such Person to holders of Capital Stock of such Person. "Subsidiary" of any Person means (x) any corporation of - which at least a majority - of the aggregate voting power of all classes of the Common Equity is owned by such Person directly or through one or more other Subsidiaries of such Person and (y) any entity other than a corporation in which - such Person, directly or indirectly, owns at least a majority of the Common Equity of such entity. (f) Maturity Date. The Corporation shall redeem all of the ------------- outstanding shares of Series 1 Preferred Stock on or before December 31, 2007, in accordance with the applicable provisions of this Section 5, at a redemption price per share equal to 100% of the Liquidation Preference Per Share, plus all accrued but unpaid dividends thereon to the date of redemption, to the extent the Corporation shall have funds legally available for such payment, except that the Corporation shall not redeem any shares of Series 1 Preferred Stock that are held by any entity affiliated with the Corporation. In the event the Corporation fails to make such redemption, in addition to whatever other remedies the holders of the Series 1 Preferred Stock may have as a result of the Corporation's failure to make such redemption, the holders of the Series 1 Preferred Stock shall have the exclusive right, voting separately as a class, to elect two-thirds of the directors of the Corporation, and a special meeting of the holders of Series 1 Preferred Stock for C-11 the purpose of electing such directors shall be called promptly in accordance with applicable law and the Corporation's Certificate of Incorporation and Bylaws. 6. Voting Rights. ------------- (a) Generally. The holders of record of shares of Series 1 --------- Preferred Stock shall not be entitled to any voting rights except as hereinafter provided in this Section 6 or as otherwise provided by law. (b) Matters Submitted to Vote of Stockholders. ----------------------------------------- (i) Each holder of Series 1 Preferred Stock shall be entitled to vote on all matters submitted to a vote of the holders of Common Stock. Each share of Series 1 Preferred Stock shall entitle the holder thereof to one-tenth of a vote at any annual or special meeting of the Corporation's stockholders. (ii) Notwithstanding anything to the contrary contained in this Section 6, neither the Corporation nor any of its direct or indirect subsidiaries will be permitted to vote the shares of Series 1 Preferred Stock that either the Corporation or such subsidiaries may hold from time to time on any matters submitted to a vote of stockholders of the Corporation or any matters upon which holders of Series 1 Preferred Stock vote separately as a class. (c) Election of Additional Directors. The holders of Series 1 -------------------------------- Preferred Stock shall have the exclusive right, voting separately as a class, to appoint the number of additional directors set forth below, under the conditions specified below: (i) Failure to Pay Dividends. If at any time or times the ------------------------ Corporation shall fail for any reason to pay any quarterly dividend on the Series 1 Preferred Stock in accordance with the provisions of Section 3, then the number of directors constituting the Board of Directors, without further action, shall be increased by one (1), and the holders of Series 1 Preferred Stock shall have the exclusive right, voting separately as a class, to elect one additional director of the Corporation to fill such newly created directorship at a special meeting of the holders of Series 1 Preferred Stock or, if within 90 days thereof, at an annual meeting of the Corporation's stockholders held for the purpose of electing directors; provided that (X) the holders of Series 1 Preferred Stock shall be entitled to elect one (1) additional director (in addition to the one director referenced above) in accordance with this Section 6(c)(i) if the Corporation shall fail to pay any dividend in any subsequent quarter when due, and (Y) the holders of Series 1 Preferred Stock shall not have the right to elect more than two (2) directors of the Corporation pursuant to this Section 6(c)(i). (ii) General Provisions Concerning Election of Additional ---------------------------------------------------- Directors. - --------- (A) Whenever any voting rights pursuant to Section 6(c)(i) shall have vested, such rights may be exercised initially either at a special meeting of the holders of Series 1 Preferred Stock, called as promptly as possible in compliance with applicable law, rules and regulations and the Corporation's Certificate of Incorporation C-12 and Bylaws, or at any annual meeting of stockholders held for the purpose of electing directors, and thereafter at such meetings or by the written consent of the holders of Series 1 Preferred Stock pursuant to Section 228 of the General Corporation Law of the State of Delaware. In connection with any special or annual meeting called for the purpose of electing any such director, the Board of Directors shall designate as the nominee for election by the holders of the Series 1 Preferred Stock such person as is recommended by the holders of a majority of the Series 1 Preferred Stock. Such voting rights shall continue until such time as all cumulative dividends accumulated on all outstanding Series 1 Preferred Stock shall have been paid in full or declared and set aside for payment in full, at which time such voting rights of the holders of Series 1 Preferred Stock shall terminate, subject to revesting in the event of each and every subsequent failure of the Corporation to pay any quarterly dividend as described above. (B) At any meeting held for the purpose of electing any director by the holders of the Series 1 Preferred Stock, a quorum shall be a majority of the number of shares of Series 1 Preferred Stock outstanding (other than shares held by any holder that is an entity affiliated with the Corporation), present in person or represented by proxy, and the affirmative vote of a majority of the outstanding shares of the Series 1 Preferred Stock (other than shares held by any holder that is an entity affiliated with the Corporation), present in person or represented by proxy, shall be required to take action. At any such meeting or adjournment thereof, (x) the absence of a - quorum of the holders of Series 1 Preferred Stock shall not prevent the election of directors other than those to be elected by the holders of stock of such class, and the absence of a quorum of the holders of capital stock entitled to elect such other directors shall not prevent the election of any director to be elected by the holders of Series 1 Preferred Stock and (y) in the absence of a - quorum of the holders of shares of Series 1 Preferred Stock, a majority of such holders present in person or represented by proxy shall have the power to adjourn the meeting for the election of any director which the holders of shares of Series 1 Preferred Stock may be entitled to elect, from time to time, without notice (except as required by law) other than announcement at the meeting, until a quorum shall be present. (C) The term of office of any director elected by the holders of Series 1 Preferred Stock pursuant to Section 6(c)(i) shall terminate upon the election of his or her successor at any meeting of stockholders for the purpose of electing directors. Upon any termination of the aforesaid voting rights in accordance with Section 6(c)(ii), the term of office of all directors elected by the holders of Series 1 Preferred Stock pursuant to Section 6(c)(i) and then in office shall thereupon terminate and upon such termination the number of directors constituting the Board of Directors shall, without further action, be reduced by one (1) or two (2), as the case may be, subject always to the increase of the number of directors pursuant to Section 6(c)(i) in case of the future right of the holders of Series 1 Preferred Stock to elect directors as provided herein. (D) In case of any vacancy occurring among the directors so elected by the holders of Series 1 Preferred Stock, any remaining director who shall have been so elected may appoint a successor to hold office for the unexpired term of the director whose place shall be vacant. If all directors elected by the holders of Series 1 C-13 Preferred Stock shall cease to serve as directors before their terms shall expire, the holders of Series 1 Preferred Stock then outstanding may, at a special meeting of the holders called as provided above or by written consent pursuant to Section 228 of the General Corporation Law of the State of Delaware, elect a successor to hold office for the unexpired term of any director whose place shall be vacant. (d) Quorum; Vote for Action. At any meeting at which shares of ----------------------- the Series 1 Preferred Stock are entitled to a separate vote on matters other than election of additional directors as provided in Section 6(c) above, a quorum shall be a majority of the number of shares of Series 1 Preferred Stock outstanding (other than shares held by any holder that is an entity affiliated with the Corporation), present in person or represented by proxy. At any such meeting at which a quorum of shares of Series 1 Preferred Stock is present, the affirmative vote of a majority of the then outstanding shares of the Series 1 Preferred Stock (other than shares held by any holder that is an entity affiliated with the Corporation), present in person or represented by proxy, shall be required to take action. (e) Authorization of Other Securities, Changes in Capital, etc. ---------------------------------------------------------- Except as set forth in Section 6(f) below, the creation, authorization or issuance of any shares of any Junior Securities, Parity Securities or Senior Securities, the creation of any indebtedness of any kind of the Corporation, or the increase or decrease in the amount of authorized capital stock of any class, including Preferred Stock, shall not require the consent of the holders of Series 1 Preferred Stock and shall not be deemed to affect materially and adversely the rights, preferences, privileges or voting rights of shares of Series 1 Preferred Stock. (f) Authorization of Parity and Senior Securities. So long as any --------------------------------------------- shares of the Series 1 Preferred Stock are outstanding (except when notice of the redemption of all outstanding shares of Series 1 Preferred Stock has been given pursuant to Section 5 and funds have been deposited in trust for such redemption), the Corporation shall not, without the affirmative vote or consent of the holders of at least 66-2/3% of the shares of Series 1 Preferred Stock at the time outstanding (other than shares held by an entity affiliated with the Corporation), given in person or by proxy, either in writing or by resolution adopted at an annual or special meeting called for the purpose, at which the holders of Series 1 Preferred Stock shall vote separately as a class, authorize any new class of Parity Securities or Senior Securities. (g) Changes in Designations of Series 1 Preferred Stock. So long --------------------------------------------------- as any shares of the Series 1 Preferred Stock are outstanding (except when notice of the redemption of all outstanding shares of Series 1 Preferred Stock has been given pursuant to Section 5 and funds have been deposited in trust for such redemption), the Corporation shall not, without the affirmative vote or consent of the holders of at least 66-2/3% of the shares of Series 1 Preferred Stock at the time outstanding (other than shares held by an entity affiliated with the Corporation), given in person or by proxy, either in writing or by resolution adopted at an annual or special meeting called for the purpose, at which the holders of Series 1 Preferred Stock shall vote separately as a class, amend the Certificate of Incorporation so as to affect materially and adversely the specified rights, preferences, privileges or voting rights of shares of Series 1 Preferred Stock. C-14 7. Limitations. Except as may otherwise be required by law, the shares ----------- of Series 1 Preferred Stock shall not have any powers or designations, preferences or relative, participating, optional or other special rights or qualifications, limitations or restrictions other than those specifically set forth herein (as this Certificate of Incorporation may be amended from time to time). FIFTH: Elimination of Certain Liability of Directors. No director of the --------------------------------------------- Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director except (a) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (b) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (c) under Section 174 of the DGCL or (d) for any transaction from which the director derived an improper personal benefit. If the DGCL is hereafter amended to permit a corporation to further eliminate or limit the liability of a director of a corporation, then the liability of a director of the Corporation, in addition to the circumstances in which a director is not personally liable as set forth in the preceding sentence, shall, without further action of the directors or stockholders, be further eliminated or limited to the fullest extent permitted by the DGCL as so amended. Neither any amendment, repeal, or modification of this Article Fifth, nor the adoption or amendment of any other provision of this Certificate of Incorporation or the bylaws of the Corporation inconsistent with this Article Fifth, shall adversely affect any right or protection provided hereby with respect to any act or omission occurring prior to the date when such amendment, repeal, modification, or adoption became effective. SIXTH: Indemnification. --------------- Section 6.1. Right to Indemnification. Each person who was or is a party or ------------------------ is threatened to be made a party to or is involved in any threatened, pending or completed action, suit, proceeding or alternative dispute resolution procedure, whether (a) civil, criminal, administrative, investigative or otherwise, (b) formal or informal or (c) by or in the right of the Corporation (collectively, a "proceeding"), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, manager, officer, partner, trustee, employee or agent of another foreign or domestic corporation or of a foreign or domestic limited liability company, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is alleged action in an official capacity as such a director, officer, employee or agent of the Corporation or in any other capacity while serving as such other director, manager, officer, partner, trustee, employee or agent, shall be indemnified and held harmless by the Corporation against all judgments, penalties and fines incurred or paid, and against all expenses (including attorneys' fees) and settlement amounts incurred or paid, in connection with any such proceeding, except in relation to matters as to which the person did not act in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person's conduct was unlawful. Until such time as there has been a final judgment to the contrary, a person shall be presumed to be entitled to be indemnified under this Section 6.1. The termination of any proceeding by judgment, order, settlement, conviction, or upon a plea of nolo C-15 contendere or its equivalent, shall not, of itself, either rebut such presumption or create a presumption that (a) the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of the Corporation, (b) with respect to any criminal action or proceeding, the person had reasonable cause to believe that the person's conduct was unlawful or (c) the person was not successful on the merits or otherwise in defense of the proceeding or of any claim, issue or matter therein. If the DGCL is hereafter amended to provide for indemnification rights broader than those provided by this Section 6.1, then the persons referred to in this Section 6.1 shall be indemnified and held harmless by the Corporation to the fullest extent permitted by the DGCL as so amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than permitted prior to such amendment). Section 6.2. Determination of Entitlement to Indemnification. A ----------------------------------------------- determination as to whether a person who is a director or officer of the Corporation at the time of the determination is entitled to be indemnified and held harmless under Section 6.1 shall be made (a) a majority vote of the directors who are not parties to such proceeding, even though less than a quorum, (b) by a committee of such directors designated by majority vote of such directors, even though less than a quorum, (c) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (d) by the stockholders. A determination as to whether a person who is not a director or officer of the Corporation at the time of the determination is entitled to be indemnified and held harmless under Section 6.1 shall be made by or as directed by the Board of Directors of the Corporation. Section 6.3. Mandatory Advancement of Expenses. The right to --------------------------------- indemnification conferred in this Article Sixth shall include the right to require the Corporation to pay the expenses (including attorneys' fees) incurred in defending any such proceeding in advance of its final disposition; provided, -------- however, that, if the Board of Directors so determines, an advancement of - ------- expenses incurred by an indemnitee in his or her capacity as a director or officer of the Corporation (but not in any other capacity in which service was or is rendered by such indemnitee, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such indemnitee, to repay all amounts so advanced if it shall be finally determined that such indemnitee is not entitled to be indemnified for such expenses under Section 6.1 or otherwise. Section 6.4. Non-Exclusivity of Rights. The right to indemnification and ------------------------- the advancement of expenses conferred in this Article Sixth shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, any provision of this Certificate of Incorporation or of any bylaw, agreement, or insurance policy or arrangement, or any vote of stockholders or disinterested directors, or otherwise. The Board of Directors is expressly authorized to adopt and enter into indemnification agreements with, and obtain insurance for, directors and officers. Section 6.5. Effect of Amendment. Neither any amendment, repeal, or ------------------- modification of this Article Sixth, nor the adoption or amendment of any other provision of this Certificate of Incorporation or the bylaws of the Corporation inconsistent with this Article Sixth, shall adversely affect any right or protection provided hereby with respect to any act or omission C-16 occurring prior to the date when such amendment, repeal, modification, or adoption became effective. SEVENTH: Miscellaneous. The following provisions are inserted for the ------------- management of the business and for the conduct of the affairs of the Corporation and for the purpose of creating, defining, limiting and regulating powers of the Corporation and its directors and stockholders: Section 7.1 No Preemptive Rights. The holders of the Corporation's capital -------------------- stock shall have no preemptive rights to subscribe for any shares of any class of stock of the Corporation whether now or hereafter authorized. Section 7.2 Manner of Election of Directors. Elections of directors need ------------------------------- not be by written ballot unless the bylaws of the Corporation shall so provide. Section 7.3 Election Not To Be Governed by Section 203. The Corporation ------------------------------------------ expressly elects not to be governed by Section 203 of the DGCL. Section 7.4 Adoption and Amendment of Bylaws. The Board of Directors shall -------------------------------- have power to make and adopt bylaws with respect to the organization, operation and government of the Corporation and, subject to such restrictions as may be set forth in the bylaws, from time to time to change, alter, amend or repeal the same, but the stockholders of the Corporation may make and adopt additional bylaws and, subject to such restrictions as may be set forth in the bylaws, may change, alter, amend or repeal any bylaw whether adopted by them or otherwise. Section 7.5 Vote Required to Amend Certificate of Incorporation. --------------------------------------------------- Notwithstanding any other provision of this Certificate of Incorporation or the bylaws of the Corporation or any provision of law which might otherwise permit a lesser vote, but in addition to any affirmative vote of the holders of any particular class or series of stock required by law, this Certificate of Incorporation, the terms of any class or series of stock having preference over the Common Stock as to dividends or upon liquidation, or the bylaws, the affirmative vote of the holders of at least 66 2/3 % of the Corporation's capital stock, voting as a single class, shall be required to alter, amend, or adopt any provision inconsistent with or repeal Articles Fifth and Sixth of this Certificate of Incorporation. Section 7.6 Severability. In the event any provision (or portion thereof) ------------ of this Certificate of Incorporation shall be found to be invalid, prohibited, or unenforceable for any reason, the remaining provisions (or portions thereof) of this Certificate of Incorporation shall be deemed to remain in full force and effect, and shall be construed as if such invalid, prohibited, or unenforceable provision had been stricken herefrom or otherwise rendered inapplicable, it being the intent of the Corporation and its stockholders that each such remaining provision (or portion thereof) of this Certificate of Incorporation remain, to the fullest extent permitted by law, applicable and enforceable as to all stockholders, notwithstanding any such finding. Section 7.7 Reservation of Right to Amend Certificate of Incorporation. The ---------------------------------------------------------- Corporation reserves the right to amend, alter, change or repeal any provision contained in this C-17 Certificate of Incorporation, in the manner now or hereafter prescribed by statute or herein, and all rights conferred upon stockholders herein are granted subject to this reservation. EIGHTH: Incorporator. The name and mailing address of the incorporator are ------------ as follows: Name Mailing Address ---- --------------- NINTH: Initial Directors. The name and mailing address of each person who ----------------- is to serve as a director until the first annual meeting of the stockholders or until a successor is elected and qualified are as follows: Name Mailing Address ---- --------------- I, THE UNDERSIGNED, for the purpose of forming a corporation under the laws of the State of Delaware, do make, file and record this Certificate, and do certify that the facts herein stated are true, and I have accordingly hereunto set my hand this _____ day of ___________, 2000. ---------------------------- Sole Incorporator C-18 EXHIBIT C BYLAWS OF KAISER GROUP HOLDINGS, INC. ARTICLE I Meetings of Stockholders ------------------------ Section 1.1 Place of Meetings. All meetings of stockholders for the ----------------- election of directors or for any other purpose whatsoever shall be held