<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended June 30, 1996 Commission File Number 0-18858
KAISER VENTURES INC.
--------------------
(Exact name of registrant as specified in its charter)
DELAWARE 94-0594733
--------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3633 East Inland Empire Blvd., Suite 850
Ontario, California 91764
-----------------------------------------------------
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (909) 483-8500
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate by check mark whether registrant has filed all documents and reports
required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court.
Yes X No
--- ---
On July 31, 1996, the Company had 10,516,594 shares of Common Stock, $.03 par
value outstanding (including 136,919 shares deemed outstanding and held in
reserve by the Company for issuance to the former general unsecured creditors of
Kaiser Steel Corporation pursuant to its Plan of Reorganization).
<PAGE>
TABLE OF CONTENTS TO FORM 10-Q
<TABLE>
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PAGE
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<S> <C>
INTRODUCTION
BUSINESS UPDATE........................................................ 1
PART I
Item 1. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.......................... 5
Item 2. FINANCIAL STATEMENTS.......................................... 12
CONSOLIDATED BALANCE SHEETS................................... 12
CONSOLIDATED STATEMENTS OF INCOME............................. 14
CONSOLIDATED STATEMENTS OF CASH FLOWS......................... 15
CONSOLIDATED STATEMENT OF CHANGES IN
STOCKHOLDERS' EQUITY......................................... 16
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.................... 17
PART II
Item 1. LEGAL PROCEEDINGS............................................. 19
Item 2. CHANGES IN SECURITIES......................................... 20
Item 3. DEFAULTS UPON SENIOR SECURITIES............................... 20
Item 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS............. 20
Item 5. OTHER INFORMATION............................................. 21
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.............................. 21
SIGNATURES................................................................. 22
</TABLE>
i
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AVAILABILITY OF PREVIOUS REPORTS
--------------------------------
The Company will furnish without charge, to each stockholder, upon written
request of any such person, a copy of the Company's annual report on Form 10-K
for the year ended December 31, 1995, and quarterly report on Form 10-Q for the
period ended March 31, 1996 (collectively, the "Reports") as filed with the
Securities Exchange and Commission, including the financial statement schedules
thereto. Those requesting a copy of the Reports that are not currently
stockholders of the Company may also obtain a copy directly from the Company.
Requests for copies of the Reports should be directed to Vice President-
Corporate Relations, at 3633 East Inland Empire Boulevard, Suite 850, Ontario,
California 91764.
The reader is encouraged to read this Form 10-Q Report in conjunction with
the Reports since the information contained herein is often an update of the
information in such reports.
ii
<PAGE>
KAISER VENTURES INC. AND SUBSIDIARIES
SOME OF THE STATEMENTS IN THIS FORM 10-Q REPORT CONTAIN FORWARD-LOOKING
INFORMATION WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS
AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
ACTUAL RESULTS COULD DIFFER FROM THOSE PROJECTED IN THESE FORWARD-LOOKING
STATEMENTS AS A RESULT OF FACTORS SUCH AS THE GENERAL ECONOMIC CONDITIONS IN THE
UNITED STATES AND SOUTHERN CALIFORNIA; THE IMPACT OF FEDERAL, STATE, AND LOCAL
LAWS AND REGULATIONS ON THE COMPANY'S DEVELOPMENT ACTIVITIES; THE IMPACT OF
WEATHER ON THE COMPANY'S CONSTRUCTION RELATED ACTIVITIES; AND THE DISCOVERY OF
UNANTICIPATED ENVIRONMENTAL CONDITIONS ON ANY OF THE COMPANY'S PROPERTIES.
INTRODUCTION
BUSINESS UPDATE
General
Kaiser Ventures Inc.'s, ("Kaiser" or the "Company" which shall be deemed to
include its wholly-owned subsidiaries unless otherwise provided herein), long-
term emphasis is on the development of its principal assets: (i) a 50.88%
interest in Fontana Union Water Company ("Fontana Union"), a mutual water
company; (ii) a 10.56% interest in Penske Motorsports, Inc. ("PMI"), a publicly
traded motorsports company; (iii) approximately 750 acres of the former Kaiser
Steel Corporation ("KSC") steel mill site (the "Mill Site Property"); (iv) an
approximate 73% interest in Mine Reclamation Corporation ("MRC"), the developer
of the Eagle Mountain Landfill Project (the "Landfill Project"); and (v) the
11,350 acre idle iron ore mine in the California desert (the "Eagle Mountain
Site"), which includes the associated 460 acre town of Eagle Mountain ("Eagle
Mountain Townsite"). A reader of this Form 10-Q Report is encouraged to read the
entire report, in addition to the Company's 1995 Form 10-K Report and first
quarter 1996 Form 10-Q Report for background information and a complete
understanding as to material developments concerning the Company.
Investment In Fontana Union Water Company
The Company, through a wholly-owned subsidiary, Fontana Water Resources,
Inc., leases its 50.88% ownership of the capital stock of Fontana Union, a
mutual water company, to Cucamonga County Water District ("Cucamonga") pursuant
to a 102-year take-or-pay lease (the "Cucamonga Lease"). Under the terms of the
Cucamonga Lease, Cucamonga's payments to the Company are based upon established
fixed quantities of water for most of the applicable sources, multiplied by a
fixed percentage of the rate for untreated and non-interruptible water from the
Metropolitan Water District of Southern California ("MWD") as available through
the Chino Basin Municipal Water District as it may change from time-to-time (the
"Lease Rate").
In the second quarter, there were two important developments with respect
to the Cucamonga Lease. First, in April, 1996, the Company commenced litigation
against Cucamonga in San Bernardino County Superior Court to resolve a dispute
over the interpretation of the Cucamonga Lease. On July 1, 1995, MWD implemented
its previously announced changed rates and a new rate structure. As a result of
these changes, the Cucamonga Lease rate increased by at least 2.7% or up to
approximately 5.1% if the Cucamonga Lease is interpreted as the Company asserts
to include all the changed rates and items implemented by MWD. Cucamonga
disputes the Company's interpretation of the Cucamonga Lease resulting in the
current litigation. Cucamonga continues to pay under the terms of the Cucamonga
Lease, but at the 2.7% rate increase as opposed to the 5.1% increase that the
Company maintains it is entitled to receive pursuant to the Cucamonga Lease.
1
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KAISER VENTURES INC. AND SUBSIDIARIES
In addition, MWD is studying, but has not adopted to date, further water
rate refinements as well as various rate and revenue generating alternatives.
Second, revenues from the Cucamonga Lease are generally tied to agreed upon
quantities of water for the various sources of water. However, there can be
adjustments in those fixed quantities in certain limited circumstances. One of
the sources of water under the Cucamonga Lease is known as the Colton/Rialto
Basin wells. Under the terms of the Cucamonga Lease, Cucamonga pays the Company
based upon a presumed production of 3,000 acre feet through 1997 and thereafter
3,100 acre feet from the Colton/Rialto Basin wells provided that the level of
water in certain monitoring or index wells averages to be above 1002.3 feet
above mean sea level. However, if the average in the index wells is between
1002.3 feet above mean sea level and 969.7 feet above mean sea level, Fontana
Union's right to produce from the Colton/Rialto wells is reduced to its
adjudicated water allowance of 920 acre feet. Other water producers from the
Colton/Rialto Basin are similarly required to reduce their pumping to their
adjudicated rights. If the average water elevation of the index wells drops
below 969.7 feet above mean sea level, Fontana Union's pumping rights are
reduced by 1% for every foot of drop in elevation, but never less than 460 acre
feet. On June 6, 1996, the Company was informed that the average elevation of
the water in the index wells was determined to be 999.66 above mean sea level.
Accordingly, the annual amount of water Fontana Union may pump from the
Colton/Rialto Basin is reduced to 920 acre feet with Cucamonga's annual payment
obligation also reduced to 920 acre feet. With this reduction in pumping from
the Colton/Rialto wells, the revenues from the Cucamonga Lease are currently
anticipated to decline by approximately $300,000 during this year.
The reason for the decline of the water levels in the index wells is
currently unknown. However, the Company along with other producers in the
Colton/Rialto Basin are investigating the possible reasons for the decline in
the water level. The Company is not able to predict whether the reduction in
pumping will continue beyond the current applicable water year.
Interest In Penske Motorsports, Inc.
The Company owns a 10.56% interest in PMI. PMI is traded on the NASDAQ
National Market under the symbol "SPWY." The Company acquired its interest in
PMI in November, 1995 in exchange for approximately 460 acres of the Mill Site
Property on which The California Speedway ("TCS") is being built. PMI is a
leading owner and operator of speedway facilities as well as a promoter of auto
track racing events. PMI, through subsidiaries, owns: Michigan International
Speedway; Nazareth Motor Speedway; TCS (which is under construction); a 2%
interest in North Carolina Motor Speedway; Motorsports International Corp., a
motorsports apparel and memorabilia company; and Competition Tire West and
Competition Tire South, distributors of Goodyear racing tires in the mid-west
and southern regions of the United States. TCS is to be a two mile tri-oval
similar to Michigan International Speedway and is anticipated to be completed in
the Spring of 1997. The date of the first scheduled race at TCS is June 22,
1997. The race will be a NASCAR(R) Winston Cup race. A second race, an
IndyCar(R) sponsored by CART, is anticipated to be held in September, 1997.
Currently, PMI is paying to the Company a quarterly fee of $162,500 which
will expire at the end of the first quarter of 1997. On July 31, 1996, PMI
announced gross revenues of $24.7 million and net income of $6.7 million or .52
per share for the second quarter of 1996. In addition, as of April 1, 1996, the
Company began accounting for its share of PMI's net income. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
2
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KAISER VENTURES INC. AND SUBSIDIARIES
Property Redevelopment
After the contribution of approximately 460 acres of the Mill Site Property
in exchange for its interest in PMI, the Company currently owns approximately
750 acres of the Mill Site Property. As discussed in detail in the Company's
1995 Form 10-K Report, the Company is pursuing several other projects for the
redevelopment of the Mill Site Property, including a rail-served municipal solid
waste transfer and recovery facility, and several industrial and commercial lots
adjoining the motorsports complex. Material developments with respect to these
projects are described below.
West Valley Materials Recovery Facility
The Company and Burrtec Waste Industries, Inc. ("Burrtec"), a privately-
held company, are equal joint venture partners in the development of the West
Valley Materials Recovery Facility (the "Joint Venture"), a proposed rail-served
municipal solid waste transfer and recovery facility that at full build out will
be located on three parcels totaling approximately 30 acres of the Mill Site
Property (the "Mill Site MRF"). The transfer station and material recovery
facility are fully permitted, other than necessary construction and ancillary
permits. The Company is responsible for the environmental remediation of the
property for the Mill Site MRF. The Company is currently in the process of
remediating the site (except for one parcel of about two acres containing the
tar pits) to the extent necessary in anticipation that one or more phases of the
Mill Site MRF will soon be built. The remediation required has been more
extensive than originally anticipated but the Company believes the required
additional work will not substantially delay the construction of the proposed
Phase 1 of the Mill Site MRF.
The Company and Burrtec are currently negotiating a restructuring of the
Joint Venture and its business terms. The Company and Burrtec are also
continuing to undertake the preliminary steps necessary to construct Phase 1 of
the Mill Site MRF which is currently expected to include a 62,000 square foot
building, sorting equipment, and related facilities for waste transfer and
recycling services. Offsite improvements are being installed and grading of the
site has commenced. A final decision to proceed with the restructuring of the
Joint Venture, its terms and the construction of Phase 1 of the Mill Site MRF is
anticipated to be made in the third quarter of 1996.
Waste Management
Eagle Mountain Landfill Project
In 1988, the Company entered into a 100-year lease agreement (the "MRC
Lease") with MRC. MRC is seeking to develop the Company's former iron ore mine
near Eagle Mountain, California into a large, regional rail-haul, municipal
solid waste landfill. MRC became a subsidiary of the Company when the Company's
subsidiary, Eagle Mountain Reclamation, Inc., acquired a 70% interest in MRC
during the first quarter of 1995 in exchange for the elimination of the minimum
monthly rent due the Company under the MRC Lease. The elimination of the minimum
monthly rent did not change the future royalty payments due the Company once the
landfill commences operations.
Since its initial acquisition of an equity interest in MRC, the Company,
through its wholly-owned subsidiary, Eagle Mountain Reclamation, Inc., has made
additional equity investments in MRC. As of July 31, 1996, the Company had
invested $3,977,000 in additional equity in MRC by participating in two private
placements of MRC common stock. Currently, the Company's ownership interest in
MRC is approximately 73%. Another $500,000 is to be funded by the Company by
October 15, 1996, pursuant to its commitment in the second private placement.
Additional funding will be necessary to complete all permitting activities.
3
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KAISER VENTURES INC. AND SUBSIDIARIES
MRC continues to pursue the activities necessary to re-permit the Landfill
Project. The draft environmental impact report/environmental impact statement
("EIR/EIS") prepared by Riverside County's and the U.S. Bureau of Land
Management's ("BLM"), independent consultant was first released to the public
for comment in July 1996. The release of the EIR/EIS commences the public review
process for the Landfill Project. The new EIR/EIS is the second full-scale
environmental review for the Landfill Project and the Company's proposed land
exchange with the BLM which were originally approved by Riverside County in 1992
and the BLM in 1993. The original county approval of the EIR was overturned in
1994 due to California Superior Court rulings which required Riverside County to
perform additional environmental review on the Landfill Project. The BLM
withdrew its original approval of the EIS in order to conduct new, additional
review concurrent with the County process.
The EIR/EIS examines the Landfill Project's potential impacts to such items
as air quality, water, traffic, noise, and natural resources and also identifies
measures to mitigate potential impacts. Once the EIR and EIS is approved,
assuming the EIR and EIS receive the necessary approvals, it will probably take
up to an additional year to secure the necessary technical permits for the
Landfill Project. Following a 60-day public comment period a final EIR/EIS will
be prepared and released to the public. The Landfill Project will then be
reviewed by the Riverside County Planning Commission this fall and forwarded
with recommendations to the Riverside County Board of Supervisors for
anticipated action in late 1996 or early 1997. The BLM conducted public meetings
on the EIS during the week of August 5, 1996.
An important step for the Company in connection with the proposed land
exchange with the BLM was achieved when the Federal Energy Regulatory Commission
issued on June 7, 1996, a letter stating that the proposed land exchange between
the BLM and the Company would not impact the pending license application of
Eagle Crest Energy Company, the proponent of a hydro-electric pump storage
project. Receipt of this non-jeopardy letter will assist the Company in securing
the proposed land exchange. The amount of Federal land that remains subject to
Section 24 reservation under the Federal Power Act is approximately 40 acres.
As discussed in more detail in the Company's 1995 10-K Report, there are
numerous risks associated with MRC and the Landfill Project which must be
overcome to achieve the financing, permitting, construction and operation of the
Landfill Project. There have been and will continue to be opponents to the
Landfill Project. The current anticipated time schedule for MRC and the Landfill
Project is based on forward-looking information and as a result, the time
schedule may not be achieved because of the risks associated with the Project.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operation" in Part I, Item 1 of this Form 10-Q Report.
4
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KAISER VENTURES INC. AND SUBSIDIARIES
PART I
ITEM 1. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
General
Kaiser Ventures Inc. ("Kaiser" or the "Company") is an emerging company
pursuing project opportunities and investments in activities related to water
resources, property redevelopment and solid waste management. The Company's
long-term emphasis is on the development of its principal assets: (i) a 50.88%
interest in Fontana Union Water Company ("Fontana Union"), a mutual water
company; (ii) a 10.56% interest in Penske Motorsports, Inc. ("PMI"), a public
professional motorsports company that is developing The California Speedway
("TCS") on land acquired from Kaiser; (iii) approximately a 73% interest in Mine
Reclamation Corporation ("MRC"), the developer of the Eagle Mountain Landfill
Project (the "Landfill Project"); (iv) approximately 750 acres of the former
Kaiser Steel Corporation ("KSC") steel mill site (the "Mill Site Property"); and
(v) the 11,350 acre idle iron ore mine in the California desert (the "Eagle
Mountain Site"), which includes the associated 460 acre town of Eagle Mountain
("Eagle Mountain Townsite"). The Company is also pursuing other related longer-
term growth opportunities on the balance of its Mill Site Property, including
the development of a joint venture for a transfer station and materials recovery
facility on the Mill Site Property ("Mill Site MRF"); and the redevelopment of
industrial and commercial parcels of land adjoining TCS and the Mill Site MRF.
Primary Revenue Sources
Ongoing Operations
The Company's revenues from ongoing operations are generally derived from
the development of the Company's long-term projects. Revenues from water
resources represent payments under the lease of the Company's interest in
Fontana Union to Cucamonga County Water District ("Cucamonga"). Property
redevelopment revenues currently reflect housing rental income, aggregate rock
sales and lease payments for the minimum security prison at the Eagle Mountain
Townsite, and royalty revenues from iron ore shipments from the Company's iron
ore mine in California (the "Silver Lake Mine"). Joint venture revenues reflect
Kaiser's share of income related to those equity investments (primarily PMI) and
joint ventures which the Company accounts for under the equity method.
Interim Activities
Revenues from interim activities are generated from various sources
primarily related to the Mill Site Property. Significant components of interim
activities include rentals under short-term tenant lease arrangements, royalty
revenues from the sale of slag to outside contractors, water and wastewater
treatment service revenues, revenues from the sale of recyclable materials and
other miscellaneous interim activities.
Summary of Revenue Sources
Due to the development nature of certain Company projects and the Company's
recognition of revenues from bankruptcy-related and other non-recurring items,
historical period-to-period comparisons of total revenues may not be meaningful
for developing an overall understanding of the Company.
5
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KAISER VENTURES INC. AND SUBSIDIARIES
Therefore, the Company believes it is important to evaluate the trends in the
components of its revenues as well as the recent developments regarding its
long-term ongoing and interim revenue sources.
In addition, due to the concentration of motor sport racing events between
April and September, PMI's operations have been, and will continue to be, highly
seasonal. PMI has no current plans to host events in the first and fourth
quarters at its existing facilities (including TCS). As a result, the Company's
reported share of undistributed equity in the earnings of PMI will likely be
positive (income) in the second and third quarters and negative (loss) in the
first and fourth quarters.
