<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Revised Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Kaiser Ventures Inc.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: N/A
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies: N/A
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined): N/A
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction: $87,500,000
-------------------------------------------------------------------------
(5) Total fee paid: Yes
-------------------------------------------------------------------------
[X] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
<PAGE>
KAISER VENTURES INC.
________
NOTICE OF CONSENT SOLICITATION
January 5, 2001
TO THE STOCKHOLDERS OF KAISER VENTURES INC.:
Notice is hereby given that Kaiser Ventures Inc., a Delaware corporation,
("Kaiser" or the "Company") is soliciting written consents (the "Consents") for
the purpose approving the proposed sale (the "Sale") of Kaiser's ownership
interest in Fontana Union Water Company ("Fontana Union") to Cucamonga County
Water District ("Cucamonga") for $87.5 million. The District currently leases
substantially all of Kaiser's ownership interest in Fontana Union pursuant to a
103-year "take or pay" lease that was originally entered into 1989. In July
1995, a dispute arose between Cucamonga and Kaiser as to the amount of lease
payments due Kaiser under the terms of the lease. The dispute centered upon
whether various changes commencing in July 1995, should be reflected in the
water rate index used to calculate the amount of lease payments to be paid to
Kaiser under the terms of the lease. The Sale will also fully settle this
dispute.
Section 271 of the Delaware General Corporation Law requires that the sale
of all or substantially all of a corporation's assets must be authorized by a
resolution adopted by stockholders owning a majority of the issued and
outstanding shares of Kaiser. Kaiser has made the determination that Section
271 is probably applicable to the Sale and thus is seeking stockholder approval
of the Sale. Because of certain advantages to Kaiser of a quick resolution of
this matter, Kaiser does not intend to call a special meeting of stockholders to
approve the Sale but rather is soliciting written consents. The Sale proposal
is more fully described in the Consent Solicitation Statement accompanying this
Notice.
The Board of Directors has fixed the close of business as of December 28,
2000, as the record date for the determination of stockholders entitled to
notice of, and to give Consent to the Sale. In order to be valid, a Consent
must be received (by facsimile or in the mail) on or before the earlier of (a)
the date upon which the Company has received Consents from stockholders owning a
majority of outstanding shares or (b) 5:00 p.m., Pacific Time, on January 26,
2001 (unless extended by Kaiser) (the "Expiration Date").
Your approval is important. Please read the accompanying Consent
Solicitation Statement carefully and then complete, sign and date the enclosed
Consent Card and return it in the self-addressed prepaid envelope. Any Consent
Card which is signed and does not specifically disapprove the Sale will be
treated as approving the Sale.
If you wish to approve the Sale, Kaiser encourages you to return the
enclosed Written Consent of Stockholder ("Consent Card") immediately. The
-----------
closing is expected to occur 30 days after sufficient Consents are obtained.
Thus, prompt response from stockholders would be appreciated.
<PAGE>
A CONSENT MAY BE REVOKED BY WRITTEN NOTICE OF REVOCATION OR BY A LATER
DATED ACTION CONTAINING DIFFERENT INSTRUCTIONS RECEIVED BY KAISER AT ANY TIME
PRIOR TO THE EXPIRATION DATE.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Terry L. Cook
---------------------------------
Terry L. Cook, Secretary
Ontario, California
January 5, 2001
<PAGE>
KAISER VENTURES INC.
3633 East Inland Empire Boulevard, Suite 850
Ontario, CA 91764
(909) 483-8500
Consent Solicitation Statement
Information Concerning Solicitation
General. This Consent Solicitation Statement ("Statement") is being
furnished in connection with the solicitation by the Board of Directors of
Kaiser Ventures Inc. (the "Company" or "Kaiser") of written consents (the
"Consents") from the holders of common stock. The purpose of the Consents is to
obtain stockholder approval of the sale (the "Sale") of Kaiser's ownership
interest (the "Shares") in Fontana Union Water Company, a California mutual
water company ("Fontana Union") to Cucamonga County Water District ("Cucamonga")
as described in more detail in this Statement. A copy of the Stock Purchase
Agreement and Joint Escrow Instructions (the "Sale Agreement") is attached as
Attachment "A" to this Statement and all discussions of that agreement are
==============
qualified by reference to the full text.
Under Kaiser's Bylaws and pursuant to applicable Delaware law, any action
which may be taken at any annual or special meeting of the stockholders of
Kaiser may be taken without meeting (except for the election of directors),
without prior notice and without a vote, if a consent or consents in writing,
setting forth the action, is signed by holders of outstanding stock having not
less than the minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereon were
present and voted. Because of the potential advantage to Kaiser in closing the
Sale quickly, the proposal to approve the Sale is being submitted for action by
written consent rather than at a meeting.
This Statement and the accompanying combined Written Consent of Stockholder
("Consent Card") are first being sent or given to stockholders on or about
January 5, 2001.
Receipt of Consents. In order to be valid, Consents must be received (by
facsimile or by mail) on or before the earlier of (a) the date upon which the
Company has received Consents from stockholders owning a majority of a majority
of the outstanding shares or (b) 5:00 p.m., Pacific Time, on January 26, 2001
(unless extended by Kaiser) (the "Expiration Date"). The Company reserves the
right to extend the solicitation of written consents made hereby. Any election
to extend the consent solicitation period will be made by Kaiser by news release
or other similar public announcement. The Sale will be deemed to have been
approved by Kaiser on the Expiration Date if Consents which have not been
previously revoked represent the requisite number of shares to approve the Sale
have been filed with the Company. The closing will occur 30 days after
sufficient Consents are obtained. Certain shareholders may be able to return
their completed proxy card by facsimile. If you desire to send in your completed
Consent Card by facsimile, please contact Terry L. Cook at Kaiser at the phone
number listed above.
If a stockholder holds Kaiser stock in "street name" (i.e., shares held by
a broker or nominee) and the stockholder fails to instruct his or her broker as
to the giving of a Consent, the stockholder's broker or nominee will not be
permitted, pursuant to applicable stock exchange rules, to execute a
1
<PAGE>
Consent with respect to the Sale. "Withheld" votes and broker "non-votes" have
the same effect as votes against the Sale.
Revocation of Consent. A Consent may be revoked at any time prior to the
time that Consents for the number of shares required to approve the Sale have
been received by Kaiser or its agent, but a stockholder may not do so
thereafter. To change a Consent, you will need to complete and mail or facsimile
a substitute Consent Card AND a letter stating that you are revoking your
previous vote. To withdraw a Consent, you will need to mail or facsimile a
letter stating that you have revoked your previous vote. Any change or
withdrawal received after Kaiser has received the consents required will not be
effective for any reason.
Expenses of Solicitation. Kaiser will bear the cost of soliciting Consents.
Consents may be solicited by mail, telephone, the Internet, facsimile, or in
person. Directors, officers, and other employees of Kaiser may, without
compensation, other than regular remuneration, solicit Consents. Kaiser will
request persons holding stock in their names for others, or in the names of
nominees for others, to obtain instructions from the beneficial owner and Kaiser
will reimburse them for their reasonable out-of-pocket expenses in obtaining
instructions regarding giving Consent.
Record Date, Requirement for Shareholder Approval, and Required Consent
The record date for stockholders entitled to approve the transaction by
Consent is December 28, 2000. As of the close of business on December 28, 2000
Kaiser had outstanding 6,385,781 shares of common stock, $.03 par value,
Kaiser's only outstanding voting securities. Each outstanding share is entitled
to one vote on the Sale. Although an additional 136,919 shares of common stock
are deemed outstanding for financial reporting purposes, they have not yet been
distributed to the Class 4A unsecured creditors of the Kaiser Steel Corporation
bankruptcy estate and accordingly may not be voted by Consent.
Section 271 of the Delaware General Corporation Law requires that the sale
of all or substantially all of a corporation's assets must be authorized by a
resolution adopted by stockholders owning a majority of the issued and
outstanding shares. Section 271 and applicable case law are not absolutely clear
as to whether the Sale constitutes a Sale of substantially all of Kaiser's
assets. However, Kaiser has determined that Section 271 is probably applicable
to the Sale due the size of the transaction relative to the value of its
remaining assets and in recognition that the Fontana Union shares and the
revenues generated by the lease of such ownership interest are key assets to
Kaiser. Thus, Kaiser is seeking stockholder approval of the Sale. The
affirmative consent of a majority of the outstanding shares will be necessary to
approve the Sale.
