Exhibit 3
CONTINGENT PAYMENT AGREEMENT
This CONTINGENT PAYMENT Agreement ("Agreement") is made and entered
into this 22nd day of November, 1999, by and between KAISER VENTURES INC., a
Delaware corporation, ("Kaiser") and THE New Kaiser Voluntary EmployeeS'
BenefiCIARY Association, a tax exempt trust formed pursuant to Sections 501(a)
and 501(c)(9) of the Internal Revenue Code of 1986, as amended ("VEBA").
Recitals
A. The parties hereto are the parties to that certain Stock Purchase
Agreement (the "Stock Purchase Agreement") dated as of even date herewith
pursuant to which VEBA is selling to Kaiser certain shares of the $.03 par value
common stock of Kaiser, which VEBA received in connection with the Chapter 11
bankruptcy reorganization of Xxxxxx Steel Corporation. Certain capitalized terms
not otherwise defined in this Agreement will be defined as set out in the Stock
Purchase Agreement.
B. A portion of the consideration under the Stock Purchase Agreement is
a Contingent Payment to be made by Kaiser under certain terms and conditions.
C. This Agreement is the Contingent Payment Agreement contemplated by
the Stock Purchase Agreement under which the Contingent Payment will be made.
NOW, THEREFORE, for and in consideration of the mutual promises and
covenants contained herein, and for other good and valuable consideration, the
parties hereto agree as follows:
1. CONTINGENT PAYMENT.
(a) CONTINGENCY. In addition to the other consideration
provided for in the Stock Purchase Agreement, if (i) Kaiser is engaged in
active, ongoing discussions with a specific purchaser or purchasers at the end
of the first year from the date hereof for the sale or other transfer in a
single transaction (or a series of related transactions to one or more buyers)
of at least 65% of the approximately 592 acres of Mill Site real estate other
than the NAPA lots and the Rancho Cucamonga lots (which are excluded from this
test, but not from the calculation of the payment due hereunder), including the
assumption of all or substantially all known and unknown environmental
remediation and liabilities (including, without limitation, environmental
liabilities to third parties) associated with all such real estate whether title
is actually transferred or not (a "Bulk Real Estate Transaction"), and (ii)
Kaiser in fact executes a definitive agreement with such purchaser or its
affiliates (including but not limited to an option or other conveyance) on or
before December 31, 2000 relating to the Bulk Real Estate Transaction under
active negotiation at the end of the year and (iii) that Bulk Real Estate
Transaction in fact closes (regardless of whether before or after December 31,
2000), then Kaiser will make an additional cash payment to VEBA (the "VEBA
Contingent Real Estate Payment"). The term "Mill Site" refers to the East Slag
Pile and the Kaiser Commerce Center real estate properties which are composed of
the parcels commonly referred to by Kaiser as the West End, West Slag Pile and
Valley Boulevard.
(b) TIMING OF PAYMENT. Kaiser will make the VEBA Contingent
Real Estate Payment within 10 business days following the closing and the
receipt of funds from the Bulk Real Estate Transaction.
(c) CALCULATION. The "VEBA Contingent Real Estate Payment"
shall mean 24.69% of the excess of the net after-tax proceeds received by Kaiser
from the Bulk Real Estate
Transaction (net of all commissions, closing costs, investment banking fees,
Mill Site environmental remediation liabilities not assumed by the buyer, and
income taxes at the rate of 28%) above $8,073,064 as reflected in the "Asset
Valuation" contained in Exhibit I hereto. The VEBA Contingent Real Estate
Payment shall be determined by utilizing the "Contingent Real Estate Payment"
model contained in Exhibit I and shall be calculated by modifying those
assumptions for the actual amounts in the Bulk Real Estate Transaction. As an
example, based upon the example assumptions shown in Exhibit I, the VEBA
Contingent Real Estate Payment would be $2,973,300.
2. MISCELLANEOUS PROVISIONS.
(a) EXPENSES. Except as may otherwise be provided herein, no
party hereto shall be responsible for the payment of any other party's expenses
incurred in connection with this Agreement.
(b) THIRD PARTY BENEFICIARIES. The terms and provisions of
this Agreement are intended solely for the benefit of each party hereto and its
respective successors and assigns, and it is not the intention of the parties to
confer third party beneficiary rights upon any other person or entity.
(c) FURTHER ASSURANCES. At any time, and from time to time,
after the Closing Date, each party will execute such additional instruments and
take such action as may be reasonably requested by the other party to confirm or
perfect title to VEBA Shares or otherwise to carry out the intent and purposes
of this Agreement.