at such place within or without the United States as may be decided upon from time to time by the Board of Directors and indicated in the notice of meeting. Section 1.2 Annual Meetings. An annual meeting of stockholders shall be --------------- held for the election of directors at such date, time and place as may be designated by resolution of the Board of Directors from time to time. Such other business may be transacted thereat as may be specified in the notice of the meeting or as may properly be brought before the meeting. Section 1.3 Special Meetings. Special meetings of stockholders for any ---------------- purpose or purposes may be called at any time by the Board of Directors, the Chair of the Board of Directors or by the President, or by the holders of not less than 20% of the Corporation's capital stock entitled to vote generally in the election of directors, but such special meetings may not be called by any other person or persons. Section 1.4 Business to be Conducted at Meetings. At any meeting of ------------------------------------ stockholders (including any adjournment thereof) only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before a meeting of stockholders, business must be (a) specified in the notice of meeting (or any supplement or amendment thereto) given by or at the direction of the Board of Directors, (b) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (c) otherwise properly brought before the meeting by a stockholder. In addition to any other applicable requirements, for business to be properly brought before a meeting of stockholders by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely a stockholder's notice must be delivered to or mailed and received at the principal executive offices of the Corporation not less than 60 days nor more than 90 days prior to the meeting (as initially called, in the case of adjourned meetings); provided, however, that in the event that less than 75 days' notice -------- ------- or prior public disclosure of the date of the meeting is given or made to the stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the fifteenth day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made, whichever first occurs. A stockholder's notice to the Secretary shall set forth as to each matter the stockholder proposes to C-19 bring before the meeting (a) a brief description of the business desired to be brought before the meeting and the reasons for conducting such business at the meeting, (b) the name and record address of the stockholder proposing such business, (c) the class, series and number of shares of capital stock of the Corporation beneficially owned by such stockholder and (d) any material interest of such stockholder in such business. Notwithstanding anything in these bylaws to the contrary, no business shall be conducted at the meeting except in accordance with the procedures set forth in this Section 1.4. The officer of the Corporation presiding at a meeting of stockholders shall, if the facts warrant, determine that business was not properly brought before the meeting in accordance with the provisions of this Section 1.4, and if such officer should so determine, such officer shall so declare to the meeting, and any such business not properly brought before the meeting shall not be transacted. Section 1.5 Notice of Meetings; Waiver of Notice. A written or printed ------------------------------------ notice of every annual or special meeting of the stockholders stating the place, date and hour of the meeting and, in the case of a special meeting, the purpose or purposes therefor, shall be given to each stockholder entitled to vote thereat and to each stockholder entitled to notice as provided by the Delaware General Corporation Law, as amended from time to time (the "DGCL"). Unless otherwise provided by the DGCL, such notice shall be given not less than ten nor more than 60 days before the date of the meeting. If mailed, such notice shall be deemed to be given when deposited in the United States mail, postage prepaid, directed to the stockholder at the stockholder's address as it appears on the records of the Corporation. Every person who by operation of law, by transfer, or by any other means whatsoever, shall become entitled to any share of capital stock, or right or interest therein, shall be bound by every notice in respect of such share, which, prior to the entering of the stockholder's name and address upon the books of the Corporation, shall have been duly given to the record holder from whom such person derived the stockholder's title to such share. Any stockholder may waive in writing before or after any meeting of the stockholders any notice required to be given by the DGCL or these bylaws and, by attending or voting at any meeting without protesting the lack of proper notice, a stockholder shall be deemed to have waived notice thereof. Section 1.6 Voting and Proxies. Each stockholder entitled to vote at any ------------------ meeting of stockholders shall be entitled to one vote for each share of stock held by such stockholder which has voting power upon each matter in question, except as otherwise provided in the Certificate of Incorporation as relates to any class or series of stock having preference over the Common Stock as to dividends or upon liquidation. Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for such stockholder by proxy by an instrument in writing (or other means permitted by the DGCL) naming such person, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. A proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A stockholder may revoke any proxy which is not irrevocable by (a) attending the meeting and voting in person, (b) an instrument in writing (or other means permitted by the DGCL) revoking the proxy or (c) another proxy bearing a later date. Voting at meetings of stockholders need not be by written ballot and need not be conducted by inspectors unless the holders of a majority of the outstanding shares of all classes of stock with voting rights in the election of directors present in person or by proxy at such meeting shall so determine. Unless otherwise provided by the C-20 DGCL, the Certificate of Incorporation or these bylaws, at all meetings of stockholders at which a quorum is present, a plurality of the votes entitled to be cast in the election of directors shall be sufficient to elect directors; all other elections and questions shall be decided by the vote of the holders of a majority of the outstanding shares of stock entitled to vote thereon present in person or by proxy at the meeting, provided that (except as otherwise required -------- by the DGCL or by the Certificate of Incorporation) the Board of Directors may require a larger vote upon any election or question. Section 1.7 Adjournments. Any meeting of stockholders, annual or special, ------------ may adjourn from time to time to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 1.8 Quorum. At each meeting of stockholders, except where otherwise ------ provided by the DGCL, the Certificate of Incorporation or these bylaws, the holders of a majority of the outstanding shares of stock entitled to vote at the meeting, present in person or by proxy, shall constitute a quorum. In the absence of a quorum, the stockholders so present may, by majority vote, adjourn the meeting from time to time in the manner provided in Section 1.7 above until a quorum shall be present. Section 1.9 Fixing Date for Determination of Stockholders of Record. In ------------------------------------------------------- order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive the payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than 60 days nor less than ten days before the date of such meeting, nor more than 60 days prior to any other action. If no record date is fixed, (a) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held, (b) the record date for determining stockholders entitled to express consent to corporate action in writing without a meeting, when no prior action of the Board of Directors is necessary, shall be the day on which the first written consent is expressed, and (c) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. Except as otherwise required by the DGCL, a determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, -------- however, that the Board of Directors may fix a new record date for an adjourned - ------- meeting. C-21 Section 1.10 List of Stockholders Entitled to Vote. The Secretary shall ------------------------------------- prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stockholder who is present. The Corporation's stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list of stockholders or the books of the Corporation, or to vote in person or by proxy at any meeting of stockholders. Section 1.11 Action by Consent of Stockholders. Unless otherwise restricted --------------------------------- by the Certificate of Incorporation, any action required or permitted to be taken at any annual or special meeting of the stockholders may be taken without a meeting, without prior notice and without a vote, if one or more consents in writing, setting forth the action so taken, shall be signed by the holders of all of the outstanding stock entitled to vote thereon, provided that any action permitted by the Certificate of Incorporation to be taken by the holders of Series 1 Preferred Stock, voting separately as a class, may be taken by one or more consents in writing signed by the holders of Series 1 Preferred Stock having such number of votes sufficient to take such action in accordance with the applicable terms of the Series 1 Preferred Stock. Every written consent shall the bear the date of signature of each stockholder who signs the consent, and no written consent shall be effective to take the corporate action referred to therein unless, within 60 days of the earliest dated consent delivered to the Corporation, written consents are delivered to the Corporation in accordance with Section 228 of the DGCL. Prompt notice of the taking of corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for such meeting had been the date that written consents signed by all of the stockholders entitled to vote thereon were delivered to the Corporation as required by the DGCL. ARTICLE II Board of Directors ------------------ Section 2.1 Number. The number of directors shall be no fewer than one. ------ Subject to the rights of the holders of any class or series of stock having preference over the Common Stock as to dividends or upon liquidation to elect directors, the number of directors may be fixed from time to time (a) at a meeting of the stockholders called for the purpose of electing directors at which a quorum is present, by the affirmative vote of a majority of the shares represented at the meeting in person or by proxy and entitled to vote generally in the election of directors, or (b) by majority vote of the Board of Directors. No decrease in the number of directors shall change the term of any director in office at the time of such decrease. C-22 Section 2.2 Nominations. Nominations of persons for election as such ----------- directors of the Corporation may be made at a meeting of stockholders by or at the direction of the directors, by any nominating committee or person appointed by the directors or by any stockholder of the Corporation entitled to vote for the election of directors at the meeting who complies with the notice procedures set forth in this Section 2.2. Such nominations, other than those made by or at the direction of the directors, shall be made pursuant to timely notice in writing to the Secretary of the Corporation. To be timely, a stockholder's notice shall be delivered to or mailed and received at the principal executive offices of the Corporation not less than 60 days nor more than 90 days prior to the meeting (as initially called, in the case of adjourned meetings); provided, -------- however, that in the event that less than 75 days' notice or prior public - ------- disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the fifteenth day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made, whichever first occurs. Such stockholder's notice shall set forth (a) as to each person who is not an incumbent director whom the stockholder proposes to nominate for election or reelection as a director (i) the name, age, business address and residence address of such person; (ii) the principal occupation or employment of such person; (iii) the class and number of shares of capital stock of the Corporation which are beneficially owned by such person; and (iv) any other information relating to such person that is required to be disclosed in solicitations for proxies for election of directors pursuant to the Rules and Regulations of the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended; and (b) as to the stockholder giving the notice (i) the name and record address of such stockholder and (ii) the class and number of shares of capital stock of the Corporation which are beneficially owned by such stockholder. Such notice shall be accompanied by the written consent of each proposed nominee to serve as a director of the Corporation if elected. The Corporation may require any proposed nominee to furnish such other information as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as a director of the Corporation. Except for the initial directors named in the Certificate of Incorporation and directors who may be elected in accordance with provisions relating to the rights of the holders of any class or series of stock having preference over the Common Stock as to dividends or upon liquidation, no person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 2.2. The officer of the Corporation presiding at a meeting of stockholders shall, if the facts warrant, determine that a nomination was not made in accordance with the provisions of this Section 2.2, and, if the presiding officer should so determine, such officer shall so declare to the meeting, and the defective nomination shall be disregarded. Section 2.3 Tenure and Vacancies. Directors shall be elected at each annual -------------------- meeting of stockholders for a term of office that expires at the next succeeding annual meeting of stockholders and shall hold office until their successors are elected and qualified, subject, however, to prior resignation, death or removal as provided by law. Any director may resign at any time upon written notice to that effect delivered to the Secretary, to be effective upon its acceptance or at the time specified in such writing. Except as otherwise provided for or fixed by or pursuant to provisions relating to the rights of the holders of any class or series of stock having preference over the Common Stock as to dividends or upon liquidation to elect directors, any vacancy occurring in the Board of Directors for any cause may be filled by a majority of the C-23 remaining members of the Board of Directors, although such majority is less than a quorum, or by a plurality of the votes entitled to be cast in the election of directors at a meeting of stockholders. Each director so elected shall hold office until the expiration of the term of office of the director whom such director has replaced. Section 2.4 Annual Meeting. After each annual meeting of the stockholders -------------- or special meeting held in lieu thereof, the newly elected Board of Directors, if a quorum is present, shall hold an annual meeting at the same place for the purpose of electing officers and transacting any other business. If, for any reason, the annual meeting is not held at such time, a special meeting for such purpose shall be held as soon thereafter as practicable. Section 2.5 Regular Meetings. Regular meetings of the Board of Directors ---------------- for the transaction of any business may be held without notice of the time, place or purposes thereof and shall be held at such times and places as may be determined in advance by the Board of Directors. Section 2.6 Special Meetings. Special meetings of the Board of Directors ---------------- may be held at any time and place upon call by the Chair of the Board, the President or any two directors. Reasonable oral (including by telephone) or written (including by facsimile transmission) notice thereof shall be given by the person or persons calling the meeting, not later than 24 hours before the special meeting. Section 2.7 Telephonic Meetings Permitted. Members of the Board of ----------------------------- Directors, or any committee designated in these bylaws or by the Board, may participate in a meeting of such Board or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation shall constitute presence in person at such meeting. Section 2.8 Quorum. At all meetings of the Board of Directors, a majority ------ of the total number of directors shall constitute a quorum for the transaction of business, and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors. If a quorum shall not be present at any meeting of the Board of Directors the directors present thereat may adjourn the meeting from time to time without notice other than announcement at the meeting until a quorum shall be present. Section 2.9 Compensation. The directors are authorized to fix a reasonable ------------ retainer for directors or a reasonable fee for attendance at any meeting of the directors, or any meeting of a committee of the Board of Directors, or any combination of retainer and attendance fee, provided that no compensation as a director shall be paid to any director who is an employee of the Corporation or of a subsidiary. In addition to such compensation or fees provided for directors, directors shall be reimbursed for any expenses incurred by them in traveling to and from such meetings. Section 2.10 Action of Board of Directors and Committees Without Meeting. ----------------------------------------------------------- Unless otherwise restricted by the Certificate of Incorporation or these bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may C-24 be taken without a meeting if all members of the Board or the committee, as the case may be, consent thereto in writing and the writing or writings are filed with the minutes of proceedings of the Board or the committee. ARTICLE III Committees ---------- Section 3.1 Designation. The Board of Directors may designate one or more ----------- committees, each such committee to consist of one or more of the directors of the Corporation. The Board of Directors may, at any time, remove any member of any committee with or without cause and may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the event the Board of Directors has not designated a chair, the committee shall appoint one of its own number as chair, who shall preside at all meetings, and may also appoint a secretary (who need not be a member of the committee), who shall keep its records and who shall hold office at the pleasure of the committee. Section 3.2 Powers and Authority. Any such committee, to the extent -------------------- provided by resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation to the extent permitted by the DGCL and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to the following matters: (a) approving or adopting, or recommending to the stockholders, any action or matter expressly required by the DGCL to be submitted to stockholders for approval or (b) adopting, amending or repealing any bylaw of the Corporation. Section 3.3 Regular Meetings. Regular meetings of such committees may be ---------------- held without notice of the time, place or purposes thereof and shall be held at such times and places (or by telephone as provided in Article II, Section 2.7) as the committee may from time to time determine in advance. Section 3.4 Special Meetings. Special meetings of such committees may be ---------------- held upon notice of the time, place and purposes thereof. Until otherwise ordered by the committee, special meetings shall be held at any time and place (or by telephone as provided in Article II, Section 2.7) at the call of the chair. Section 3.5 Actions at Regular and Special Committee Meetings; Actions ---------------------------------------------------------- Without a Meeting. At any regular or special meeting any such committee may - ----------------- exercise any or all of its powers, and any business which shall come before any regular or special meeting may be transacted thereat, provided a majority of the -------- members of the committee is present. The affirmative vote of a majority of the members of the committee present at a meeting of the committee at which a quorum is present shall be necessary to take any action. In the absence or disqualification of a member of a committee, the member or members present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may C-25 unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any authorized action by the committee may be taken without a meeting by a writing or writings signed by all the members of the committee. ARTICLE IV Officers -------- Section 4.1 Officers Designated. The officers of the Corporation shall be ------------------- elected by the Board of Directors at its annual meeting or any special meeting. They shall include a Chair of the Board, a President and Chief Executive Officer, a Secretary, and such other officers as the Board may from time to time determine. The Chair of the Board and President and Chief Executive Officer shall be, and the other officers may, but need not be, chosen from among the directors. Any two offices may be held by the same person, but in any case where the action of more than one officer is required, no one person shall act in more than one capacity. Section 4.2 Tenure of Office. The officers of the Corporation shall hold ---------------- office until the next annual meeting of the Board of Directors and until their respective successors are chosen and qualified, except in case of their prior resignation, death or removal. The Board of Directors may remove any officer at any time with or without cause by the vote of a majority of the directors in office at the time, but such removal shall be without prejudice to the contractual rights of such officer, if any. A vacancy, however created, in any office may be filled by election by the directors. Section 4.3 Powers and Duties of Officers. The officers of the Corporation ----------------------------- shall have such powers and duties in the management of the Corporation as may be prescribed by the Board of Directors and, to the extent not so provided, as generally pertain to their respective offices, subject to the control of the Board of Directors. Section 4.4 Compensation. The Board of Directors is authorized to ------------ determine, to provide the method of determining, or to empower a committee of its members to determine, the compensation of all officers. Section 4.5 Bond. Any officer, if so required by the Board of Directors, ---- shall furnish a fidelity bond in such sum and with such security as the Board of Directors may require. ARTICLE V Miscellaneous ------------- Section 5.1 Seal. In the discretion of the Board of Directors, the ---- Corporation may have a seal which shall have inscribed thereon the name of the Corporation and the words "Corporate Seal." The seal may be used by causing it or a facsimile thereof to be impressed or affixed or otherwise reproduced. C-26 Section 5.2 Books. The books of