A stockholder may only vote by Consent using the Consent Card provided, and
only during the solicitation period which ends on the Expiration Date (unless
extended by Kaiser). "Withheld" votes and broker "non-votes" have the same
effect as votes against the Sale. If Kaiser receives a Consent Card signed but
unmarked, it will be counted as a vote FOR the Sale.
All questions as to the form of all documents and the validity (including
the time of receipt) of all approvals will be determined by Kaiser and such
determinations will be final and binding. Kaiser reserves the absolute right to
waive any defects or irregularities in any approval of the Sale. In addition,
Kaiser shall be under no duty to give notification of any defects or
irregularities in any approval of the Sale or preparation of the Consent Card,
and shall not have any liability for failing to give such notification.
2
<PAGE>
Approval of the Sale
This Statement contains forward-looking statements, which involve risks and
uncertainties. Kaiser's actual results may differ significantly from the results
discussed in the forward-looking statements. Statements of Kaiser's or
management's beliefs or expectations and which are not historical facts or which
apply prospectively are forward-looking statements. Forward-looking statements
are inherently subject to uncertainties and other factors, which could cause
actual results to differ materially from the results stated or implied by such
forward-looking statements. Additional information concerning factors that could
cause actual results to differ materially from those in the forward-looking
statements is contained from time to time in Kaiser's filings with the
Securities and Exchange Commission, including, but not limited to, Kaiser's 10-K
Report and subsequent 10-Q Reports. Copies of those are available from Kaiser
and the Securities and Exchange Commission.
Background of the Sale
Background. Kaiser currently owns 53.71% of Fontana Union, which was a
primary local source of water for Kaiser Steel Corporation's former steel making
operations. (Fontana Water Resources, Inc., Kaiser's wholly owned subsidiary,
actually owned the Shares until its merger into Kaiser effective December 27,
2000, and thus, all references to Kaiser shall include FWR unless expressly
otherwise provided.) In March 2000, Kaiser increased its ownership interest in
Fontana Union from 50.88% to 53.71% by the acquisition of 424.4 shares of
Fontana Union at a price of approximately $1,540 per share.
Fontana Union owns water rights to produce water from four distinct surface
and subsurface sources of water near Fontana, California, including: (i)
adjudicated surface and streambed flow rights from the Lytle Creek area of the
San Gabriel Mountains; (ii) adjudicated rights to the Chino Basin subsurface
aquifer; (iii) adjudicated rights to the Colton/Rialto Basin subsurface aquifer;
and (iv) unadjudicated rights to a subsurface aquifer accessed by a well at the
base of Lytle Creek (Well No. 22).
Kaiser's ownership of the Shares entitles Kaiser to receive its
proportionate share of Fontana Union's water, which has historically been
approximately 34,000 acre feet per year (an acre foot equals approximately
325,000 gallons). In addition, if any other shareholders of Fontana Union do not
take their shares of water in any year, that unclaimed water is divided pro rata
among those shareholders that wish it. In recent years, Kaiser's pro rata
interest in unclaimed water has increased its effective overall share to
currently approximately 57.18%. Over time, Kaiser expects this supplemental
source of water to be reduced or eliminated as minority shareholders who do not
currently utilize all their water begin to use, sell, or lease their water
interests.
Cucamonga Lease. In 1989, Kaiser leased the Shares it then owned to
Cucamonga, a local water district. A more definitive take-or-pay lease was
entered into with Cucamonga in July 1993 (the "Cucamonga Lease") with its term
ending on June 30, 2092. Cucamonga's offices are located at 10440 Ashford
Street, Rancho Cucamonga, California 91729. Cucamonga was organized in 1955,
under the provisions of the California County District law, Division 12 of the
California Water Code. Cucamonga is an independent public corporation not
affiliated or controlled in any way by San Bernardino County or any other
county. Cucamonga's approximately 50 square mile service area lies in western
San Bernardino County, bounded on the west by the City of Upland, on the south
by the City of Ontario, on the east by the City of Fontana, and on the north by
the foothills of the San Gabriel Mountain. The Cucamonga service area includes
the City of Rancho Cucamonga, portions of the cities of Fontana, Upland, and
Ontario as well as certain
3
<PAGE>
unincorporated areas of San Bernardino County. Cucamonga provides water and
sewer services to approximately 140,000 citizens.
Under the terms of the Cucamonga Lease Cucamonga is entitled to receive
Kaiser's share of water from Fontana Union (the Shares purchased in 2000 are not
directly included in the Cucamonga Lease). Currently, Cucamonga pays Kaiser
based upon fixed quantities of water at a rate equal to 68.13% of the
Metropolitan Water District of Southern California's (the "MWD") charge for
untreated, non-interruptible water as available through Chino Basin Municipal
Water District. Under the Cucamonga Lease, Kaiser and Cucamonga agreed that the
gross annual quantity of Fontana Union water from all sources (except the annual
Chino Basin agricultural pool transfer, for which Kaiser accrues revenues for
its share in the 4th quarter), is approximately 34,000 acre feet or
approximately 8,500 acre feet per quarter. Thus, except in certain limited
situations, Cucamonga pays for its share of the agreed upon annual quantities
regardless of fluctuations in actual water flows and actual receipt and use of
water. Fixing the average quantities of water stabilized Kaiser's revenues and
Cucamonga's payments. During each of 1999 and 1998, the Cucamonga Lease
generated $5.2 million in revenues to Kaiser. The Cucamonga Lease is expected to
generate approximately $5.7 million in revenues during 2000. The increase in
revenues in 2000 is a one time event primarily attributable to Fontana Union
receiving twice the usual annual agricultural pool water transfer.
There are, however, limited circumstances in which the agreed upon
quantities of water paid for under the Cucamonga Lease may be adjusted. As an
example, the agreed upon quantity of water from one source of water, the
Colton/Rialto wells, can be temporarily reduced if the average water level in
certain basin index wells drops below a specified level. This occurred in 1996,
resulting in a temporary decrease in production. However, in the fourth quarter
of 1996, the wells again began pumping at their historical levels because the
water level in the index wells had sufficiently increased.
Another source of water leased by Kaiser to Cucamonga pursuant to the
Cucamonga Lease is Kaiser's share of water from the "Chino Basin agriculture
pool transfers". These transfers represent that portion of water allocated to
agricultural users in the Chino Basin which is not used by those agricultural
users in a particular water year. Kaiser (through Fontana Union) is entitled to
a share of this surplus water, which Cucamonga pays for under the Cucamonga
Lease. The historical average of annual agricultural pool transfers to Fontana
Union has fluctuated in recent years. For the 1999/2000 water year, the
agricultural transfer was 7,371.770 acre feet. The agricultural pool transfer
for 1999/2000 is roughly double the usual yearly transfer as a result of an
agreement reached earlier in 2000 among many of the water users in the Chino
Basin. Pursuant to the same agreement, the agricultural pool transfers to
Fontana Union will be approximately 3,800 acre feet per year for the duration of
the agreement.
Kaiser's future lease revenue increases are primarily dependent upon any
adjustments in the MWD water rates and other fees upon which the lease rate is
calculated. The MWD rate established for untreated, non-interruptible water is
based on a number of factors, including the MWD need for funds to finance
capital improvements and to cover its fixed operational and overhead costs. The
MWD rate increases are often cyclical in nature depending upon such factors as
water availability, consumption, capital projects, and available reserves. On
July 1, 1995, MWD implemented a new rate structure which is the subject of a
dispute as described in more detail below and it recently approved another major
rate restructuring. On December 12, 2000, MWD approved a proposal that
completely redefined its approach for pricing of water, dividing rates into at
least two tiers of water service (Tier 1 for long term contracts and Tier 2 for
"spot-market" water), and
4
<PAGE>
unbundling rates with the full-service rate for water being divided into
separate services and rates for supply, conveyance, distribution, and power. It
is currently anticipated that the new MWD rate structure will become effective
in 2002. Under the approved MWD proposal, water rates for Tier 1 water could be
reduced by approximately 10% over the next several years. However, neither past
rate increases nor the newly adopted proposal are necessarily indicative of
future rate decisions by MWD.