Results of Operations
Analysis of Results for the Quarter ended June 30, 1996 and 1995
An analysis of the significant components of the Company's resource
revenues for the quarter ended June 30, 1996 and 1995 follows:
<TABLE>
<CAPTION>
Quarter Ended June 30,
---------------------------------------
1996 1995 % Inc(Dec)
---- ---- ----------
<S> <C> <C> <C>
Ongoing Operations
Water resource............................. $1,000,000 $1,079,000 (7%)
Property redevelopment..................... 277,000 277,000 0%
Joint venture.............................. 721,000 - 100%
---------- ----------
Total ongoing operations............. 1,998,000 1,356,000 47%
---------- ----------
Interim Activities
Lease and royalty.......................... 259,000 463,000 (44%)
Service.................................... 57,000 117,000 (51%)
Miscellaneous.............................. 110,000 214,000 (49%)
---------- ----------
Total interim activities............. 426,000 794,000 (46%)
---------- ----------
Total resource revenues.............. $2,424,000 $2,150,000 13%
========== ==========
Revenues as a Percentage of Total
Resource Revenues:
Ongoing operations......................... 82% 63%
Interim activities......................... 18% 37%
---------- ----------
Total resource revenues.............. 100% 100%
========== ==========
</TABLE>
Resource Revenues. Total resource revenues for the second quarter of 1996
were $2,423,000, as compared to $2,150,000 for the second quarter of 1995.
Revenues from ongoing operations increased 47% during the second quarter of 1996
to $1,998,000 from $1,356,000 in the second quarter of 1995, while revenues from
interim activities declined 46% to $426,000 from $794,000 in the second quarter
of 1995. Revenues from ongoing operations as a percentage of total revenues
increased to 82% in the second quarter of 1996 from 63% in the second quarter of
1995.
Ongoing Operations. Water lease revenues under the Company's 102-year take-
or-pay lease with Cucamonga were $1,000,000 during the second quarter of 1996 as
compared to $1,079,000 for the second quarter of 1995. The 7% decrease in water
revenues during the quarter primarily reflects a reduction, affecting all
parties under the Rialto Basin judgment, in the amount of water that Cucamonga
6
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KAISER VENTURES INC. AND SUBSIDIARIES
through Fontana Union can draw from the Rialto Basin due to low water levels.
The annual impact of the reduction is estimated to be approximately $300,000;
$150,000 of which was recorded during the second quarter when the Company was
notified of the reduction. Offsetting this reduction was the July, 1995 increase
in water rates of 5.1% by The Metropolitan Water District of Southern California
("MWD"). There was no reduction in the Company's 55.53% effective interest in
Fontana Union for 1996. As previously disclosed, the Company's effective
interest in Fontana Union may decline over time due to an increase in the number
of Fontana Union shareholders taking water. However, the Company's effective
interest in Fontana Union's water cannot fall below its equity interest of
50.9%. In addition, MWD, effective July 1, 1995, implemented changed rates and a
changed rate structure which has resulted in a continuing lease interpretation
dispute with Cucamonga regarding the extent of the MWD rate increase. The total
amount of lease payments in dispute as of June 30, 1996 is approximately
$140,000. In addition, MWD has stated that it may refine its rate structure
further.
Property redevelopment revenue was $277,000 for the second quarter of 1996
and 1995. Reductions in tenant rental income at Eagle Mountain were offset by
higher iron ore sales from one of the Company's California mines.
Joint venture revenue increased 100% to $721,000 as a result of the
$162,000 quarterly project service fee due from PMI plus $559,000 pertaining to
the Company's 10.56% share of PMI's net income for the second quarter, net of
expenses. The Company is recording its investment in PMI on the equity method
and began recording its share of PMI's net income concurrent with conversion of
the Company's preferred stock into common stock at the end of the first quarter
of 1996.
Interim Activities. Revenues from interim activities for the second quarter
of 1996 were $425,000 as compared to $794,000 for the second quarter of 1995. As
noted above, the 46% decrease in revenues from interim activities in the second
quarter of 1996 is primarily attributable to lower levels of service revenues
under the amended Services Agreement with California Steel Industries ("CSI");
lower tenant rental income on the portion of the Mill Site Property that was
contributed to PMI in November, 1995 for the development of TCS; and lower scrap
sales and slag royalties.
Resource Operating Costs. Resource operating costs are those costs directly
related to the resource revenue sources. Total resource operating costs for the
second quarter of 1996 declined to $845,000 from $975,000 in the second quarter
of 1995. Operations and maintenance costs for the second quarter of 1996 were
$261,000 compared to $386,000 for the second quarter of 1995. This 32% decrease
in operations and maintenance costs was primarily due to lower expenses
associated with the reduced levels of services being provided to CSI and lower
property taxes associated with the portion of the Mill Site Property that was
contributed to PMI for the development of TCS. Administrative support expenses
for the second quarter of 1996 decreased slightly to $584,000 from $589,000 for
the second quarter of 1995.
Corporate General and Administrative Expenses. Corporate general and
administrative expenses for the second quarter of 1996 increased 1% to $920,000
from $913,000 for the second quarter of 1995 due primarily to higher outside
professional and legal expenses.
Net Interest Expense. Net interest expense for the second quarter of 1996,
was $139,000, a decline of 21% from $176,000 in the second quarter of 1995. The
reduction was due primarily to the capitalization of interest expense associated
with the development of certain parcels of the Mill Site Property and higher
interest income being partially offset by the increased amortization of deferred
loan fees associated with the Union Bank credit facility.
7
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KAISER VENTURES INC. AND SUBSIDIARIES
Income and Income Tax Provision. The Company recorded income before income
tax provision of $519,000 for the second quarter of 1996, a 503% increase from
the $86,000 recorded in the second quarter of 1995. A provision for income taxes
of $225,000 was recorded in the second quarter of 1996 as compared with $37,000
in the second quarter of 1995. Over 90% of the tax provision in 1996 and 1995 is
not currently payable due primarily to utilization of the Company's net
operating loss carryforwards ("NOLs"). Consequently, pretax income is an
important indicator of the Company's performance.
Net Income. For the second quarter of 1996, the Company reported net income
of $294,000, or $.03 per share, a 500% increase from the $49,000, or $.00 per
share, reported for the second quarter of 1995.
Analysis of Results for the Six months ended June 30, 1996 and 1995
An analysis of the significant components of the Company's resource
revenues for the six-months ended June 30, 1996 and 1995 follows:
<TABLE>
<CAPTION>
6 Months Ended June 30,
----------------------------------------
1996 1995 % Inc(Dec)
---- ---- ---------
<S> <C> <C> <C>
Ongoing Operations
Water resource.............................. $2,116,000 $2,157,000 (2%)
Property redevelopment...................... 540,000 521,000 4%
Joint venture............................... 884,000 - 100%
---------- ----------
Total ongoing operations.............. 3,540,000 2,678,000 32%
---------- ----------
Interim Activities
Lease and royalty........................... 556,000 883,000 (37%)
Service..................................... 114,000 234,000 (51%)
Miscellaneous............................... 247,000 354,000 (30%)
---------- ----------
Total interim activities.............. 917,000 1,471,000 (38%)
---------- ----------
Total resource revenues............... $4,457,000 $4,149,000 7%
========== ==========
Revenues as a Percentage of Total
Resource Revenues:
Ongoing operations.......................... 79% 65%
Interim activities.......................... 21% 35%
---------- ----------
Total resource revenues............... 100% 100%
========== ==========
</TABLE>
Resource Revenues. Total resource revenues for the first six-months of 1996
were $4,457,000, as compared to $4,149,000 for the first six-months of 1995.
Revenues from ongoing operations increased 32% during the first six-months of
1996 to $3,540,000 from $2,678,000 in the first six-months of 1995, while
revenues from interim activities declined 38% to $917,000 from $1,471,000 in the
first six-months of 1995. Revenues from ongoing operations as a percentage of
total revenues increased to 79% in the first six months of 1996 from 65% in the
first six months of 1995.
Ongoing Operations. Water lease revenues under the Company's 102-year take-
or-pay lease with Cucamonga were $2,116,000 during the first six months of 1996
as compared to $2,157,000 for the first six-months of 1995. The 2% decrease in
water revenues during the quarter primarily reflects a reduction, affecting all
parties under the Rialto Basin judgment, in the amount of water that Cucamonga
through Fontana Union can draw from the Rialto Basin due to low water levels.
The annual impact of the reduction is estimated to be
8
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KAISER VENTURES INC. AND SUBSIDIARES
approximately $300,000; $150,000 of which was recorded during the first six
months of 1996. Offsetting this reduction was the July, 1995 increase in water
rates of 5.1% by The Metropolitan Water District of Southern California ("MWD").
There was no reduction in the Company's 55.53% effective interest in Fontana
Union for 1996. As previously disclosed, the Company's effective interest in
Fontana Union may decline over time due to an increase in the number of Fontana
Union shareholders taking water. However, the Company's effective interest in
Fontana Union's water cannot fall below its equity interest of 50.9%. In
addition, MWD, effective July 1, 1995, implemented changed rates and a changed
rate structure which has resulted in a continuing lease interpretation dispute
with Cucamonga regarding the extent of the MWD rate increase. The total amount
of lease payments in dispute as of June 30, 1996 is approximately $140,000. In
addition, MWD has stated that it may refine its rate structure further.
Property redevelopment revenues were $540,000 for the first six-months of
1996 as compared to $521,000 for the first six-months of 1995. The 4% increase
from the first six-months of 1995 primarily represents higher iron ore sales
from one of the Company's California mines.
Joint venture revenue increased 100% to $884,000 as a result of the
$325,000 in project service fees from PMI plus $559,000 pertaining to the
Company's 10.56% share of PMI's net income for the second quarter, net of
expenses. The Company is recording its investment in PMI on the equity method
and began recording its share of PMI's net income concurrent with conversion of
the Company's preferred stock into common stock at the end of the first quarter
of 1996.
Interim Activities. Revenues from interim activities for the first six-
months of 1996 were $917,000 as compared to $1,471,000 for the first six-months
of 1995. As noted above, the 38% decrease in revenues from interim activities in
the first six-months of 1996 is primarily attributable to lower levels of
service revenues under the amended Services Agreement with California Steel
Industries ("CSI"); lower tenant rental income on the portion of the Mill Site
Property that was contributed to PMI in November 1995, for the development of
TCS; and lower scrap sales and slag royalties.
Resource Operating Costs. Resource operating costs are those costs directly
related to the resource revenue sources. Total resource operating costs for the
first six-months of 1996 declined to $1,586,000 from $1,872,000 in the first
six-months of 1995. Operations and maintenance costs for the first six-months of
1996 were $509,000 compared to $783,000 for the first six-months of 1995. As
noted above, this 35% decrease in operations and maintenance costs was primarily
due to lower expenses associated with the reduced levels of services being
provided to CSI and lower property taxes associated with the portion of the Mill
Site Property that was contributed to PMI for the development of TCS. In
addition, Administrative support expenses for the first six-months of 1996
decreased 1% to $1,077,000 from $1,089,000 for the first six-months of 1995 due
primarily to lower outside professional fees.
Corporate General and Administrative Expenses. Corporate general and
administrative expenses for the first six-months of 1996 increased 7% to
$1,878,000 from $1,758,000 for the first six-months of 1995 due primarily to
higher outside professional and legal expenses.
Net Interest Expense. Net interest expense for the first six-months of
1996, was $250,000, a decline of 27% from $344,000 in the first six-months of
1995. The reduction was due primarily to the capitalization of interest expense
associated with the development of certain parcels of the Mill Site Property and
higher interest income being partially offset by the increased amortization of
deferred loan fees associated with the Union Bank credit facility.
Income and Income Tax Provision. The Company recorded income before income
tax provision of $743,000 for the first six-months of 1996, a 325% increase from
the $175,000 recorded in the first six-
9
<PAGE>
KAISER VENTURES INC. AND SUBSIDIARIES
months of 1995. A provision for income taxes of $322,000 was recorded in the
first six-months of 1996 as compared with $76,000 in the first six-months of
1995. Over 90% of the tax provision in 1996 and 1995 is not currently payable
due primarily to utilization of the Company's net operating loss carryforwards
("NOLs"). Consequently, pretax income is an important indicator of the Company's
performance.
Net Income. For the first six-months of 1996, the Company reported net
income of $421,000, or $.04 per share, a 325% increase from the $99,000, or $.01
per share, reported for the first six-months of 1995.
Liquidity and Capital Resources
Cash, Cash Equivalents and Short Term Investments. The Company defines cash
equivalents as highly liquid debt instruments with original maturities of 90
days or less. Cash and cash equivalents declined $4,053,000 to $6,810,000 at
June 30, 1996 from $10,863,000 at December 31, 1995 Included in cash and cash
equivalents at December 31, 1995 is $2,297,000 held solely for the benefit of
MRC. The Company also had short-term investments, comprised of treasury bills
and certificates of deposit, of $74,000 at June 30, 1996 and December 31, 1995.
The decrease in cash and cash equivalents is due primarily to capital
expenditures of approximately $6,800,000 for environmental remediation and real
estate development at the Mill Site Property and to additional investments of
approximately $1,600,000 in MRC being offset by net cash proceeds of
approximately $3,400,000 from the CSI and environmental insurance settlements.
Working Capital. During the first six months of 1996, current assets
decreased $11,339,000 to $9,370,000 while current liabilities declined
$3,542,000 to $8,522,000. The decrease in current assets resulted primarily from
the $4,053,000 decrease in cash and cash equivalents, discussed above, plus a
$7,286,000 decline in accounts receivable due primarily to the receipt of over
$6,000,000 in gross proceeds from the CSI and environmental insurance
settlements. Included in current liabilities is $1,441,000 in accounts payable
and accrued liabilities relating to MRC. As a result, working capital decreased
during the first quarter of 1996 by $7,797,000 to $848,000 at June 30, 1996.
Real Estate. Real Estate increased nearly $6.8 million during the first six
months of 1996 primarily due to the capitalization of environmental remediation
and real estate development costs relating the Mill Site Property.
Investments. The Company's investment in PMI increased primarily as a
result of PMI's initial public offering in March 1996 and the Company's
recording of its share of equity in PMI's earnings subsequent to the public
offering. As a result of the initial public offering, the Company increased its
investment in PMI by approximately $6.5 million and recorded corresponding
increases in deferred income taxes and stockholders equity of approximately
$400,000 and $6.1 million, respectively.
Other Assets. The increase in other assets is primarily related to
capitalized landfill permitting and development costs for MRC.
Long-term Debt and Other Long-term Liabilities. As of June 30, 1996, the
Company had $5,222,000 in long-term debt associated with the note the Company
issued as part of the purchase of properties from the Lusk Joint Ventures in
July, 1994. The Company had no outstanding borrowings under its $20.0 million
revolving-to-term credit facility at June 30, 1996.
Minority Interest and Other Liabilities. At June 30, 1996, the Company had
recorded $1,491,000 of minority interest relating to MRC in which the Company
had approximately a 73% equity interest.
10
<PAGE>
KAISER VENTURES INC. AND SUBSIDIARIES
Contingent Liabilities. The Company has contingent liabilities more fully
described in the notes to the financial statements.
Capital Resources. The Company expects that its current cash balances and
short-term investments together with: (a) cash provided from operating
activities; (b) proceeds from the CSI and environmental insurance litigation
settlements; and (c) amounts available under its $20,000,000 revolving-to-term
credit facility (less $339,000 in reductions in the borrowing base and
$3,432,000 reserved for financial assurances required by the DTSC and relating
to environmental remediation on the Mill Site Property) will be sufficient to
satisfy both the Company's near-term operating cash requirements and to enable
the Company to continue the development of its long-term projects. To the
extent that additional capital resources are required, such capital will be
raised through bank borrowings, partnerships, joint venture arrangements,
additional equity or asset sale or monetization.
The Company expects to commit, in 1996, more than $15.0 million for capital
projects of which more $7.4 million will be for required environmental
remediation, $4.6 million will be for real estate improvement and development of
certain parcels at the Company's Mill Site Property, $2.6 million will be for
supporting MRC's landfill permitting and development, and $400,000 at Eagle
Mountain for the Specific Plan and BLM Land Exchange.
11
<PAGE>
KAISER VENTURES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
as of
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents................. $ 6,810,000 $10,863,000
Short-term investments.................... 74,000 74,000
Accounts receivable and other,
net of allowance for doubtful
accounts of $281,000 and $414,000,
respectively............................. 2,486,000 9,772,000
----------- -----------
Total current assets...................... 9,370,000 20,709,000
----------- -----------
Real Estate
Land and improvements..................... 27,469,000 22,084,000
Real estate under development............. 8,999,000 7,564,000
----------- -----------
Total real estate......................... 36,468,000 29,648,000
----------- -----------
Investment in Penske Motorsports, Inc......... 29,814,000 22,991,000
Investment in Fontana Union Water Company..... 16,108,000 16,108,000
Other Assets
Landfill permitting and development....... 3,674,000 1,660,000
Buildings and equipment (net)............. 2,334,000 2,433,000
Other assets and investments.............. 1,170,000 1,154,000
----------- -----------
Total other assets........................ 7,178,000 5,247,000
----------- -----------
Total Assets.................................. $98,938,000 $94,703,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
12
<PAGE>
KAISER VENTURES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
as of
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
----------- -------------
(Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable.............................. $ 3,343,000 $ 4,065,000
Accrued liabilities........................... 4,939,000 7,759,000
Current portion of long-term debt............. 240,000 240,000
----------- -----------
Total current liabilities................... 8,522,000 12,064,000
----------- -----------
Long-term Liabilities
Deferred tax liabilities...................... 1,118,000 721,000
Groundwater remediation reserve............... 1,431,000 1,431,000
Environmental remediation reserve............. 5,500,000 5,500,000
Long-term debt................................ 5,222,000 5,342,000
----------- -----------
Total long-term liabilities................. 13,271,000 12,994,000
----------- -----------
Total liabilities........................... 21,793,000 25,058,000
----------- -----------
Minority Interest and Other Liabilities........... 1,491,000 948,000
Commitments and Contingencies
Stockholders' Equity
Common stock, par value $.03 per share,
authorized 13,333,333 shares; issued
and outstanding 10,488,114 and 10,470,614
respectively................................. 315,000 314,000
Capital in excess of par value................ 66,791,000 60,256,000
Retained earnings since November 15, 1988..... 8,548,000 8,127,000
----------- -----------
Total stockholders' equity.................... 75,654,000 68,697,000
----------- -----------
Total Liabilities and Stockholders' Equity........ $98,938,000 $94,703,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
13
<PAGE>
KAISER VENTURES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
for the Three and Six Months Ended June 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
---------------------------- ----------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Resource Revenues
Ongoing Operations
Water resource................................................ $ 1,000,000 $ 1,079,000 $ 2,116,000 $ 2,157,000
Joint Venture................................................. 721,000 --- 884,000 ---
Property redevelopment........................................ 277,000 277,000 540,000 521,000
----------- ----------- ----------- -----------
Total ongoing operations.................................... 1,998,000 1,356,000 3,540,000 2,678,000
Interim Activities
Lease and royalty............................................. 258,000 463,000 556,000 883,000
Service....................................................... 57,000 117,000 114,000 234,000
Miscellaneous................................................. 110,000 214,000 247,000 354,000
----------- ----------- ----------- -----------
Total interim activities.................................... 425,000 794,000 917,000 1,471,000
----------- ----------- ----------- -----------
Total resource revenues..................................... 2,423,000 2,150,000 4,457,000 4,149,000
----------- ----------- ----------- -----------
Resource Operating Costs
Operations and maintenance...................................... 261,000 386,000 509,000 783,000
Administrative support expenses................................. 584,000 589,000 1,077,000 1,089,000
----------- ----------- ----------- -----------
Total resource operating costs.............................. 845,000 975,000 1,586,000 1,872,000
----------- ----------- ----------- -----------
Income from Resources............................................. 1,578,000 1,175,000 2,871,000 2,277,000
Corporate general and administrative expenses................... 920,000 913,000 1,878,000 1,758,000
----------- ----------- ----------- -----------
Income from Operations............................................ 658,000 262,000 993,000 519,000
Net Interest expense (income)................................... 139,000 176,000 250,000 344,000
----------- ----------- ----------- -----------
Income before Income Tax Provision................................ 519,000 86,000 743,000 175,000
Income tax provision
Currently payable............................................. 16,000 3,000 23,000 6,000
Deferred tax expense credited to equity....................... 209,000 34,000 299,000 70,000
----------- ----------- ----------- -----------
Net Income........................................................ $ 294,000 $ 49,000 $ 421,000 $ 99,000
=========== =========== =========== ===========
Earnings Per Share................................................ $ .03 $ .00 $ .04 $ .01
=========== =========== =========== ===========
Weighted Average Number of Shares
Outstanding...................................................... 10,711,000 10,649,000 10,730,000 10,647,000
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
14
<PAGE>
KAISER VENTURES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the Six Months Ended June 30
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Cash Flows from Operating Activities
Net income..................................................................... $ 421,000 $ 99,000
Provision for income tax which is credited to equity........................... 299,000 70,000
Equity income in Penske Motorsports Inc........................................ (559,000) ---
Depreciation and amortization.................................................. 336,000 249,000
Allowance for doubtful accounts................................................ (133,000) 14,000
Changes in assets:
Accounts receivable and other................................................ 7,419,000 634,000
Other assets................................................................. --- (3,000)
Changes in liabilities:
Current liabilities.......................................................... (3,540,000) (3,718,000)
----------- -----------
Net cash flows from operating activities....................................... 4,243,000 (2,655,000)
----------- -----------
Cash Flows from Investing Activities
Short-term investments and marketable securities............................... --- 3,500,000
Minority interest and other liabilities........................................ 543,000 268,000
Investment in Penske Motorsports, Inc.......................................... 249,000 (50,000)
Capital expenditures........................................................... (8,878,000) (1,226,000)
Other investments.............................................................. (211,000) (137,000)
----------- -----------
Net cash flows from investing activities....................................... (8,297,000) 2,355,000
----------- -----------
Cash Flows from Financing Activities
Issuance of common stock....................................................... 121,000 13,000
Environmental insurance proceeds............................................... --- 975,000
Principal payments on note payable............................................. (120,000) (120,000)
----------- -----------
Net Cash Flows from Financing Activities......................................... 1,000 868,000
Net Changes in Cash and Cash Equivalents......................................... (4,053,000) 568,000
Cash and Cash Equivalents at Beginning of Year................................... 10,863,000 3,205,000
Cash and Cash Equivalents at end of the period................................... $ 6,810,000 $ 3,773,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
15
<PAGE>
KAISER VENTURES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
for the Six Months Ended June 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Capital In
----------------------- Excess of Retained
Shares Amount Par Value Earnings Total
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1995 10,470,614 $314,000 $60,256,000 $8,127,000 $68,697,000
Provision for income tax, credited to equity........ --- --- 299,000 --- 299,000
Increase in investment in Penske Motorsports, Inc.