the Corporation may be kept (subject to any ----- provision contained in the DGCL) within or without the State of Delaware at such place or places as may be designated from time to time by the Board of Directors. Section 5.3 Fiscal Year. The fiscal year of the Corporation shall be as ----------- determined by the Board of Directors. Section 5.4 Facsimiles. Any copy, facsimile telecommunication or other ---------- reliable reproduction of a writing, transmission or signature may be substituted or used in lieu of the original writing, transmission or signature for any and all purposes for which the original writing, transmission or signature could be used, provided that such copy, facsimile telecommunication or other reproduction -------- shall be a complete reproduction of the entire original writing, transmission or signature, as the case may be. Section 5.5 Amendment of Bylaws. These bylaws may be changed, altered, ------------------- amended or repealed, and new bylaws made, by the Board of Directors, provided -------- that the stockholders may make additional bylaws and may change, alter, amend and repeal any bylaws, whether adopted by them or otherwise. C-27 EX-3.I 3 0003.txt EXHIBIT 3(I) Exhibit 3(i) CERTIFICATE OF INCORPORATION OF KAISER GROUP HOLDINGS, INC. FIRST: Name. The name of this corporation is Kaiser Group Holdings, Inc. ---- (the "Corporation"). SECOND: Registered Office and Agent. The address of the Corporation's --------------------------- registered office in the State of Delaware is to be located at 2711 Centerville Road, Suite 400, in the City of Wilmington, County of New Castle, State of Delaware 19808. Its registered agent at such address is Corporation Service Company. THIRD: Purpose. The purpose of the Corporation is to engage in any lawful ------- act or activity for which corporations may be organized under the Delaware General Corporation Law, as amended from time to time (the "DGCL"). FOURTH: Capital Stock. ------------- Section 4.1. Authorized Shares. The total number of shares of stock which ----------------- the Corporation shall have authority to issue is 5,000,000, 3,000,000 of which shall be shares of Common Stock with a par value of $0.01 per share and 2,000,000 of which shall be shares of Preferred Stock with a par value of $0.01 per share. The Corporation shall not issue any non-voting equity securities. Section 4.2. Preferred Stock. --------------- (a) Board Authorized to Fix Terms. The Board of Directors is ----------------------------- authorized, subject to limitations prescribed by law, by resolution or resolutions to provide for the issuance of shares of Preferred Stock in one or more series, and, by filing a certificate when required by the applicable law of the State of Delaware, to establish from time to time the number of shares to be included in each such series and to fix the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations or restrictions thereof. The authority of the Board with respect to each series shall include, but not be limited to, determination of the following: (i) the number of shares constituting that series, including the authority to increase or decrease such number, and the distinctive designation rof that series; (ii) the dividend rate on the shares of that series, whether dividends shall be cumulative, and, if so, the date or dates from which they shall be cumulative and the relative rights of priority, if any, in the payment of dividends on shares of that series; (iii) the voting rights, if any, of the shares of that series in addition to the voting rights provided by law and the terms of any such voting rights; (iv) the terms and conditions, if any, upon which shares of that series shall be convertible or exchangeable for shares of any other class or classes of stock of the Corporation or other entity, including provision for adjustment of the conversion or exchange rate upon the occurrence of such events as the Board of Directors shall determine; (v) the right, if any, of the Corporation to redeem shares of that series and the terms and conditions of such redemption, including the date or dates upon or after which they shall be redeemable and the amount per share payable in case of redemption, which amount may vary according to different conditions and different redemption dates; (vi) the obligation, if any, of the Corporation to retire shares of that series pursuant to a retirement or sinking fund or fund of a similar nature for the redemption or purchase of shares of that series and the terms and conditions of such obligation; (vii) the rights of the shares of that series in the event of voluntary or involuntary liquidation, dissolution or winding up of the Corporation, and the relative rights of priority, if any, in the payment of shares of that series; and (viii) any other rights, preferences and limitations of the shares of that series as may be permitted by law. (b) Dividend Preference. Dividends on outstanding shares of Preferred ------------------- Stock shall be paid or declared and set apart for payment before any dividends shall be paid or declared and set apart for payment on shares of Common Stock with respect to the same dividend period. (c) Relative Liquidation Preference. If, upon any voluntary or ------------------------------- involuntary liquidation, dissolution or winding up of the Corporation, the assets available for distribution to holders of shares of Preferred Stock of all series shall be insufficient to pay such holders the full preferential amount to which they are entitled, then such assets shall be distributed ratably among the shares of all series of Preferred Stock in accordance with their respective priorities and preferential amounts (including unpaid cumulative dividends, if any) payable with respect thereto. (d) Reissuance of Preferred Stock. Subject to the conditions or ----------------------------- restrictions on issuance set forth in the resolution or resolutions adopted by the Board of Directors providing for the issue of any series of shares of Preferred Stock, shares of Preferred Stock of any series that have been redeemed or repurchased by the Corporation (whether through the operation of a sinking fund or otherwise) or that, if convertible or exchangeable, have been converted or exchanged in accordance with their terms, shall be retired and have the status of authorized and unissued shares of Preferred Stock of the same series and may be reissued as a part of the series 2 of which they were originally a part or may, upon the filing of an appropriate certificate with the Delaware Secretary of State, be reissued as part of a new series of shares of Preferred Stock to be created by resolution or resolutions of the Board of Directors or as part of any other series of shares of Preferred Stock. Section 4.3. Series 1 Redeemable Cumulative Preferred Stock. The ---------------------------------------------- designations, dividend rate, redemption provisions, voting powers, rights on liquidation, dissolution or winding up, and other preferences and relative, participating, optional or other special rights of the Corporation's Series 1 Redeemable Cumulative Preferred Stock, par value $0.01 per share, and the qualifications, limitations or restrictions thereof, are as follows: 1. Designation. The designation of the series of Preferred Stock ----------- created and authorized hereby shall be "Series 1 Redeemable Cumulative Preferred Stock" (the "Series 1 Preferred Stock"), consisting of 2,000,000 shares. The par value of the Series 1 Preferred Stock shall be $0.01 per share, which value does not represent a determination by the Board of Directors for the purposes of the capital accounts. 2. Rank. The Series 1 Preferred Stock shall, with respect to dividend ---- rights and rights on liquidation, winding up and dissolution, rank prior to the Common Stock, par value $0.01 per share, of the Corporation (the "Common Stock"). (All equity securities of the Corporation to which the Series 1 Preferred Stock ranks prior, including the Common Stock, are collectively referred to herein as the "Junior Securities," all equity securities of the Corporation with which the Series 1 Preferred Stock ranks on a parity are collectively referred to herein as the "Parity Securities" and all equity securities of the Corporation (other than convertible debt securities) to which the Series 1 Preferred Stock ranks junior, whether with respect to dividends or upon liquidation, dissolution, winding-up or otherwise, are collectively referred to herein as the "Senior Securities.") The Series 1 Preferred Stock shall be subject to the creation of Junior Securities, Parity Securities and Senior Securities. 3. Dividends. --------- (a) The holders of the shares of Series 1 Preferred Stock shall be entitled to receive, out of funds legally available for the payment of dividends, cumulative annual dividends paid in cash at a rate of 7.0% of the Liquidation Preference Per Share (as defined in Section 4(a)), or paid in additional shares of Series 1 Preferred Stock at a rate of 12.0% of the Liquidation Preference Per Share, with the form of payment being in the sole discretion of the Corporation. Dividends paid in additional shares of Series 1 Preferred Stock may be paid from either authorized but unissued shares or shares that are owned by the Corporation. As relates to a quarterly dividend that the Corporation elects to pay in shares of Series 1 Preferred Stock, the number of shares to be distributed to a holder of Series 1 Preferred Stock shall be calculated by multiplying the number of shares held by that holder by 12% of the Liquidation Preference per Share and dividing the result by four, except that no fractional shares shall be issued and in lieu of fractional shares, the holder shall be entitled to receive a cash payment equal to the fractional interest otherwise issuable multiplied by $55. 3 (b) Dividends shall be payable in quarterly payments in arrears on April 30, July 31, October 31 and January 31 of each year (each such date, a "dividend payment date"), commencing with the first dividend payment date following the Transaction Date (as defined in Section 5(a)), in preference to dividends on the Junior Securities. Such dividends shall be payable to the holders of the Series 1 Preferred Stock who are holders of record on the record date fixed by the Board of Directors (each such date, a "dividend payment record date"). Except as provided in Section 3(d), each of such quarterly dividends shall be fully cumulative and shall accrue (whether or not declared), without interest, from the previous dividend payment date. Dividends payable for the first dividend period and any partial dividend period shall be calculated on the basis of a 360-day year and the actual number of days elapsed in the period for which payable. (c) All dividends paid with respect to shares of the Series 1 Preferred Stock pursuant to Section 3(a) shall be paid pro rata to the holders --- ---- entitled thereto. (d) If any dividends are not paid in full upon the shares of the Series 1 Preferred Stock and any other Parity Securities, all dividends declared and paid upon shares of the Series 1 Preferred Stock and any other Parity Securities shall be declared and paid pro rata so that the amount of dividends --- ---- declared per share of the Series 1 Preferred Stock and such Parity Securities shall in all cases bear to each other the same ratio that accrued dividends per share on the Series 1 Preferred Stock and such Parity Securities bear to each other. (e) (i) Holders of shares of the Series 1 Preferred Stock shall be entitled to receive the dividends provided for in Section 3(a) hereof in preference to and in priority over any dividends upon any of the Junior Securities. (ii) So long as any shares of the Series 1 Preferred Stock are outstanding, the Board of Directors shall not declare, and the Corporation shall not pay, or set apart for payment, any dividend on any of the Junior Securities, or call for or pay, or set apart for payment money for a sinking or other similar fund, for the repurchase, redemption or other retirement of, any Junior Securities or any warrants, rights or options exercisable for or convertible into any of the Junior Securities (other than (a) purchases or redemptions - pursuant to or in accordance with employee benefit plans, employee stock subscriptions and stock option agreements entered into between the Corporation and certain of its or its subsidiaries' directors, officers and employees, and (b) the repurchase, redemption or other retirement of any Series 1 Preferred - Stock made pursuant to the requirements of Section 5(a) hereof), or make any distribution in respect of the Junior Securities, either directly or indirectly, and whether in cash, obligations or other property (other than distributions or dividends in Junior Securities to the holders of Junior Securities), and shall not permit any corporation or other entity directly or indirectly controlled by the Corporation to purchase or redeem any of the Junior Securities or any warrants, rights, calls or options exercisable for or convertible into any of the Junior Securities (other than (x) purchases or redemptions pursuant to or in - accordance with employee benefit plans, employee stock subscriptions and stock option agreements entered into between the Corporation and certain of its or its subsidiaries' directors, officers and employees) unless 4 prior to or concurrently with such declaration, payment, setting apart for payment, repurchase, redemption or other retirement or distribution, as the case may be, all accrued and unpaid dividends on shares of the Series 1 Preferred Stock not paid on the dates provided for in Section 3(a) hereof (including accrued dividends not paid by reason of the terms and conditions of Section 3(a) or Section 3(d) hereof) shall have been or be paid. (f) Holders of shares of the Series 1 Preferred Stock at the close of business on a dividend payment record date shall be entitled to receive the dividend payable on such shares unless such shares shall have been redeemed prior to such dividend payment date. (g) Notwithstanding anything to the contrary contained in this Section 3, in the event that any entity affiliated with the Corporation becomes a holder of shares of Series 1 Preferred Stock as the result of the required purchase of such shares from cash distributions or proceeds related to Kaiser-Hill Company LLC, in accordance with the provisions of an agreement with other holders of Series 1 Preferred Stock, such affiliated entity shall not be entitled to receive any dividends to which it otherwise would be entitled as a holder of Series 1 Preferred Stock. The preceding sentence shall not operate so as to increase the pro rata dividends payable to non-affiliated holders of Series 1 Preferred Stock, which dividends shall continue to be calculated in accordance with the provisions of this Section 3 on the basis of all holders of outstanding Series 1 Preferred Stock, including the affiliated entity and as if the affiliated entity was entitled to receive such dividends. For purposes of this Certificate of Incorporation, an entity shall be deemed to be "affiliated" with the Corporation or an "affiliated entity" of the Corporation if it directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the Corporation. (h) To the extent permitted or required by applicable law, the Corporation will treat the Series 1 Preferred Stock as debt for federal income tax and other tax purposes and will treat dividends paid on the Series 1 Preferred Stock as interest expense for federal income tax and other tax purposes. 4. Liquidation Preference. ---------------------- (a) In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, the holders of shares of Series 1 Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders an amount in cash equal to the Liquidation Preference Per Share plus all accrued but unpaid dividends thereon to the date of voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation for each share outstanding before any payment shall be made or any assets distributed to the holders of any of the Junior Securities. For purposes of this Certificate of Incorporation, the "Liquidation Preference Per Share" shall mean cash in the amount of $55.00 per share. If the assets of the Corporation are not sufficient to pay in full the liquidation payments payable to the holders of outstanding shares of the Series 1 Preferred Stock and any Parity Securities, then the holders of all such shares shall share ratably in such distribution of assets in accordance with the amount which would be payable on such distribution if the amounts to which 5 the holders of outstanding shares of Series 1 Preferred Stock and the holders of outstanding shares of such Parity Securities are entitled were paid in full. Except as provided in this Section 4(a), holders of the Series 1 Preferred Stock shall not be entitled to any distribution in the event of liquidation, dissolution or winding up of the affairs of the Corporation. (b) For the purposes of this Section 4, neither the voluntary sale, conveyance, lease, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all of the property or assets of the Corporation nor the consolidation or merger of the Corporation with or into one or more other corporations nor the consolidation or merger of one more corporations with or into the Corporation shall be deemed to be a voluntary or involuntary liquidation, dissolution or winding up. (c) Notwithstanding anything to the contrary contained in this Section 4, in the event that any entity affiliated with the Corporation becomes a holder of shares of Series 1 Preferred Stock as the result of the required purchase of such shares from cash distributions or proceeds related to Kaiser-Hill Company LLC, in accordance with the provisions of an agreement with other holders of Series 1 Preferred Stock, such affiliated entity shall not be entitled to be paid any amounts in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, provided that any such nonpayment to any affiliated entity shall not operate so as to increase the payments to which non-affiliated holders of Series 1 Preferred Stock would otherwise be entitled in accordance with the provisions of this Section 4, which payments shall be calculated as if the affiliated entity was entitled to receive payments in the event of the voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation. 5. Redemption; Repurchase Upon Change of Control. --------------------------------------------- (a) Voluntary Redemption by the Corporation. The Corporation may --------------------------------------- redeem at its option the Series 1 Preferred Stock, at any time in whole or from time to time in part after the Transaction Date (as defined in this Section 5(a)), at a redemption price per share equal to 100% of the Liquidation Preference Per Share, plus all accrued but unpaid dividends thereon to the date of redemption, to the extent the Corporation shall have funds legally available for such payment, except that the Corporation shall not be permitted to redeem any shares of Series 1 Preferred Stock that are held by any entity affiliated with the Corporation. As used herein, the term "Transaction Date" shall mean the date of initial issuance of the Series 1 Preferred Stock. (b) Redemption Upon Disposition of Assets. (i) In the event that the ------------------------------------- Corporation or any Subsidiary (as such term is defined in Section 5(e) hereof) of the Corporation engages in any Asset Disposition (as defined in this Section 5(b)), the Corporation shall apply, or cause such Subsidiary to apply, 100% of the Net Cash Proceeds (as defined in this Section 5(b)) of such Asset Disposition to redeem Series 1 Preferred Stock (other than Series 1 Preferred Stock held by any entity that is affiliated with the Corporation) at a redemption price per share equal to 6 100% of the Liquidation Preference Per Share, plus all accrued and unpaid dividends thereon to the date of redemption. (ii) For purposes of this Section 5(b), "Asset Disposition" means any sale, lease, transfer or other disposition (or series of related sales, leases, transfers or dispositions that are part of a common plan) (each, for purposes of this definition, referred to as a "disposition") of shares of a Subsidiary of the Corporation or of any other property or other assets by the Corporation or any Subsidiary of the Corporation, including any disposition by means of a merger, consolidation or similar transaction, other than (A) a disposition as between the Corporation and a Subsidiary or between Subsidiaries of the Corporation, (B) a disposition of inventory or collection of receivables in the ordinary course of business, (C) a disposition of obsolete or worn out equipment or equipment that is no longer useful in the conduct of the business of the Corporation and its Subsidiaries and that is disposed of in each case in the ordinary course of business, (D) dispositions of property for net proceeds which, when taken collectively with the net proceeds of any other such dispositions under this clause (D) that were consummated since the beginning of the calendar year in which such disposition is consummated, do not exceed $3 million. (iii) For purposes of this Section 5(b), "Net Cash Proceeds" means cash payments received (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise, but only as and when received, but excluding any other consideration received in the form of assumption of indebtedness or other obligations relating to the properties or assets subject to an Asset Disposition) from an Asset Disposition, in each case net of (A) all legal, title and recording tax expenses, commissions and other fees and expenses incurred, and all Federal, state, foreign and local taxes required to be paid or accrued as a liability under GAAP, as a consequence of such Asset Disposition, (B) all distributions and other payments required to be made to any person owning a beneficial interest in assets subject to sale or minority interest holders in Subsidiaries or joint ventures as a result of such Asset Disposition, (C) the deduction of appropriate amounts to be provided by the seller as a reserve, in accordance with GAAP and as reasonably determined by the Board of Directors of the Corporation, against any liabilities associated with the assets disposed of in such Asset Disposition, and (D) any portion of the purchase price from an Asset Disposition placed in escrow (whether as a reserve for adjustment of the purchase price, for satisfaction or indemnities in respect of such Asset Disposition or otherwise in connection with such Asset Disposition), provided, however, that upon the termination of such escrow, Net Cash Proceeds shall be increased by any portion of funds therein released to the Corporation or any Subsidiary. (c) Redemption Relating to Certain Nova Hut Project Funds. The ----------------------------------------------------- Corporation's subsidiary, Kaiser Netherlands, B.V., is performing a certain contract for engineering and related services pertaining to a steel mini-mill project owned by Nova Hut, a.s. in Ostrava, Czech Republic. In the event that cash pledged by the Corporation in support of a certain letter of credit issued in connection with such project is released from such pledge so it 7 becomes available to the Corporation and not restricted to use in connection with such project, the Corporation