As a result of MWD's December 2000 adoption of a completely revised rate
restructuring, Cucamonga might argue that Kaiser's revenue under the Cucamonga
Lease should drop by a similar amount, or about $500,000 per year based on
current conditions. However, at the time the Cucamonga Lease was entered into,
Cucamonga and Kaiser did not foresee the types of major rate restructuring being
undertaken by MWD. Thus, it is likely that Cucamonga and Kaiser would again be
in a dispute as to the proper means of calculating the payments due Kaiser under
the Cucamonga Lease.
The Dispute. As a result of the July 1995 changes in the MWD rates, Kaiser
asserted that all the changed rates and items implemented by MWD which must be
paid in order to receive untreated, non-interruptible water from MWD, must also
be included in the calculation of the MWD rate payable under the terms of the
Cucamonga Lease. Cucamonga disputed Kaiser's interpretation of the Cucamonga
Lease, and contended that the appropriate rate increase in 1995 was 2.7% and
Kaiser maintained that the full rate increase for that year was approximately
7.9%. The same dispute (the "Dispute"), i.e., the appropriate increase in the
MWD rate which is used to calculate the payments due Kaiser under the terms of
the Cucamonga Lease, affects the years 1996 through 2000 as well as future years
until settlement or resolution of the Dispute is obtained. After Kaiser and
Cucamonga were unable to resolve the Dispute, in 1996 Kaiser instituted
litigation against Cucamonga in San Bernardino County Superior Court.
A trial concerning the Dispute was held in March 1998. The Court concluded
that the MWD Rate as defined in the Cucamonga Lease was discontinued effective
July 1, 1995, as a result of the rate restructuring implemented by MWD.
Therefore, the terms of the Cucamonga Lease required the parties to seek to
negotiate in good faith on a new substitute rate. If the parties were unable to
agree on a substitute rate, the matter was to be resolved by reference, a form
of private trial similar to arbitration. Before and after the trial, there were
attempts to resolve the Dispute and negotiate a new substitute rate. However,
since the parties were not able to do so, a reference proceeding was commenced
during the week of February 28, 2000. After the conclusion of all the testimony
in the proceeding, the referee asked for further briefing and a final oral
argument was held on May 15, 2000.
Subsequent to the final oral argument, Cucamonga and Kaiser renewed their
efforts to settle the Dispute. They agreed that the judge in the reference
proceeding would not issue her decision until such time as the parties' renewed
settlement discussions terminated. The parties have not been able to negotiate
a substitute rate under the Cucamonga Lease, in part because of complications
introduced by MWD's proposal to radically restructure its water rates again as
discussed in more detail above, which restructuring was approved by MWD on
December 12, 2000. As a result, the parties focused their efforts on a purchase
by Cucamonga of the Shares, thus effectively terminating the Cucamonga Lease and
resolving the Dispute. These discussions culminated in agreement on the Sale.
Additional Cucamonga Lease Information. Pursuant to the Cucamonga Lease,
if any of the Fontana Union water sources become sufficiently contaminated as to
be unusable after
5
<PAGE>
treatment and/or blending, Cucamonga is not obligated to pay for that water.
Kaiser is aware of only one limited source of water that has been affected by
contamination. Two water wells owned by San Gabriel Water Company but pumping
Fontana Union water have been closed because of contamination apparently
originating from the Mid-Valley Sanitary Landfill owned by San Bernardino
County. During the second quarter of 2000, Kaiser entered into a settlement
agreement with San Bernardino County resolving the water contamination and
quantity issues.
The Cucamonga Lease also provides that Kaiser and Cucamonga will share the
costs of defending any third party challenge to Fontana Union's water rights.
Kaiser bears the risk of loss if there is a successful challenge to Fontana
Union's water rights. It also grants Cucamonga an option to purchase the leased
Fontana Union shares in 2042, at a price generally based upon a 15 times the
then current annual lease payment, as well as the right to purchase the Shares
for $1.00 in 2092.
Cucamonga has, to date, paid its obligations under the Cucamonga Lease on a
timely basis, but at a level that reflects the lower rates that Kaiser has been
disputing in the Dispute. Although Kaiser bills Cucamonga for the full amount
it asserts it is entitled to receive under the Cucamonga Lease, Kaiser has
elected to report water revenues in the amounts Cucamonga is currently paying.
Consequently, if the Sale is not consummated and the Dispute continues, any
decision would not affect Kaiser's historical financial statements. However, if
Kaiser's complete position in the Dispute is ultimately successful, the payments
otherwise due Kaiser under the Cucamonga Lease would increase by approximately
12.2% over the rate currently being paid by Cucamonga. The total amount in
dispute currently represents less than 5% of the purchase price. However, as
discussed in more detail above, MWD is again considering another major rate
restructuring which could lead to additional disputes between Kaiser and
Cucamonga. In addition, the outcome of the Dispute might serve as a precedent
in those disputes.
The leased Fontana Union shares and the Cucamonga Lease are currently
pledged as collateral for Kaiser's revolving-to-term credit facility with Union
Bank. Kaiser will be terminating its revolving-to-term credit facility with
Union Bank in connection with the Sale. There is no outstanding loan balance
due under the revolving-to-term credit facility.
Commission Agreement. Kaiser employed a consulting organization in its
original search for a lessee of its Fontana Union shares. The consulting
agreement calls for a commission payment of 5.42% of each payment received by
Kaiser. A commission payment, net of various expenses (including previous
litigation expenses), is expected to be due on the sale of the Fontana Union
stock that is currently leased to Cucamonga. A commission payment will not be
payable on the shares purchased in 2000.
Terms of the Sale
The following description of the Sale Agreement, the terms of the Sale, and
the settlement between Cucamonga and Kaiser is only a summary and does not
purport to be complete. The description is qualified in its entirety by
reference to the complete text of the Sales Agreement attached to this Statement
as Attachment "A".
==============
Effective November 14, 2000, Kaiser entered into the Sale Agreement
pursuant to which Kaiser agreed to sell its ownership interest in Fontana Union
consisting of 8,057.025 shares (the "Shares"). Under the Sale, Cucamonga will
pay Kaiser $10,860.088 per Fontana Union share, or an aggregate of $87.5 million
dollars, in cash. The Sale Agreement also provides that Kaiser will
6
<PAGE>
receive approximately $2.5 million in payments under the Cucamonga Lease through
the period ending December 31, 2000.
The closing is scheduled to occur 30 days after sufficient Consents are
obtained. The Sale has already been approved by the Board of Directors of
Kaiser and by the Board of Directors of Cucamonga.
Under the terms of the Sale Agreement, there are a number of contingencies
to the Sale, including, but not limited to, the following (any or all of which
may be waived by the parties):
(1) approval of the Sale by Kaiser's stockholders;
(2) Cucamonga securing financing for the Sale;
(3) Kaiser delivering the Shares free and clear of all liens or other
encumbrances;
(4) the absence of litigation that would be adverse to or enjoin the Sale
and the other transactions contemplated by the Sale Agreement; and
(5) the completion of the Sale on or before February 28, 2001, unless
Cucamonga and Kaiser otherwise agree.
Assuming the Sale is consummated, the Dispute, including the related
reference proceeding, would be dismissed with prejudice. Each party would be
responsible for their respective attorneys' fees and there would be no
adjustment to the amounts previously paid by Cucamonga to Kaiser. In addition,
as a part of the settlement, each party would release the other from any and all
claims, including any unknown claims.
Approval by the Stockholders of the Sale does not mean that the Sale will
close. Subject to the contractual rights of Cucamonga, the Board of Directors
of Kaiser will have the right to abandon the Sale. Certain provisions of the
Sale Agreement could be modified by the Board of Directors without stockholder
consent, provided that the changes are not sufficient to require a new approval
under Section 271 of the Delaware General Corporation Law.