due to public offering.............................. --- --- 6,116,000 --- 6,116,000
Issuance of shares of common stock.................. 17,500 1,000 120,000 --- 121,000
Net Income.......................................... --- --- --- 421,000 421,000
---------- -------- ----------- ---------- -----------
Balance at June 30, 1996.............................. 10,488,114 $315,000 $66,791,000 $8,548,000 $75,654,000
========== ======== =========== ========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
16
<PAGE>
KAISER VENTURES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1. BASIS OF PRESENTATION
The unaudited, consolidated financial statements as of June 30, 1996, and
for the three and six-month periods ended June 30, 1996 and 1995, as well as
related notes should be read in conjunction with the audited consolidated
financial statements and related notes as of and for the year ended December 31,
1995. In the opinion of management, the accompanying unaudited financial
statements contain all adjustments necessary (all of which are normal and/or
recurring in nature) to present fairly the Company's financial position at June
30, 1996, and results of operations and cash flows for the six and three-month
periods ended June 30, 1996 and 1995.
The Company has reclassified the 1995 quarterly information to conform with
the 1996 presentation.
Note 2. PENSKE MOTORSPORTS, INC.
In March, 1996, Penske Motorsports, Inc. ("PMI") effected a
recapitalization resulting in PMI ownership of the outstanding shares of
Michigan International Speedway, Inc., Pennsylvania International Raceway, Inc.,
The California Speedway Corporation, Motorsports International Corp.,
Competition Tire West, Inc. and Competition Tire South, Inc. Subsequent to the
recapitalization, PMI completed an initial public offering ("IPO") by issuing
3,737,500 shares of common stock at a price to the public of $24 per share. The
proceeds to PMI, after underwriting discounts and commissions and other offering
expenses, were approximately $83.1 million. As a result of the IPO, the Company
has recorded an increase in its equity investment in PMI of $6,513,000 and
corresponding increases in deferred income taxes and capital in excess of par
value of $397,000 and $6,116,000, respectively.
As an additional result of the IPO, the Company began recording it's share
of undistributed equity in the earnings of PMI effective April 1, 1996. The
Company's share of income from PMI, net of expenses, amounted to $559,000 for
the three and six-month periods ended June 30, 1996. Due to the concentration of
motor sport racing events between April and September, PMI's operations have
been, and will continue to be, highly seasonal. PMI has no current plans to host
events in the first and fourth quarters at it existing facilities (including The
California Speedway). As a result, the Company's reported share of undistributed
equity in the earnings of PMI will likely be positive (income) in the second and
third quarters and negative (loss) in the first and fourth quarters.
Note 3. COMMITMENTS AND CONTINGENCIES
Environmental Contingencies
The Company currently estimates that, as of June 30, 1996, the future costs
of remediating the balance of its land will be between $13 million and $23
million, depending upon which approved remediation alternatives are eventually
selected. The Company anticipates recovery of these costs through redevelopment
of the property, primarily in connection with specific redevelopment projects or
joint ventures. Although extensive environmental investigations have been
conducted on the site and are
17
<PAGE>
KAISER VENTURES INC. AND SUBSIDIARIES
ongoing, there can be no assurance that the actual amount of environmental
remediation expenditures will not substantially exceed those currently
anticipated or that additional areas of contamination may not be identified.
While the Company has monitored certain groundwater wells in the past, the
DTSC requested and the Company will implement a supplemental groundwater
monitoring system. The Company has settled obligations of groundwater
contamination with the California Regional Water Quality Control Board. The
settlement required a $1,500,000 cash payment by the Company which was made in
February, 1994, and the contribution of 1,000 acre feet of water annually for 25
years to a water quality project. These water rights are unrelated to those
leased to Cucamonga County Water District. In 1995, the Company contributed
18,000 acre feet of its water in storage thus, satisfying the first 18 years of
its obligation. The Company remains contingently liable for any impacts the
groundwater plume may have on water wells owned by third parties. Recently the
City of Ontario, California commenced litigation against the Company alleging
that the Company has contaminated one of its municipal wells. The Company
believes sufficient amounts have been accrued for this contingency.
18
<PAGE>
KAISER VENTURES INC. AND SUBSIDIARIES
PART II
Item 1. LEGAL PROCEEDINGS
As discussed in the Company's Form 10-K Report for 1995 and its 1996 first
quarter Form 10-Q Report, the Company is engaged in certain claims and
litigation, which if resolved adverse to the Company or the Company's interests,
would have a material adverse impact on the Company. There have been no
material developments in any legal proceeding except as noted below and as
discussed in the "Introduction - Business Update" section of this Form 10-Q
Report.
City of Ontario Litigation
In February, 1996, the City of Ontario, California served on the Company a
complaint filed in San Bernardino County Superior Court (City of Ontario v.
Kaiser Ventures Inc., et al.; Case No. RCV 17334). In sum, the complaint
alleges there is a plume or plumes containing organic carbon, dissolved solids
and mercury originating from the Company's Mill Site Property due to activities
of KSC, and/or a former tenant of the Mill Site Property, that have impacted one
of the City of Ontario's water wells. Ontario seeks reimbursement for remedial
costs, replacement of the allegedly impacted well and replacement or
refurbishment of related facilities.
The Company challenged Ontario's ability to bring this litigation given the
KSC bankruptcy and the discharge granted to the Company. In April, 1996, Ontario
brought a declaratory judgment action in the U. S. District Court for the
District of Colorado in Bankruptcy ("the U.S. Bankruptcy Court") against the
Company, (City of Ontario v. Kaiser Ventures Inc., Adversary Proceeding No. 96-
1215 MSK). In the U. S. Bankruptcy Court action, Ontario in effect seeks a
determination that the matters and damages alleged in its California lawsuit are
not discharged as a part of the KSC bankruptcy proceedings.
Kaiser and the City have reached a tentative agreement concerning the
matter before the U.S. Bankruptcy Court. Under the terms of the tentative
settlement, which is subject to approval by the Ontario City Counsel and the
Company's Board of Directors, Kaiser has agreed to waive its bankruptcy-related
defenses to the City's prosecution of claims for groundwater contamination
caused by mercury or other priority pollutants. In return, the City agrees to
dismiss the California litigation as to all claims related to total dissolved
solids and total dissolved carbons and sulfate, and to be bound by the 1993
Settlement Agreement between Kaiser and the California Regional Water Quality
Control Board. Pending the approval and execution of the settlement agreement or
other resolution of the matter before the U. S. Bankruptcy Court, the litigation
in California is on hold.
CCWD Rate Dispute Litigation
As discussed in more detail in the "Business Update" section of this Form
10-Q Report, the Company on April 22, 1996 initiated legal action in San
Bernardino County Superior Court against Cucamonga County Water District
("Cucamonga"), (Fontana Water Resources, Inc. v. Cucamonga County Water
District; Case No. RCV 21135). The dispute involves the appropriate
interpretation of the Cucamonga Lease with respect to changed rates and a new
rate structure implemented by the Metropolitan Water District of Southern
California as of July 1, 1995. The litigation is in the early stages of
discovery.
19
<PAGE>
KAISER VENTURES INC. AND SUBSIDIARIES
Item 2. CHANGES IN SECURITIES
None.
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
Item 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
On June 17, 1996, the Company held its annual meeting of stockholders.
The only formal actions taken by the stockholders were a vote on: (i) the
election of nine directors for the Company for the ensuing year; and (ii) an
amendment to the Company's 1995 Stock Plan to increase the term of the Plan for
one year, increase the number of shares of common stock eligible for issuance
thereunder, and make other related changes to the Plan. The stockholders re-
elected nine of the current directors and approved the amendments to the
Company's 1995 Stock Plan. The vote on each nominee to the Board and on each
matter was as follows:
A. Election to the Board of Directors Votes For Votes Withheld
Ronald E. Bitonti 9,163,349 37,524
Todd G. Cole 9,159,873 41,000
Reynold C. MacDonald 9,159,773 41,100
William J. Morgan 9,164,873 36,000
Charles E. Packard 9,164,873 36,000
Thomas S. Rabone 9,158,499 42,374
Lyle B. Stevenson 9,164,218 36,655
Richard E. Stoddard 9,163,451 37,422
Marshall F. Wallach 9,189,457 11,416
B. Approval of the amendment to the Company's 1995 Stock Plan
Votes For Votes Against Abstain
8,469,786 526,379 23,407
20
<PAGE>
KAISER VENTURES INC. AND SUBSIDIARIES
Item 5. OTHER INFORMATION
See the "Introduction" Section of this Form 10-Q Report.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
--------
Exhibit 10.1 - Employment Agreement between the Company and Pamela
M. Catlett dated June 17, 1996.
Exhibit 10.2 - Employment Agreement between the Company and Terry
L. Cook dated June 17, 1996.
Exhibit 10.3 - Employment Agreement between the Company and Lee R.
Redmond dated June 17, 1996.
Exhibit 10.4 - Employment Agreement between the Company and James
F. Verhey dated June 17, 1996.
Exhibit 27 - Financial Data Schedule for 2nd quarter 10-Q.
B. Reports on Form 8-K.
-------------------
None.
21
<PAGE>
KAISER VENTURES INC. AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
KAISER VENTURES INC.
Dated: August 12, 1996 /s/ James F. Verhey
---------------------------
James F. Verhey
Principal Financial Officer
22
<PAGE>
EXHIBIT 10.1
------------
EMPLOYMENT AGREEMENT
OF
PAMELA M. CATLETT
This EMPLOYMENT AGREEMENT is made and entered into effective June 17,
1996 by and between Pamela M. Catlett ("EMPLOYEE") and Kaiser Ventures Inc.
("KAISER").
RECITALS
A. Employee is currently employed by Kaiser as Vice President-Corporate
Relations.
B. Effective as of January 15, 1996, Kaiser expanded Employee's duties
and responsibilities.
C. The intent of this Agreement is to set forth the current agreement
and understanding of Employee and Kaiser with regard to Employee's continued
employment by Kaiser.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. EMPLOYMENT, POSITIONS AND DUTIES. Kaiser hereby continues the
employment of Employee upon the terms and conditions set forth in this
Agreement. Employee's position with Kaiser shall be Vice President-Corporate
Relations. Employee shall have the responsibilities and duties normally
incident to such position, including, but not limited to, those duties and
responsibilities set forth in Exhibit "A" attached hereto and incorporated
herein by this reference and such other duties and responsibilities as may be
reasonably assigned to her from time-to-time by Kaiser's Chief Operating Officer
or Chief Executive Officer. Employee agrees to devote her full business time
and attention to the discharge of her duties and responsibilities under this
Agreement.
2. TERM. Employee's employment under the terms of this Agreement shall
commence as of June 17, 1996, and shall continue until terminated as provided
herein; provided, however, upon Employee's termination, Employee shall receive
the severance compensation provided herein.
3. BASE SALARY. Employee's initial annual base salary shall be Eighty
Thousand Dollars ($80,000) per year. For 1996, as a part of Employee's annual
base salary the Board has elected to issue to Employee Five Thousand Dollars
($5,000) of restricted stock in lieu of Five Thousand Dollars ($5,000) cash
compensation. In the event that any restricted stock is issued to Employee as a
part of her annual base salary, the value of such restricted stock at the time
of its grant shall be counted as base salary in the calculation of any bonus
that may be awarded to Employee. For all other purposes, any such stock shall
be treated as salary for the calculation of any benefits based upon an
employee's salary as may be required by law or any benefit plan.
1
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Prior to the first meeting of the Board of Directors in any calendar
year, the Compensation and Benefits Committee of the Board will review
Employee's salary and report its recommendations for any revision to the full
Board at such meeting.
4. ANNUAL BONUS. In addition to her base salary, Employee shall be
entitled to participate in the bonus program of Kaiser applicable to senior
executives as it may be amended from time to time. The timing, size and/or
amount of any bonus awarded to Employee during the term of this Agreement will
be determined annually in accordance with the process set forth in Paragraph 3
above for the annual base salary review and based upon the bonus program
developed from time to time by the Compensation and Benefits Committee and
approved by the Board of Directors.
5. STOCK OPTIONS AND OTHER STOCK RELATED INCENTIVES. Employee shall be
eligible for the grant of incentive stock options, non-qualified stock options
and other forms of stock related incentives from time-to-time in the discretion
of the Stock Option Committee of the Board of Directors. The timing, size and
amount of any future stock options or other stock related incentives will be
determined generally in accordance with the process used to determine the award
of any bonus to Employee. The grant and exercise of the stock options and other
stock related incentives shall generally be subject to and governed by the terms
of Kaiser's 1995 Stock Plan as it may be amended or any similar or successor
option plan. However, the Stock Option Committee may award stock options,
restricted stock or other stock related incentives outside the 1995 Stock Option
Plan in its discretion. It is acknowledged that the Board is considering the
grant to Employee of a greater number of options than are usually granted in one
year with the number of options that may be granted to Employee in future years
reduced accordingly.
The parties acknowledge that as of January 15, 1996, the Stock Option
Committee awarded to Employee stock options for 15,000 shares pursuant to the
1995 Stock Option Plan in accordance with a stock option agreement of the same
date.
6. OTHER BENEFITS. Employee will be entitled to participate in all
benefits provided by Kaiser to its employees and to senior executives in
accordance with and subject to Kaiser's polices and procedures as they may exist
from time-to-time, including, but not limited to, medical and dental insurance,
life insurance, disability insurance, 401(k) savings plan, any pension plan,
deferred compensation plan, education and seminar reimbursement, car allowance,
and reimbursement of reasonable expenses for company business. These benefits
shall include life insurance for the benefit of Employee with a face amount of
not less than Employee's annual base salary, except that Kaiser may self-insure
if insurance is not available on a commercially reasonable basis. Employee
shall be entitled to three (3) weeks of paid vacation per year until Employee
haS been employed at Kaiser for five (5) years at which time Employee shall be
entitled to four (4) weeks of paid vacation per year.
7. RESTRICTED STOCK. Any restricted stock issued by Kaiser in lieu of
cash payments in connection with Employee's base salary or any bonus, shall be
subject to the terms and conditions of a stock restriction agreement which may
provide, among other things, for the forfeiture of such stock in phases if
Employee should voluntarily terminate her employment with Kaiser within a
certain period of time or upon Employee's termination for "cause", as defined
herein.
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8. DEATH BENEFITS. In the event of Employee's death, Kaiser shall pay
to Employee's personal representative or her estate, Employee's salary and
benefits through the end of the month in which the death occurred plus a ratable
portion of Employee's anticipated bonus for the year through the date of
Employee's death. Employee's anticipated bonus shall be measured by the bonus
awarded for the most recent fiscal year. If a bonus has been earned by Employee
for the preceding fiscal year but has not yet been paid prior to the death of
Employee, Employee's estate or personal representative shall be paid the full
amount of the earned but unpaid bonus. The proceeds from any such life
insurance shall be for the sole benefit of Employee's designated beneficiaries
or if there are no designated beneficiaries, Employee's estate. Upon an
Employee's death, all restricted stock issued to Employee for past services
(e.g. bonus stock), shall immediately vest and all restricted stock initially
issued for anticipated future services (e.g. salary stock) will vest ratably
through the date of death. Employee's estate or personal representative shall
have at least one (1) year after the date of Employee's death while in the
employment of the Company in which to exercise all vested Stock Options.
9. DISABILITY BENEFITS. In the event of the disability of Employee for
any reason, Kaiser shall continue to pay to Employee her salary and benefits
less short-term disability payments until long-term disability payments are made
to Employee but in no event shall such salary and benefit payments continue for
longer than six (6) months from the date of disability. In addition, upon
permanent disability, the vesting of all retirement and deferral compensation
plans and all outstanding options, restricted stock or other stock related
incentives shall continue to occur for a period of two (2) years after the date
of disability in the same manner as if Employee were still employed by Kaiser
during that period.