(d) WAIVER. Any failure on the part of any party hereto to
comply with any of its obligations, agreements or conditions hereunder may be
waived in writing by the party to whom such compliance is owed.
(e) NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been given if delivered in
person or sent by prepaid first class registered or certified mail, return
receipt requested to the respective principal offices of the parties hereto to
the respective principal offices of the parties hereto as specified below:
If to Kaiser: Xxxxxx Ventures Inc.
0000 X. Xxxxxx Xxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
Attention: President
With a copy to:
Xxxxx X. Xxxx, Esq.
Xxxxxx Ventures Inc.
0000 X. Xxxxxx Xxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to VEBA: The New Kaiser Voluntary Employees' Beneficiary
Association
0000 Xxxxxx Xxxxxx, Xxxxx X
0
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000)000-0000
Any notice or communication mailed shall also be faxed to the
appropriate number specified above.
(f) INTERPRETATION. In this Agreement the singular included
the plural and the plural the singular; words importing any gender include the
other genders; references to statutes are to be construed as including all
statutory provisions consolidating, amending or replacing the statute referred
to; references to "writing," include printing, typing, lithography and other
means of reproducing words in a tangible visible form; the word "including,"
"includes" and "include" are deemed to be followed by the words "but not limited
to"; and references to paragraphs (or subdivisions of paragraphs) recitals or
exhibits are to those of this Agreement unless otherwise indicated. The language
used in this Agreement will be deemed to be the language chosen by the parties
to this Agreement to express their mutual intent, and no rule of strict
construction shall be applied against any party.
(g) COUNTERPARTS. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
(h) GOVERNING LAW. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of Delaware, without
regard to the conflict of law principles thereof. All actions and proceedings
arising out of or relating to this Agreement shall be heard and determined in
any state or Federal court sitting in Delaware. Each of the parties hereto (i)
consents to submit such party to the personal jurisdiction of any Federal court
located in the State of Delaware or any Delaware state court in the event any
dispute arises out of this Agreement or any of the transactions contemplated
hereby; (ii) agrees that such party will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court;
(iii) agrees that such party will not bring any action relating to this
Agreement or the transactions contemplated hereby in any court other than a
Federal court sitting in the State of Delaware or a Delaware state court; and
(iv) waives any right to trial by jury with respect to any claim or proceeding
related to or arising out of this Agreement or any of the transactions
contemplated hereby.
(i) BINDING EFFECT. This Agreement shall be binding upon the
parties hereto and inure to the benefit of the parties, their respective
successors and assigns.
(j) ENTIRE AGREEMENT. This Agreement and the exhibits to be
attached hereto constitute the entire agreement of the parties covering
everything agreed upon or understood in the Transaction. The parties are
executing and carrying out this Agreement in reliance solely on the
representations, warranties and covenants and agreements contained in this
Agreement and in the written documents contemplated by this Agreement. This
Agreement may not be amended or modified except by a written document executed
by Kaiser and VEBA.
(k) ENFORCEMENT COSTS. In the event of any legal proceeding to
enforce any of the terms hereof, the prevailing party shall be entitled to
receive payment for its attorneys' fees and all other costs required to enforce
its rights hereunder.
(l) REGULATORY FILINGS. Each party shall be reasonable for
completing and filing any
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regulatory filings that may be applicable to it, including, but not limited to,
any filings with the Securities and Exchange Commission.
(m) GOOD FAITH. The parties agree to seek in good faith to
seek to consummate the Transaction.
(n) SEVERABILITY. The validity, legality or enforceability of
the remainder of this Agreement shall not be affected even if one or more of the
provisions of this Agreement shall be held to be invalid, illegal or
unenforceable in any respect. To the extent permitted by applicable law, the
parties hereby waive any provision of law that would render any provision hereof
prohibited or unenforceable in any respect.
(o) HEADINGS. The headings in this Agreement are inserted only
as a matter of convenience, and in no way define, limit, or extend or interpret
the scope of this Agreement or of any particular paragraph.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the day and year first above written.
"VEBA" "Kaiser"
New Kaiser Voluntary Employees' Xxxxxx Ventures Inc.
Benefit Association
By: _________________________________ By: ____________________________
Xxxxxx X. Xxxxxxx Xxxxxxx X. Xxxxxxxx
Chairman, Administrative Committee President, Chief Executive
Officer & Chairman of the Board
By: Xxxxx Fargo Bank of California, as trustee
By: __________________________
Xxxxx Xxxxxxxx
Assistant Vice President
Institutional Trust Group
By: ______________________________
Xxxxxxx Xxxx
Vice President and Area Manager
Los Angeles Office
Institutional Trust Group
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