shall use all of such cash to redeem shares of Series 1 Preferred Stock (other than Series 1 Preferred Stock held by any entity affiliated with the Corporation) at a redemption price per share equal to 100% of the Liquidation Preference Per Share, plus all accrued and unpaid dividends thereon to the date of redemption. In addition, certain amounts due to Kaiser Netherlands, B.V. under the contract governing such project have been retained and are held in an escrow account in the Czech Republic. In the event amounts due to Kaiser Netherlands, B.V. and retained in such account are released to Kaiser Netherlands, B. V. and become available to the Corporation and not restricted to use in connection with such project, then if and to the extent that the Board of Directors determines, in its sole discretion, that such redemption would be financially prudent, the Corporation shall cause such amounts to be used to redeem Series 1 Preferred Stock (other than Series 1 Preferred Stock held by any entity affiliated with the Corporation) at a redemption price per share equal to 100% of the Liquidation Preference Per Share, plus all accrued and unpaid dividends thereon to the date of redemption. (d) Redemption Pro Rata, etc. (i) So long as any shares of the Series ------------------------ 1 Preferred Stock are outstanding, any repurchase, redemption or other retirement of any Parity Securities or any warrants, rights or options exercisable for or convertible into any of the Parity Securities (other than the repurchase, redemption or other retirement of debentures or other debt securities that are convertible or exchangeable into any Parity Securities) must be made on a pro rata basis with the Series 1 Preferred Stock so that the total redemption prices of the shares redeemed of Series 1 Preferred Stock and such Parity Securities shall in all cases bear to each other the same ratio that the total redemption prices of all shares outstanding on the applicable date of Series 1 Preferred Stock and such Parity Securities bear to each other, unless prior to or concurrently with such repurchase, redemption or other retirement, as the case may be, all accrued and unpaid dividends on shares of the Series 1 Preferred Stock not paid on the dates provided for in Section 3(a) hereof (including accrued dividends not paid by reason of the terms and conditions of Section 3(a) or Section 3(c) hereof) shall have been or be paid. (ii) Shares of Series 1 Preferred Stock that have been issued and reacquired in any manner, including shares purchased or redeemed or exchanged, shall be retired by action of the Corporation's Board of Directors and shall not be reissued as part of any series of the Preferred Stock. (iii) In the event that fewer than all the outstanding shares of Series 1 Preferred Stock are to be redeemed, the number of shares to be redeemed shall be determined by the Board of Directors and the shares to be redeemed shall be selected pro rata, except that in any redemption of fewer than all the outstanding shares of Series 1 Preferred Stock, the Corporation may redeem all shares held by any holders of a number of shares not to exceed 100, including all shares held by holders who, after giving effect to such redemption, would hold less than 100 shares, as may be specified by the Corporation. (iv) In the event the Corporation shall redeem shares of Series 1 Preferred Stock, written notice of such redemption shall be given by first- class mail, postage 8 prepaid mailed not less than 30 days nor more than 60 days prior to the redemption date (on which date the Corporation shall pay the redemption price for each share of Series 1 Preferred Stock properly submitted for redemption), to each holder of record of the shares to be redeemed at such holder's address as the same appears on the stock register of the Corporation; provided, however, -------- ------- that no failure to give such notice nor any defect therein shall affect the validity of the proceeding for the redemption of any shares of Series 1 Preferred Stock to be redeemed except as to the holder to whom the Corporation has failed to give said notice or except as to the holder whose notice was defective. Each such notice shall state: (i) the redemption date; (ii) the - -- number of shares of Series 1 Preferred Stock to be redeemed and, if less than all the shares held by such holder are to be redeemed from such holder, the number of shares to be redeemed from such holder or the method by which the number of shares to be redeemed will be determined; (iii) the redemption price; --- (iv) the place or places where certificates for such shares are to be -- surrendered for payment of the redemption price; and (v) that dividends on the - shares to be redeemed will cease to accrue on such redemption date. The Board of Directors shall be authorized to establish such other reasonable procedures for redemption and payment of the redemption price that are not inconsistent with the foregoing provisions. (v) Notice having been mailed as aforesaid, from and after the redemption date (unless default shall be made by the Corporation in providing money for the payment of the redemption price of the shares called for redemption) dividends on the shares of Series 1 Preferred Stock so called for redemption shall cease to accrue and said shares shall no longer be deemed to be outstanding and all rights of the holders thereof as stockholders of the Corporation (except the right to receive from the Corporation the redemption price and any accrued and unpaid dividends) shall cease. Upon surrender in accordance with said notice of the certificates for any shares to be redeemed (properly endorsed or assigned for transfer, if the Board of Directors shall so require and the notice shall so state), such shares shall be redeemed by the Corporation at the redemption price aforesaid plus any accrued and unpaid dividends. In case fewer than all the shares represented by any such certificate are redeemed, a new certificate shall be issued representing the unredeemed shares without cost to the holder hereof. (e) Repurchase in Connection with a Change of Control. (i) If a Change ------------------------------------------------- of Control (as defined below) shall occur, each holder of Series 1 Preferred Stock (other than an entity affiliated with the Corporation) shall have the right to require the Corporation to repurchase all or any part (but not any fractional shares) of that holder's Series 1 Preferred Stock pursuant to the offer described below (the "Change of Control Offer"). In the Change of Control Offer, the Corporation shall offer a payment in cash equal to 100% of the Liquidation Preference Per Share repurchased (the "Change of Control Payment") plus all accrued but unpaid dividends thereon to the date of repurchase. Within 30 days following any Change of Control, the Corporation shall mail a notice to each holder of Series 1 Preferred Stock (other than an entity affiliated with the Corporation) describing the transaction or transactions that constitute the Change of Control and offering to repurchase Series 1 Preferred Stock on the date specified in such notice, which date shall be no earlier than 30 days and no later than 60 days from the date such notice is mailed (the "Change of Control Payment Date"), pursuant to the procedures required by this Certificate of Incorporation and described in such notice. The Corporation shall 9 comply with the requirements of federal and state securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of the Series 1 Preferred Stock as a result of a Change of Control. To the extent that the provisions of any securities laws or regulations conflict with this Section 5(e), the Corporation shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 5(e) by virtue of such conflict. On the Change of Control Payment Date, the Corporation shall, to the extent lawful: (x) accept for payment all Series 1 Preferred Stock or portions thereof properly - tendered pursuant to the Change of Control Offer; (y) deposit with the persons - appointed by the Corporation to act as the paying agent (the "Paying Agent") an amount equal to the Change of Control Payment in respect of all Series 1 Preferred Stock or portions thereof so tendered; and (z) deliver or cause to be - delivered to an agent appointed by the Corporation (the "Transfer Agent") the Series 1 Preferred Stock so accepted together with an officers' certificate stating the Liquidation Preference Per Share or portions thereof (plus all accrued but unpaid dividends thereon to the date of repurchase) being purchased by the Corporation. The Paying Agent shall promptly mail to each holder of Series 1 Preferred Stock so tendered the Change of Control Payment for such Series 1 Preferred Stock, and the Transfer Agent shall promptly authenticate and mail (or cause to be transferred by book-entry) to each such holder of Series 1 Preferred Stock a new certificate representing the Series 1 Preferred Stock equal in Liquidation Preference Per Share (which certificate shall include the right to any accrued but unpaid dividends) to any unpurchased portion of the Series 1 Preferred Stock surrendered, if any. The Corporation shall publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. The Corporation shall not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Certificate of Incorporation applicable to a Change of Control Offer made by the Corporation and purchases all Series 1 Preferred Stock validly tendered and not withdrawn under such Change of Control Offer. Notwithstanding the provisions of this Section 5(e), nothing in this Section 5(e) shall operate (or be deemed to operate) to prevent the Corporation from redeeming in accordance with the provisions of Section 5(a) any shares of Series 1 Preferred Stock in advance of any Change of Control, or following any Change of Control, with respect to any shares not tendered pursuant to this Section 5(e). (ii) For purposes of Section 5(e), "Change of Control" means the occurrence of any of the following: (v) the sale, lease, conveyance or other - disposition of all or substantially all of the Corporation's assets as an entirety or substantially as an entirety to any Person or "group" (within the meaning of section 13(d)(3) of the Exchange Act) in one or a series of transactions taking place after the issuance of the Series 1 Preferred Stock, provided that a transaction where the holders of all classes of Common Equity of - -------- the Corporation immediately prior to such transaction own, directly or indirectly, more than 50% of the aggregate voting power of all classes of Common Equity of such Person or group immediately after such transactions shall not be a Change of Control; (w) the acquisition by the Corporation and any of its - Subsidiaries of 50% or more of all classes of Common Equity of the Corporation in one transaction or a series of related transactions; (x) the approval by the - Corporation of a Plan of 10 Liquidation of the Corporation; or (y) any transaction or series of transactions - taking place after the Transaction Date (as a result of a tender offer, merger, consolidation or otherwise) that results in, or that is in connection with, (I) - any Person, including a "group" (within the meaning of section 13(d)(3) of the Exchange Act) that includes such Person, acquiring "beneficial ownership" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% or more of the aggregate voting power of all classes of Common Equity of the Corporation or any Person that possesses "beneficial ownership" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% or more of the aggregate voting power of all classes of Common Equity of the Corporation, or (II) less than 50% (measured by the aggregate voting power of all classes) of -- the Corporation's Common Equity being registered under section 12(b) or 12(g) of the Exchange Act. (iii) For purposes of Section 5(e), the following terms shall have the respective meanings as follow: "Capital Stock" of any Person means any and all shares, rights to purchase, warrants or options (whether or not currently exercisable), participations or other equivalents of or interests in (however designated) the equity (including without limitation common stock, preferred stock and partnership and joint venture interests) of such Person. "Common Equity" of any Person means all Capital Stock of such Person that is generally entitled to (x) vote in the election of directors of - such Person or (y) if such Person is not a corporation, vote or otherwise - participate in the selection of the governing body, partners, managers or others that will control the management and policies of such Person. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Person" means any individual, corporation, partnership, joint venture, incorporated or unincorporated association, joint-stock company, trust, unincorporated organization or government or other agency or political subdivision thereof or other entity of any kind. "Plan of Liquidation," with respect to any Person, means a plan that provides for, contemplates or the effectuation of which is preceded or accompanied by (whether or not substantially contemporaneously, in phases or otherwise): (x) the sale, lease, conveyance or other disposition of all or - substantially all of the assets of such Person otherwise than as an entirety or substantially as an entirety; and (y) the distribution of all or substantially - all of the proceeds of such sale, lease, conveyance or other disposition and all or substantially all of the remaining assets of such Person to holders of Capital Stock of such Person. 11 "Subsidiary" of any Person means (x) any corporation of which at - least a majority of - the aggregate voting power of all classes of the Common Equity is owned by such Person directly or through one or more other Subsidiaries of such Person and (y) any entity other than a corporation in which - such Person, directly or indirectly, owns at least a majority of the Common Equity of such entity. (f) Maturity Date. The Corporation shall redeem all of the outstanding ------------- shares of Series 1 Preferred Stock on or before December 31, 2007, in accordance with the applicable provisions of this Section 5, at a redemption price per share equal to 100% of the Liquidation Preference Per Share, plus all accrued but unpaid dividends thereon to the date of redemption, to the extent the Corporation shall have funds legally available for such payment, except that the Corporation shall not redeem any shares of Series 1 Preferred Stock that are held by any entity affiliated with the Corporation. In the event the Corporation fails to make such redemption, in addition to whatever other remedies the holders of the Series 1 Preferred Stock may have as a result of the Corporation's failure to make such redemption, the holders of the Series 1 Preferred Stock shall have the exclusive right, voting separately as a class, to elect two-thirds of the directors of the Corporation, and a special meeting of the holders of Series 1 Preferred Stock for the purpose of electing such directors shall be called promptly in accordance with applicable law and the Corporation's Certificate of Incorporation and Bylaws. 6. Voting Rights. ------------- (a) Generally. The holders of record of shares of Series 1 Preferred --------- Stock shall not be entitled to any voting rights except as hereinafter provided in this Section 6 or as otherwise provided by law. (b) Matters Submitted to Vote of Stockholders. ----------------------------------------- (i) Each holder of Series 1 Preferred Stock shall be entitled to vote on all matters submitted to a vote of the holders of Common Stock. Each share of Series 1 Preferred Stock shall entitle the holder thereof to one-tenth of a vote at any annual or special meeting of the Corporation's stockholders. (ii) Notwithstanding anything to the contrary contained in this Section 6, neither the Corporation nor any of its direct or indirect subsidiaries will be permitted to vote the shares of Series 1 Preferred Stock that either the Corporation or such subsidiaries may hold from time to time on any matters submitted to a vote of stockholders of the Corporation or any matters upon which holders of Series 1 Preferred Stock vote separately as a class. (c) Election of Additional Directors. The holders of Series 1 -------------------------------- Preferred Stock shall have the exclusive right, voting separately as a class, to appoint the number of additional directors set forth below, under the conditions specified below: 12 (i) Failure to Pay Dividends. If at any time or times the ------------------------ Corporation shall fail for any reason to pay any quarterly dividend on the Series 1 Preferred Stock in accordance with the provisions of Section 3, then the number of directors constituting the Board of Directors, without further action, shall be increased by one (1), and the holders of Series 1 Preferred Stock shall have the exclusive right, voting separately as a class, to elect one additional director of the Corporation to fill such newly created directorship at a special meeting of the holders of Series 1 Preferred Stock or, if within 90 days thereof, at an annual meeting of the Corporation's stockholders held for the purpose of electing directors; provided that (X) the holders of Series 1 -------- - Preferred Stock shall be entitled to elect one (1) additional director (in addition to the one director referenced above) in accordance with this Section 6(c)(i) if the Corporation shall fail to pay any dividend in any subsequent quarter when due, and (Y) the holders of Series 1 Preferred Stock shall not have - the right to elect more than two (2) directors of the Corporation pursuant to this Section 6(c)(i). (ii) General Provisions Concerning Election of Additional ---------------------------------------------------- Directors. - --------- (A) Whenever any voting rights pursuant to Section 6(c)(i) shall have vested, such rights may be exercised initially either at a special meeting of the holders of Series 1 Preferred Stock, called as promptly as possible in compliance with applicable law, rules and regulations and the Corporation's Certificate of Incorporation and Bylaws, or at any annual meeting of stockholders held for the purpose of electing directors, and thereafter at such meetings or by the written consent of the holders of Series 1 Preferred Stock pursuant to Section 228 of the General Corporation Law of the State of Delaware. In connection with any special or annual meeting called for the purpose of electing any such director, the Board of Directors shall designate as the nominee for election by the holders of the Series 1 Preferred Stock such person as is recommended by the holders of a majority of the Series 1 Preferred Stock. Such voting rights shall continue until such time as all cumulative dividends accumulated on all outstanding Series 1 Preferred Stock shall have been paid in full or declared and set aside for payment in full, at which time such voting rights of the holders of Series 1 Preferred Stock shall terminate, subject to revesting in the event of each and every subsequent failure of the Corporation to pay any quarterly dividend as described above. (B) At any meeting held for the purpose of electing any director by the holders of the Series 1 Preferred Stock, a quorum shall be a majority of the number of shares of Series 1 Preferred Stock outstanding (other than shares held by any holder that is an entity affiliated with the Corporation), present in person or represented by proxy, and the affirmative vote of a majority of the outstanding shares of the Series 1 Preferred Stock (other than shares held by any holder that is an entity affiliated with the Corporation), present in person or represented by proxy, shall be required to take action. At any such meeting or adjournment thereof, (x) the absence of a quorum of the holders of Series 1 Preferred - Stock shall not prevent the election 13 of directors other than those to be elected by the holders of stock of such class, and the absence of a quorum of the holders of capital stock entitled to elect such other directors shall not prevent the election of any director to be elected by the holders of Series 1 Preferred Stock and (y) in the absence of a quorum of the holders of shares of Series 1 Preferred Stock, a majority of such holders present in person or represented by proxy shall have the power to adjourn the meeting for the election of any director which the holders of shares of Series 1 Preferred Stock may be entitled to elect, from time to time, without notice (except as required by law) other than announcement at the meeting, until a quorum shall be present. (C) The term of office of any director elected by the holders of Series 1 Preferred Stock pursuant to Section 6(c)(i) shall terminate upon the election of his or her successor at any meeting of stockholders for the purpose of electing directors. Upon any termination of the aforesaid voting rights in accordance with Section 6(c)(ii), the term of office of all directors elected by the holders of Series 1 Preferred Stock pursuant to Section 6(c)(i) and then in office shall thereupon terminate and upon such termination the number of directors constituting the Board of Directors shall, without further action, be reduced by one (1) or two (2), as the case may be, subject always to the increase of the number of directors pursuant to Section 6(c)(i) in case of the future right of the holders of Series 1 Preferred Stock to elect directors as provided herein. (D) In case of any vacancy occurring among the directors so elected by the holders of Series 1 Preferred Stock, any remaining director who shall have been so elected may appoint a successor to hold office for the unexpired term of the director whose place shall be vacant. If all directors elected by the holders of Series 1 Preferred Stock shall cease to serve as directors before their terms shall expire, the holders of Series 1 Preferred Stock then outstanding may, at a special meeting of the holders called as provided above or by written consent pursuant to Section 228 of the General Corporation Law of the State of Delaware, elect a successor to hold office for the unexpired term of any director whose place shall be vacant. (d) Quorum; Vote for Action. At any meeting at which shares of the ----------------------- Series 1 Preferred Stock are entitled to a separate vote on matters other than election of additional directors as provided in Section 6(c) above, a quorum shall be a majority of the number of shares of Series 1 Preferred Stock outstanding (other than shares held by any holder that is an entity affiliated with the Corporation), present in person or represented by proxy. At any such meeting at which a quorum of shares of Series 1 Preferred Stock is present, the affirmative vote of a majority of the then outstanding shares of the Series 1 Preferred Stock (other than shares held by any holder that is an entity affiliated with the Corporation), present in person or represented by proxy, shall be required to take action. (e) Authorization of Other Securities, Changes in Capital, etc. Except ---------------------------------------------------------- as set forth in Section 6(f) below, the creation, authorization or issuance of any shares of any Junior Securities, Parity Securities or Senior Securities, the creation of any indebtedness of any kind of the Corporation, or the increase or decrease in the amount of authorized capital stock of any class, including Preferred Stock, shall not require the consent of the holders of Series 1 Preferred 14 Stock and shall not be deemed to affect materially and adversely the rights, preferences, privileges or voting rights of shares of Series 1 Preferred Stock. (f) Authorization of Parity and Senior Securities. So long as any --------------------------------------------- shares of the Series 1 Preferred Stock are outstanding (except when notice of the redemption of all outstanding shares of Series 1 Preferred Stock has been given pursuant to Section 5 and funds have been deposited in trust for such redemption), the Corporation shall not, without the affirmative vote or consent of the holders of at least 66-2/3% of the shares of Series 1 Preferred Stock at the time outstanding (other than shares held by an entity affiliated with the Corporation), given in person or by proxy, either in writing or by resolution adopted at an annual or special meeting called for the purpose, at which the holders of Series 1 Preferred Stock shall vote separately as a class, authorize any new class of Parity Securities or Senior Securities. (g) Changes in Designations of Series 1 Preferred Stock. So long as --------------------------------------------------- any shares of the Series 1 Preferred Stock are outstanding (except when notice of the redemption of all outstanding shares of Series 1 Preferred Stock has been given pursuant to Section 5 and funds have been deposited in trust for such redemption), the Corporation shall not, without the affirmative vote or consent of the holders of at least 66-2/3% of the shares of Series 1 Preferred Stock at the time outstanding (other than shares held by an entity affiliated with the Corporation), given in person or by proxy, either in writing or by resolution adopted at an annual or special meeting called for the purpose, at which the holders of Series 1 Preferred Stock shall vote separately as a class, amend the Certificate of Incorporation so as to affect materially and adversely the specified rights, preferences, privileges or voting rights of shares of Series 1 Preferred Stock. 