10. DEDUCTIONS. Applicable federal and state income taxes, social
security contributions (FICA), Medicare contributions, medical insurance
premiums and any other appropriate or customary deductions shall be withheld
from any compensation paid to Employee by Kaiser.
11. MATERIAL CHANGE. Upon the occurrence of a Material Change as
hereafter defined and subject to Paragraph 14 below, all options to acquire
shares of Kaiser stock, restricted stock or any other stock related incentive
previously granted to Employee shall immediately and fully vest one (1) day
prior to the Material Change, notwithstanding any other applicable vesting
schedule. Upon the occurrence of a Material Change, Employee shall be entitled,
for a period of two years, to exercise her stock options as to any of such
shares. This provision shall take precedence over any contrary provision in any
standard stock option agreement. For purposes of this Agreement, the term
Material Change shall refer to and mean the occurrence of any one of the
following events after the date of this Agreement:
a. any sale, merger or other acquisition of all or substantially
all of Kaiser with or by another entity where the shareholders of Kaiser at the
time of the sale, merger or other acquisition do not own or control at least 51%
of the voting power of such entity immediately after the time of the sale,
merger or other acquisition.
b. any acquisition of common stock by a person or "group" (as defined
in section 13(d) of the Securities Exchange Act of 1934), resulting in the
"beneficial ownership" (as
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defined in Rule 13d-3 under the Securities Exchange Act of 1934) by that person
or group of more than (i) 25% of the capital stock of Kaiser accompanied by a
change of more than 50% of the directors of Kaiser within one year after such
event or (ii) 35% of the capital stock of Kaiser with or without such change.
c. following the date of this Agreement, there has been an
aggregate of net assets with a cumulative value that exceeds the greater of (i)
$20,000,000 or (ii) 20% of the net equity of Kaiser at the time of the
distribution (whether by dividend or repurchase of stock) distributed to any one
or more Kaiser shareholders.
12. CONSTRUCTIVE TERMINATION AFTER A MATERIAL CHANGE. Upon the occurrence
of a Material Change, Employee shall be deemed to have been constructively
discharged upon the occurrence of any of the following events within six months
(6) before or eighteen (18) months after the Material Change:
a. The assignment to Employee of duties materially and adversely
inconsistent with Employee's positions immediately prior to a Material Change.
This includes a change in reporting responsibilities, authority including title,
or responsibilities; provided, however, a lateral transfer within Kaiser or to
an Affiliate shall not be deemed a constructive termination;
b. Any requirement that Employee permanently relocate to an
office more than 50 miles from the then location to which she is assigned; and
c. Any failure to provide Employee with compensation and benefits
in the aggregate on terms not materially less favorable than those enjoyed by
Employee under this Agreement immediately prior to a Material Change, or the
subsequent taking of any action that would materially reduce any of Employee's
compensation and benefits in effect at the time of the Material Change unless
such compensation and benefits are substantially equally reduced for executive
officers of Kaiser as a group (as measured by a percentage) or there is less
than a ten percent (10%) reduction in compensation or benefits.
then, at Employee's option, exercisable within ninety (90) days of the date
Employee knew, or should have known exercising reasonable care, of the
occurrence of any of the foregoing events and the expiration of any applicable
cure period, Employee shall have the right to terminate her employment by
written notice to Kaiser, and on the date of such termination Kaiser will pay
Employee the compensation and benefits described in Paragraph 13 below.
13. COMPENSATION PAYABLE UPON ACTUAL OR CONSTRUCTIVE TERMINATION RELATED
TO A MATERIAL CHANGE. In the event Employee is terminated for any reason except
for death, permanent disability or for cause, as defined below, within six (6)
months before or eighteen (18) months after a Material Change or upon the
Constructive Termination of Employee before or after a Material Change as
defined and provided in Paragraph 12 above, Kaiser shall pay to Employee the
following compensation as severance benefits in addition to the severance
compensation that Employee shall receive pursuant to Paragraph 15 regardless of
any Material Change:
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a. if the termination is effective after March 31 of any year, an
amount equal to the pro rata portion of the bonus that Employee would have been
eligible to earn for the year of termination as measured by the preceding year's
bonus;
b. an amount equal to one year's average annual bonus (cash and
stock, but not including stock options or stock grants outside of the annual
bonus) averaged over the two (2) immediately preceding years; and
c. Employee shall have the right to participate proportionately
in stock buyback or dividend distribution in proportion to shares owned together
will all other shareholders.
All amounts due Employee shall be payable in one lump sum or, at Employee's
option, over such period of time not to exceed twelve (12) months. Employee
shall have no duty to seek other employment during this period of time and there
shall be no offset for any compensation paid to Employee from any other source;
provided, however, if Employee is paid a consulting fee or receives compensation
from Kaiser or an Affiliate of Kaiser for services actually rendered during a
one (1) year period from the date of termination, unless otherwise agreed in
writing, such amount shall be offset against the payments made or due Employee.
14. POSSIBLE REDUCTION IN CERTAIN BENEFITS.
(a) Except as provided in Paragraph 14(b) below, Employee shall in no
circumstances receive "payments in the nature of compensation" from Kaiser which
would result in "excess parachute payments" (as that term is defined in Sections
280G and 4999 of the Internal Revenue Code of 1954, as amended, or any
equivalent or analogous term as shall in the future be defined in any law or
regulation governing the amount of severance compensation that may be paid
without penalty to an officer of a company upon a change in control of Kaiser).
In the event either Employee or Kaiser shall be advised in writing by Employee
or its counsel that Employee would receive excess parachute payments if all
payments under all contacts between Employee and Kaiser were made, such opinion
shall be confidentially disclosed to the other party. If it is mutually
determined that such payments would trigger the excess parachute payments
provisions, Employee shall receive only such compensation and benefits under her
contracts with Kaiser (not to exceed those permitted without constituting excess
parachute payments) which she, in her sole discretion, has designated in written
notice to Kaiser. Employee shall have a minimum of thirty (30) days in which to
make such written designation. In the event of a disagreement between the
counsel of the respective parties as to whether a payment would result in excess
parachute payments, such counsel shall jointly designate an independent tax
counsel (whose fees shall be paid by Kaiser) within 10 days who shall promptly
make a conclusive determination of the matter.
(b) Notwithstanding anything else to the contrary, in the event
Employee is terminated pursuant to Paragraph 13 above, Employee shall have the
right, in her sole discretion, to elect to receive all or any part of the
compensation payable to her upon termination (or which would have been due under
Section 11 but for a previous election under Section 14(a)) without regard to
whether any such amounts may constitute "excess parachute payments." If
Employee fails to provide the Company a written designation within thirty (30)
days, she shall be presumed to have elected to receive all compensation and
benefits due her
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without regard to whether any such compensation or benefits shall constitute
"excess parachute payments."
(c) Nothing in this Paragraph 14 shall be construed or deemed to be a
forfeiture of any compensation or benefits that Employee may elect not to
accelerate due to any concern about the receipt of "excess parachute payments."
15. TERMINATION WITHOUT CAUSE. In the event Kaiser elects to terminate
Employee's employment without cause (as defined below) during the term of this
Agreement, then Kaiser agrees to pay Employee an amount equal to one year's
annual base salary (based on Employees then current annual base salary) and
continue to provide and pay its portion of all of Employee's health, welfare,
insurance and other benefits for a period of twelve (12) months following the
date of termination, including Kaiser's portion of any retirement and deferred
compensation plan such as Kaiser's 401(k) plan. After such termination,
Employee shall be entitled, for a period of two years to exercise her stock
options as to any then vested, including any options vesting within one year of
termination as provided in the next sentence, notwithstanding any other
applicable provision contained in any option agreement. In addition to the
foregoing related to stock options, with respect to any restricted stock or
other stock related incentives, Employee shall continue to vest in such
securities for a period of one year following termination. If Employee is
terminated before or after a Material Change as provided in Paragraph 12,
Employee shall receive the additional severance compensation provided in
Paragraph 13.
16. TERMINATION FOR CAUSE. If Kaiser elects to terminate Employee's
employment for cause (as defined below), Employee's employment will terminate on
the date fixed for termination by Kaiser and thereafter Kaiser will not be
obligated to pay Employee any additional compensation, other than the
compensation due and owing up to the date of termination and as may be required
by law. After such termination, Employee shall be entitled, for a period of
ninety (90) days, to exercise any stock options or other stock related
incentives that are vested as of the date of termination.
17. DEFINITION OF "CAUSE." "Cause" for the purposes of this Agreement
shall mean any of the following:
a. Willful breach by Employee of any provision of this Agreement,
provided, however, if the breach is not a material breach, Kaiser shall give
Employee written notice of such breach and Employee shall have thirty (30) days
in which to cure such breach. No written notice or cure period shall be
required in the event of a willful and material breach of this Agreement by
Employee;
b. Gross negligence or dishonesty in the performance of Employee's
duties or responsibilities hereunder;
c. Engaging in conduct or activities or holding any position that
materially conflicts with the interest of, or materially interferes with
Employee's duties and responsibilities to Kaiser or its Affiliates; or
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d. Engaging in conduct which is materially detrimental to the
business of Kaiser or its Affiliates.
18. VOLUNTARY TERMINATION. Employee's employment by Kaiser may be
terminated at any time upon the parties' mutual written agreement or voluntarily
by either party upon prior written notice to the other. In the event of a
mutual written agreement, Employee's severance benefits shall be as set forth in
such agreement. In the event of Employee's voluntary termination of employment,
Kaiser shall not be obligated to pay Employee any additional compensation, other
than the compensation due and owing as through the date of termination and as
may be required by law. After such termination, Employee shall be entitled for
a period of ninety (90) days to exercise any stock options or other stock
related incentives that are vested as of the date of termination.
19. CONFIDENTIALITY.
a. EMPLOYEE'S OBLIGATIONS. Employee agrees that (a) except as
----------------------
provided in this Agreement Employee shall maintain the confidential nature of
any Proprietary Information received or acquired by her, and (b) Employee shall
use such Proprietary Information solely for the purpose of meeting her
obligations under this Agreement and not in connection with any other business
or activity. "PROPRIETARY INFORMATION" means all oral, written or recorded
information about or related to Kaiser or any of its Affiliates or its or their
technology, assets, liabilities, or business, whether acquired before or after
the date hereof, and regardless of the manner in which it is acquired, together
with any documents or other materials prepared by Employee which contain or
reflect such information. After termination of employment upon demand of
Kaiser, Employee agrees to return or destroy any and all materials containing
any Proprietary Information.
b. KAISER'S OBLIGATIONS. Kaiser agrees that it shall maintain and
--------------------
provide information regarding Employee in accordance with generally accepted
industry and business practices.
c. LIMITATIONS ON CONFIDENTIAL OBLIGATIONS AND USE RESTRICTIONS.
------------------------------------------------------------
The restrictions in Paragraph 19(a) above do not apply to information which the
Employee can demonstrate (i) is then in the public domain by acts not
attributable to such disclosing party or (ii) is hereafter received on an
unrestricted basis by such Employee from a third party source who, to Employee's
knowledge after due inquiry, is not and was not bound by confidentiality
obligations to Kaiser or any Affiliate thereof. In addition, Employee and
Kaiser are permitted to disclose any Proprietary Information as necessary in the
defense or prosecution of any legal action.
d. ACTIONS IF DISCLOSURE REQUIRED. If Employee is required by law
-------------------------------
to make any disclosure otherwise prohibited hereunder, such party shall use its
best efforts to provide the other with prompt prior notice where possible so
that (a) the other party (with the reasonable cooperation of the party required
to make such disclosure) may seek an appropriate protection order or other
remedy and/or (b) the parties can seek in good faith to agree on the appropriate
scope and approach to disclosure. If a protective order or other remedy is not
obtained, the party required to make such disclosure may furnish only that
portion of
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information protected hereby which it is legally compelled to disclose and shall
use its reasonable efforts to obtain confidential treatment for all information
so disclosed.
e. INJUNCTION. Each party agrees that remedies at law may be
-----------
inadequate to protect against breach of this Paragraph 19, and hereby agrees to
the granting of injunctive relief without proof of actual damage.
20. ARBITRATION OF DISPUTES. If Employee and Kaiser cannot resolve a
dispute (whether arising in contract or tort or any other legal theory, whether
based on federal, state or local statute or common law and regardless of the
identities of any other defendants) that in any way relates to or arises out of
this Agreement, the termination of Employee's employment relationship with
Kaiser or any Affiliate thereof, (without limiting the generality of any other
Paragraph herein), then such dispute shall be settled as follows:
a. Kaiser and Employee agree to jointly select a judicial officer
who is affiliated with the Judicial Arbitration and Mediation Service, or such
other equivalent organization as Kaiser and Employee may mutually select, to act
as the trier of fact and judicial officer in such dispute resolution;
b. If Kaiser and Employee are unable to agree upon a particular
judicial officer, then the decision shall be made by the chief executive officer
of the Judicial Arbitration and Mediation Service, after consulting with Kaiser
and Employee;
c. Kaiser and Employee shall have the same rights of discovery as if
the dispute were being resolved in the Superior Court of the State of
California. However, the judicial officer shall, on her own motion, or the
request of either Kaiser or Employee, have the authority to extend or reduce the
time periods therefor; and,
d. The judicial officer serving hereunder shall be designated as a
referee under the provisions of Title VIII, Chapter 6 of the California Code of
Civil Procedure (Sections 638 through 645. 1, inclusive). Payment for the
services of the judicial officer and the rights and procedure of appeal, and/or
other review of the decision, shall be made as provided in such sections.
The judicial officer shall have the right to grant injunctive relief,
specific performance and other equitable remedies.
21. MISCELLANEOUS.
a. ENTIRE AGREEMENT; AMENDMENTS. This Agreement states the entire
-----------------------------
understanding and agreement between the parties with respect to its subject
matter and may only be amended by a written instrument duly executed by Employee
and Kaiser.
b. ASSIGNMENT. This Agreement and the rights and obligations of
-----------
Employee may not be sold, transferred, assigned, pledged or hypothecated by
Employee.
c. NON-WAIVER. Failure to insist upon strict compliance with any
-----------
provision of this Agreement or the waiver of any specific event of non-
compliance shall not be deemed to
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be or operate as a waiver of such provision or any other provision hereof or any
other event of non-compliance.
d. BINDING EFFECT. This Agreement shall be binding upon and inure
---------------
to the benefit of Kaiser, its successors and assigns and, Employee's heirs,
successors, and legal or personal representatives.
e. HEADINGS. The headings throughout this Agreement are for
---------
convenience only and shall in no way be deemed to define, limit, or add to the
meaning of any provision of this Agreement.
f. CONTEXT. Whenever required by the context, the singular shall
--------
include the plural, the plural the singular, and one gender such other gender as
is appropriate.
g. NOTICES. All notices, request, demands, consents and other
--------
communications hereunder shall be transmitted in writing and shall be deemed to
have been duly given when hand delivered or sent by certified United States
mail, postage prepaid, with return by certified requested, addressed to the
parties as follows:
Kaiser Ventures Inc.
3633 E. Inland Empire Blvd., Suite 850
Ontario, CA 91764
Pamela M. Catlett
424 Cabrillo Road
Arcadia, CA 91007
h. COSTS. In any action taken to enforce the provisions of this
------
Agreement, the prevailing party shall be reimbursed all reasonable costs
incurred in such legal action including reasonable attorney's fees in such
action.
i. SEVERABILITY. If any provision or clause of this Agreement, as
-------------
applied to any party or circumstances shall be adjudged by a court to be invalid
or unenforceable, said adjudication shall in no manner effect any other
provision of this Agreement, the application of such provision to any other
circumstances or the validity or enforceability of this Agreement.
j. DEFINITION OF AFFILIATE. The term "AFFILIATE" for purposes of
------------------------
this Agreement shall mean any person or entity now or hereafter in control,
controlled by or in common control with Kaiser. It shall also include any
direct or indirect subsidiary of such Corporation and any company in which
Kaiser has more than a ten percent (10%) ownership interest.
k. ACKNOWLEDGMENT REGARDING ISO'S. Employee acknowledges that she is
------------------------------
responsible for the tax consequences of all severance compensation she may
receive and that certain actions may need to be taken by Employee within limited
periods of time to preserve the tax status of any incentive stock options.
Kaiser makes no representation or warranty that any past or future grant of a
stock option to Employee qualifies as an incentive stock option.
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l. GOVERNING LAW. This Agreement shall be governed by and construed
--------------
in accordance with the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement to be effective as of the day and year first written above not
withstanding the actual date of signature.
"EMPLOYEE"
PAMELA M. CATLETT
/s/ Pamela M. Catlett
---------------------------------------
Pamela M. Catlett
"KAISER"
KAISER VENTURES INC.
By: /s/ Lyle B. Stevenson
----------------------------------
Lyle B. Stevenson, Chairman of the
Compensation and Benefits Committee
By: /s/ Gerald A. Fawcett
-----------------------------------
Gerald A. Fawcett, President
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SCHEDULE "A"
PAMELA M. CATLETT
VICE PRESIDENT CORPORATE RELATIONS
This position will report to the Chief Executive Officer and Chief
Operating Officer.
RESPONSIBILITIES
The Vice President-Corporate Relations has overall responsibility for
the creation and implementation of all corporate communications and public
affairs programs including, investor relations, media relations, government
affairs, and community and civic relations. In this capacity, the Vice
President-Corporate Relations will serve as the primary company spokesperson to
investors, the media, and the public at-large. Specific duties include:
INVESTOR RELATIONS
- - ------------------
* Design and implementation of a planned annual investor relations program
to ensure a consistent, timely flow of information about Kaiser to the
financial communities and company shareholders;
* Maintenance and initiation of daily contact with shareholders, financial
analysts, and others in the financial community, serving as operational
spokesperson to these groups;
* Planning and conducting management presentations before the financial
community, with other officers as appropriate;
* Preparation and dissemination of annual and quarterly reports and other
shareholder materials including fact books, issues papers, brochures
etc.;
* Preparation for all shareholder meetings, including presentations, proxy
material preparation, dissemination and solicitation;
* Preparation of corporate disclosure policy and maintenance of corporate
guidelines for the timely disclosure of financial matters and corporate
activities; and
* Maintenance of corporate mailing lists.
PUBLIC RELATIONS
- - ----------------
* Preparation and dissemination of corporate press releases;
* Maintenance of personal contacts with the press and financial
publications, local and national;
* Direct government relations activities with other corporate officers;
* Compliance with community relations provisions of the Mill Site Cleanup
Consent Order with CAL-EPA, such as fact sheets and community meetings;
* Development of civic and business development activities, such as
charitable activities, appropriate business organizations, etc.;
* Prepare Director Updates which are disseminated to members of the Board
of Directors, executive officers and managers;
* Assist in other corporate activities where specialized knowledge and
expertise will contribute to enhance Kaiser's corporate goals including;
* Development and coordination of special programs to enhance specific
corporate projects, such as permit applications, public hearings, etc.;
and
* Work through VEBA to organize the Kaiser Steel Retirees in support of
corporate projects when appropriate.