Recommendation of Kaiser's Board of Directors
Kaiser's Board of Directors has unanimously approved the Sale as being in
the best interests of Kaiser, and recommends that Kaiser's stockholders approve
the Sale. In reaching its conclusions and recommendations, the Board consulted
with its financial and legal advisors, and management of Kaiser, and considered
the following factors, among others:
. the terms and conditions of the Sale, including the cash nature of the
consideration and a purchase price of approximately 17 times current
revenues from the Cucamonga Lease. Kaiser cannot predict how the
purchase price relates to revenues of the Cucamonga Lease over its
possible remaining 92 year life, since, as discussed above, those
rates would depend on the outcome of the Dispute and future changes in
applicable water rates, as well as other risks inherent in the
Cucamonga Lease such as legal challenges to the water rights and the
impacts of possible future contamination. In the past fifteen years,
water rate increases have ranged from 0% to 21.17% in a particular
year;
7
<PAGE>
. the Board's familiarity with, and review of, prior offers relating to
the Fontana Union ownership interest. As part of the process
undertaken in 1998 -1999 with the assistance of Kaiser's financial
advisor, Merrill Lynch & Co., Kaiser solicited offers for its interest
in Fontana Union as well as its other assets. More recently, Kaiser
has received other possible offers involving its Fontana Union stock.
Offers have ranged from $50 million in cash or cash and securities to
$85 million in some combination of cash and securities, and was in
each case subject to due diligence and in some cases subject to
resolution of the Dispute in favor of Kaiser. None of these tentative
offers was deemed acceptable by the Board;
. the Board's familiarity with, and review of, the Shares, the maturity
of the asset and prospects for increased revenues under the terms of
the Cucamonga Lease as discussed above;
. the Board's familiarity with, and review of, the private water
industry in Southern California. As discussed above, the proposals of
the MWD suggest that rates may not increase significantly over the
next couple of years. However, water rates are not predictable, and
over the long term could increase significantly. Despite this, the
Board determined that now is an opportune time to maximize stockholder
value;
. the costs and uncertainty associated with the Dispute as discussed
above, although no specific adjustment in the price was made in the
price based on this factor;
. the uncertainty associated with the rate restructuring proposals
currently being considered by MWD and that could occur in the future;
. the likelihood of additional disputes with Cucamonga over the
remaining 92 years of the Cucamonga Lease as discussed above;
. the goals and potential plans concerning Kaiser and its other assets
and projects as discussed in more detail below; and
. the ability to maximize the use of Kaiser's net operating losses as
discussed in more detail below.
The foregoing summary and discussion of the information and factors
considered by Kaiser's Board is not intended to list every point considered by
the Board. In view of the wide variety of information and points considered,
Kaiser's Board did not find it practical to, and did not, assign any relative
weight or importance of the factors listed above, and individual directors may
have given different weight to different factors.
Assuming the Sale is completed, Kaiser will evaluate and determine the best
tax efficient manner to deliver maximum value to stockholders. These
alternatives, include, but are not limited to, distributions pursuant to a plan
of reorganization or dissolution, dividends, or stock repurchases. Kaiser will
also continue to implement the following previously announced goals and plans:
(1) completing the previously announced and pending sale of the Eagle Mountain
landfill project to the Los Angles Sanitation District and to favorably resolve
outstanding contingencies to the sale, including the outstanding litigation
concerning a completed land exchange; (2) continue to eliminate, minimize,
and/or reduce the risk of the outstanding liabilities Kaiser may have, including
8
<PAGE>
environmental liabilities; (3) continue to seek to sell miscellaneous assets,
including previously announced and currently pending transactions totaling
approximately $3.75 million; (4) continue to hold the Company's principal
remaining asset, Kaiser's ownership interest in the West Valley MRF, while
continuing to evaluate market opportunities to allow maximum value to be
realized; and (5) further reduce its general and administrative expenses by,
among other things, eliminating positions and/or negotiating reduced time
commitments for senior company personnel. If the Sale is completed, Kaiser
expects that these goals will be accelerated and that the Board will make a
final determination and recommendation regarding the Company and its future.
However, these goals and the Company's future will be impacted in particular by
whether the Sale is approved and completed and if the pending sale of the Eagle
Mountain landfill projects is completed. If the Sale is not completed, the
Company will implement a plan to maximize the cash flow from the Cucamonga Lease
and from the Company's ownership interest in the West Valley MRF while otherwise
implementing the plans and goals outlined.
No Appraisal Rights
If stockholders owning a majority of Kaiser's stock approve the Sale, that
approval will bind all stockholders. The Delaware General Corporation Law,
under which Kaiser is governed for this purpose, does not grant appraisal or
similar rights to those stockholders that dissent from the approval. Thus, even
if a stockholder dissents from the Sale, the stockholder will not have the right
to have his or her shares appraised or to have the value of his or her shares
paid to him or her.
Failure to Approve the Sale
If the stockholders fail to approve the Sale, Kaiser will continue to own
its ownership interest in Fontana Union for an indefinite period of time, and
will continue to receive lease payments under the Cucamonga Lease unless Kaiser
determines to sell it in the future. In addition, unless another means of
settling the Dispute is negotiated, the Dispute will continue.
Federal Income Tax Consequences and Utilization of Net Operating Losses
There are no direct federal income tax consequences to Kaiser's
stockholders arising out of the Sale. However, Kaiser will have a taxable gain
on the Sale equal to the difference between Kaiser's tax basis in the Shares of
approximately $500,000 and the purchase price of $87.5 million net of all
expenses such as commission costs and closing costs. However, because of
Kaiser's existing net operating losses, it is anticipated that Kaiser will be
able to reduce the approximately $82 million of taxable gain from the Sale by
its available net operating losses. As of December 31, 1999, Kaiser had a net
operating loss of approximately $35.5 million for regular tax purposes and $14.7
million for alternative minimum tax purposes. These amounts are not anticipated
to materially change as of December 31, 2000. Kaiser's current net operating
losses begin to expire in 2006. Kaiser does not have any California net
operating losses.
The amount and final utilization of Kaiser's net operating losses will be
dependent on future events. As previously announced, Kaiser presently has a
number of other currently pending sale transactions totaling approximately $3.75
million, that, depending on whether and when they close, will also utilize
Kaiser's net operating losses. However, the anticipated sale of the Eagle
Mountain landfill project for an anticipated ultimate sale price of $41 million
(Kaiser has an 80% ownership interest) may actually increase Kaiser's net
operating losses but the amount and timing of any increase in net operating
losses is not currently known.
9
<PAGE>
If the Sale is not completed, Kaiser may not be able to utilize all of its
existing or future net operating losses before such losses begin to expire.
Security Ownership of Principal Stockholders
The following table sets forth, based upon the latest available filings
with the Securities and Exchange Corporation (generally September 30, 2000), the
number of shares of Kaiser's common stock owned by each person known by Kaiser
to own of record or beneficially five percent (5%) or more of such stock. The
table does not include the 136,919 shares reserved but not yet distributed to
the Class 4A unsecured creditors of KSC, since such shares are not yet deemed
outstanding or eligible to consent to the Sale.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
10
<PAGE>
<TABLE>
<CAPTION>
Number of Percent of
Common Issued and
Shares Warrants Outstanding
Beneficially Exercisable Total Shares Based
Name and Address of Owned Without Within 60-Days/1/ of Stock on Total
Beneficial Owner Warrants December 28, 2000 Interest/1/ Stock Interest/2/
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Dimensional Fund Advisors, Inc./3/ 776,500 --- 76,500 12.3%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
New Kaiser Voluntary Employees' 656,987 460,000 1,116,987 16.6%
Beneficiary Association Trust/4/
(VEBA)
9810 Sierra Avenue, Suite A
Fontana, CA 92335
Willow Creek Capital Management/5/ 632,300 --- 632,300 10.1%
17 East Sir Francis Drake Blvd., Suite 100
Larkspur, CA 94939
Ashford Capital Management, Inc./6/ 413,308 --- 413,308 6.6%
3801 Kennett Pike, Bldg. B-107
Wilmington, DE 19807-2309
Arnold & S. Bleichroeder Advisers, Inc./7/ 450,000 --- 450,000 7.2%
1345 Avenue of the Americas, 44th Floor
New York, New York 10105
Pension Benefit Guaranty Corporation/8/ 407,415 285,260 692,675 10.5%
(PBGC)
Pacholder Associates, Inc.