7. Limitations. Except as may otherwise be required by law, the shares ----------- of Series 1 Preferred Stock shall not have any powers or designations, preferences or relative, participating, optional or other special rights or qualifications, limitations or restrictions other than those specifically set forth herein (as this Certificate of Incorporation may be amended from time to time). FIFTH: Elimination of Certain Liability of Directors. No director of the --------------------------------------------- Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director except (a) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (b) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (c) under Section 174 of the DGCL or (d) for any transaction from which the director derived an improper personal benefit. If the DGCL is hereafter amended to permit a corporation to further eliminate or limit the liability of a director of a corporation, then the liability of a director of the Corporation, in addition to the circumstances in which a director is not personally liable as set forth in the preceding sentence, shall, without further action of the directors or stockholders, be further eliminated or limited to the fullest extent permitted by the DGCL as so amended. Neither any amendment, repeal, or modification of this Article Fifth, nor the adoption or amendment of any other provision of this Certificate of Incorporation or the bylaws of the Corporation inconsistent with this Article Fifth, 15 shall adversely affect any right or protection provided hereby with respect to any act or omission occurring prior to the date when such amendment, repeal, modification, or adoption became effective. SIXTH: Indemnification. --------------- Section 6.1. Right to Indemnification. Each person who was or is a party or ------------------------ is threatened to be made a party to or is involved in any threatened, pending or completed action, suit, proceeding or alternative dispute resolution procedure, whether (a) civil, criminal, administrative, investigative or otherwise, (b) formal or informal or (c) by or in the right of the Corporation (collectively, a "proceeding"), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, manager, officer, partner, trustee, employee or agent of another foreign or domestic corporation or of a foreign or domestic limited liability company, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is alleged action in an official capacity as such a director, officer, employee or agent of the Corporation or in any other capacity while serving as such other director, manager, officer, partner, trustee, employee or agent, shall be indemnified and held harmless by the Corporation against all judgments, penalties and fines incurred or paid, and against all expenses (including attorneys' fees) and settlement amounts incurred or paid, in connection with any such proceeding, except in relation to matters as to which the person did not act in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person's conduct was unlawful. Until such time as there has been a final judgment to the contrary, a person shall be presumed to be entitled to be indemnified under this Section 6.1. The termination of any proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, either rebut such presumption or create a presumption that (a) the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of the Corporation, (b) with respect to any criminal action or proceeding, the person had reasonable cause to believe that the person's conduct was unlawful or (c) the person was not successful on the merits or otherwise in defense of the proceeding or of any claim, issue or matter therein. If the DGCL is hereafter amended to provide for indemnification rights broader than those provided by this Section 6.1, then the persons referred to in this Section 6.1 shall be indemnified and held harmless by the Corporation to the fullest extent permitted by the DGCL as so amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than permitted prior to such amendment). Section 6.2. Determination of Entitlement to Indemnification. A ----------------------------------------------- determination as to whether a person who is a director or officer of the Corporation at the time of the determination is entitled to be indemnified and held harmless under Section 6.1 shall be made (a) a majority vote of the directors who are not parties to such proceeding, even though less than a quorum, (b) by a committee of such directors designated by majority vote of such directors, even though 16 less than a quorum, (c) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (d) by the stockholders. A determination as to whether a person who is not a director or officer of the Corporation at the time of the determination is entitled to be indemnified and held harmless under Section 6.1 shall be made by or as directed by the Board of Directors of the Corporation. Section 6.3. Mandatory Advancement of Expenses. The right to --------------------------------- indemnification conferred in this Article Sixth shall include the right to require the Corporation to pay the expenses (including attorneys' fees) incurred in defending any such proceeding in advance of its final disposition; provided, -------- however, that, if the Board of Directors so determines, an advancement of - ------- expenses incurred by an indemnitee in his or her capacity as a director or officer of the Corporation (but not in any other capacity in which service was or is rendered by such indemnitee, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such indemnitee, to repay all amounts so advanced if it shall be finally determined that such indemnitee is not entitled to be indemnified for such expenses under Section 6.1 or otherwise. Section 6.4. Non-Exclusivity of Rights. The right to indemnification and ------------------------- the advancement of expenses conferred in this Article Sixth shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, any provision of this Certificate of Incorporation or of any bylaw, agreement, or insurance policy or arrangement, or any vote of stockholders or disinterested directors, or otherwise. The Board of Directors is expressly authorized to adopt and enter into indemnification agreements with, and obtain insurance for, directors and officers. Section 6.5. Effect of Amendment. Neither any amendment, repeal, or ------------------- modification of this Article Sixth, nor the adoption or amendment of any other provision of this Certificate of Incorporation or the bylaws of the Corporation inconsistent with this Article Sixth, shall adversely affect any right or protection provided hereby with respect to any act or omission occurring prior to the date when such amendment, repeal, modification, or adoption became effective. SEVENTH: Miscellaneous. The following provisions are inserted for the ------------- management of the business and for the conduct of the affairs of the Corporation and for the purpose of creating, defining, limiting and regulating powers of the Corporation and its directors and stockholders: Section 7.1 No Preemptive Rights. The holders of the Corporation's capital -------------------- stock shall have no preemptive rights to subscribe for any shares of any class of stock of the Corporation whether now or hereafter authorized. Section 7.2 Manner of Election of Directors. Elections of directors need ------------------------------- not be by written ballot unless the bylaws of the Corporation shall so provide. 17 Section 7.3 Election Not To Be Governed by Section 203. The Corporation ------------------------------------------ expressly elects not to be governed by Section 203 of the DGCL. Section 7.4 Adoption and Amendment of Bylaws. The Board of Directors shall -------------------------------- have power to make and adopt bylaws with respect to the organization, operation and government of the Corporation and, subject to such restrictions as may be set forth in the bylaws, from time to time to change, alter, amend or repeal the same, but the stockholders of the Corporation may make and adopt additional bylaws and, subject to such restrictions as may be set forth in the bylaws, may change, alter, amend or repeal any bylaw whether adopted by them or otherwise. Section 7.5 Vote Required to Amend Certificate of Incorporation. --------------------------------------------------- Notwithstanding any other provision of this Certificate of Incorporation or the bylaws of the Corporation or any provision of law which might otherwise permit a lesser vote, but in addition to any affirmative vote of the holders of any particular class or series of stock required by law, this Certificate of Incorporation, the terms of any class or series of stock having preference over the Common Stock as to dividends or upon liquidation, or the bylaws, the affirmative vote of the holders of at least 66 2/3 % of the Corporation's capital stock, voting as a single class, shall be required to alter, amend, or adopt any provision inconsistent with or repeal Articles Fifth and Sixth of this Certificate of Incorporation. Section 7.6 Severability. In the event any provision (or portion thereof) ------------ of this Certificate of Incorporation shall be found to be invalid, prohibited, or unenforceable for any reason, the remaining provisions (or portions thereof) of this Certificate of Incorporation shall be deemed to remain in full force and effect, and shall be construed as if such invalid, prohibited, or unenforceable provision had been stricken herefrom or otherwise rendered inapplicable, it being the intent of the Corporation and its stockholders that each such remaining provision (or portion thereof) of this Certificate of Incorporation remain, to the fullest extent permitted by law, applicable and enforceable as to all stockholders, notwithstanding any such finding. Section 7.7 Reservation of Right to Amend Certificate of Incorporation. The ---------------------------------------------------------- Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute or herein, and all rights conferred upon stockholders herein are granted subject to this reservation. EIGHTH: Incorporator. The name and mailing address of the incorporator are ------------ as follows: Name Mailing Address ---- --------------- James J. Maiwurm 9300 Lee Highway Fairfax, VA 22031 18 NINTH: Initial Directors. The name and mailing address of each person who ----------------- is to serve as a director until the first annual meeting of the stockholders or until a successor is elected and qualified are as follows: Name Mailing Address ---- --------------- Jon Bennett Information Management Office 37 Quebec Street Devens, MA 01432-4424 John Koerber 200 Park Avenue, 55th Floor New York, NY 10166 James J. Maiwurm 9300 Lee Highway Fairfax, VA 22031 I, THE UNDERSIGNED, for the purpose of forming a corporation under the laws of the State of Delaware, do make, file and record this Certificate, and do certify that the facts herein stated are true, and I have accordingly hereunto set my hand this 6th day of December, 2000. /s/ James J. Maiwurm ----------------------------------- Sole Incorporator 19 EX-3.II 4 0004.txt EXHIBIT 3(II) Exhibit 3(ii) BYLAWS OF KAISER GROUP HOLDINGS, INC. ARTICLE I Meetings of Stockholders ------------------------ Section 1.1 Place of Meetings. All meetings of stockholders for the ----------------- election of directors or for any other purpose whatsoever shall be held at such place within or without the United States as may be decided upon from time to time by the Board of Directors and indicated in the notice of meeting. Section 1.2 Annual Meetings. An annual meeting of stockholders shall be --------------- held for the election of directors at such date, time and place as may be designated by resolution of the Board of Directors from time to time. Such other business may be transacted thereat as may be specified in the notice of the meeting or as may properly be brought before the meeting. Section 1.3 Special Meetings. Special meetings of stockholders for any ---------------- purpose or purposes may be called at any time by the Board of Directors, the Chair of the Board of Directors or by the President, or by the holders of not less than 20% of the Corporation's capital stock entitled to vote generally in the election of directors, but such special meetings may not be called by any other person or persons. Section 1.4 Business to be Conducted at Meetings. At any meeting of ------------------------------------ stockholders (including any adjournment thereof) only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before a meeting of stockholders, business must be (a) specified in the notice of meeting (or any supplement or amendment thereto) given by or at the direction of the Board of Directors, (b) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (c) otherwise properly brought before the meeting by a stockholder. In addition to any other applicable requirements, for business to be properly brought before a meeting of stockholders by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely a stockholder's notice must be delivered to or mailed and received at the principal executive offices of the Corporation not less than 60 days nor more than 90 days prior to the meeting (as initially called, in the case of adjourned meetings); provided, however, that in the event that less than 75 days' notice -------- ------- or prior public disclosure of the date of the meeting is given or made to the stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the fifteenth day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made, whichever first occurs. A stockholder's notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the meeting (a) a brief description of the business desired to be brought before the meeting and the reasons for conducting such business at the meeting, (b) the name and record address of the stockholder proposing such business, (c) the class, series and number of shares of capital stock of the Corporation beneficially owned by such stockholder and (d) any material interest of such stockholder in such business. Notwithstanding anything in these bylaws to the contrary, no business shall be conducted at the meeting except in accordance with the procedures set forth in this Section 1.4. The officer of the Corporation presiding at a meeting of stockholders shall, if the facts warrant, determine that business was not properly brought before the meeting in accordance with the provisions of this Section 1.4, and if such officer should so determine, such officer shall so declare to the meeting, and any such business not properly brought before the meeting shall not be transacted. Section 1.5 Notice of Meetings; Waiver of Notice. A written or printed ------------------------------------ notice of every annual or special meeting of the stockholders stating the place, date and hour of the meeting and, in the case of a special meeting, the purpose or purposes therefor, shall be given to each stockholder entitled to vote thereat and to each stockholder entitled to notice as provided by the Delaware General Corporation Law, as amended from time to time (the "DGCL"). Unless otherwise provided by the DGCL, such notice shall be given not less than ten nor more than 60 days before the date of the meeting. If mailed, such notice shall be deemed to be given when deposited in the United States mail, postage prepaid, directed to the stockholder at the stockholder's address as it appears on the records of the Corporation. Every person who by operation of law, by transfer, or by any other means whatsoever, shall become entitled to any share of capital stock, or right or interest therein, shall be bound by every notice in respect of such share, which, prior to the entering of the stockholder's name and address upon the books of the Corporation, shall have been duly given to the record holder from whom such person derived the stockholder's title to such share. Any stockholder may waive in writing before or after any meeting of the stockholders any notice required to be given by the DGCL or these bylaws and, by attending or voting at any meeting without protesting the lack of proper notice, a stockholder shall be deemed to have waived notice thereof. Section 1.6 Voting and Proxies. Each stockholder entitled to vote at any ------------------ meeting of stockholders shall be entitled to one vote for each share of stock held by such stockholder which has voting power upon each matter in question, except as otherwise provided in the Certificate of Incorporation as relates to any class or series of stock having preference over the Common Stock as to dividends or upon liquidation. Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for such stockholder by proxy by an instrument in writing (or other means permitted by the DGCL) naming such person, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. A proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A stockholder may revoke any proxy which is not irrevocable by (a) attending the meeting and voting in person, (b) an instrument in writing (or other means permitted by the DGCL) revoking the proxy or (c) another proxy bearing a later date. Voting at meetings of stockholders need not be by written ballot and need not be conducted by inspectors unless the holders of a majority of the outstanding shares of all classes of stock with voting rights in the election of directors present in person or by proxy at such meeting shall so determine. Unless otherwise provided by the DGCL, the Certificate of Incorporation or these bylaws, at all meetings of stockholders at which a quorum is present, a plurality of the votes entitled to be cast in the election of directors shall be sufficient to elect directors; all other elections and questions shall be decided by the vote of the 2 holders of a majority of the outstanding shares of stock entitled to vote thereon present in person or by proxy at the meeting, provided that (except as -------- otherwise required by the DGCL or by the Certificate of Incorporation) the Board of Directors may require a larger vote upon any election or question. Section 1.7 Adjournments. Any meeting of stockholders, annual or special, ------------ may adjourn from time to time to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 1.8 Quorum. At each meeting of stockholders, except where otherwise ------ provided by the DGCL, the Certificate of Incorporation or these bylaws, the holders of a majority of the outstanding shares of stock entitled to vote at the meeting, present in person or by proxy, shall constitute a quorum. In the absence of a quorum, the stockholders so present may, by majority vote, adjourn the meeting from time to time in the manner provided in Section 1.7 above until a quorum shall be present. Section 1.9 Fixing Date for Determination of Stockholders of Record. In ------------------------------------------------------- order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive the payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than 60 days nor less than ten days before the date of such meeting, nor more than 60 days prior to any other action. If no record date is fixed, (a) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held, (b) the record date for determining stockholders entitled to express consent to corporate action in writing without a meeting, when no prior action of the Board of Directors is necessary, shall be the day on which the first written consent is expressed, and (c) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. Except as otherwise required by the DGCL, a determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, -------- however, that the Board of Directors may fix a new record date for an adjourned - ------- meeting. Section 1.10 List of Stockholders Entitled to Vote. The Secretary shall ------------------------------------- prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall 3 be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stockholder who is present. The Corporation's stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list of stockholders or the books of the Corporation, or to vote in person or by proxy at any meeting of stockholders. Section 1.11 Action by Consent of Stockholders. Unless otherwise restricted --------------------------------- by the Certificate of Incorporation, any action required or permitted to be taken at any annual or special meeting of the stockholders may be taken without a meeting, without prior notice and without a vote, if one or more consents in writing, setting forth the action so taken, shall be signed by the holders of all of the outstanding stock entitled to vote thereon, provided that any action permitted by the Certificate of Incorporation to be taken by the holders of Series 1 Preferred Stock, voting separately as a class, may be taken by one or more consents in writing signed by the holders of Series 1 Preferred Stock having such number of votes sufficient to take such action in accordance with the applicable terms of the Series 1 Preferred Stock. Every written consent shall the bear the date of signature of each stockholder who signs the consent, and no written consent shall be effective to take