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EXHIBIT 10.2
------------
EMPLOYMENT AGREEMENT
OF
TERRY L. COOK
This EMPLOYMENT AGREEMENT is made and entered into effective June 17,
1996 by and between Terry L. Cook ("EMPLOYEE") and Kaiser Ventures Inc.
("KAISER").
RECITALS
A. Employee is currently employed by Kaiser as Senior Vice President,
General Counsel and Corporate Secretary.
B. Effective as of January 15, 1996, Kaiser expanded Employee's duties
and responsibilities.
C. The intent of this Agreement is to set forth the current agreement
and understanding of Employee and Kaiser with regard to Employee's continued
employment by Kaiser.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. EMPLOYMENT, POSITIONS AND DUTIES. Kaiser hereby continues the
employment of Employee upon the terms and conditions set forth in this
Agreement. Employee's positions with Kaiser shall be Senior Vice President,
General Counsel and Corporate Secretary. Employee shall have the
responsibilities and duties normally incident to such positions, including, but
not limited to, those duties and responsibilities set forth in Exhibit "A"
attached hereto and incorporated herein by this reference and such other duties
and responsibilities as may be reasonably assigned to him from time-to-time by
Kaiser's Chief Operating Officer or Chief Executive Officer. Employee agrees to
devote his full business time and attention to the discharge of his duties and
responsibilities under this Agreement.
2. TERM. Employee's employment under the terms of this Agreement shall
commence as of June 17, 1996, and shall continue until terminated as provided
herein; provided, however, upon Employee's termination, Employee shall receive
the severance compensation provided herein.
3. BASE SALARY. Employee's initial annual base salary shall be One
Hundred Fifty Five Thousand Dollars ($155,000) per year. For 1996, as a part of
Employee's annual base salary the Board has elected to issue to Employee Twenty
Thousand Dollars ($20,000) of restricted stock in lieu of Twenty Thousand
Dollars ($20,000) cash compensation. In the event that any restricted stock is
issued to Employee as a part of his annual base salary, the value of such
restricted stock at the time of its grant shall be counted as base salary in the
calculation of any bonus that may be awarded to Employee. For all other
purposes, any such stock shall be treated as salary for the calculation of any
benefits based upon an employee's salary as may be required by law or any
benefit plan.
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Prior to the first meeting of the Board of Directors in any calendar
year, the Compensation and Benefits Committee of the Board will review
Employee's salary and report its recommendations for any revision to the full
Board at such meeting.
4. ANNUAL BONUS. In addition to his base salary, Employee shall be
entitled to participate in the bonus program of Kaiser applicable to senior
executives as it may be amended from time to time. The timing, size and/or
amount of any bonus awarded to Employee during the term of this Agreement will
be determined annually in accordance with the process set forth in Paragraph 3
above for the annual base salary review and based upon the bonus program
developed from time to time by the Compensation and Benefits Committee and
approved by the Board of Directors.
5. STOCK OPTIONS AND OTHER STOCK RELATED INCENTIVES. Employee shall be
eligible for the grant of incentive stock options, non-qualified stock options
and other forms of stock related incentives from time-to-time in the discretion
of the Stock Option Committee of the Board of Directors. The timing, size and
amount of any future stock options or other stock related incentives will be
determined generally in accordance with the process used to determine the award
of any bonus to Employee. The grant and exercise of the stock options and other
stock related incentives shall generally be subject to and governed by the terms
of Kaiser's 1995 Stock Plan as it may be amended or any similar or successor
option plan. However, the Stock Option Committee may award stock options,
restricted stock or other stock related incentives outside the 1995 Stock Option
Plan in its discretion. It is acknowledged that the Board is considering the
grant to Employee of a greater number of options than are usually granted in one
year with the number of options that may be granted to Employee in future years
reduced accordingly.
The parties acknowledge that as of January 15, 1996, the Stock Option
Committee awarded to Employee stock options for 25,000 shares pursuant to the
1995 Stock Option Plan in accordance with a stock option agreement of the same
date.
6. OTHER BENEFITS. Employee will be entitled to participate in all
benefits provided by Kaiser to its employees and to senior executives in
accordance with and subject to Kaiser's polices and procedures as they may exist
from time-to-time, including, but not limited to, medical and dental insurance,
life insurance, disability insurance, 401(k) savings plan, any pension plan,
deferred compensation plan, education and seminar reimbursement, car allowance,
and reimbursement of reasonable expenses for company business. These benefits
shall include life insurance for the benefit of Employee with a face amount of
not less than Employee's annual base salary, except that Kaiser may self-insure
if insurance is not available on a commercially reasonable basis. Employee
shall be entitled to three (3) weeks of paid vacation per year until Employee
haS been employed at Kaiser for five (5) years at which time Employee shall be
entitled to four (4) weeks of paid vacation per year.
7. RESTRICTED STOCK. Any restricted stock issued by Kaiser in lieu of
cash payments in connection with Employee's base salary or any bonus, shall be
subject to the terms and conditions of a stock restriction agreement which may
provide, among other things, for the forfeiture of such stock in phases if
Employee should voluntarily terminate his employment
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with Kaiser within a certain period of time or upon Employee's termination for
"cause", as defined herein.
8. DEATH BENEFITS. In the event of Employee's death, Kaiser shall pay
to Employee's personal representative or his estate, Employee's salary and
benefits through the end of the month in which the death occurred plus a ratable
portion of Employee's anticipated bonus for the year through the date of
Employee's death. Employee's anticipated bonus shall be measured by the bonus
awarded for the most recent fiscal year. If a bonus has been earned by Employee
for the preceding fiscal year but has not yet been paid prior to the death of
Employee, Employee's estate or personal representative shall be paid the full
amount of the earned but unpaid bonus. The proceeds from any such life
insurance shall be for the sole benefit of Employee's designated beneficiaries
or if there are no designated beneficiaries, Employee's estate. Upon an
Employee's death, all restricted stock issued to Employee for past services
(e.g. bonus stock), shall immediately vest and all restricted stock initially
issued for anticipated future services (e.g. salary stock) will vest ratably
through the date of death. Employee's estate or personal representative shall
have at least one (1) year after the date of Employee's death while in the
employment of the Company in which to exercise all vested Stock Options.
9. DISABILITY BENEFITS. In the event of the disability of Employee for
any reason, Kaiser shall continue to pay to Employee his salary and benefits
less short-term disability payments until long-term disability payments are made
to Employee but in no event shall such salary and benefit payments continue for
longer than six (6) months from the date of disability. In addition, upon
permanent disability, the vesting of all retirement and deferral compensation
plans and all outstanding options, restricted stock or other stock related
incentives shall continue to occur for a period of two (2) years after the date
of disability in the same manner as if Employee were still employed by Kaiser
during that period.
10. DEDUCTIONS. Applicable federal and state income taxes, social
security contributions (FICA), Medicare contributions, medical insurance
premiums and any other appropriate or customary deductions shall be withheld
from any compensation paid to Employee by Kaiser.
11. MATERIAL CHANGE. Upon the occurrence of a Material Change as
hereafter defined and subject to Paragraph 14 below, all options to acquire
shares of Kaiser stock, restricted stock or any other stock related incentive
previously granted to Employee shall immediately and fully vest one (1) day
prior to the Material Change, notwithstanding any other applicable vesting
schedule. Upon the occurrence of a Material Change, Employee shall be entitled,
for a period of two years, to exercise his stock options as to any of such
shares. This provision shall take precedence over any contrary provision in any
standard stock option agreement. For purposes of this Agreement, the term
Material Change shall refer to and mean the occurrence of any one of the
following events after the date of this Agreement:
a. any sale, merger or other acquisition of all or substantially
all of Kaiser with or by another entity where the shareholders of Kaiser at the
time of the sale, merger or other acquisition do not own or control at least 51%
of the voting power of such entity immediately after the time of the sale,
merger or other acquisition.
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b. any acquisition of common stock by a person or "group" (as defined
in section 13(d) of the Securities Exchange Act of 1934), resulting in the
"beneficial ownership" (as defined in Rule 13d-3 under the Securities Exchange
Act of 1934) by that person or group of more than (i) 25% of the capital stock
of Kaiser accompanied by a change of more than 50% of the directors of Kaiser
within one year after such event or (ii) 35% of the capital stock of Kaiser with
or without such change.
c. following the date of this Agreement, there has been an
aggregate of net assets with a cumulative value that exceeds the greater of (i)
$20,000,000 or (ii) 20% of the net equity of Kaiser at the time of the
distribution (whether by dividend or repurchase of stock) distributed to any one
or more Kaiser shareholders.
12. CONSTRUCTIVE TERMINATION AFTER A MATERIAL CHANGE. Upon the occurrence
of a Material Change, Employee shall be deemed to have been constructively
discharged upon the occurrence of any of the following events within six months
(6) before or eighteen (18) months after the Material Change:
a. The assignment to Employee of duties materially and adversely
inconsistent with Employee's positions immediately prior to a Material Change.
This includes a change in reporting responsibilities, authority including title,
or responsibilities; provided, however, a lateral transfer within Kaiser or to
an Affiliate shall not be deemed a constructive termination;
b. Any requirement that Employee permanently relocate to an
office more than 50 miles from the then location to which he is assigned; and
c. Any failure to provide Employee with compensation and benefits
in the aggregate on terms not materially less favorable than those enjoyed by
Employee under this Agreement immediately prior to a Material Change, or the
subsequent taking of any action that would materially reduce any of Employee's
compensation and benefits in effect at the time of the Material Change unless
such compensation and benefits are substantially equally reduced for executive
officers of Kaiser as a group (as measured by a percentage) or there is less
than a ten percent (10%) reduction in compensation or benefits.
then, at Employee's option, exercisable within ninety (90) days of the date
Employee knew, or should have known exercising reasonable care, of the
occurrence of any of the foregoing events and the expiration of any applicable
cure period, Employee shall have the right to terminate his employment by
written notice to Kaiser, and on the date of such termination Kaiser will pay
Employee the compensation and benefits described in Paragraph 13 below.
13. COMPENSATION PAYABLE UPON ACTUAL OR CONSTRUCTIVE TERMINATION RELATED
TO A MATERIAL CHANGE. In the event Employee is terminated for any reason except
for death, permanent disability or for cause, as defined below, within six (6)
months before or eighteen (18) months after a Material Change or upon the
Constructive Termination of Employee before or after a Material Change as
defined and provided in Paragraph 12 above, Kaiser shall pay to Employee the
following compensation as severance benefits in addition to the severance
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compensation that Employee shall receive pursuant to Paragraph 15 regardless of
any Material Change:
a. if the termination is effective after March 31 of any year, an
amount equal to the pro rata portion of the bonus that Employee would have been
eligible to earn for the year of termination as measured by the preceding year's
bonus;
b. an amount equal to one year's average annual bonus (cash and
stock, but not including stock options or stock grants outside of the annual
bonus) averaged over the two (2) immediately preceding years; and
c. Employee shall have the right to participate proportionately
in stock buyback or dividend distribution in proportion to shares owned together
will all other shareholders.
All amounts due Employee shall be payable in one lump sum or, at Employee's
option, over such period of time not to exceed twelve (12) months. Employee
shall have no duty to seek other employment during this period of time and there
shall be no offset for any compensation paid to Employee from any other source;
provided, however, if Employee is paid a consulting fee or receives compensation
from Kaiser or an Affiliate of Kaiser for services actually rendered during a
one (1) year period from the date of termination, unless otherwise agreed in
writing, such amount shall be offset against the payments made or due Employee.
14. POSSIBLE REDUCTION IN CERTAIN BENEFITS.
(a) Except as provided in Paragraph 14(b) below, Employee shall in no
circumstances receive "payments in the nature of compensation" from Kaiser which
would result in "excess parachute payments" (as that term is defined in Sections
280G and 4999 of the Internal Revenue Code of 1954, as amended, or any
equivalent or analogous term as shall in the future be defined in any law or
regulation governing the amount of severance compensation that may be paid
without penalty to an officer of a company upon a change in control of Kaiser).
In the event either Employee or Kaiser shall be advised in writing by his or its
counsel that Employee would receive excess parachute payments if all payments
under all contacts between Employee and Kaiser were made, such opinion shall be
confidentially disclosed to the other party. If it is mutually determined that
such payments would trigger the excess parachute payments provisions, Employee
shall receive only such compensation and benefits under his contracts with
Kaiser (not to exceed those permitted without constituting excess parachute
payments) which he, in his sole discretion, has designated in written notice to
Kaiser. Employee shall have a minimum of thirty (30) days in which to make such
written designation. In the event of a disagreement between the counsel of the
respective parties as to whether a payment would result in excess parachute
payments, such counsel shall jointly designate an independent tax counsel (whose
fees shall be paid by Kaiser) within 10 days who shall promptly make a
conclusive determination of the matter.
(b) Notwithstanding anything else to the contrary, in the event
Employee is terminated pursuant to Paragraph 13 above, Employee shall have the
right, in his sole discretion, to elect to receive all or any part of the
compensation payable to him upon termination (or which would have been due under
Section 11 but for a previous election under
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Section 14(a)) without regard to whether any such amounts may constitute "excess
parachute payments." If Employee fails to provide the Company a written
designation within thirty (30) days, he shall be presumed to have elected to
receive all compensation and benefits due him without regard to whether any such
compensation or benefits shall constitute "excess parachute payments."
(c) Nothing in this Paragraph 14 shall be construed or deemed to be a
forfeiture of any compensation or benefits that Employee may elect not to
accelerate due to any concern about the receipt of "excess parachute payments."
15. TERMINATION WITHOUT CAUSE. In the event Kaiser elects to terminate
Employee's employment without cause (as defined below) during the term of this
Agreement, then Kaiser agrees to pay Employee an amount equal to one year's
annual base salary (based on Employees then current annual base salary) and
continue to provide and pay its portion of all of Employee's health, welfare,
insurance and other benefits for a period of twelve (12) months following the
date of termination, including Kaiser's portion of any retirement and deferred
compensation plan such as Kaiser's 401(k) plan. After such termination,
Employee shall be entitled, for a period of two years to exercise his stock
options as to any then vested, including any options vesting within one year of
termination as provided in the next sentence, notwithstanding any other
applicable provision contained in any option agreement. In addition to the
foregoing related to stock options, with respect to any restricted stock or
other stock related incentives, Employee shall continue to vest in such
securities for a period of one year following termination. If Employee is
terminated before or after a Material Change as provided in Paragraph 12,
Employee shall receive the additional severance compensation provided in
Paragraph 13.
16. TERMINATION FOR CAUSE. If Kaiser elects to terminate Employee's
employment for cause (as defined below), Employee's employment will terminate on
the date fixed for termination by Kaiser and thereafter Kaiser will not be
obligated to pay Employee any additional compensation, other than the
compensation due and owing up to the date of termination and as may be required
by law. After such termination, Employee shall be entitled, for a period of
ninety (90) days, to exercise any stock options or other stock related
incentives that are vested as of the date of termination.
17. DEFINITION OF "CAUSE." "Cause" for the purposes of this Agreement
shall mean any of the following:
a. Willful breach by Employee of any provision of this Agreement,
provided, however, if the breach is not a material breach, Kaiser shall give
Employee written notice of such breach and Employee shall have thirty (30) days
in which to cure such breach. No written notice or cure period shall be
required in the event of a willful and material breach of this Agreement by
Employee;
b. Gross negligence or dishonesty in the performance of Employee's
duties or responsibilities hereunder;
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c. Engaging in conduct or activities or holding any position that
materially conflicts with the interest of, or materially interferes with
Employee's duties and responsibilities to Kaiser or its Affiliates; or
d. Engaging in conduct which is materially detrimental to the
business of Kaiser or its Affiliates.
18. VOLUNTARY TERMINATION. Employee's employment by Kaiser may be
terminated at any time upon the parties' mutual written agreement or voluntarily
by either party upon prior written notice to the other. In the event of a
mutual written agreement, Employee's severance benefits shall be as set forth in
such agreement. In the event of Employee's voluntary termination of employment,
Kaiser shall not be obligated to pay Employee any additional compensation, other
than the compensation due and owing as through the date of termination and as
may be required by law. After such termination, Employee shall be entitled for
a period of ninety (90) days to exercise any stock options or other stock
related incentives that are vested as of the date of termination.
19. CONFIDENTIALITY.
a. EMPLOYEE'S OBLIGATIONS. Employee agrees that (a) except as
----------------------
provided in this Agreement Employee shall maintain the confidential nature of
any Proprietary Information received or acquired by him, and (b) Employee shall
use such Proprietary Information solely for the purpose of meeting his
obligations under this Agreement and not in connection with any other business
or activity. "PROPRIETARY INFORMATION" means all oral, written or recorded
information about or related to Kaiser or any of its Affiliates or its or their
technology, assets, liabilities, or business, whether acquired before or after
the date hereof, and regardless of the manner in which it is acquired, together
with any documents or other materials prepared by Employee which contain or
reflect such information. After termination of employment upon demand of
Kaiser, Employee agrees to return or destroy any and all materials containing
any Proprietary Information.
b. KAISER'S OBLIGATIONS. Kaiser agrees that it shall maintain and
--------------------
provide information regarding Employee in accordance with generally accepted
industry and business practices.
c. LIMITATIONS ON CONFIDENTIAL OBLIGATIONS AND USE RESTRICTIONS.
------------------------------------------------------------
The restrictions in Paragraph 19(a) above do not apply to information which the
Employee can demonstrate (i) is then in the public domain by acts not
attributable to such disclosing party or (ii) is hereafter received on an
unrestricted basis by such Employee from a third party source who, to Employee's
knowledge after due inquiry, is not and was not bound by confidentiality
obligations to Kaiser or any Affiliate thereof. In addition, Employee and
Kaiser are permitted to disclose any Proprietary Information as necessary in the
defense or prosecution of any legal action.
d. ACTIONS IF DISCLOSURE REQUIRED. If Employee is required by law
-------------------------------
to make any disclosure otherwise prohibited hereunder, such party shall use its
best efforts to provide the other with prompt prior notice where possible so
that (a) the other party (with the reasonable cooperation of the party required
to make such disclosure) may seek an appropriate
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protection order or other remedy and/or (b) the parties can seek in good faith
to agree on the appropriate scope and approach to disclosure. If a protective
order or other remedy is not obtained, the party required to make such
disclosure may furnish only that portion of information protected hereby which
it is legally compelled to disclose and shall use its reasonable efforts to
obtain confidential treatment for all information so disclosed.
e. INJUNCTION. Each party agrees that remedies at law may be
-----------
inadequate to protect against breach of this Paragraph 19, and hereby agrees to
the granting of injunctive relief without proof of actual damage.