8044 Montgomery Road, Suite 382
Cincinnati, OH 45236
</TABLE>
(1) This column includes warrants exercisable within 60 days of December 28,
2000, at $17.00 per share in the following amounts: VEBA - 460,000 shares;
and PBGC - 285,260. The warrants expire September 30, 2004.
(2) Does not include 136,919 shares deemed outstanding for financial reporting
purposes, but not yet distributed to the Class 4A unsecured creditors of
the Kaiser Steel Corporation bankruptcy estate. The percentage for each
stockholder was determined as if all the warrants specified in Note (1)
above held by the stockholder, if any, had been exercised by that
particular stockholder.
(3) Based on a Schedule 13F, Dimensional Fund Advisors Inc. ("Dimensional"), a
registered investment advisor, is deemed to have beneficial ownership of
776,500 shares of Kaiser Ventures Inc. stock as of September 30, 2000, all
of which shares are held in portfolios of DFA Investment Dimensions Group
Inc., a registered open-end investment company, or in series of the DFA
Investment Trust company, a Delaware business trust, or the DFA Group Trust
and DFA Participation Group Trust, investment vehicles for qualified
employee benefit plans, all of which Dimensional Fund Advisors Inc. serves
as investment manager. Dimensional disclaims beneficial ownership of all
such shares.
(4) VEBA received its shares in Kaiser as a creditor of the Kaiser Steel
Corporation bankruptcy. VEBA acquired warrants in connection with the
purchase by Kaiser of Company stock owned by VEBA. VEBA's shares in Kaiser
are held in trust by Wells Fargo & Company.
(5) Willow Creek Capital Management is a registered investment advisor whose
clients have the right to receive or the power to direct the receipt of
dividends from, or the proceeds from the sale of, the various securities in
which their assets are invested, including Company stock. Depending upon
Willow Creek's agreement with each advisory client, the client may have no
right or a shared right to direct the voting of Company stock.
(6) Ashford Capital Management, Inc. is an institutional investment manager.
(7) Arnold & S. Bleichroeder Advisers, Inc. is an institutional investment
manager.
(8) PBGC received its shares in Kaiser as a creditor of the Kaiser Steel
Corporation bankruptcy. PBGC acquired warrants in connection with the
purchase by Kaiser of Company stock owned by PBGC. Pacholder Associates,
Inc. has a contract with the PBGC pursuant to which it has full and
complete investment discretion with respect to the stock owned by PBGC,
including the power to vote such shares.
11
<PAGE>
SECURITY OWNERSHIP OF EXECUTIVE OFFICERS AND DIRECTORS
This table below reflects the number of common shares beneficially owned by
the principal Executive Officers of Kaiser, the directors and all directors and
other officers as a group as of December 28, 2000, as well as the number of
options exercisable within 60 days of December 28, 2000.
<TABLE>
<CAPTION>
Percent of
Issued and
Shares Shares Underlying Outstanding
Beneficially Options Exercisable Total Shares Based on
Owned, Without Within 60-Days of Stock Total Stock
Officers and Directors Options December 28, 2000/1/ Interest/1/ Interest/1/
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Richard E. Stoddard, CEO, President &
Chairman 77,723 86,100 163,823 2.5%
Gerald A. Fawcett, Vice Chairman/2/ 54,285 123,333 177,618 2.7%
James F. Verhey, Executive Vice
President - Finance & CFO 17,035 70,000 87,035 1.3%
Terry L. Cook, Executive Vice
President - Administration, General
Counsel & Corporate Secretary 17,966 95,000 113,966 1.7%
Anthony Silva, Vice President Resource
Development & Environmental Services 4,785 37,000 41,785 *
Paul E. Shampay, Vice President-
Finance --- 22,500 22,500 *
Ronald E. Bitonti, Director/3/ 4,146 7,500 11,646 *
Todd G. Cole, Director 6,500 14,000 20,500 *
Reynold C. MacDonald, Director 13,000 7,500 20,500 *
Charles E. Packard, Director 1,500 14,000 15,500 *
Marshall F. Wallach, Director 7,600 14,000 21,600 *
All officers and directors as a group
(11 persons)/1/ 204,540 490,933 696,473 10.8%
</TABLE>
_________________
* Less than one percent.
(1) Does not include 136,919 shares deemed outstanding for financial reporting
purposes, but not yet distributed to Class A unsecured creditors of the
Kaiser Steel Corporation bankruptcy estate. Percentage was determined as if
all the options listed in the column "Shares Underlying Options Exercisable
Within 60-Days of December 28, 2000," were exercised by the applicable
individual.
(2) Mr. Fawcett retired as President and Chief Operating Officer of Kaiser
effective January 15, 1998.
(3) Mr. Bitonti is Chairman of the VEBA Board of Trustees. He disclaims any
beneficial ownership interest in the shares beneficially owned by VEBA as
set forth in the prior table, and such shares are not included in this
table.
12
<PAGE>
Available Information about Kaiser
This Statement does not purport to be a complete description of all matters
relating to the Sale and Kaiser. Kaiser is subject to the reporting requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and is
required to file reports and other information with the Secretes and Exchange
Commission ("SEC"), 450 Fifth Street N.W., Washington, D.C. 20549. For
additional information concerning Kaiser and its ownership interest in Fontana
Union, please refer to the reports of Kaiser filed with the SEC, copies of which
may be examined without charge at, or obtained upon payment of prescribed fees
from, the Public Reference Section of the SEC at the following facilities
located at: Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C., 7 World
Trade Center, 13th Floor, New York, New York 10048, and 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. The SEC maintains a web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the SEC at http:\\www.sec.gov. The
website contains information about certain companies, including Kaiser, that
file information electronically with the SEC. Stockholders are encouraged to
read Kaiser's latest reports files with the SEC and those reports are
incorporated herein by this reference.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Terry L. Cook
---------------------------------
Terry L. Cook, Secretary
Dated: January 5, 2001
13
<PAGE>
Attachment "A"
==============
Stock Purchase Agreement and Joint Escrow Instructions
======================================================
This STOCK PURCHASE AGREEMENT AND JOINT ESCROW INSTRUCTIONS ("Agreement")
is made and entered into effective the 14th day of November, 2000, by and
between KAISER VENTURES INC., a Delaware corporation ("Kaiser") and Cucamonga
County Water District, a California county water district (the "District").
Kaiser and the District are sometimes individually referred to in this Agreement
as a "Party" or collectively as "Parties".
Recitals
A. Kaiser owns or will own as of the Closing Date 8,057.025 shares of the
common stock of Fontana Union Water Company, a California mutual water company,
(the "Shares"), of which 7,632.625 are leased to pursuant to that certain Lease
of Corporate Shares Coupled With Irrevocable Proxy dated as of July 1, 1993,
between Kaiser (then called Kaiser Steel Resources Inc.) and the District (the
"CCWD Lease").
B. The Parties desire to enter this Agreement and to pursue the
transaction contemplated hereby pursuant to which the District will purchase the
Shares from Kaiser (the "Stock Transaction").
C. In connection with Stock Transaction, the Parties also desire to fully
settle and release all claims arising of the CCWD Lease including all claims a
part of or relating to that certain case in San Bernardino Superior Court, Case
No. RCV 21135, entitled Fontana Water Resources, Inc., a corporation, Plaintiff,
vs. Cucamonga County Water District, Defendant, and the reference proceeding,
which constitutes a part of said case (collectively the "CCWD Lease
Litigation").
NOW, THEREFORE, for and in consideration of the mutual promises and
covenants contained herein, and for other good and valuable consideration, the
parties hereto agree as follows:
SECTION 1. Purchase and Sale of Shares. Subject to the terms and conditions of
this Agreement, on the Closing Date as defined below, the District shall
purchase from Kaiser, and Kaiser shall sell to the District, the Shares.