the corporate action referred to therein unless, within 60 days of the earliest dated consent delivered to the Corporation, written consents are delivered to the Corporation in accordance with Section 228 of the DGCL. Prompt notice of the taking of corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for such meeting had been the date that written consents signed by all of the stockholders entitled to vote thereon were delivered to the Corporation as required by the DGCL. ARTICLE II Board of Directors ------------------ Section 2.1 Number. The number of directors shall be no fewer than one. ------ Subject to the rights of the holders of any class or series of stock having preference over the Common Stock as to dividends or upon liquidation to elect directors, the number of directors may be fixed from time to time (a) at a meeting of the stockholders called for the purpose of electing directors at which a quorum is present, by the affirmative vote of a majority of the shares represented at the meeting in person or by proxy and entitled to vote generally in the election of directors, or (b) by majority vote of the Board of Directors. No decrease in the number of directors shall change the term of any director in office at the time of such decrease. Section 2.2 Nominations. Nominations of persons for election as such ----------- directors of the Corporation may be made at a meeting of stockholders by or at the direction of the directors, by any nominating committee or person appointed by the directors or by any stockholder of the 4 Corporation entitled to vote for the election of directors at the meeting who complies with the notice procedures set forth in this Section 2.2. Such nominations, other than those made by or at the direction of the directors, shall be made pursuant to timely notice in writing to the Secretary of the Corporation. To be timely, a stockholder's notice shall be delivered to or mailed and received at the principal executive offices of the Corporation not less than 60 days nor more than 90 days prior to the meeting (as initially called, in the case of adjourned meetings); provided, however, that in the event -------- ------- that less than 75 days' notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the fifteenth day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made, whichever first occurs. Such stockholder's notice shall set forth (a) as to each person who is not an incumbent director whom the stockholder proposes to nominate for election or reelection as a director (i) the name, age, business address and residence address of such person; (ii) the principal occupation or employment of such person; (iii) the class and number of shares of capital stock of the Corporation which are beneficially owned by such person; and (iv) any other information relating to such person that is required to be disclosed in solicitations for proxies for election of directors pursuant to the Rules and Regulations of the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended; and (b) as to the stockholder giving the notice (i) the name and record address of such stockholder and (ii) the class and number of shares of capital stock of the Corporation which are beneficially owned by such stockholder. Such notice shall be accompanied by the written consent of each proposed nominee to serve as a director of the Corporation if elected. The Corporation may require any proposed nominee to furnish such other information as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as a director of the Corporation. Except for the initial directors named in the Certificate of Incorporation and directors who may be elected in accordance with provisions relating to the rights of the holders of any class or series of stock having preference over the Common Stock as to dividends or upon liquidation, no person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 2.2. The officer of the Corporation presiding at a meeting of stockholders shall, if the facts warrant, determine that a nomination was not made in accordance with the provisions of this Section 2.2, and, if the presiding officer should so determine, such officer shall so declare to the meeting, and the defective nomination shall be disregarded. Section 2.3 Tenure and Vacancies. Directors shall be elected at each annual -------------------- meeting of stockholders for a term of office that expires at the next succeeding annual meeting of stockholders and shall hold office until their successors are elected and qualified, subject, however, to prior resignation, death or removal as provided by law. Any director may resign at any time upon written notice to that effect delivered to the Secretary, to be effective upon its acceptance or at the time specified in such writing. Except as otherwise provided for or fixed by or pursuant to provisions relating to the rights of the holders of any class or series of stock having preference over the Common Stock as to dividends or upon liquidation to elect directors, any vacancy occurring in the Board of Directors for any cause may be filled by a majority of the remaining members of the Board of Directors, although such majority is less than a quorum, or by a plurality of the votes entitled to be cast in the election of directors at a meeting of stockholders. Each director so elected shall hold office until the expiration of the term of office of the director whom such director has replaced. 5 Section 2.4 Annual Meeting. After each annual meeting of the stockholders -------------- or special meeting held in lieu thereof, the newly elected Board of Directors, if a quorum is present, shall hold an annual meeting at the same place for the purpose of electing officers and transacting any other business. If, for any reason, the annual meeting is not held at such time, a special meeting for such purpose shall be held as soon thereafter as practicable. Section 2.5 Regular Meetings. Regular meetings of the Board of Directors ---------------- for the transaction of any business may be held without notice of the time, place or purposes thereof and shall be held at such times and places as may be determined in advance by the Board of Directors. Section 2.6 Special Meetings. Special meetings of the Board of Directors ---------------- may be held at any time and place upon call by the Chair of the Board, the President or any two directors. Reasonable oral (including by telephone) or written (including by facsimile transmission) notice thereof shall be given by the person or persons calling the meeting, not later than 24 hours before the special meeting. Section 2.7 Telephonic Meetings Permitted. Members of the Board of ----------------------------- Directors, or any committee designated in these bylaws or by the Board, may participate in a meeting of such Board or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation shall constitute presence in person at such meeting. Section 2.8 Quorum. At all meetings of the Board of Directors, a majority ------ of the total number of directors shall constitute a quorum for the transaction of business, and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors. If a quorum shall not be present at any meeting of the Board of Directors the directors present thereat may adjourn the meeting from time to time without notice other than announcement at the meeting until a quorum shall be present. Section 2.9 Compensation. The directors are authorized to fix a reasonable ------------ retainer for directors or a reasonable fee for attendance at any meeting of the directors, or any meeting of a committee of the Board of Directors, or any combination of retainer and attendance fee, provided that no compensation as a -------- director shall be paid to any director who is an employee of the Corporation or of a subsidiary. In addition to such compensation or fees provided for directors, directors shall be reimbursed for any expenses incurred by them in traveling to and from such meetings. Section 2.10 Action of Board of Directors and Committees Without Meeting. ----------------------------------------------------------- Unless otherwise restricted by the Certificate of Incorporation or these bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all members of the Board or the committee, as the case may be, consent thereto in writing and the writing or writings are filed with the minutes of proceedings of the Board or the committee. 6 ARTICLE III Committees ---------- Section 3.1 Designation. The Board of Directors may designate one or more ----------- committees, each such committee to consist of one or more of the directors of the Corporation. The Board of Directors may, at any time, remove any member of any committee with or without cause and may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the event the Board of Directors has not designated a chair, the committee shall appoint one of its own number as chair, who shall preside at all meetings, and may also appoint a secretary (who need not be a member of the committee), who shall keep its records and who shall hold office at the pleasure of the committee. Section 3.2 Powers and Authority. Any such committee, to the extent -------------------- provided by resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation to the extent permitted by the DGCL and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to the following matters: (a) approving or adopting, or recommending to the stockholders, any action or matter expressly required by the DGCL to be submitted to stockholders for approval or (b) adopting, amending or repealing any bylaw of the Corporation. Section 3.3 Regular Meetings. Regular meetings of such committees may be ---------------- held without notice of the time, place or purposes thereof and shall be held at such times and places (or by telephone as provided in Article II, Section 2.7) as the committee may from time to time determine in advance. Section 3.4 Special Meetings. Special meetings of such committees may be ---------------- held upon notice of the time, place and purposes thereof. Until otherwise ordered by the committee, special meetings shall be held at any time and place (or by telephone as provided in Article II, Section 2.7) at the call of the chair. Section 3.5 Actions at Regular and Special Committee Meetings; Actions ---------------------------------------------------------- Without a Meeting. At any regular or special meeting any such committee may - ----------------- exercise any or all of its powers, and any business which shall come before any regular or special meeting may be transacted thereat, provided a majority of the -------- members of the committee is present. The affirmative vote of a majority of the members of the committee present at a meeting of the committee at which a quorum is present shall be necessary to take any action. In the absence or disqualification of a member of a committee, the member or members present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any authorized action by the committee may be taken without a meeting by a writing or writings signed by all the members of the committee. 7 ARTICLE IV Officers -------- Section 4.1 Officers Designated. The officers of the Corporation shall be ------------------- elected by the Board of Directors at its annual meeting or any special meeting. They shall include a Chair of the Board, a President and Chief Executive Officer, a Secretary, and such other officers as the Board may from time to time determine. The Chair of the Board and President and Chief Executive Officer shall be, and the other officers may, but need not be, chosen from among the directors. Any two offices may be held by the same person, but in any case where the action of more than one officer is required, no one person shall act in more than one capacity. Section 4.2 Tenure of Office. The officers of the Corporation shall hold ---------------- office until the next annual meeting of the Board of Directors and until their respective successors are chosen and qualified, except in case of their prior resignation, death or removal. The Board of Directors may remove any officer at any time with or without cause by the vote of a majority of the directors in office at the time, but such removal shall be without prejudice to the contractual rights of such officer, if any. A vacancy, however created, in any office may be filled by election by the directors. Section 4.3 Powers and Duties of Officers. The officers of the Corporation ----------------------------- shall have such powers and duties in the management of the Corporation as may be prescribed by the Board of Directors and, to the extent not so provided, as generally pertain to their respective offices, subject to the control of the Board of Directors. Section 4.4 Compensation. The Board of Directors is authorized to ------------ determine, to provide the method of determining, or to empower a committee of its members to determine, the compensation of all officers. Section 4.5 Bond. Any officer, if so required by the Board of Directors, ---- shall furnish a fidelity bond in such sum and with such security as the Board of Directors may require. ARTICLE V Miscellaneous ------------- Section 5.1 Seal. In the discretion of the Board of Directors, the ---- Corporation may have a seal which shall have inscribed thereon the name of the Corporation and the words "Corporate Seal." The seal may be used by causing it or a facsimile thereof to be impressed or affixed or otherwise reproduced. Section 5.2 Books. The books of the Corporation may be kept (subject to any ----- provision contained in the DGCL) within or without the State of Delaware at such place or places as may be designated from time to time by the Board of Directors. 8 Section 5.3 Fiscal Year. The fiscal year of the Corporation shall be as ----------- determined by the Board of Directors. Section 5.4 Facsimiles. Any copy, facsimile telecommunication or other ---------- reliable reproduction of a writing, transmission or signature may be substituted or used in lieu of the original writing, transmission or signature for any and all purposes for which the original writing, transmission or signature could be used, provided that such copy, facsimile telecommunication or other reproduction -------- shall be a complete reproduction of the entire original writing, transmission or signature, as the case may be. Section 5.5 Amendment of Bylaws. These bylaws may be changed, altered, ------------------- amended or repealed, and new bylaws made, by the Board of Directors, provided -------- that the stockholders may make additional bylaws and may change, alter, amend and repeal any bylaws, whether adopted by them or otherwise. 9 EX-4 5 0005.txt EXHIBIT 4 Exhibit 4 PUT AGREEMENT THIS PUT AGREEMENT (the "Agreement") is entered into as of the ___ day of _______, 2000, by and among KAISER GOVERNMENT PROGRAMS, INC., a Delaware corporation ("KGP"), KAISER GROUP HOLDINGS, INC., a Delaware corporation (the "Company"), Kaiser K-H Holdings, Inc., a Delaware corporation ("K-H Holdings"), and The Bank of New York (the "Depositary"), as agent on behalf those holders of Senior Notes (as hereinafter defined) who have elected to exchange their rights under the Guarantee (as hereinafter defined) for the Put (as hereinafter defined) pursuant to the Exchange Offer (as hereinafter defined) and their successors and assigns. RECITALS WHEREAS, KGP previously issued a guarantee (the "Guarantee") of the 12.0% Senior Subordinated Notes due 2003 (the "Senior Notes") of Kaiser Group International, Inc., a Delaware corporation ("Kaiser International"); and WHEREAS, on September 1, 2000, KGP commenced an exchange offer pursuant to Section 3(a)(9) of the Securities Act of 1933 (the "Exchange Offer") whereby holders of Senior Notes could exchange their rights under the Guarantee for options (the "Puts") to sell to KGP, on the terms and subject to the conditions set forth herein, shares of Preferred Stock (as hereinafter defined) issued to them under the Plan (as hereinafter defined) in partial satisfaction of Kaiser International's obligations under the Senior Notes; and WHEREAS, certain holders of Senior Notes have elected to exchange their rights under the Guarantee for the Puts pursuant to the Exchange Offer. ARTICLE I DEFINITIONS Section 1.01 Certain Definitions As used in this Agreement, the following terms shall have the following respective meanings: "Affiliate" of any person means any person directly or indirectly controlling or controlled by or under direct or indirect common control with such person. For purposes of this definition, "control", when used with respect to any person, means the power to direct the management and policies of such person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Certificate(s)" means the certificates in the form of Exhibit A ------- - hereto representing the Puts. 1 "Company" means Kaiser Group Holdings, Inc., a Delaware corporation, and its successors and assigns. "Depositary" means, with respect to the Puts, The Bank of New York (including its successors and assigns), which shall act as paying agent with respect to exercise of the Puts. "Excess Proceeds" means the net after-tax proceeds received by KGP from (i) any cash distributions from Kaiser-Hill through K-H Holdings, that, on a quarterly basis, exceed 2.8 times the amount of cash required to pay (a) all past accrued but unpaid cash dividends on the Preferred Stock, plus (b) the next scheduled quarterly cash dividend on the Preferred Stock, (ii) the disposition of any interest in Kaiser-Hill either by means of a disposition by KGP of shares of K-H Holdings or a disposition by K-H Holdings of all or part of its interest in Kaiser-Hill, (iii) any extraordinary distribution from Kaiser-Hill through K-H Holdings, as reasonably determined by the Board of Directors of the Company, and (iv) any interest paid on Excess Proceeds held by the Depositary. Any and all Excess Proceeds distributed to KGP by the Depositary pursuant to Section 3.04(d) shall become operating capital of KGP and shall not be subject to any limitation on use or disposition under this Agreement or the Puts. For purposes of this definition, "net after-tax proceeds" means the aggregate proceeds received by KGP as a result of any of the transactions described in clauses (i), (ii), (iii) or (iv) of this definition of "Excess Proceeds" after providing for any and all taxes that may be or become due relating to such transaction by any member of the Company's consolidated tax group (for United States federal income tax purposes), as reasonably determined by the Company. "Exchange Offer" means the offer commenced on September 1, 2000, pursuant to Section 3(a)(9) of the Securities Act of 1933, whereby holders of Senior Notes could exchange their rights under the Guarantee for options to sell to KGP, on the terms and subject to the conditions set forth herein, shares of the Preferred Stock issued to such holders under the Plan in partial satisfaction of Kaiser International's obligations under the Senior Notes. "Final Report" means, with respect to each Period of Exercisability, the written report of the Depositary setting forth the name of each Holder that has properly exercised its Put and the number of shares of Preferred Stock with respect to which such Holder has properly exercised its Put and the amount of all Excess Proceeds held by the Depositary. "Guarantee" means the Guarantee of KGP with respect to the Senior Notes. "Holders" means the holders of Puts, comprised of holders of Senior Notes that exchanged their rights under the Guarantee for Puts, together with any successors and assigns of such holders as regards Puts, as reflected from time to time on the Register for the Puts, except that no Affiliate of KGP or the Company shall be considered to be a Holder for purposes of this Agreement. "Kaiser-Hill" means Kaiser-Hill Company, LLC, a Colorado limited liability company and an indirect, 50% owned subsidiary of KGP. 2 "Kaiser International" means Kaiser Group International, Inc, a Delaware corporation. "KGP" means Kaiser Government Programs, Inc., a Delaware corporation. "KGP Report" means, with respect to each Period of Exercisability, the report of KGP to the Depositary setting forth the aggregate Purchase Price payable to each Holder, instructions with respect to the pro rata purchase of shares of Preferred Stock and the number of shares of Preferred Stock, if any, for which the Company must cause new stock certificates to be issued to the holders thereof. "K-H Holdings" means Kaiser K-H Holdings, Inc., a Delaware corporation, which is a wholly-owned subsidiary of KGP and the owner of 50% of the interests in Kaiser-Hill. "Notice of Exercise" means the notice from a Holder substantially in the form of Exhibit C specifying the maximum number of shares of Preferred --------- Stock with respect to which a Put is being exercised. "Notice of Triggering Event" means the notice of a Triggering Event given to the Holders by the Depositary substantially in the form of Exhibit B. --------- "Period of Exercisability" means, with respect to any Triggering Event, the thirty-(30) day period during which Holders may exercise Puts. "Plan" means the Plan of Reorganization of Kaiser International and its debtor subsidiaries, as confirmed by the Bankruptcy Court and as effective. "Plan Effective Date" shall mean the date provided for in the Plan as the effective date. "Preferred Stock" means the Series 1 Redeemable Cumulative Preferred Stock, $0.01 par value, of the Company. "Purchase Price" means, for any shares of Preferred Stock with respect to which a Put is exercised, (a) 100% of the liquidation preference of such Preferred Stock, plus (b) all accrued and unpaid dividends thereon, as adjusted from time to time. "Put(s)" means the option(s) to sell Preferred Stock evidenced by the Certificates, the terms and conditions of which are set forth herein. "Register" means the list of Holders maintained by the Transfer Agent. "Senior Notes" means Kaiser International's 12.0% Senior Subordinated Notes due 2003 issued pursuant to that certain Indenture dated January 11, 1994, as amended, by and between Kaiser International and The Bank of New York, as Trustee. 