20. ARBITRATION OF DISPUTES. If Employee and Kaiser cannot resolve a
dispute (whether arising in contract or tort or any other legal theory, whether
based on federal, state or local statute or common law and regardless of the
identities of any other defendants) that in any way relates to or arises out of
this Agreement, the termination of Employee's employment relationship with
Kaiser or any Affiliate thereof, (without limiting the generality of any other
Paragraph herein), then such dispute shall be settled as follows:
a. Kaiser and Employee agree to jointly select a judicial officer
who is affiliated with the Judicial Arbitration and Mediation Service, or such
other equivalent organization as Kaiser and Employee may mutually select, to act
as the trier of fact and judicial officer in such dispute resolution;
b. If Kaiser and Employee are unable to agree upon a particular
judicial officer, then the decision shall be made by the chief executive officer
of the Judicial Arbitration and Mediation Service, after consulting with Kaiser
and Employee;
c. Kaiser and Employee shall have the same rights of discovery as if
the dispute were being resolved in the Superior Court of the State of
California. However, the judicial officer shall, on his own motion, or the
request of either Kaiser or Employee, have the authority to extend or reduce the
time periods therefor; and,
d. The judicial officer serving hereunder shall be designated as a
referee under the provisions of Title VIII, Chapter 6 of the California Code of
Civil Procedure (Sections 638 through 645. 1, inclusive). Payment for the
services of the judicial officer and the rights and procedure of appeal, and/or
other review of the decision, shall be made as provided in such sections.
The judicial officer shall have the right to grant injunctive relief,
specific performance and other equitable remedies.
21. MISCELLANEOUS.
a. ENTIRE AGREEMENT; AMENDMENTS. This Agreement states the entire
-----------------------------
understanding and agreement between the parties with respect to its subject
matter and may only be amended by a written instrument duly executed by Employee
and Kaiser.
b. ASSIGNMENT. This Agreement and the rights and obligations of
-----------
Employee may not be sold, transferred, assigned, pledged or hypothecated by
Employee.
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c. NON-WAIVER. Failure to insist upon strict compliance with any
-----------
provision of this Agreement or the waiver of any specific event of non-
compliance shall not be deemed to be or operate as a waiver of such provision or
any other provision hereof or any other event of non-compliance.
d. BINDING EFFECT. This Agreement shall be binding upon and inure
---------------
to the benefit of Kaiser, its successors and assigns and, Employee's heirs,
successors, and legal or personal representatives.
e. HEADINGS. The headings throughout this Agreement are for
---------
convenience only and shall in no way be deemed to define, limit, or add to the
meaning of any provision of this Agreement.
f. CONTEXT. Whenever required by the context, the singular shall
--------
include the plural, the plural the singular, and one gender such other gender as
is appropriate.
g. NOTICES. All notices, request, demands, consents and other
--------
communications hereunder shall be transmitted in writing and shall be deemed to
have been duly given when hand delivered or sent by certified United States
mail, postage prepaid, with return by certified requested, addressed to the
parties as follows:
Kaiser Ventures Inc.
3633 E. Inland Empire Blvd., Suite 850
Ontario, CA 91764
Terry L. Cook
10154 Whispering Forest Drive
Alta Loma, CA 91737
h. COSTS. In any action taken to enforce the provisions of this
------
Agreement, the prevailing party shall be reimbursed all reasonable costs
incurred in such legal action including reasonable attorney's fees in such
action.
i. SEVERABILITY. If any provision or clause of this Agreement, as
-------------
applied to any party or circumstances shall be adjudged by a court to be invalid
or unenforceable, said adjudication shall in no manner effect any other
provision of this Agreement, the application of such provision to any other
circumstances or the validity or enforceability of this Agreement.
j. DEFINITION OF AFFILIATE. The term "AFFILIATE" for purposes of
------------------------
this Agreement shall mean any person or entity now or hereafter in control,
controlled by or in common control with Kaiser. It shall also include any
direct or indirect subsidiary of such Corporation and any company in which
Kaiser has more than a ten percent (10%) ownership interest.
k. ACKNOWLEDGMENT REGARDING ISO'S. Employee acknowledges that he is
------------------------------
responsible for the tax consequences of all severance compensation he may
receive and that certain actions may need to be taken by Employee within limited
periods of time to preserve
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the tax status of any incentive stock options. Kaiser makes no representation or
warranty that any past or future grant of a stock option to Employee qualifies
as an incentive stock option.
l. GOVERNING LAW. This Agreement shall be governed by and construed
--------------
in accordance with the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement to be effective as of the day and year first written above not
withstanding the actual date of signature.
"EMPLOYEE"
TERRY L. COOK
/s/ Terry L. Cook
------------------------------
Terry L. Cook
"KAISER"
KAISER VENTURES INC.
By: /s/ Lyle B. Stevenson
-------------------------
Lyle B. Stevenson, Chairman of
the Compensation and Benefits
Committee
By: /s/ Gerald A. Fawcett
-------------------------
Gerald A. Fawcett, President
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SCHEDULE "A"
TERRY L. COOK
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND CORPORATE SECRETARY
These positions report to the Board of Directors, Chief Executive Officer
and Chief Operating Officer, as appropriate.
RESPONSIBILITIES. Legal services, business insights, and technical assistance
in the following areas, among others:
* General legal and business advice;
* All contractual relations, including joint ventures, leases,
partnership agreements, purchase and sale agreements, collection of
receivables, tenant disputes, etc.;
* Due diligence investigations and legal evaluation of acquisition
targets, plus assistance in preparation, review and closing of
acquisition agreements;
* Legal risk analysis;
* Corporate legal strategy;
* Personnel issues;
* All SEC compliance matters (other than financial statements and
related information which you will coordinate with the Chief
Financial Officer), including preparation of reports on Forms 10-K,
10-Q, 8-K, Form 3 & 4 filings, oversight of Company policies on
insider trading and confidential information, proxy materials, and
shareholder meetings;
* Advise the Board of Directors regarding procedures, legal issues, and
legal positions;
* Corporate governance matters, such as corporate minutes, Board of
Director resolutions and special matters, by-laws and articles of
incorporation, annual corporate filings, tradenames, maintenance of
corporate subsidiaries, etc. for both Kaiser and MRC;
* Supervision of litigation matters;
* Development of defense strategies involved in defending Kaiser
against lawsuits;
* Regulatory and agency issues;
* Resolution of outstanding bankruptcy reorganization matters;
* Providing legal assistance to subsidiaries of Kaiser, as appropriate;
and
* Participate in major negotiations involving all phases of
corporate transactions.
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EXHIBIT 10.3
------------
EMPLOYMENT AGREEMENT
OF
LEE R. REDMOND III
This EMPLOYMENT AGREEMENT is made and entered into effective June 17,
1996 by and between Lee R. Redmond III ("EMPLOYEE") and Kaiser Ventures Inc.
("KAISER").
RECITALS
A. Employee is currently employed by Kaiser as Senior Vice President-
Real Estate.
B. Effective as of January 15, 1996, Kaiser expanded Employee's duties
and responsibilities.
C. The intent of this Agreement is to set forth the current agreement
and understanding of Employee and Kaiser with regard to Employee's continued
employment by Kaiser.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. EMPLOYMENT, POSITIONS AND DUTIES. Kaiser hereby continues the
employment of Employee upon the terms and conditions set forth in this
Agreement. Employee's position with Kaiser shall be Senior Vice President-Real
Estate. Employee shall have the responsibilities and duties normally incident
to such position, including, but not limited to, those duties and
responsibilities set forth in Exhibit "A" attached hereto and incorporated
herein by this reference and such other duties and responsibilities as may be
reasonably assigned to him from time-to-time by Kaiser's Chief Operating Officer
or Chief Executive Officer. Employee agrees to devote his full business time
and attention to the discharge of his duties and responsibilities under this
Agreement.
2. TERM. Employee's employment under the terms of this Agreement shall
commence as of June 17, 1996, and shall continue until terminated as provided
herein; provided, however, upon Employee's termination, Employee shall receive
the severance compensation provided herein.
3. BASE SALARY. Employee's initial annual base salary shall be One
Hundred Fifty Five Thousand Dollars ($155,000) per year. For 1996, as a part of
Employee's annual base salary the Board has elected to issue to Employee Twenty
Thousand Dollars ($20,000) of restricted stock in lieu of Twenty Thousand
Dollars ($20,000) cash compensation. In the event that any restricted stock is
issued to Employee as a part of his annual base salary, the value of such
restricted stock at the time of its grant shall be counted as base salary in the
calculation of any bonus that may be awarded to Employee. For all other
purposes, any such stock shall be treated as salary for the calculation of any
benefits based upon an employee's salary as may be required by law or any
benefit plan.
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Prior to the first meeting of the Board of Directors in any calendar
year, the Compensation and Benefits Committee of the Board will review
Employee's salary and report its recommendations for any revision to the full
Board at such meeting.
4. ANNUAL BONUS. In addition to his base salary, Employee shall be
entitled to participate in the bonus program of Kaiser applicable to senior
executives as it may be amended from time to time. The timing, size and/or
amount of any bonus awarded to Employee during the term of this Agreement will
be determined annually in accordance with the process set forth in Paragraph 3
above for the annual base salary review and based upon the bonus program
developed from time to time by the Compensation and Benefits Committee and
approved by the Board of Directors.
5. STOCK OPTIONS AND OTHER STOCK RELATED INCENTIVES. Employee shall be
eligible for the grant of incentive stock options, non-qualified stock options
and other forms of stock related incentives from time-to-time in the discretion
of the Stock Option Committee of the Board of Directors. The timing, size and
amount of any future stock options or other stock related incentives will be
determined generally in accordance with the process used to determine the award
of any bonus to Employee. The grant and exercise of the stock options and other
stock related incentives shall generally be subject to and governed by the terms
of Kaiser's 1995 Stock Plan as it may be amended or any similar or successor
option plan. However, the Stock Option Committee may award stock options,
restricted stock or other stock related incentives outside the 1995 Stock Option
Plan in its discretion. It is acknowledged that the Board is considering the
grant to Employee of a greater number of options than are usually granted in one
year with the number of options that may be granted to Employee in future years
reduced accordingly.
The parties acknowledge that as of January 15, 1996, the Stock Option
Committee awarded to Employee stock options for 25,000 shares pursuant to the
1995 Stock Option Plan in accordance with a stock option agreement of the same
date.
6. OTHER BENEFITS. Employee will be entitled to participate in all
benefits provided by Kaiser to its employees and to senior executives in
accordance with and subject to Kaiser's polices and procedures as they may exist
from time-to-time, including, but not limited to, medical and dental insurance,
life insurance, disability insurance, 401(k) savings plan, any pension plan,
deferred compensation plan, education and seminar reimbursement, car allowance,
and reimbursement of reasonable expenses for company business. These benefits
shall include life insurance for the benefit of Employee with a face amount of
not less than Employee's annual base salary, except that Kaiser may self-insure
if insurance is not available on a commercially reasonable basis. Employee
shall be entitled to three (3) weeks of paid vacation per year until Employee
haS been employed at Kaiser for five (5) years at which time Employee shall be
entitled to four (4) weeks of paid vacation per year.
7. RESTRICTED STOCK. Any restricted stock issued by Kaiser in lieu of
cash payments in connection with Employee's base salary or any bonus, shall be
subject to the terms and conditions of a stock restriction agreement which may
provide, among other things, for the forfeiture of such stock in phases if
Employee should voluntarily terminate his employment with Kaiser within a
certain period of time or upon Employee's termination for "cause", as defined
herein.
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8. DEATH BENEFITS. In the event of Employee's death, Kaiser shall pay
to Employee's personal representative or his estate, Employee's salary and
benefits through the end of the month in which the death occurred plus a ratable
portion of Employee's anticipated bonus for the year through the date of
Employee's death. Employee's anticipated bonus shall be measured by the bonus
awarded for the most recent fiscal year. If a bonus has been earned by Employee
for the preceding fiscal year but has not yet been paid prior to the death of
Employee, Employee's estate or personal representative shall be paid the full
amount of the earned but unpaid bonus. The proceeds from any such life
insurance shall be for the sole benefit of Employee's designated beneficiaries
or if there are no designated beneficiaries, Employee's estate. Upon an
Employee's death, all restricted stock issued to Employee for past services
(e.g. bonus stock), shall immediately vest and all restricted stock initially
issued for anticipated future services (e.g. salary stock) will vest ratably
through the date of death. Employee's estate or personal representative shall
have at least one (1) year after the date of Employee's death while in the
employment of the Company in which to exercise all vested Stock Options.
9. DISABILITY BENEFITS. In the event of the disability of Employee for
any reason, Kaiser shall continue to pay to Employee his salary and benefits
less short-term disability payments until long-term disability payments are made
to Employee but in no event shall such salary and benefit payments continue for
longer than six (6) months from the date of disability. In addition, upon
permanent disability, the vesting of all retirement and deferral compensation
plans and all outstanding options, restricted stock or other stock related
incentives shall continue to occur for a period of two (2) years after the date
of disability in the same manner as if Employee were still employed by Kaiser
during that period.
10. DEDUCTIONS. Applicable federal and state income taxes, social
security contributions (FICA), Medicare contributions, medical insurance
premiums and any other appropriate or customary deductions shall be withheld
from any compensation paid to Employee by Kaiser.
11. MATERIAL CHANGE. Upon the occurrence of a Material Change as
hereafter defined and subject to Paragraph 14 below, all options to acquire
shares of Kaiser stock, restricted stock or any other stock related incentive
previously granted to Employee shall immediately and fully vest one (1) day
prior to the Material Change, notwithstanding any other applicable vesting
schedule. Upon the occurrence of a Material Change, Employee shall be entitled,
for a period of two years, to exercise his stock options as to any of such
shares. This provision shall take precedence over any contrary provision in any
standard stock option agreement. For purposes of this Agreement, the term
Material Change shall refer to and mean the occurrence of any one of the
following events after the date of this Agreement:
a. any sale, merger or other acquisition of all or substantially
all of Kaiser with or by another entity where the shareholders of Kaiser at the
time of the sale, merger or other acquisition do not own or control at least 51%
of the voting power of such entity immediately after the time of the sale,
merger or other acquisition.
b. any acquisition of common stock by a person or "group" (as defined
in section 13(d) of the Securities Exchange Act of 1934), resulting in the
"beneficial ownership" (as
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defined in Rule 13d-3 under the Securities Exchange Act of 1934) by that person
or group of more than (i) 25% of the capital stock of Kaiser accompanied by a
change of more than 50% of the directors of Kaiser within one year after such
event or (ii) 35% of the capital stock of Kaiser with or without such change.
c. following the date of this Agreement, there has been an
aggregate of net assets with a cumulative value that exceeds the greater of (i)
$20,000,000 or (ii) 20% of the net equity of Kaiser at the time of the
distribution (whether by dividend or repurchase of stock) distributed to any one
or more Kaiser shareholders.
12. CONSTRUCTIVE TERMINATION AFTER A MATERIAL CHANGE. Upon the occurrence
of a Material Change, Employee shall be deemed to have been constructively
discharged upon the occurrence of any of the following events within six months
(6) before or eighteen (18) months after the Material Change:
a. The assignment to Employee of duties materially and adversely
inconsistent with Employee's positions immediately prior to a Material Change.
This includes a change in reporting responsibilities, authority including title,
or responsibilities; provided, however, a lateral transfer within Kaiser or to
an Affiliate shall not be deemed a constructive termination;
b. Any requirement that Employee permanently relocate to an
office more than 50 miles from the then location to which he is assigned; and
c. Any failure to provide Employee with compensation and benefits
in the aggregate on terms not materially less favorable than those enjoyed by
Employee under this Agreement immediately prior to a Material Change, or the
subsequent taking of any action that would materially reduce any of Employee's
compensation and benefits in effect at the time of the Material Change unless
such compensation and benefits are substantially equally reduced for executive
officers of Kaiser as a group (as measured by a percentage) or there is less
than a ten percent (10%) reduction in compensation or benefits.
then, at Employee's option, exercisable within ninety (90) days of the date
Employee knew, or should have known exercising reasonable care, of the
occurrence of any of the foregoing events and the expiration of any applicable
cure period, Employee shall have the right to terminate his employment by
written notice to Kaiser, and on the date of such termination Kaiser will pay
Employee the compensation and benefits described in Paragraph 13 below.
13. COMPENSATION PAYABLE UPON ACTUAL OR CONSTRUCTIVE TERMINATION RELATED
TO A MATERIAL CHANGE. In the event Employee is terminated for any reason except
for death, permanent disability or for cause, as defined below, within six (6)
months before or eighteen (18) months after a Material Change or upon the
Constructive Termination of Employee before or after a Material Change as
defined and provided in Paragraph 12 above, Kaiser shall pay to Employee the
following compensation as severance benefits in addition to the severance
compensation that Employee shall receive pursuant to Paragraph 15 regardless of
any Material Change:
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a. if the termination is effective after March 31 of any year, an
amount equal to the pro rata portion of the bonus that Employee would have been
eligible to earn for the year of termination as measured by the preceding year's
bonus;
b. an amount equal to one year's average annual bonus (cash and
stock, but not including stock options or stock grants outside of the annual
bonus) averaged over the two (2) immediately preceding years; and
c. Employee shall have the right to participate proportionately
in stock buyback or dividend distribution in proportion to shares owned together
will all other shareholders.
All amounts due Employee shall be payable in one lump sum or, at Employee's
option, over such period of time not to exceed twelve (12) months. Employee
shall have no duty to seek other employment during this period of time and there
shall be no offset for any compensation paid to Employee from any other source;
provided, however, if Employee is paid a consulting fee or receives compensation
from Kaiser or an Affiliate of Kaiser for services actually rendered during a
one (1) year period from the date of termination, unless otherwise agreed in
writing, such amount shall be offset against the payments made or due Employee.
14. POSSIBLE REDUCTION IN CERTAIN BENEFITS.
(a) Except as provided in Paragraph 14(b) below, Employee shall in no
circumstances receive "payments in the nature of compensation" from Kaiser which
would result in "excess parachute payments" (as that term is defined in Sections
280G and 4999 of the Internal Revenue Code of 1954, as amended, or any
equivalent or analogous term as shall in the future be defined in any law or
regulation governing the amount of severance compensation that may be paid
without penalty to an officer of a company upon a change in control of Kaiser).
In the event either Employee or Kaiser shall be advised in writing by his or its
counsel that Employee would receive excess parachute payments if all payments
under all contacts between Employee and Kaiser were made, such opinion shall be
confidentially disclosed to the other party. If it is mutually determined that
such payments would trigger the excess parachute payments provisions, Employee
shall receive only such compensation and benefits under his contracts with
Kaiser (not to exceed those permitted without constituting excess parachute
payments) which he, in his sole discretion, has designated in written notice to
Kaiser. Employee shall have a minimum of thirty (30) days in which to make such
written designation. In the event of a disagreement between the counsel of the
respective parties as to whether a payment would result in excess parachute
payments, such counsel shall jointly designate an independent tax counsel (whose
fees shall be paid by Kaiser) within 10 days who shall promptly make a
conclusive determination of the matter.