SECTION 2. Purchase Price and Payment Terms. The net purchase price payable by
the District to Kaiser for the Shares shall be $10,860.088 for each of the
Shares for a total purchase price of $87,500,000 (the "Purchase Price"). The
Purchase Price shall be paid to Kaiser by wire transfer on the Closing Date.
SECTION 3. Payments Under the CCWD Lease. In addition to payment of the
Purchase Price, the District shall make the following payments under the CCWD
Lease: (i) the fourth quarter 2000 CCWD Lease payment totaling $1,177,127.19;
(ii) the 1999-2000 agricultural pool transfer payment totaling $1,008,882.69;
and (iii) the agricultural pool transfer payment for the first six months of
2000-2001 totaling $263,892.60. All the payments required pursuant to this
Section 3 shall be made within ten days following the District's receipt of an
invoice for such payment, but in no event shall payment be later than the
Closing Date. Payments made by the District pursuant to this Paragraph 3 shall
not be paid through escrow unless any payment has not been paid prior to the
Closing Date.
1
<PAGE>
SECTION 4. Settlement of CCWD Lease Litigation. Kaiser shall execute and
deliver into Escrow as provided herein, a dismissal with prejudice of the CCWD
Lease Litigation in the form attached hereto as Exhibit "A" (the "Dismissal").
===
Kaiser and the District shall execute and deliver into Escrow as provided
herein, a settlement agreement in the form attached hereto as Exhibit "B" (the
===
"Settlement Agreement").
SECTION 5. Mid-Valley Settlement. To the extent that the Company has any
transferable rights pursuant to that certain Settlement Agreement between
Fontana Water Resources, Inc. and the County of San Bernardino ("Mid-Valley
Settlement"), at the closing the Company shall assign and transfer any such
rights to the District.
SECTION 6. Conditions Precedent to the Obligations of Kaiser. All of the
obligations of Kaiser under this Agreement are subject to fulfillment prior to
or on the Closing Date of each of the following conditions, which may be waived
by Kaiser in writing:
6.1 The District's Representations and Warranties Remain True. The
representations and warranties by the District contained in this Agreement shall
be true in all material respects on the Closing Date as though made as of such
time and Kaiser shall receive a certificate from the District at Closing to that
effect.
6.2 Payment of the Purchase Price. The District shall have delivered the
Purchase Price to Kaiser through the Escrow Agent.
6.3 Payment of CCWD Lease Payments. The District shall have paid to Kaiser the
payments specified in Section 3, or if not previously paid, deposit the funds
necessary to make payment with the Escrow Agent.
6.4 Litigation. There shall be no third party claim or litigation pending or
threatened regarding the transactions contemplated herein on the Closing Date
which the Kaiser's Board of Directors reasonably believes is likely to have a
material adverse impact on Kaiser, its shareholders, officers or directors. No
preliminary or permanent injunction that restricts, prevents or prohibits the
delivery of the Shares to the District or execution and delivery of the
Settlement Agreement and Dismissal shall be outstanding.
6.5 Settlement Agreement. The District shall have executed and delivered into
Escrow two originals of the Settlement Agreement.
6.6 Certified Board Resolutions. The District shall have delivered certified
resolutions of the District's Board of Directors approving the Stock Purchase
Transaction, the Settlement Agreement, and payment of the Purchase Price to
Kaiser for the Shares.
6.7 Receipt of Shareholder Approval. Kaiser shall have received any necessary
approval by its shareholders of the Stock Transaction.
SECTION 7. Conditions Precedent to the Obligations of the District. All of the
obligations of the District under this Agreement are subject to fulfillment
prior to or on the Closing Date of each of the following conditions, which may
be waived by the District in writing:
2
<PAGE>
7.1 Kaiser's Representatives and Warranties Remain True. The representations
and warranties of Kaiser contained in this Agreement shall be true in all
material respects on the Closing Date as through made as of such time and the
District shall receive a certificate from Kaiser at Closing to that effect.
7.2 Delivery of Shares. Kaiser shall have delivered into Escrow the Shares and
the Stock Assignment into Escrow.
7.3 Litigation. There shall be no third party claim or litigation pending or
threatened regarding the transactions contemplated herein on the Closing Date
which the District's Board of Directors reasonably believes is likely to have a
material adverse impact on the District, its, officers or directors. No
preliminary or permanent injunction that restricts, prevents or prohibits the
delivery of the Shares to the District shall be outstanding.
7.4 Settlement Agreement. Kaiser shall have executed and delivered into Escrow
two originals of the Settlement Agreement.
7.5 Dismissal. Kaiser shall have executed and delivered into Escrow two
originals of the Dismissal.
7.6 Certified Board Resolutions. Kaiser shall have delivered certified
resolutions of Kaiser's Board of Directors approving the Stock Transaction, the
Settlement Agreement and the Dismissal.
7.7 Kaiser Shareholder Approval. Kaiser shall have obtained any requisite
approval by its shareholders of the Stock Transaction and shall deposit into
Escrow a certificate executed by Kaiser's certifying that any requisite
shareholder approval has been obtained.
7.8 Financing. The District shall have obtained financing for the Purchase
Price amortized over at least 31 years.
7.9 Cancellation of Lease. If requested by the District, Kaiser shall have
executed and delivered into Escrow the Lease Cancellation document in the form
attached hereto as Exhibit "C" (the "Lease Cancellation").
===========
7.10 Assignment of Mid-Valley Settlement. Kaiser shall have executed and
delivered into Escrow an assignment transferring any rights Kaiser may have in
the Mid-Valley Settlement to the District.
SECTION 8. ESCROW AND CLOSING
8.1 Opening of Escrow. Within two business days of the date of this Agreement,
Kaiser and the District shall open an escrow account ("Escrow") with Chicago
Title Insurance Company, San Bernardino office ("Escrow Agent") by depositing a
fully executed original of this Agreement for use as escrow instructions and
Escrow Agent shall execute the consent of Escrow Agent and deliver a fully
executed consent to Kaiser and the District. In addition, District, Kaiser and
Escrow Agent agree to the general provisions attached here to as Attachment "1",
==============
and incorporated hereby this reference. If there is any conflict between the
provisions of this Agreement and any additional or supplementary escrow
instructions, the terms of this Agreement shall control. The Closing shall be
conducted through Escrow unless Kaiser and the District shall otherwise agree in
writing or as expressly set forth in this Agreement.
3
<PAGE>
8.2 District's Deliveries into Escrow. On or before the Close of Escrow (or
sooner if so specified in this Section 8.2), the District shall deposit into
Escrow with the Escrow Agent:
(a) the Purchase Price by wire transfer;
(b) if the payments specified in Section 3 have not been paid by the
District, the funds necessary to pay any unpaid payment;
(c) a certified copy of the resolutions of the Board of Directors of the
District authorizing the Stock Transaction, the payment of the Purchase Price
and the transfer of funds for the Purchase Price and the Settlement Agreement;
(d) two original executed copies of the Settlement Agreement The executed
Settlement Agreement together with the District's resolutions authorizing the
Settlement Agreement shall be delivered into Escrow on or before ten (10) days
following the opening of Escrow;
(e) a certificate executing by the District stating that the District's
representations and warranties set forth in this Agreement are true and correct
as of the Closing Date; and
(f) Any other document reasonably requested by Escrow Agent to complete
the Stock Transactions contemplated by this Agreement and the Settlement Agent.