3 "Transfer Agent" means The Bank of New York or any other entity appointed subsequently by KGP for the purpose of maintaining the Register for the registration of ownership and registration of transfer of the Puts. "Triggering Event" means any event that results in the receipt by KGP of Excess Proceeds (other than the payment of interest on Excess Proceeds); provided, however, in the event that KGP receives Excess Proceeds within twelve (12) months of a previous Triggering Event, then such Triggering Event shall be deemed to have occurred on the date that is the earlier of (i) twelve (12) months following the previous Triggering Event or (ii) the date on which there is an aggregate of three million dollars ($3,000,000) or more of Excess Proceeds. ARTICLE II GENERAL; FORM OF CERTIFICATE; EXECUTION, DELIVERY AND ISSUANCE OF CERTIFICATES Section 2.01 General (a) Each Put shall represent an option of the Holder to require KGP to purchase, on a pro rata basis, Preferred Stock at the Purchase Price from Excess Proceeds, all subject to the terms and conditions set forth herein. Puts shall be effective only upon the Plan Effective Date and shall be exercisable only upon the occurrence of a Triggering Event. Notwithstanding anything else provided herein or in any Certificate, all Puts shall expire at 5:00 p.m., New York City time, on December 31, 2007. (b) The Puts shall be transferable, except that no transfer shall be effective unless reflected on the register for the Puts maintained by KGP or an entity appointed by KGP to serve as the registrar and transfer agent for the Puts. Notwithstanding anything to the contrary in the immediately preceding sentence, the Puts shall cease to be transferable and shall become nontransferable if the effect of any further transfer would be to cause KGP to be required to register the Puts as a class of securities under the applicable provisions of the Securities Exchange Act of 1934. Section 2.02 Form of Certificate (a) Puts shall be evidenced solely by certificates representing the option to sell Preferred Stock to KGP on the terms set forth herein and substantially in the form attached as Exhibit A to this Agreement (the --------- "Certificates"). (b) The Certificates (i) shall be issued in registered form only; (ii) shall be dated the date of issuance (whether upon initial issuance, exchange or replacement); and (iii) shall contain such legends and endorsements, each as provided by KGP, typed, stamped, printed, lithographed or engraved, as KGP may deem appropriate and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any law, rule or regulation applicable to the Puts or KGP, or to conform to customary usage. 4 Section 2.03 Execution, Delivery and Issuance of Certificates (a) Certificates evidencing the Puts shall be executed promptly by KGP on or after the Plan Effective Date and delivered to the Depositary for subsequent delivery to those holders of Senior Notes that exchange their rights under the Guarantee. The Certificates shall be executed on behalf of KGP by its Chairman, Chief Executive Officer or President or by any of its Vice Presidents, either manually or by facsimile signature. In case any officer of KGP whose signature shall have been placed upon any Certificates shall cease to be the Chairman, Chief Executive Officer, President or a Vice President of KGP before issuance and delivery of the Certificates, such Certificates may, nevertheless, be issued and delivered with the same force and effect as though such person had not ceased to be such officer of KGP. (b) The Depositary shall promptly deliver the Certificates to the Holders at the address provided by such Holders in the Exchange Offer letter of transmittal or thereafter provided by any Holder in writing to the Depositary and KGP. ARTICLE III EXERCISE OF PUTS Section 3.01 Shares Subject to Put; Deposit of Excess Proceeds; Pro Rata Purchase (a) Upon the occurrence of a Triggering Event, subject to the limitations set forth in this Agreement, each Certificate shall entitle the Holder thereof to require KGP to purchase, at the Purchase Price, any or all Preferred Stock issued to a Holder pursuant to the Plan in partial satisfaction of the Kaiser International's obligations under the Senior Notes or subsequently purchased from such a Holder or any subsequent transferee. (b) Within five (5) business days of receipt of any Excess Proceeds, KGP shall deliver the Excess Proceeds to the Depositary by wire transfer of immediately available United States funds for the irrevocable benefit of the Holders. (c) KGP shall purchase shares of Preferred Stock on a pro rata basis from the Holders based upon the number of shares of Preferred Stock with respect to which Puts have been properly exercised, but only up to the amount of the then-existing Excess Proceeds. KGP shall not be required to purchase any fractional shares. To the extent KGP cannot purchase Preferred Stock precisely on a pro rata basis, KGP shall use its reasonable discretion in purchasing the maximum number of whole shares of Preferred Stock purchasable from the Excess Proceeds with respect to which Puts have been properly exercised. Section 3.02 Notice of Triggering Event Within fifteen (15) days of the occurrence or deemed occurrence of a Triggering Event, KGP shall give the Depositary written notice that a Triggering Event has occurred. The 5 notice shall specify the Purchase Price per share of Preferred Stock payable to the Holders upon due exercise of the Puts and shall be accompanied by all documentation reasonably required by KGP in connection with the exercise by the Holders of the Puts. Within five (5) days, the Depositary shall issue a written notice of occurrence of a Triggering Event ("Notice of Triggering Event") to each Holder (with a copy to KGP) at the address provided by such Holder in writing to the Depositary and KGP and contained in the Register. Such notice shall be dated the date of issuance by the Depositary and shall be in the form of Exhibit B hereto and shall be accompanied by a form of Notice of Exercise and --------- all other documentation reasonably required by KGP or the Depositary in connection with exercise of the Puts. Section 3.03 Exercise of Puts Subject to the terms and conditions set forth in this Agreement, Puts may be exercised by the Holders thereof only within the thirty (30) day period following the date of issuance by the Depositary of a Notice of Triggering Event (the "Period of Exercisability") with respect to any Triggering Event by delivering to the Depositary: (a) A Notice of Exercise in the form of Exhibit C specifying the --------- maximum number of shares of Preferred Stock with respect to which the Put is being exercised; (b) Any stock certificate(s) representing the shares of Preferred Stock with respect to which the Put is being exercised, duly endorsed with signature guaranteed, or accompanied by a properly completed separate stock power; (c) An executed Substitute Form W-9; (d) The Certificate(s); and (e) Such other documentation reasonably required by KGP or the Depositary in connection with exercise of the Puts. Section 3.04 Reports of the Depositary; Payment of the Purchase Price; Distribution of Funds to KGP; Issuance of New Certificates (a) During each Period of Exercisability, the Depositary shall provide daily reports to KGP, in the form requested by KGP, of the number of shares of Preferred Stock with respect to which Puts have been properly exercised as of the previous business day. On the business day following expiration of each Period of Exercisability, the Depositary shall issue a written report (a "Final Report") setting forth the name of each Holder that has properly exercised its Put, the number of shares of Preferred Stock with respect to which such Holder has properly exercised its Put and the aggregate amount of all Excess Proceeds held by the Depositary. (b) Within five (5) business days following receipt of the Final Report, KGP shall deliver to the Depositary (i) a report setting forth the aggregate Purchase Price payable to each Holder, instructions with respect to the pro rata purchase of shares of Preferred Stock, and the number of shares of Preferred Stock, if any, for which the Company must cause new stock 6 certificates to be issued and the holders thereof (the "KGP Report"), and (ii) new Certificates representing the number of shares of Preferred Stock, if any, with respect to which each Holder's Put remains unexercised. (c) Following receipt of the items listed in subsection (b) of this Section, the Depositary shall promptly issue payment of the aggregate Purchase Price payable to each Holder that has properly exercised its Put, along with new Certificates representing the number of shares of Preferred Stock, if any, with respect to which each Holder's Put remains unexercised. The Depositary shall simultaneously deliver to the Company, all stock certificates representing the Preferred Stock tendered to it, along with the KGP Report setting forth the number of shares of Preferred Stock, if any, for which the Company must cause new stock certificates to be issued and delivered to the holders thereof. (d) Following payment of the Purchase Price in accordance with subsection (c) above, the Depositary shall distribute to KGP all funds that had been held by the Depositary as Excess Proceeds but that were not required to be paid to Holders as a result of the exercise of Puts during the immediately preceding Period of Exercisability, except that the Depositary shall retain and invest for the irrevocable benefit of the Holders of the Puts any Excess Proceeds that represent fractional shares not purchased by KGP as permitted by the provisions of this Agreement. (e) The Company agrees to promptly issue, or cause the transfer agent for the Preferred Stock to issue, stock certificates representing the shares of Preferred Stock not purchased by KGP pursuant to the exercise of Puts and to deliver such stock certificates to the record holders in accordance with the instructions in the Notice of Exercise. ARTICLE IV DEPOSITARY Section 4.01 Nature of Duties and Responsibilities Assumed (a) KGP hereby appoints the Depositary to act as agent on behalf of the Holders as set forth in this Agreement. The Depositary hereby accepts the appointment as agent on behalf of the Holders and agrees to perform that agency upon the terms and conditions set forth in this Agreement, by all of which KGP, K-H Holdings, the Company and the Holders, by their acceptance of this Agreement and the Puts, shall be bound. The Depositary shall not by any act under this Agreement be deemed to make any representation as to validity or authorization of the Puts or the Certificates, or as to the number or kind or amount of any property, stock or other securities deliverable upon exercise of any Put or the correctness of the representations of KGP or the Holders made in the documents that the Depositary receives. The Depositary shall not have any duty to calculate or determine any adjustments with respect to the kind and amount of shares or other securities or any property receivable by Holders upon the exercise of Puts, and the Depositary shall have no duty or responsibility in determining the accuracy or correctness of any such calculation. The Depositary shall not (i) be liable for any recital or statement of fact contained in this Agreement or in the Certificates or for any action taken, suffered or omitted by it 7 in good faith in the belief that any Certificate or any other document or any signature is genuine or properly authorized, (ii) be responsible for any failure on the part of any Holder, KGP, K-H Holdings, or the Company to comply with any of its covenants and obligations contained in this Agreement or in the Certificates or (iii) be liable for any act or omission in connection with this Agreement except for its own gross negligence, bad faith or willful misconduct. The Depositary is hereby authorized to accept instructions with respect to the performance of its duties under this Agreement from the Chief Executive Officer, the President, any Vice President, the Chief Financial Officer, the Treasurer, the Secretary or the Assistant Secretary of KGP and to apply to any such officer for instructions (which instructions will be promptly given in writing when requested), and the Depositary shall not be liable for any action taken or suffered to be taken by it in good faith in accordance with the instructions of any such officer, except for its own gross negligence or willful misconduct, but in its discretion the Depositary may in lieu of such instructions accept other evidence of such or may require such further or additional evidence as it may deem reasonable. Any application by the Depositary for written instructions from KGP may, at the option of the Depositary, set forth in writing any action proposed to be taken or omitted by the Depositary under this Agreement and the date on and/or after which such action shall be taken or such omission shall be effective. The Depositary shall not be liable for any action taken by, or omission of, the Depositary in accordance with a proposal included in such application on or after the date specified in such application (which date shall not be less than three business days after the date any officer of KGP actually receives such application, unless any such officer shall have consented in writing to any earlier date) unless prior to taking any such action (or the effective date in the case of an omission), the Depositary shall have received written instructions in response to such application specifying the action to be taken or omitted. (b) The Depositary understands that from time to time it will receive from KGP Excess Proceeds, including, as is permitted by the provisions of this Agreement, Excess Proceeds that will be distributed to Holders of the Puts on a delayed basis. The Depositary shall hold all such Excess Proceeds for the irrevocable benefit of the Holders of the Puts and shall invest such Excess Proceeds in an interest-bearing account designated by KGP and identified as the KGP Excess Proceeds account, until such time as such Excess Proceeds are required to be distributed in accordance with the provisions of this Agreement. (c) The Depositary may execute and exercise any of the rights and powers vested in it under this Agreement or perform any duty under this Agreement either itself or by or through its attorneys, agents or employees, provided reasonable care has been exercised in the selection of any such attorney, agent or employee. The Depositary shall not be under any obligation or duty to institute, appear in or defend any action, suit or legal proceeding in respect of this Agreement, unless first indemnified to its satisfaction, but this provision shall not affect the power of the Depositary to take such action as the Depositary may consider proper, whether with or without such indemnity. The Depositary shall promptly notify KGP and the Company in writing of any claim made or action, suit or proceeding instituted against or arising out of or in connection with this Agreement. No provision of this Agreement shall require the Depositary to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties under this Agreement or in the exercise of its rights if there shall be reasonable grounds for believing that repayment of such funds or adequate indemnification against such risk or liability is not reasonably assured to it. 8 (d) KGP will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further acts, instruments and assurances as may reasonably be required by the Depositary in order to enable it to carry out or perform its duties under this Agreement. (e) The Depositary shall not be liable except for the failure to perform such duties as are specifically set forth in this Agreement, and no implied covenants or obligations shall be read into this Agreement against the Depositary, whose duties and obligations shall be determined solely by the express provisions of this Agreement. (f) The Depositary may rely conclusively and shall be protected in acting upon any order, notice, demand, certificate, opinion or advice of counsel (including counsel chosen by the Depositary), statement, instrument, report or other paper or document (not only as to its due execution and the validity and effectiveness of its provisions but also as to the truth and acceptability of any information therein contained) which is believed by the Depositary to be genuine and to be signed or presented by the proper person or persons, except in case of the gross negligence, bad faith or willful misconduct of the Depositary. The Depositary shall not be bound by any notice or demand, or any waiver, modification, termination or rescission of this Agreement or any of the terms hereof, unless evidenced by a writing delivered to the Depositary signed by the proper party or parties and, if the duties or rights of the Depositary are affected, unless it shall give its prior written consent thereto. (g) The Depositary shall not be responsible for the sufficiency or accuracy of the form of, or the execution, validity, value or genuineness of, any document or property received, held or delivered by it hereunder, or of any signature or endorsement thereof, or for any lack of endorsement thereon, or for any description therein, nor shall the Depositary be responsible or liable to the other parties hereto or to anyone else in any respect on account of the identity, authority or rights of the persons executing or delivering or purporting to execute or deliver any document or property or this Agreement. The Depositary shall have no responsibility with respect to the use or application of any funds or other property paid or delivered by the Depositary pursuant to the provisions hereof. Except for its own gross negligence, bad faith or willful misconduct, the Depositary shall not be liable to the other parties hereto or to anyone else for any loss which may be incurred by reason of any investment of any monies which it holds hereunder. (h) The Depositary shall have the right to assume in the absence of written notice to the contrary from the proper person that a fact or an event by reason of which an action would or might be taken by the Depositary does not exist or has not occurred without incurring liability to the other parties hereto or to anyone else for any action taken or omitted, or any action suffered by it to be taken or omitted, in good faith and in the exercise of its own best judgment, in reliance upon such assumption. Section 4.02 Right to Consult Counsel The Depositary may at any time consult with legal counsel of its selection satisfactory to it (who may be legal counsel for KGP, the Company or any Holder), and the 9 Depositary shall incur no liability or responsibility to KGP, the Company or to any Holder for any action taken, suffered or omitted by it in good faith in accordance with the opinion or advice of such counsel. Section 4.03 Compensation and Reimbursement; Indemnification KGP agrees to pay to The Bank of New York reasonable compensation for all services rendered by it in any capacity under this Agreement and to reimburse The Bank of New York for reasonable expenses and disbursements incurred in connection with the execution and administration of this Agreement (including the reasonable compensation and the expenses of its counsel). KGP further agrees to indemnify The Bank of New York for, and to hold it harmless against, any and all loss, liability, damage, claim or expense incurred without gross negligence, bad faith or willful misconduct on its part, arising out of or in connection with the acceptance and administration of this Agreement, including reasonable counsel fees, costs and disbursements (it being understood that such fees, costs and disbursements include those incurred to enforce the provisions of this Agreement), or loss suffered by the Depositary in connection with any action, suit or other proceeding or investigation brought against the Depositary involving any claim, or in connection with any claim or demand, which in any way, directly or indirectly, arises out of or relates to this Agreement, the services of the Depositary hereunder, the monies or other property held by it hereunder or any income earned from investment of such monies. The Depositary shall have a lien for the amount of any such expense or loss on the monies and other property held by it hereunder and shall be entitled to reimburse itself from such monies or property for the amount of any such expense or loss, provided that no such reimbursement by the Depositary shall excuse KGP from its obligations to purchase Preferred Stock that is the subject of a properly exercised Put under the terms of this Agreement. For the purposes hereof, the term "expense or loss" shall include all amounts paid or payable to satisfy any claim, demand or liability, or in settlement of any claim, demand, action, suit or proceeding settled with the express written consent of the Depositary, and all costs and expenses, including, but not limited to, reasonable counsel fees, costs and disbursements, paid or incurred in investigating or defending against any such claim, demand, action, suit, proceeding or investigation. The provisions of this Section 4.03 shall survive the termination of this Agreement and the resignation and replacement of the Depositary, and shall extend to the Depositary's service as Transfer Agent. Section 4.04 Depositary May Hold KGP and Company Securities Except as may be limited by applicable law, the Depositary and any stockholder, director, officer or employee of the Depositary may buy, sell or deal in any securities of KGP, the Company or its Affiliates or become pecuniarily interested in transactions in which KGP, the Company or its Affiliates may be interested, or contract with or lend money to KGP, the Company or its Affiliates or otherwise act as fully and freely as though it were not the Depositary under this Agreement. Nothing in this Agreement shall preclude the Depositary from acting in any other capacity for KGP, the Company or for any other person. 10 Section 4.05 Resignation and Removal; Appointment of Successor (a) No resignation or removal of the Depositary and no appointment of a successor Depositary shall become effective until the acceptance of appointment by the successor Depositary as provided in this Agreement. The Depositary may resign its duties and be discharged from all further duties and liability under this Agreement (except liability arising as a result of the Depositary's own gross negligence, bad faith or willful misconduct) after giving written notice to KGP. KGP may remove the Depositary upon written notice, and the Depositary shall in such case be discharged from all further duties and liabilities under this Agreement, except as set forth above. The Depositary shall, at KGP's expense, cause to be mailed (by first-class mail, postage prepaid) to each Holder of a Put at its last address as shown on the register maintained by the Depositary a copy of said notice of resignation or notice of removal, as the case may be. Upon such resignation or removal, KGP shall appoint in writing a new Depositary. If KGP shall fail to make such appointment within a period of thirty (30) days after it has been notified in writing of such resignation by the resigning Depositary or after such removal, then KGP shall become Depositary until a successor Depositary has been appointed, and the Holder of any Put may apply to any court of competent jurisdiction for the appointment of a new Depositary. Any new Depositary, whether appointed by KGP or by such a court, shall be a corporation doing business under the laws of the United States, any state of the United States, or the District of Columbia, in good standing and having a combined capital and surplus of not less than $50,000,000. The combined capital and surplus of any such new Depositary shall be deemed to be the combined capital and surplus as set forth in the most recent annual report of its condition published by such Depositary prior to its appointment, provided that such reports are published at least annually pursuant to law or to the requirements of a federal or state supervising or examining authority. After acceptance in writing of such appointment by the new Depositary, it shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as the Depositary, without any further assurance, conveyance, act or deed; but if for any reason it shall be necessary or expedient to execute and deliver any further assurance, conveyance, act or deed, the same shall be done at the expense of KGP and shall be legally and validly executed and delivered by the resigning or removed Depositary. Not later than the effective date of any such appointment, KGP shall give notice of the appointment to the resigning or removed Depositary. Failure to give any notice provided for in this Section, however, or any defect in such notice, shall not affect the legality or validity of the resignation or removal of the Depositary or the appointment of a new Depositary, as the case may be. (b) Any corporation into which the Depositary or any new Depositary may be merged or any corporation resulting from any consolidation to which the Depositary or any new Depositary shall be a party or any person to whom the Depositary transfers substantially all of its corporate trust business shall be a successor Depositary under this Agreement without any further act, provided that such corporation (i) would be eligible for appointment as successor to the Depositary under the provisions of Section 4.05(a) or (ii) is a wholly-owned subsidiary of the Depositary. Any such successor Depositary shall promptly cause notice of its succession as Depositary to be mailed (by first class mail, postage prepaid) to each Holder at such Holder's last address as shown on the register maintained by the Depositary. 