(b) Notwithstanding anything else to the contrary, in the event
Employee is terminated pursuant to Paragraph 13 above, Employee shall have the
right, in his sole discretion, to elect to receive all or any part of the
compensation payable to him upon termination (or which would have been due under
Section 11 but for a previous election under Section 14(a)) without regard to
whether any such amounts may constitute "excess parachute payments." If
Employee fails to provide the Company a written designation within thirty (30)
days, he shall be presumed to have elected to receive all compensation and
benefits due him
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without regard to whether any such compensation or benefits shall constitute
"excess parachute payments."
(c) Nothing in this Paragraph 14 shall be construed or deemed to be a
forfeiture of any compensation or benefits that Employee may elect not to
accelerate due to any concern about the receipt of "excess parachute payments."
15. TERMINATION WITHOUT CAUSE. In the event Kaiser elects to terminate
Employee's employment without cause (as defined below) during the term of this
Agreement, then Kaiser agrees to pay Employee an amount equal to one year's
annual base salary (based on Employees then current annual base salary) and
continue to provide and pay its portion of all of Employee's health, welfare,
insurance and other benefits for a period of twelve (12) months following the
date of termination, including Kaiser's portion of any retirement and deferred
compensation plan such as Kaiser's 401(k) plan. After such termination,
Employee shall be entitled, for a period of two years to exercise his stock
options as to any then vested, including any options vesting within one year of
termination as provided in the next sentence, notwithstanding any other
applicable provision contained in any option agreement. In addition to the
foregoing related to stock options, with respect to any restricted stock or
other stock related incentives, Employee shall continue to vest in such
securities for a period of one year following termination. If Employee is
terminated before or after a Material Change as provided in Paragraph 12,
Employee shall receive the additional severance compensation provided in
Paragraph 13.
16. TERMINATION FOR CAUSE. If Kaiser elects to terminate Employee's
employment for cause (as defined below), Employee's employment will terminate on
the date fixed for termination by Kaiser and thereafter Kaiser will not be
obligated to pay Employee any additional compensation, other than the
compensation due and owing up to the date of termination and as may be required
by law. After such termination, Employee shall be entitled, for a period of
ninety (90) days, to exercise any stock options or other stock related
incentives that are vested as of the date of termination.
17. DEFINITION OF "CAUSE." "Cause" for the purposes of this Agreement
shall mean any of the following:
a. Willful breach by Employee of any provision of this Agreement,
provided, however, if the breach is not a material breach, Kaiser shall give
Employee written notice of such breach and Employee shall have thirty (30) days
in which to cure such breach. No written notice or cure period shall be
required in the event of a willful and material breach of this Agreement by
Employee;
b. Gross negligence or dishonesty in the performance of Employee's
duties or responsibilities hereunder;
c. Engaging in conduct or activities or holding any position that
materially conflicts with the interest of, or materially interferes with
Employee's duties and responsibilities to Kaiser or its Affiliates; or
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d. Engaging in conduct which is materially detrimental to the
business of Kaiser or its Affiliates.
18. VOLUNTARY TERMINATION. Employee's employment by Kaiser may be
terminated at any time upon the parties' mutual written agreement or voluntarily
by either party upon prior written notice to the other. In the event of a
mutual written agreement, Employee's severance benefits shall be as set forth in
such agreement. In the event of Employee's voluntary termination of employment,
Kaiser shall not be obligated to pay Employee any additional compensation, other
than the compensation due and owing as through the date of termination and as
may be required by law. After such termination, Employee shall be entitled for
a period of ninety (90) days to exercise any stock options or other stock
related incentives that are vested as of the date of termination.
19. CONFIDENTIALITY.
a. EMPLOYEE'S OBLIGATIONS. Employee agrees that (a) except as
----------------------
provided in this Agreement Employee shall maintain the confidential nature of
any Proprietary Information received or acquired by him, and (b) Employee shall
use such Proprietary Information solely for the purpose of meeting his
obligations under this Agreement and not in connection with any other business
or activity. "PROPRIETARY INFORMATION" means all oral, written or recorded
information about or related to Kaiser or any of its Affiliates or its or their
technology, assets, liabilities, or business, whether acquired before or after
the date hereof, and regardless of the manner in which it is acquired, together
with any documents or other materials prepared by Employee which contain or
reflect such information. After termination of employment upon demand of
Kaiser, Employee agrees to return or destroy any and all materials containing
any Proprietary Information.
b. KAISER'S OBLIGATIONS. Kaiser agrees that it shall maintain and
--------------------
provide information regarding Employee in accordance with generally accepted
industry and business practices.
c. LIMITATIONS ON CONFIDENTIAL OBLIGATIONS AND USE RESTRICTIONS.
------------------------------------------------------------
The restrictions in Paragraph 19(a) above do not apply to information which the
Employee can demonstrate (i) is then in the public domain by acts not
attributable to such disclosing party or (ii) is hereafter received on an
unrestricted basis by such Employee from a third party source who, to Employee's
knowledge after due inquiry, is not and was not bound by confidentiality
obligations to Kaiser or any Affiliate thereof. In addition, Employee and
Kaiser are permitted to disclose any Proprietary Information as necessary in the
defense or prosecution of any legal action.
d. ACTIONS IF DISCLOSURE REQUIRED. If Employee is required by law
-------------------------------
to make any disclosure otherwise prohibited hereunder, such party shall use its
best efforts to provide the other with prompt prior notice where possible so
that (a) the other party (with the reasonable cooperation of the party required
to make such disclosure) may seek an appropriate protection order or other
remedy and/or (b) the parties can seek in good faith to agree on the appropriate
scope and approach to disclosure. If a protective order or other remedy is not
obtained, the party required to make such disclosure may furnish only that
portion of
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information protected hereby which it is legally compelled to disclose and shall
use its reasonable efforts to obtain confidential treatment for all information
so disclosed.
e. INJUNCTION. Each party agrees that remedies at law may be
-----------
inadequate to protect against breach of this Paragraph 19, and hereby agrees to
the granting of injunctive relief without proof of actual damage.
20. ARBITRATION OF DISPUTES. If Employee and Kaiser cannot resolve a
dispute (whether arising in contract or tort or any other legal theory, whether
based on federal, state or local statute or common law and regardless of the
identities of any other defendants) that in any way relates to or arises out of
this Agreement, the termination of Employee's employment relationship with
Kaiser or any Affiliate thereof, (without limiting the generality of any other
Paragraph herein), then such dispute shall be settled as follows:
a. Kaiser and Employee agree to jointly select a judicial officer
who is affiliated with the Judicial Arbitration and Mediation Service, or such
other equivalent organization as Kaiser and Employee may mutually select, to act
as the trier of fact and judicial officer in such dispute resolution;
b. If Kaiser and Employee are unable to agree upon a particular
judicial officer, then the decision shall be made by the chief executive officer
of the Judicial Arbitration and Mediation Service, after consulting with Kaiser
and Employee;
c. Kaiser and Employee shall have the same rights of discovery as if
the dispute were being resolved in the Superior Court of the State of
California. However, the judicial officer shall, on his own motion, or the
request of either Kaiser or Employee, have the authority to extend or reduce the
time periods therefor; and,
d. The judicial officer serving hereunder shall be designated as a
referee under the provisions of Title VIII, Chapter 6 of the California Code of
Civil Procedure (Sections 638 through 645. 1, inclusive). Payment for the
services of the judicial officer and the rights and procedure of appeal, and/or
other review of the decision, shall be made as provided in such sections.
The judicial officer shall have the right to grant injunctive relief,
specific performance and other equitable remedies.
21. MISCELLANEOUS.
a. ENTIRE AGREEMENT; AMENDMENTS. This Agreement states the entire
-----------------------------
understanding and agreement between the parties with respect to its subject
matter and may only be amended by a written instrument duly executed by Employee
and Kaiser.
b. ASSIGNMENT. This Agreement and the rights and obligations of
-----------
Employee may not be sold, transferred, assigned, pledged or hypothecated by
Employee.
c. NON-WAIVER. Failure to insist upon strict compliance with any
-----------
provision of this Agreement or the waiver of any specific event of non-
compliance shall not be deemed to
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be or operate as a waiver of such provision or any other provision hereof or any
other event of non-compliance.
d. BINDING EFFECT. This Agreement shall be binding upon and inure
---------------
to the benefit of Kaiser, its successors and assigns and, Employee's heirs,
successors, and legal or personal representatives.
e. HEADINGS. The headings throughout this Agreement are for
---------
convenience only and shall in no way be deemed to define, limit, or add to the
meaning of any provision of this Agreement.
f. CONTEXT. Whenever required by the context, the singular shall
--------
include the plural, the plural the singular, and one gender such other gender as
is appropriate.
g. NOTICES. All notices, request, demands, consents and other
--------
communications hereunder shall be transmitted in writing and shall be deemed to
have been duly given when hand delivered or sent by certified United States
mail, postage prepaid, with return by certified requested, addressed to the
parties as follows:
Kaiser Ventures Inc.
3633 E. Inland Empire Blvd., Suite 850
Ontario, CA 91764
Lee R. Redmond III
1501 Crestview Road
Redlands, CA 92374
h. COSTS. In any action taken to enforce the provisions of this
------
Agreement, the prevailing party shall be reimbursed all reasonable costs
incurred in such legal action including reasonable attorney's fees in such
action.
i. SEVERABILITY. If any provision or clause of this Agreement, as
-------------
applied to any party or circumstances shall be adjudged by a court to be invalid
or unenforceable, said adjudication shall in no manner effect any other
provision of this Agreement, the application of such provision to any other
circumstances or the validity or enforceability of this Agreement.
j. DEFINITION OF AFFILIATE. The term "AFFILIATE" for purposes of
------------------------
this Agreement shall mean any person or entity now or hereafter in control,
controlled by or in common control with Kaiser. It shall also include any
direct or indirect subsidiary of such Corporation and any company in which
Kaiser has more than a ten percent (10%) ownership interest.
k. ACKNOWLEDGMENT REGARDING ISO'S. Employee acknowledges that he is
------------------------------
responsible for the tax consequences of all severance compensation he may
receive and that certain actions may need to be taken by Employee within limited
periods of time to preserve the tax status of any incentive stock options.
Kaiser makes no representation or warranty that any past or future grant of a
stock option to Employee qualifies as an incentive stock option.
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L. GOVERNING LAW. This Agreement shall be governed by and construed
--------------
in accordance with the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement to be effective as of the day and year first written above not
withstanding the actual date of signature.
"EMPLOYEE"
LEE R. REDMOND III
/s/ Lee R. Redmond
--------------------------
Lee R. Redmond III
"KAISER"
KAISER VENTURES INC.
By: /s/ Lyle B. Stevenson
----------------------------
Lyle B. Stevenson, Chairman of the
Compensation and Benefits Committee
By: /s/ Gerald A. Fawcett
----------------------------
Gerald A. Fawcett, President
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SCHEDULE "A"
LEE R. REDMOND III
Senior Vice President-Real Estate
This position reports to the Chief Executive Officer and the Chief
Operating Officer of the Corporation.
RESPONSIBILITIES
This position has responsibility for all facets of the development and
redevelopment of the primary real estate assets in Fontana, and ultimately the
development for the Eagle Mountain Townsite and Lake Tamarisk. This involves
primary oversight of all interim land use activities, property management
functions, coordination with joint venture partners involved in the real estate,
and a lead role in overall development, remediation, permitting, infrastructure
development, financing and marketing.
* Participate in the investigation and decision making process in using
our land to enter new business opportunities.
* Primary responsibility for dealing with County, City and State
regulatory agencies, i.e., County Planning Department, City and
County redevelopment agencies and the DTSC.
* Assist senior management in analyzing, evaluating and pursuing
business and growth opportunities.
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EXHIBIT 10.4
------------
EMPLOYMENT AGREEMENT
OF
JAMES F. VERHEY
This EMPLOYMENT AGREEMENT is made and entered into effective June 17,
1996 by and between James F. Verhey ("EMPLOYEE") and Kaiser Ventures Inc.
("KAISER").
RECITALS
A. Employee is currently employed by Kaiser as Senior Vice President-
Finance and Chief Financial Officer.
B. Effective as of January 15, 1996, Kaiser expanded Employee's duties
and responsibilities.
C. The intent of this Agreement is to set forth the current agreement
and understanding of Employee and Kaiser with regard to Employee's continued
employment by Kaiser.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. EMPLOYMENT, POSITIONS AND DUTIES. Kaiser hereby continues the
employment of Employee upon the terms and conditions set forth in this
Agreement. Employee's positions with Kaiser shall be Senior Vice President-
Finance and Chief Financial Officer. Employee shall have the responsibilities
and duties normally incident to such positions, including, but not limited to,
those duties and responsibilities set forth in Exhibit "A" attached hereto and
incorporated herein by this reference and such other duties and responsibilities
as may be reasonably assigned to him from time-to-time by Kaiser's Chief
Operating Officer or Chief Executive Officer. Employee agrees to devote his
full business time and attention to the discharge of his duties and
responsibilities under this Agreement.
2. TERM. Employee's employment under the terms of this Agreement shall
commence as of June 17, 1996, and shall continue until terminated as provided
herein; provided, however, upon Employee's termination, Employee shall receive
the severance compensation provided herein.
3. BASE SALARY. Employee's initial annual base salary shall be One
Hundred Fifty Five Thousand Dollars ($155,000) per year. For 1996, as a part of
Employee's annual base salary the Board has elected to issue to Employee Twenty
Thousand Dollars ($20,000) of restricted stock in lieu of Twenty Thousand
Dollars ($20,000) cash compensation. In the event that any restricted stock is
issued to Employee as a part of his annual base salary, the value of such
restricted stock at the time of its grant shall be counted as base salary in the
calculation of any bonus that may be awarded to Employee. For all other
purposes, any such stock shall be treated as salary for the calculation of any
benefits based upon an employee's salary as may be required by law or any
benefit plan.
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Prior to the first meeting of the Board of Directors in any calendar
year, the Compensation and Benefits Committee of the Board will review
Employee's salary and report its recommendations for any revision to the full
Board at such meeting.
4. ANNUAL BONUS. In addition to his base salary, Employee shall be
entitled to participate in the bonus program of Kaiser applicable to senior
executives as it may be amended from time to time. The timing, size and/or
amount of any bonus awarded to Employee during the term of this Agreement will
be determined annually in accordance with the process set forth in Paragraph 3
above for the annual base salary review and based upon the bonus program
developed from time to time by the Compensation and Benefits Committee and
approved by the Board of Directors.
5. STOCK OPTIONS AND OTHER STOCK RELATED INCENTIVES. Employee shall be
eligible for the grant of incentive stock options, non-qualified stock options
and other forms of stock related incentives from time-to-time in the discretion
of the Stock Option Committee of the Board of Directors. The timing, size and
amount of any future stock options or other stock related incentives will be
determined generally in accordance with the process used to determine the award
of any bonus to Employee. The grant and exercise of the stock options and other
stock related incentives shall generally be subject to and governed by the terms
of Kaiser's 1995 Stock Plan as it may be amended or any similar or successor
option plan. However, the Stock Option Committee may award stock options,
restricted stock or other stock related incentives outside the 1995 Stock Option
Plan in its discretion. It is acknowledged that the Board is considering the
grant to Employee of a greater number of options than are usually granted in one
year with the number of options that may be granted to Employee in future years
reduced accordingly.
The parties acknowledge that as of January 15, 1996, the Stock Option
Committee awarded to Employee stock options for 25,000 shares pursuant to the
1995 Stock Option Plan in accordance with a stock option agreement of the same
date.
6. OTHER BENEFITS. Employee will be entitled to participate in all
benefits provided by Kaiser to its employees and to senior executives in
accordance with and subject to Kaiser's polices and procedures as they may exist
from time-to-time, including, but not limited to, medical and dental insurance,
life insurance, disability insurance, 401(k) savings plan, any pension plan,
deferred compensation plan, education and seminar reimbursement, car allowance,
and reimbursement of reasonable expenses for company business. These benefits
shall include life insurance for the benefit of Employee with a face amount of
not less than Employee's annual base salary, except that Kaiser may self-insure
if insurance is not available on a commercially reasonable basis. Employee
shall be entitled to three (3) weeks of paid vacation per year until Employee
haS been employed at Kaiser for five (5) years at which time Employee shall be
entitled to four (4) weeks of paid vacation per year.
7. RESTRICTED STOCK. Any restricted stock issued by Kaiser in lieu of
cash payments in connection with Employee's base salary or any bonus, shall be
subject to the terms and conditions of a stock restriction agreement which may
provide, among other things, for the forfeiture of such stock in phases if
Employee should voluntarily terminate his employment with Kaiser within a
certain period of time or upon Employee's termination for "cause", as defined
herein.
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8. DEATH BENEFITS. In the event of Employee's death, Kaiser shall pay
to Employee's personal representative or his estate, Employee's salary and
benefits through the end of the month in which the death occurred plus a ratable
portion of Employee's anticipated bonus for the year through the date of
Employee's death. Employee's anticipated bonus shall be measured by the bonus
awarded for the most recent fiscal year. If a bonus has been earned by Employee
for the preceding fiscal year but has not yet been paid prior to the death of
Employee, Employee's estate or personal representative shall be paid the full
amount of the earned but unpaid bonus. The proceeds from any such life
insurance shall be for the sole benefit of Employee's designated beneficiaries
or if there are no designated beneficiaries, Employee's estate. Upon an
Employee's death, all restricted stock issued to Employee for past services
(e.g. bonus stock), shall immediately vest and all restricted stock initially
issued for anticipated future services (e.g. salary stock) will vest ratably
through the date of death. Employee's estate or personal representative shall
have at least one (1) year after the date of Employee's death while in the
employment of the Company in which to exercise all vested Stock Options.
9. DISABILITY BENEFITS. In the event of the disability of Employee for
any reason, Kaiser shall continue to pay to Employee his salary and benefits
less short-term disability payments until long-term disability payments are made
to Employee but in no event shall such salary and benefit payments continue for
longer than six (6) months from the date of disability. In addition, upon
permanent disability, the vesting of all retirement and deferral compensation
plans and all outstanding options, restricted stock or other stock related
incentives shall continue to occur for a period of two (2) years after the date
of disability in the same manner as if Employee were still employed by Kaiser
during that period.
10. DEDUCTIONS. Applicable federal and state income taxes, social
security contributions (FICA), Medicare contributions, medical insurance
premiums and any other appropriate or customary deductions shall be withheld
from any compensation paid to Employee by Kaiser.