8.3 Kaiser's Deliveries Into Escrow. On or before the Close of Escrow (or
sooner if so specified in this Section 8.3), Kaiser shall deposit in Escrow:
(a) Kaiser's executed Assignment of Stock Separate from Certificate or
other mutually acceptable form of stock assignment transferring the Shares to
District, or its designee (the "Stock Assignment"), with the signatures of
Kaiser guaranteed by Kaiser's bank;
(b) the stock certificates representing the Shares;
(c) a certified copy of Kaiser's Board of Directors resolutions
authorizing the Stock Transaction, execution and delivery of the stock
assignment, the Settlement Agreement, and the Dismissal;
(d) two executed originals of the Dismissal. The two executed copies of
the Dismissal and the certified Board Resolutions authorizing the Dismissal
shall be delivered into Escrow on or before ten days following the opening of
Escrow;
(e) two original executed copies of the Settlement Agreement. The executed
Settlement Agreements and the certified Board Resolutions authorizing the
Settlement Agreement shall be delivered into Escrow on or before ten days
following the opening of escrow;
(f) A certified copy of the resolution adopted by Kaiser's shareholders
approving the Stock Transaction;
(g) A certificate executed by Kaiser stating that Kaiser's representations
and warranties as set forth in this Agreement are true and correct as of the
Closing Date; and
(h) An assignment executed by Kaiser transferring any rights it may have
under the Mid-Valley Settlement to the District;
4
<PAGE>
(i) If requested by the District, Kaiser shall execute the Lease
Cancellation; and
(j) Any other document reasonably requested by the Escrow Agent from
Kaiser to complete the Stock Transaction contemplated by this Agreement and the
Settlement Agent.
8.4 Actions by Escrow Holder. When Escrow Agent has: (i) received all the
documents and funds identified in Sections 8.2 and 8.3; (ii) received written
notification from Kaiser and the District that all payments specified in Section
3 have been paid or have been deposited into Escrow; and (iii) notice that all
conditions to precedent to Kaiser's closing (Section 6), and that all conditions
to the District's closing (Section 7) have been satisfied or have been waived,
then and only then, Escrow Holder shall promptly and concurrently:
(a) Disburse all funds deposited with Escrow Agent by as follows:
(1) Disburse the Purchase Price to Kaiser;
(2) Disburse any amounts received from the District for the payments
specified in Section 3 to Kaiser; and
(3) Disburse such other closing and escrow costs as may be required.
(b) Deliver to the District the following documents:
(1) the Stock Assignment;
(2) the stock certificates;
(3) one of the originals of the Dismissal;
(4) one of the originals of the Settlement Agreement executed by
Kaiser;
(5) the certified resolutions of Kaiser's Board of Directors;
(6) the certified resolution of Kaiser's shareholders approving the
Stock Transaction;
(7) the assignment of Kaiser's rights in the Mid-Valley Settlement;
(8) the Lease Cancellation, provided that the District previously
requested that Kaiser execute and deliver the Lease Cancellation
to Escrow; and
(9) such other items as Kaiser and the District may mutually
designate in writing.
(c) Deliver to Kaiser the following documents:
(1) one of the originals of the Dismissal;
(2) one of the originals of the Settlement Agreement executed by the
District;
(3) certified resolutions of the District's Board of Directors; and
(4) Such other items as Kaiser and the District may mutually
designate in writing
8.5 Closing. The closing shall take place on January 3, 2001; provided,
however, if Kaiser shareholder approval is not received on or before December 5,
2000, and such approval is necessary for the District to take the actions
necessary to obtain financing by January 3, 2001, then the closing shall occur
as soon as reasonably practical after the receipt of shareholder approval but in
no event shall closing occur later than the thirtieth (30/th/) day following
receipt of Kaiser's shareholder approval for the Stock Transaction unless the
Parties should otherwise agree in writing. If the thirtieth (30) day following
the receipt of Kaiser shareholder approval should not be a business day (i.e.,
Saturday, Sunday or a Federally recognized holiday), the closing shall take
place on the next business day. The actual date of closing is the "Closing
Date."
8.6 If Transaction Does Not Close. If the Stock Transaction does not close for
any reason, Escrow Agent shall:
5
<PAGE>
(a) Disburse all funds to the Party depositing any amount with the Escrow
Agents, net of Escrow costs that may be charged by Escrow Agent;
(b) Except as otherwise specified herein, return each document deposited
with Escrow Agent to the Party originally depositing such document; and
(c) With regard to the Settlement Agreement and the Dismissal, both
originals of each document shall be returned to Kaiser.
8.7 Escrow Agent Costs. All costs charged by Escrow Agent in connection with
the Escrow shall be borne equally by the Parties.
SECTION 9. Representations and Warranties of Kaiser. Kaiser represents and
warrants to the District:
9.1 Organization and Authorization. Kaiser has been duly incorporated, is
validly existing and in good standing under the laws of the State of Delaware
and qualified to do business in California. The execution, delivery and
performance of this Agreement, the Stock Transaction, the Settlement Agreement
and the Dismissal have been duly authorized by all requisite action, except that
approval of the Stock Transaction will be required from Kaiser's shareholders.
No charter, bylaw, material agreement, material document or material instrument
of any kind of which Kaiser is a party or by which it may be bound would be
violated by this Agreement or the Stock Transaction, provided, however, the
Shares are currently pledged to secure a line of credit with Union Bank of
California (the "Bank"), which line of credit will be terminated by the Closing
Date and the Shares will no longer be subject to any pledge to or lien by the
Bank or by entering into the Settlement Agreement. Kaiser has full power and
authority to execute and deliver this Agreement, the Settlement Agreement, the
Dismissal and to perform its obligations therein. This Agreement, constitutes
the valid and legally binding obligation of Kaiser, enforceable in accordance
with its terms and conditions, subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting or relating to
creditors' rights generally and subject to any required shareholder vote. The
Stock Transaction does not contravene any applicable law, rule or regulation or
any order or decrees binding on Kaiser.
9.2 Consents. Except for approval by Kaiser's shareholders of the Stock
Transaction, Kaiser has obtained any necessary third party consents, regulatory
agency approvals, permits or other approvals that may be required to be obtained
by it to complete the Stock Transaction and to enter into the Settlement
Agreement.
9.3 Ownership. As of the Close of Escrow, Kaiser will be the record and
beneficial owner of the Shares. The District will receive title to the Shares
from Kaiser free and clear of all security interests, liens, claims, pledges,
options, rights of first refusal, agreements, charges or other encumbrances of
any nature whatsoever, except any that may be imposed by applicable securities
laws.
9.4 Authority of Officers. The officers executing this Agreement, the
Settlement Agreement, the District and any other document executed by Kaiser are
duly authorized by Kaiser's Board of Directors.
6
<PAGE>
SECTION 10. Representations and Warranties of the District. The District
hereby represents and warrants to Kaiser as follows:
10.1 Organization and Authorization. The District is a public water district
that has been duly formed, is validly existing and in good standing under laws
of California. The execution, delivery and performance of this Agreement, the
Purchase Transaction, and the Settlement Agreement, and the actions necessary to
obtain funding of the Purchase Price have been duly authorized by all requisite
action as necessary. No document, material agreement, material document, or
material instrument of any kind of which the District is party or by which it
may be bound would be violated by this Agreement, the Stock Transaction or by
entering into the Settlement Agreement. This Agreement constitutes the valid
and legally binding obligation of the District, enforceable in accordance with
its terms and conditions, subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting or relating to creditors' rights
generally. The District need not give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any person, government or
governmental agency in order to consummate the transactions contemplated by this
Agreement and the Settlement Agreement. The Stock Transaction does not
contravene any applicable law, rule, or regulation or any order or decree
binding on the District.
10.2 Consents. The District has obtained any necessary third party consents,
regulatory agency approvals, permits or other approvals that may be required to
be obtained by it to complete the Stock Transaction, to enter into the
Settlement Agreement and obtain the financing to pay the Purchase Price.
10.3 District is Knowledgeable. The Shares are being acquired for the
District's own purposes as the owner of water rights and the supplier of
municipal water. The District has no intent to transfer the Shares but to
retain them. The District has the requisite knowledge and experience to assess
the relative merits and risks of an acquisition of the Shares. The District
understands the rights and obligations associated with the Shares.
10.4 Authority of Officers. The officers executing this Agreement and the
Settlement Agreement on behalf of the District are the duly authorized by the
District and they have full and complete authority to execute this Agreement,
consummate the Stock Transaction, to enter into the Settlement Agreement and
Seller to obtain the financing necessary to fund the Purchase Price.
SECTION 11. Nature and Survival of Representations. All representations,
warranties and covenants made by any party in this Agreement shall survive the
closing hereunder and the consummation of the Closing Stock Transaction and the
Settlement Agreement.