11 ARTICLE V PUT TRANSFERS Section 5.01 Put Register (a) The Puts shall be issued in registered form only. The Transfer Agent shall keep the Register in which, subject to such reasonable regulations as it may prescribe, it shall provide for the registration of the initial ownership of the Puts and the registration of any subsequent transfers of the Puts, as provided in this Agreement. (b) All Certificates issued upon any registration of transfer of Puts shall be the valid obligations of KGP, evidencing the same obligations and entitled to the same benefits under this Agreement as the Certificates surrendered for such registration of transfer. Section 5.02 Registration of Transfer (a) Transfers of Puts shall be effective only by the registration of such transfers upon the Register maintained by the Transfer Agent. Holders desiring to transfer Puts shall present to the Transfer Agent for registration of transfer the Certificate(s) evidencing the Puts to be transferred, together with a Transfer Form in the form of Exhibit D to this Agreement specifying the --------- number of Puts that the Holder desires to transfer. Such Transfer Form shall be duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Transfer Agent, duly executed by the Holder or its attorney duly authorized in writing. When Certificate(s) are properly presented to the Transfer Agent with a request to register the transfer of the Puts evidenced by the Certificate(s) in accordance with the requirements under this Agreement, the Transfer Agent shall register the transfer as requested, except as set forth in Section 5.02(e). (b) As part of such registration of transfer of Puts, the Transfer Agent shall cause to be issued to the transferee a Certificate evidencing the Puts transferred to it by the transferring Holder. If a Holder is transferring fewer than all Puts evidenced by a Certificate presented for registration of transfer, the Transfer Agent shall issue to the presenting Holder a new Certificate evidencing the Puts not being transferred. (c) No service charge shall be payable by Holders for any registration of transfer of Puts. KGP may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer of Puts. (d) The Transfer Agent shall retain copies of all letters, notices and other written communications received pursuant to this Section 5.02. If KGP has appointed a third party to serve as the Transfer Agent, KGP shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable written notice to the Transfer Agent. (e) The Transfer Agent shall maintain an accurate count of the aggregate number of holders of Puts as contained in the Register. Whenever the aggregate number of Put 12 holders shall be such that KGP, in its sole discretion exercised in good faith, believes that any requested transfer of Puts would result in a requirement to register the Puts under the Securities Exchange Act of 1934, KGP shall have the absolute right to direct the Transfer Agent to refuse to register such requested transfer, in which case the Transfer Agent shall not register any such requested transfer. The Transfer Agent (together with the Company and KGP, if not serving as the Transfer Agent) shall not be liable for any such refusal to register a requested transfer under the circumstances described in this Section 5.02(e), except for its gross negligence or bad faith. ARTICLE VI COVENANTS Section 6.01 Covenant of KGP KGP covenants that it shall not incur any indebtedness for borrowed money (other than guarantees of indebtedness of Kaiser-Hill in accordance with its historical practices) unless approved by Holders representing a majority of the number of shares of Preferred Stock with respect to which Puts are then outstanding. Section 6.02 Covenant of K-H Holdings K-H Holdings covenants that it shall distribute to KGP any and all (a) cash received by K-H Holdings from time to time from Kaiser-Hill and (b) proceeds received by K-H Holdings from the disposition by K-H Holdings of all or part of its interest in Kaiser-Hill, in each case as promptly as practicable following such receipt from Kaiser-Hill. ARTICLE VII MISCELLANEOUS Section 7.01 Rights of Action All rights of action in respect of this Agreement are vested in the Holders of the Puts, and any Holder of any Put, without the consent of the Depositary or any Holder of any other Put, may, on such Holder's own behalf and for such Holder's own benefit, enforce, and may institute and maintain any suit, action or proceeding against the Company suitable to enforce, or otherwise in respect of, such Holder's rights under this Agreement, including the right to exercise such Holder's Puts in the manner provided in this Agreement. Section 7.02 Money and Other Property Deposited with the Depositary Any money, securities or other property which at any time shall be deposited by KGP or on its behalf with the Depositary pursuant to this Agreement shall be assigned, transferred and set over to the Depositary in trust for the purpose for which such moneys, securities or other 13 property shall have been deposited; but such moneys, securities or other property need not be segregated from other funds, securities or other property of the Depositary except to the extent required by law. The Depositary shall distribute any money deposited with it for payment and distribution to any Holder by mailing by first-class mail a check in such amount as is appropriate, to such Holder at the address shown on the Register maintained by the Depositary, or as it may be otherwise directed in writing by KGP. Any money or other property deposited with the Depositary for payment and distribution to any Holder that remains unclaimed for two years, less one day, after the date the money was deposited with the Depositary shall be paid to KGP upon its request. Section 7.03 Payment of Taxes (a) KGP will pay all taxes and other governmental charges that may be imposed on KGP or the Depositary in respect of any issuance or delivery of the Puts. KGP will not be required, however, to pay any tax or other charge imposed in connection with surrender of any Certificate upon the exercise of Puts, and in case of such payment, KGP, the Depositary and the Company shall not be required to issue any Certificate or any stock certificate or security or pay any cash or distribute any property until such tax or charge has been paid by the Holder or it has been established to the satisfaction of KGP, the Depositary and the Company that no such tax or other charge is due. (b) To the extent that the Depositary determines in good faith that it is or may be liable for the payment of taxes, including withholding taxes, in respect to income derived from the investment of Excess Proceeds or any payment made hereunder, the Depositary may pay such taxes or make the appropriate withholding and payment. Without limiting the generality of the foregoing, the Depositary may withhold from any payment of monies made by it hereunder such amount as the Depositary estimates to be sufficient to provide for the payment of such taxes not yet paid, and may use the sum withheld for that purpose. The Depositary shall be indemnified and held harmless against any liability for taxes or for withholding, and for any penalties or interest in respect of taxes or withholding, as more fully provided in Section 4.03. Section 7.04 Surrender of Certificates Any Certificate surrendered for exercise shall be promptly canceled by the Depositary. The Depositary shall return such canceled Certificates to KGP; provided, if any mutilated Certificate is surrendered to the Depositary and KGP and the Depositary receive evidence to their satisfaction of the destruction, loss or theft of any Certificate, and there is delivered to KGP and the Depositary such security or indemnity as may be reasonably required by them to save each of them harmless, then KGP shall execute and upon its written request the Depositary shall deliver, in exchange for any such mutilated Certificate or in lieu of any such destroyed, lost or stolen Certificate, a replacement Certificate of like tenor. Upon the issuance of any new Certificate under this Section 7.04, KGP may require the payment by the Holder of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation to such issuance and other expenses (including the reasonable fees and expenses of the Depositary) in connection with such issuance. 14 Every new Certificate executed and delivered pursuant to this Section 7.04 in lieu of any destroyed, lost or stolen Certificate shall constitute an original contractual obligation of KGP, whether or not the destroyed, lost or stolen Certificate shall be at any time enforceable by anyone, and the Holder of such replacement Certificate shall be entitled to the benefits of this Agreement equally and proportionately with any and all other Certificates duly executed and delivered under this Agreement. The provisions of this Section 7.04 are exclusive and shall preclude (to the extent lawful) all other rights or remedies with respect to the replacement of mutilated, destroyed, lost or stolen Certificates. Section 7.05 Notice Any notice or communication by KGP, the Company or the Depositary to the others is duly given if in writing and delivered in person, mailed by first-class mail (registered or certified, return receipt requested), or sent by telecopier or overnight air courier guaranteeing next day delivery, to the other's address: If to KGP or the Company: Kaiser Government Programs, Inc. 9300 Lee Highway Fairfax, Virginia 22031-1207 Fax: (703) 934-3973 Attention: President and Chief Executive Officer or Kaiser Group Holdings, Inc. 9300 Lee Highway Fairfax, Virginia 22031-1207 Fax: (703) 934-3973 Attention: President and Chief Executive Officer cc: Chief Financial Officer If to the Depositary: The Bank of New York 101 Barclay Street, 21 W New York, New York 10286 Fax: (212) 815-5915 Attention: Geovanni Barris Vice President 15 KGP, the Company or the Depositary by notice to the others may designate additional or different addresses for subsequent notices or communications. All notices and communications by KGP, the Company or the Depositary to the others shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five business days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if telecopied; and the next business day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery. All distributions, notices or communications required or permitted to be made or given to a Holder shall be mailed by first-class mail to the Holder's address shown in the Register. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it. Section 7.06 Persons Benefiting This Agreement shall be binding upon and inure to the benefit of KGP, K-H Holdings, the Company and the Depositary, and their respective successors and assigns. Nothing in this Agreement is intended or shall be construed to confer upon any person, other than KGP, K-H Holdings, the Company, the Depositary and the Holders, any right, remedy or claim under or by reason of this or any part of this Agreement. Section 7.07 Counterpart Originals The parties may sign any number of copies of this Agreement. Each signed copy shall be an original, but all of them together represent the same agreement. Section 7.08 Amendments KGP, K-H Holdings and the Company may, without the consent of the Holders of the Puts, by supplemental agreement or otherwise, make any changes or corrections in this Agreement (a) to cure any ambiguity or correct or supplement any provision in this Agreement which may be defective or inconsistent with any other provision in this Agreement or to correct any clerical omission or mistake or manifest error contained in this Agreement, (b) to add to the covenants and agreements for the benefit of the Holders, or surrender any rights or power reserved to or conferred upon KGP or the Company in this Agreement, or (c) that do not adversely affect the interests of the Holders in any material respect. Any other changes or amendments to this Agreement may be made, by supplemental agreement or otherwise, upon the consent of holders of two-thirds of the Preferred Stock that is subject to the Puts. The Depositary shall join with KGP, K-H Holdings and the Company in the execution and delivery of any such supplemental agreements unless it affects the Depositary's own rights, duties or immunities under this Agreement, in which case such party may, but shall not be required to, join in such execution and delivery. Prior to executing any such supplemental agreement, the Depositary shall be entitled to 16 receive, and shall be protected in relying upon, certificates of KGP, K-H Holdings and the Company and an opinion of counsel which state that the proposed supplemental agreement is in compliance with the terms of this Section 7.08. Section 7.09 Governing Law THIS AGREEMENT AND EACH PUT ISSUED UNDER THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. Section 7.10 Headings The headings of the Articles and Sections of this Agreement have been inserted for convenience of reference only, are not to be considered a part of this Agreement and shall in no way modify or restrict any of the terms or provisions of this Agreement. (The balance of this page intentionally left blank.) 17 IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed, as of the day and year first above written. KAISER GOVERNMENT PROGRAMS, INC. By: --------------------------------- Name: Title: KAISER GROUP HOLDINGS, INC. By: --------------------------------- Name: Title: KAISER K-H HOLDINGS, INC. By: --------------------------------- Name: Title: THE BANK OF NEW YORK, as Depositary By: --------------------------------- Name: Title: 18 EXHIBIT A No. Relating to ________ shares of Preferred Stock ----------- [Form of Put Certificate] VOID AFTER 5:00 P.M. NEW YORK, NEW YORK TIME, DECEMBER 31, 2007 PUTS TO SELL PREFERRED STOCK OF KAISER GROUP HOLDINGS, INC. This certifies that ___________________________________ (the "Holder") is the registered holder of a Put (the "Put"). This Put Certificate is issued under and in accordance with a Put Agreement (the "Put Agreement") dated ___________, 2000 by and among Kaiser Government Programs, Inc., a Delaware corporation (the "Purchaser"), Kaiser Group Holdings, Inc. a Delaware corporation (the "Company"), Kaiser K-H Holdings, Inc., a Delaware corporation ("K-H Holdings"), and The Bank of New York, as depositary (the "Depositary"), and is subject to the terms and provisions contained in the Put Agreement, to which terms and provisions the Holder of this Put Certificate consents by acceptance of this Put Certificate. The Put may not be exercised by any party other than the Holder. Each Put entitles the Holder, subject to the provisions contained in this Put Certificate and in the Put Agreement, to require the Purchaser to purchase from the Holder up to the number of shares of Series 1 Redeemable Cumulative Preferred Stock, $0.01 par value, of the Company (the "Preferred Stock") set forth above, subject to adjustment as provided herein, on the terms and for the consideration set forth in the Put Agreement. The Put evidenced by this Put Certificate may be exercised in whole or in part only after the occurrence of a Triggering Event (as defined in the Put Agreement). The Put shall not be exercisable after and shall terminate and become void as of the close of business on December 31, 2007. The Put Agreement is incorporated in this Put Certificate by reference and made a part of this Put Certificate. Reference is hereby made to the Put Agreement for a full statement of the respective rights, limitations of rights, duties and obligations of the Purchaser, the Company, K-H Holdings, the Depositary and the Holder of the Put. Capitalized terms not defined in this Put Certificate have the meanings ascribed to them in the Put Agreement. A copy of the Put Agreement may be obtained for inspection by the Holder of this Put Certificate upon written request to the Company at 9300 Lee Highway, Fairfax, Virginia 22031-1207, Attention: Sandra Little-Harbesky. Upon the occurrence of a Triggering Event, the Holder may exercise this Put by surrendering at the office of the Depositary, (a) this Put Certificate; (b) a properly completed Notice of Exercise; (c) all certificate(s) representing the shares of Preferred Stock with respect to which the Put is being exercised, duly endorsed with signature guaranteed, or accompanied by a A-1 properly completed separate stock power; (d) a properly completed Substitute Form W-9; and (e) such other documentation reasonably required by the Purchaser or the Depositary in connection with exercise of the Puts, as set forth in the Notice of Triggering Event. KAISER GOVERNMENT PROGRAMS, INC. By: --------------------------------- Name: Title: DATED: - ----------------- A-2 [Form of Reverse of Put Certificate] KAISER GOVERNMENT PROGRAMS, INC. -------------------------------- This Put Certificate and all rights under this Put Certificate are transferable by the registered Holder of this Put Certificate, in whole or in part, on the register maintained by the Transfer Agent, upon surrender of this Put Certificate for registration of transfer at the office of the Transfer Agent maintained for such purpose, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Transfer Agent duly executed by, the registered Holder of this Put Certificate or its attorney duly authorized in writing, with signature guaranteed as specified in the attached Transfer Form, except that no transfer or assignment shall be effective, and any attempted transfer or assignment shall be null and void, if the effect of such transfer or assignment would be to cause the Purchaser to be required to register the Puts as a class of securities under the applicable provisions of the Securities Exchange Act of 1934, as amended. Upon any partial exercise or transfer, the Purchaser will issue and deliver to the Holder a new Put Certificate with respect to any portion not exercised or transferred. No service charge shall be made for issuance or transfer of Put Certificates, but the Purchaser may require payment by the Holder of a sum sufficient to cover any tax or other governmental charge payable in connection with any exercise or partial exercise or transfer or partial transfer. The number of shares of Preferred Stock purchasable upon exercise of this Put is subject to adjustment, as reasonably determined by the Company, upon the occurrence of any stock dividends, stock splits and reclassification affecting the Preferred Stock. The Puts do not entitle any Holder to any of the rights of a stockholder of the Purchaser or the Company. This Put Certificate and the Put Agreement are subject to amendment as provided in the Put Agreement. This Put Certificate and all rights under this Put Certificate shall be governed by and construed in accordance with the laws of the State of New York, without regard to principles of conflicts of laws. A-3 EXHIBIT B NOTICE OF TRIGGERING EVENT The Depositary hereby provides notice to the Holders that a Triggering Event has occurred under the Put Agreement. The Depositary further provides notice that Excess Proceeds of $________________ are available to purchase, on a pro rata basis, up to a maximum of _________ shares of Preferred Stock that are subject to the Puts, from Holders that complete and deliver a Notice of Exercise and the related required documentation within 30 days of the date of this Notice of Triggering Event, on the terms and conditions specified in the Put Certificate and the Put Agreement. Date: , 200 ---------------- - THE DEPOSITARY: By: --------------------------------- Name: Title: B-1 EXHIBIT C NOTICE OF EXERCISE (to be executed only upon exercise of Put) The undersigned hereby irrevocably elects to exercise the Put with respect to up to a maximum of _________ shares of Preferred Stock that are subject to the Put represented by the enclosed Put Certificate, on the terms and conditions specified in the Put Certificate and the Put Agreement referred to in the Put Certificate. The Holder hereby surrenders all right, title and interest in the Preferred Stock (as defined in the Put Agreement), delivers the stock certificate(s) representing the Preferred Stock, and directs that the purchase price therefor shall be paid to the Holder and delivered to the address specified below. Date: , ---------------- ---- 1 - ------------------------------------ (Signature of Owner) ------------------------------------- (Name Printed in Full) ------------------------------------- (Street Address) ------------------------------------- (City) (State) (ZIP Code) Signature Guaranteed by: ------------------------------------- - ------------- 1 The signature must correspond with the name as written upon the face of the Put Certificate in every particular, without alteration or enlargement or any change whatsoever, and must be guaranteed. C-1 EXHIBIT D TRANSFER FORM FOR VALUE RECEIVED the undersigned registered Holder of this Put Certificate hereby sells, assigns and transfers unto the Assignee(s) named below all of the rights of the undersigned under this Put Certificate, with respect to the number of Puts set forth below: - ---------------------------------------------------------------------- Social Security or other Number of Puts to be identifying Transferred Name of number of (expressed as number Assignee(s) Address assignee(s) of preferred shares) - ---------------------------------------------------------------------- - ---------------------------------------------------------------------- and does hereby irrevocably constitute and appoint the Transfer Agent as the undersigned's attorney to make such transfer on the register maintained by the Transfer Agent for that purpose, with full power of substitution in the premises. Date: , ------------------ ----- 2 ------------------------------------- (Signature of Owner) ------------------------------------- (Street Address) ------------------------------------- (City) (State) (ZIP Code) Signature Guaranteed by: ------------------------------------- - ------------- 2 The signature must correspond with the name as written upon the face of the Put Certificate in every particular, without alteration or enlargement or any change whatsoever, and must be guaranteed. D-1 -----END PRIVACY-ENHANCED MESSAGE-----