11. MATERIAL CHANGE. Upon the occurrence of a Material Change as
hereafter defined and subject to Paragraph 14 below, all options to acquire
shares of Kaiser stock, restricted stock or any other stock related incentive
previously granted to Employee shall immediately and fully vest one (1) day
prior to the Material Change, notwithstanding any other applicable vesting
schedule. Upon the occurrence of a Material Change, Employee shall be entitled,
for a period of two years, to exercise his stock options as to any of such
shares. This provision shall take precedence over any contrary provision in any
standard stock option agreement. For purposes of this Agreement, the term
Material Change shall refer to and mean the occurrence of any one of the
following events after the date of this Agreement:
a. any sale, merger or other acquisition of all or substantially
all of Kaiser with or by another entity where the shareholders of Kaiser at the
time of the sale, merger or other acquisition do not own or control at least 51%
of the voting power of such entity immediately after the time of the sale,
merger or other acquisition.
b. any acquisition of common stock by a person or "group" (as defined
in section 13(d) of the Securities Exchange Act of 1934), resulting in the
"beneficial ownership" (as
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defined in Rule 13d-3 under the Securities Exchange Act of 1934) by that person
or group of more than (i) 25% of the capital stock of Kaiser accompanied by a
change of more than 50% of the directors of Kaiser within one year after such
event or (ii) 35% of the capital stock of Kaiser with or without such change.
c. following the date of this Agreement, there has been an
aggregate of net assets with a cumulative value that exceeds the greater of (i)
$20,000,000 or (ii) 20% of the net equity of Kaiser at the time of the
distribution (whether by dividend or repurchase of stock) distributed to any one
or more Kaiser shareholders.
12. CONSTRUCTIVE TERMINATION AFTER A MATERIAL CHANGE. Upon the
occurrence of a Material Change, Employee shall be deemed to have been
constructively discharged upon the occurrence of any of the following events
within six months (6) before or eighteen (18) months after the Material Change:
a. The assignment to Employee of duties materially and adversely
inconsistent with Employee's positions immediately prior to a Material Change.
This includes a change in reporting responsibilities, authority including title,
or responsibilities; provided, however, a lateral transfer within Kaiser or to
an Affiliate shall not be deemed a constructive termination;
b. Any requirement that Employee permanently relocate to an
office more than 50 miles from the then location to which he is assigned; and
c. Any failure to provide Employee with compensation and benefits
in the aggregate on terms not materially less favorable than those enjoyed by
Employee under this Agreement immediately prior to a Material Change, or the
subsequent taking of any action that would materially reduce any of Employee's
compensation and benefits in effect at the time of the Material Change unless
such compensation and benefits are substantially equally reduced for executive
officers of Kaiser as a group (as measured by a percentage) or there is less
than a ten percent (10%) reduction in compensation or benefits.
then, at Employee's option, exercisable within ninety (90) days of the
date Employee knew, or should have known exercising reasonable care, of the
occurrence of any of the foregoing events and the expiration of any applicable
cure period, Employee shall have the right to terminate his employment by
written notice to Kaiser, and on the date of such termination Kaiser will pay
Employee the compensation and benefits described in Paragraph 13 below.
13. COMPENSATION PAYABLE UPON ACTUAL OR CONSTRUCTIVE TERMINATION RELATED
TO A MATERIAL CHANGE. In the event Employee is terminated for any reason except
for death, permanent disability or for cause, as defined below, within six (6)
months before or eighteen (18) months after a Material Change or upon the
Constructive Termination of Employee before or after a Material Change as
defined and provided in Paragraph 12 above, Kaiser shall pay to Employee the
following compensation as severance benefits in addition to the severance
compensation that Employee shall receive pursuant to Paragraph 15 regardless of
any Material Change:
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a. if the termination is effective after March 31 of any year, an
amount equal to the pro rata portion of the bonus that Employee would have been
eligible to earn for the year of termination as measured by the preceding year's
bonus;
b. an amount equal to one year's average annual bonus (cash and
stock, but not including stock options or stock grants outside of the annual
bonus) averaged over the two (2) immediately preceding years; and
c. Employee shall have the right to participate proportionately
in stock buyback or dividend distribution in proportion to shares owned together
will all other shareholders.
All amounts due Employee shall be payable in one lump sum or, at
Employee's option, over such period of time not to exceed twelve (12) months.
Employee shall have no duty to seek other employment during this period of time
and there shall be no offset for any compensation paid to Employee from any
other source; provided, however, if Employee is paid a consulting fee or
receives compensation from Kaiser or an Affiliate of Kaiser for services
actually rendered during a one (1) year period from the date of termination,
unless otherwise agreed in writing, such amount shall be offset against the
payments made or due Employee.
14. POSSIBLE REDUCTION IN CERTAIN BENEFITS.
(a) Except as provided in Paragraph 14(b) below, Employee shall in no
circumstances receive "payments in the nature of compensation" from Kaiser which
would result in "excess parachute payments" (as that term is defined in Sections
280G and 4999 of the Internal Revenue Code of 1954, as amended, or any
equivalent or analogous term as shall in the future be defined in any law or
regulation governing the amount of severance compensation that may be paid
without penalty to an officer of a company upon a change in control of Kaiser).
In the event either Employee or Kaiser shall be advised in writing by his or its
counsel that Employee would receive excess parachute payments if all payments
under all contacts between Employee and Kaiser were made, such opinion shall be
confidentially disclosed to the other party. If it is mutually determined that
such payments would trigger the excess parachute payments provisions, Employee
shall receive only such compensation and benefits under his contracts with
Kaiser (not to exceed those permitted without constituting excess parachute
payments) which he, in his sole discretion, has designated in written notice to
Kaiser. Employee shall have a minimum of thirty (30) days in which to make such
written designation. In the event of a disagreement between the counsel of the
respective parties as to whether a payment would result in excess parachute
payments, such counsel shall jointly designate an independent tax counsel (whose
fees shall be paid by Kaiser) within 10 days who shall promptly make a
conclusive determination of the matter.
(b) Notwithstanding anything else to the contrary, in the event
Employee is terminated pursuant to Paragraph 13 above, Employee shall have the
right, in his sole discretion, to elect to receive all or any part of the
compensation payable to him upon termination (or which would have been due under
Section 11 but for a previous election under Section 14(a)) without regard to
whether any such amounts may constitute "excess parachute payments." If
Employee fails to provide the Company a written designation within thirty (30)
days, he shall be presumed to have elected to receive all compensation and
benefits due him
5
<PAGE>
without regard to whether any such compensation or benefits shall constitute
"excess parachute payments."
(c) Nothing in this Paragraph 14 shall be construed or deemed to
be a forfeiture of any compensation or benefits that Employee may elect not to
accelerate due to any concern about the receipt of "excess parachute payments."
15. TERMINATION WITHOUT CAUSE. In the event Kaiser elects to terminate
Employee's employment without cause (as defined below) during the term of this
Agreement, then Kaiser agrees to pay Employee an amount equal to one year's
annual base salary (based on Employees then current annual base salary) and
continue to provide and pay its portion of all of Employee's health, welfare,
insurance and other benefits for a period of twelve (12) months following the
date of termination, including Kaiser's portion of any retirement and deferred
compensation plan such as Kaiser's 401(k) plan. After such termination,
Employee shall be entitled, for a period of two years to exercise his stock
options as to any then vested, including any options vesting within one year of
termination as provided in the next sentence, notwithstanding any other
applicable provision contained in any option agreement. In addition to the
foregoing related to stock options, with respect to any restricted stock or
other stock related incentives, Employee shall continue to vest in such
securities for a period of one year following termination. If Employee is
terminated before or after a Material Change as provided in Paragraph 12,
Employee shall receive the additional severance compensation provided in
Paragraph 13.
16. TERMINATION FOR CAUSE. If Kaiser elects to terminate Employee's
employment for cause (as defined below), Employee's employment will terminate on
the date fixed for termination by Kaiser and thereafter Kaiser will not be
obligated to pay Employee any additional compensation, other than the
compensation due and owing up to the date of termination and as may be required
by law. After such termination, Employee shall be entitled, for a period of
ninety (90) days, to exercise any stock options or other stock related
incentives that are vested as of the date of termination.
17. DEFINITION OF "CAUSE." "Cause" for the purposes of this Agreement
shall mean any of the following:
a. Willful breach by Employee of any provision of this Agreement,
provided, however, if the breach is not a material breach, Kaiser shall give
Employee written notice of such breach and Employee shall have thirty (30) days
in which to cure such breach. No written notice or cure period shall be
required in the event of a willful and material breach of this Agreement by
Employee;
b. Gross negligence or dishonesty in the performance of
Employee's duties or responsibilities hereunder;
c. Engaging in conduct or activities or holding any position that
materially conflicts with the interest of, or materially interferes with
Employee's duties and responsibilities to Kaiser or its Affiliates; or
6
<PAGE>
d. Engaging in conduct which is materially detrimental to the
business of Kaiser or its Affiliates.
18. VOLUNTARY TERMINATION. Employee's employment by Kaiser may be
terminated at any time upon the parties' mutual written agreement or voluntarily
by either party upon prior written notice to the other. In the event of a
mutual written agreement, Employee's severance benefits shall be as set forth in
such agreement. In the event of Employee's voluntary termination of employment,
Kaiser shall not be obligated to pay Employee any additional compensation, other
than the compensation due and owing as through the date of termination and as
may be required by law. After such termination, Employee shall be entitled for
a period of ninety (90) days to exercise any stock options or other stock
related incentives that are vested as of the date of termination.
19. CONFIDENTIALITY.
a. EMPLOYEE'S OBLIGATIONS. Employee agrees that (a) except as
----------------------
provided in this Agreement Employee shall maintain the confidential nature of
any Proprietary Information received or acquired by him, and (b) Employee shall
use such Proprietary Information solely for the purpose of meeting his
obligations under this Agreement and not in connection with any other business
or activity. "PROPRIETARY INFORMATION" means all oral, written or recorded
information about or related to Kaiser or any of its Affiliates or its or their
technology, assets, liabilities, or business, whether acquired before or after
the date hereof, and regardless of the manner in which it is acquired, together
with any documents or other materials prepared by Employee which contain or
reflect such information. After termination of employment upon demand of
Kaiser, Employee agrees to return or destroy any and all materials containing
any Proprietary Information.
b. KAISER'S OBLIGATIONS. Kaiser agrees that it shall maintain
--------------------
and provide information regarding Employee in accordance with generally accepted
industry and business practices.
c. LIMITATIONS ON CONFIDENTIAL OBLIGATIONS AND USE RESTRICTIONS.
------------------------------------------------------------
The restrictions in Paragraph 19(a) above do not apply to information which the
Employee can demonstrate (i) is then in the public domain by acts not
attributable to such disclosing party or (ii) is hereafter received on an
unrestricted basis by such Employee from a third party source who, to Employee's
knowledge after due inquiry, is not and was not bound by confidentiality
obligations to Kaiser or any Affiliate thereof. In addition, Employee and
Kaiser are permitted to disclose any Proprietary Information as necessary in the
defense or prosecution of any legal action.
d. ACTIONS IF DISCLOSURE REQUIRED. If Employee is required by
-------------------------------
law to make any disclosure otherwise prohibited hereunder, such party shall use
its best efforts to provide the other with prompt prior notice where possible so
that (a) the other party (with the reasonable cooperation of the party required
to make such disclosure) may seek an appropriate protection order or other
remedy and/or (b) the parties can seek in good faith to agree on the appropriate
scope and approach to disclosure. If a protective order or other remedy is not
obtained, the party required to make such disclosure may furnish only that
portion of
7
<PAGE>
information protected hereby which it is legally compelled to disclose and shall
use its reasonable efforts to obtain confidential treatment for all information
so disclosed.
e. INJUNCTION. Each party agrees that remedies at law may be
-----------
inadequate to protect against breach of this Paragraph 19, and hereby agrees to
the granting of injunctive relief without proof of actual damage.
20. ARBITRATION OF DISPUTES. If Employee and Kaiser cannot resolve a
dispute (whether arising in contract or tort or any other legal theory, whether
based on federal, state or local statute or common law and regardless of the
identities of any other defendants) that in any way relates to or arises out of
this Agreement, the termination of Employee's employment relationship with
Kaiser or any Affiliate thereof, (without limiting the generality of any other
Paragraph herein), then such dispute shall be settled as follows:
a. Kaiser and Employee agree to jointly select a judicial officer who
is affiliated with the Judicial Arbitration and Mediation Service, or such other
equivalent organization as Kaiser and Employee may mutually select, to act as
the trier of fact and judicial officer in such dispute resolution;
b. If Kaiser and Employee are unable to agree upon a particular
judicial officer, then the decision shall be made by the chief executive officer
of the Judicial Arbitration and Mediation Service, after consulting with Kaiser
and Employee;
c. Kaiser and Employee shall have the same rights of discovery as if
the dispute were being resolved in the Superior Court of the State of
California. However, the judicial officer shall, on his own motion, or the
request of either Kaiser or Employee, have the authority to extend or reduce the
time periods therefor; and,
d. The judicial officer serving hereunder shall be designated as a
referee under the provisions of Title VIII, Chapter 6 of the California Code of
Civil Procedure (Sections 638 through 645. 1, inclusive). Payment for the
services of the judicial officer and the rights and procedure of appeal, and/or
other review of the decision, shall be made as provided in such sections.
The judicial officer shall have the right to grant injunctive relief,
specific performance and other equitable remedies.
21. MISCELLANEOUS.
a. ENTIRE AGREEMENT; AMENDMENTS. This Agreement states the entire
-----------------------------
understanding and agreement between the parties with respect to its subject
matter and may only be amended by a written instrument duly executed by Employee
and Kaiser.
b. ASSIGNMENT. This Agreement and the rights and obligations of
----------
Employee may not be sold, transferred, assigned, pledged or hypothecated by
Employee.
c. NON-WAIVER. Failure to insist upon strict compliance with any
-----------
provision of this Agreement or the waiver of any specific event of non-
compliance shall not be deemed to
8
<PAGE>
be or operate as a waiver of such provision or any other provision hereof or any
other event of non-compliance.
d. BINDING EFFECT. This Agreement shall be binding upon and inure to the
---------------
benefit of Kaiser, its successors and assigns and, Employee's heirs, successors,
and legal or personal representatives.
e. HEADINGS. The headings throughout this Agreement are for convenience
---------
only and shall in no way be deemed to define, limit, or add to the meaning of
any provision of this Agreement.
f. CONTEXT. Whenever required by the context, the singular shall include
--------
the plural, the plural the singular, and one gender such other gender as is
appropriate.
g. NOTICES. All notices, request, demands, consents and other
--------
communications hereunder shall be transmitted in writing and shall be deemed to
have been duly given when hand delivered or sent by certified United States
mail, postage prepaid, with return by certified requested, addressed to the
parties as follows:
Kaiser Ventures Inc.
3633 E. Inland Empire Blvd., Suite 850
Ontario, CA 91764
James F. Verhey
320 S. Irving Boulevard
Los Angeles, Ca 90020
h. COSTS. In any action taken to enforce the provisions of this
------
Agreement, the prevailing party shall be reimbursed all reasonable costs
incurred in such legal action including reasonable attorney's fees in such
action.
i. SEVERABILITY. If any provision or clause of this Agreement, as
-------------
applied to any party or circumstances shall be adjudged by a court to be invalid
or unenforceable, said adjudication shall in no manner effect any other
provision of this Agreement, the application of such provision to any other
circumstances or the validity or enforceability of this Agreement.
j. DEFINITION OF AFFILIATE. The term "AFFILIATE" for purposes of
------------------------
this Agreement shall mean any person or entity now or hereafter in control,
controlled by or in common control with Kaiser. It shall also include any
direct or indirect subsidiary of such Corporation and any company in which
Kaiser has more than a ten percent (10%) ownership interest.
k. ACKNOWLEDGMENT REGARDING ISO'S. Employee acknowledges that he is
------------------------------
responsible for the tax consequences of all severance compensation he may
receive and that certain actions may need to be taken by Employee within limited
periods of time to preserve the tax status of any incentive stock options.
Kaiser makes no representation or warranty that any past or future grant of a
stock option to Employee qualifies as an incentive stock option.
9
<PAGE>
l. GOVERNING LAW. This Agreement shall be governed by and construed
--------------
in accordance with the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement to be effective as of the day and year first written above not
withstanding the actual date of signature.
"EMPLOYEE"
JAMES F. VERHEY
/s/ James F. Verhey
-----------------------------------
James F. Verhey
"KAISER"
KAISER VENTURES INC.
By: /s/ Lyle B. Stevenson
-------------------------------
Lyle B. Stevenson, Chairman of
the Compensation and Benefits
Committee
By: /s/ Gerald A. Fawcett
-------------------------------
Gerald A. Fawcett, President
10
<PAGE>
SCHEDULE "A"
JAMES F. VERHEY
SENIOR VICE PRESIDENT-FINANCE & CFO
This position will report to the Chief Operating Officer and Chief
Executive Officer.
RESPONSIBILITIES:
This position has the responsibility to manage all accounting,
finance, tax, and treasury functions for the Company and its subsidiaries; to
represent the Company with all outside entities coming under the purview of
corporate finance; to ensure all reporting requirements are met in a
satisfactory and timely manner; to assist senior management in analyzing,
evaluating and pursuing new business and growth opportunities; to manage the
Company's annual budget and capital plan processes; to manage the Company's
financial analysis and modeling function; to manage the Company's insurance
program; to direct the human resource and employee benefits functions; to manage
the corporate office; to ensure the smooth functioning of all administrative
departments, and to monitor all project development activities from the
financial perspective. These duties include the following:
* Manage all aspects of the accounting function of the Company,
employing Generally Accepted Accounting Procedures.
* Manage all financial aspects of SEC compliance.
* Oversee the treasury and controller functions. Oversee all audit
* procedures, outside auditors, and report to the Chairman of the Audit
Committee.
* Manage the Company's annual budget and capital plan processes.
* Manage the Company's financial analysis and modeling function.
* Manage all tax planning and reporting.
* Manage all debt and equity structuring.
* Assist senior management in analyzing, evaluating and pursuing
business and growth opportunities.
* Manage all financing for future growth opportunities and acquisitions.
* Manage all insurance programs.
* Manage all human resource functions to include employee benefits.
* Manage the corporate office, ensuring both smooth functioning of all
administrative departments and operations of the facility.
* Monitor all project development activities from the financial
perspective.
* Participate in major negotiations with third parties.
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 6,884,000
<SECURITIES> 0
<RECEIVABLES> 2,486,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 9,370,000
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 98,938,000
<CURRENT-LIABILITIES> 8,522,000
<BONDS> 5,222,000
0
0
<COMMON> 315,000
<OTHER-SE> 75,339,000
<TOTAL-LIABILITY-AND-EQUITY> 98,938,000
<SALES> 0
<TOTAL-REVENUES> 4,457,000
<CGS> 0
<TOTAL-COSTS> 1,586,000
<OTHER-EXPENSES> 1,878,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 250,000
<INCOME-PRETAX> 743,000
<INCOME-TAX> 322,000
<INCOME-CONTINUING> 421,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 421,000
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