SECTION 12. Right of Indemnification. Each Party (the "Indemnifying Party")
shall indemnify and hold the other Party (the "Indemnified Party") harmless from
and against all costs and expenses (including reasonable attorneys' fees),
damages and losses ("Losses") arising out of or resulting from a breach of any
representation, warranty or covenant made by the Indemnifying Party in this
Agreement. If any claim is asserted or any action or proceeding is brought in
respect of which indemnity may be sought, the Indemnified Party will promptly
notify the Indemnifying Party in writing of such asserted claim or the
institution of such action or proceeding; provided, however, that the
Indemnified Party's failure to so notify the Indemnifying Party will not relieve
the Indemnifying Party from any liability it might otherwise have on account of
this indemnity, except to the extent
7
<PAGE>
that the Indemnifying Party has been materially prejudiced by such failure to
notify. The Indemnifying Party may, at its option, undertake full responsibility
for the defense of any third-party claim which, if successful, would result in
an obligation of indemnity under this Agreement. The Indemnifying Party may
contest or settle any such claim on such terms as the Indemnifying Party may
choose, provided that the Indemnifying Party will not have the right, without
the Indemnified Party's prior written consent, to settle any such claim if such
settlement (i) arises from or is part of any criminal action, suit or
proceeding, (ii) contains a stipulation to, confession of judgment with respect
to, or admission or acknowledgement of, any liability or wrongdoing on the part
of the Indemnified Party, (iii) relates to any tax matters, (iv) provides for
injunctive relief, or other relief or finding other than money damages, which is
binding on the Indemnified Party, or (v) does not contain an unconditional
release of the Indemnified Party. Such defense will be conducted by reputable
attorneys retained by the Indemnifying Party at the Indemnifying Party's cost
and expense, but the Indemnified Party will have the right to participate in
such proceedings and to be separately represented by attorneys of its own
choosing. The Indemnified Party will be responsible for the costs of such
separate representation. The Indemnifying Party and the Indemnified Party shall
cooperate in determining the validity of any third-party claim for any Loss for
which a claim of indemnification may be made hereunder. Each Party shall also
use all reasonable efforts to minimize all Losses.
SECTION 13. Additional Obligations.
13.1 District's Good Faith Obligation to Secure Financing. The District
covenants and agrees in good faith to immediately undertake all commercially
reasonable steps to secure the financing necessary for the Purchase Price and to
complete the Stock Transaction.
13.2 Kaiser's Good Faith Obligation to Secure Shareholder Consent. Kaiser
covenants and agrees in good faith to immediately undertake all commercially
reasonable steps necessary to secure the required consent of Kaiser's
shareholders to the Stock Transaction.
13.3 Agreement and Negotiations shall not be Used in the CCWD Lease Litigation
if Stock Transaction Does Not Close. The Parties acknowledge and agree that
this Agreement; the Settlement Agreement and the Dismissal are as a result of
settlement negotiations concerning the CCWD Lease Litigation. In the event the
Stock Transaction does not close for any reason, this Agreement; the Settlement
Agreement and the Dismissal and the negotiations resulting in such documents and
all actions taken in connection therewith may not be used by any Party in the
CCWD Lease Litigation. In addition, the Settlement Agreement and the Dismissal
shall not be effective and the CCWD Lease Litigation shall continue without
prejudice to either Party. However, this Agreement; the Settlement Agreement
and the Dismissal may be used in connection with any litigation to enforce
and/or interpret the applicable document.
13.4 Disclosure of Agreement and its Terms. Except as may other wise be
required by law, no press release shall be released to the public by Kaiser or
the District relating to the Stock Transaction, the Settlement Agreement and/or
the CCWD Lease Litigation unless and until such communication has been submitted
and approved in writing by the Party not originating the press releases. All
oral communications must be consistent with and shall not expand upon matters
contained in the approved written press release. The Parties acknowledge that
the District as a public entity and Kaiser as a public company have disclosure
obligations which they are required to fulfill.
13.5 Commissions and Fees Payable by Kaiser. Kaiser shall indemnify and hold
harmless the District from any brokerage commissions, success fees or other
similar items payable to any person
8
<PAGE>
retained by Kaiser in connection with the Stock Transaction.
13.6 Commissions and Fees Payable by the District. The District shall
indemnify and hold harmless Kaiser from any brokerage commission, success fees
or other similar items payable to any person retained by the District in
connection with the Stock Transaction and in connection with obtaining the
financing for the Purchase Price.
SECTION 14. Miscellaneous Provisions.
14.1 Expenses. No Party hereto shall be responsible for the payment of any
other Party's expenses incurred in connection with this Agreement, the
Settlement Agreement, the Dismissal, the litigation or the reference
proceedings.
14.2 Specific Performance. The Parties hereto agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed by the applicable Party hereto in accordance with the specific terms
of this Agreement or were otherwise breached. Each of the Parties hereto shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement by the other and to enforce specifically the terms and provisions
hereof in addition to any other remedy to which such Party is entitled at law or
in equity, and each Party waives the posting of any bond or security in
connection with any proceeding related thereto.
14.3 Third Party Beneficiaries. Except as expressly provided in this
Agreement, the terms and provisions of this Agreement are intended solely for
the benefit of each Party hereto and its respective successors and assigns, and
it is not the intention of the Parties to confer third party beneficiary rights
upon any other person or entity.
14.4 Further Assurances. At any time, and from time to time, after the date
thereof, each Party will execute such additional instruments and take such
action as may be reasonably requested by the other Party to complete the Stock
Transaction, effect the settlement of the CCWD Litigation or otherwise to carry
out the intent and purposes of this Agreement and the Settlement Agreement.
14.5 Waiver. Any failure on the part of any Party hereto to comply with any
of its obligations, agreements or conditions hereunder may be waived in writing
by the Party to whom such compliance is owed.
14.6 Governing Law. This Agreement shall be governed by, and interpreted in
accordance with, the laws of the State of California, without regard to the
conflict of law principles thereof.
14.7 Binding Effect. This Agreement shall be binding upon the parties hereto
and inure to the benefit of the parties, their respective successors and
assigns.
14.8 Entire Agreement. This Agreement; the Settlement Agreement and the
Dismissal constitute the entire agreement of the Parties covering everything
agreed upon or understood in the Stock Transaction and Settlement of the CCWD
Litigation. The Parties are executing and carrying out this Agreement in
reliance solely on the representations, warranties and covenants and agreements
contained in this Agreement and in the written documents contemplated by this
Agreement. Neither this Agreement nor the Settlement Agreement may be amended
or modified except by a written document executed by Kaiser and The District.
14.9 Enforcement Costs. In the event of any legal proceeding to enforce any of
the terms of
9
<PAGE>
this Agreement, the prevailing party shall be entitled to receive payment for
its reasonably attorneys' fees and all other costs required to enforce its
rights hereunder.
14.10 Good Faith. The Parties agree to seek in good faith to seek to
consummate the Settlement Transaction, and the settlement of the CCWD
Litigation.
14.11 Headings. The headings in this Agreement are inserted only as a matter
of convenience, and in no way define, limit, extend or interpret the scope of
this Agreement or of any particular paragraph.
14.12 Notices. Any notices, demands or other communications required or
permitted to be given by any provision of this Agreement or which any Party may
desire to give the other shall be given in writing, delivered personally or sent
by certified mail, postage pre-paid, facsimile, or by Federal Express or similar
generally recognized delivery service regularly providing proof of delivery,
addressed to a Party or Escrow Agent, at the addresses set forth below, or to
such other address as said Party or Escrow Agent may hereafter or from time to
time designate by written notice to the other Party and Escrow Agent.
To Seller: With a copy to:
Kaiser Ventures Inc. Kaiser Ventures Inc.
3633 Inland Empire Blvd., Suite 850 3633 Inland Empire Blvd., Suite 850
Ontario, CA 91764 Ontario, CA 91764
Attn.: Richard E. Stoddard Attn.: Terry L. Cook
Telephone: 909.483.8501 Telephone: 909.483.8511
Facsimile: 909.944.6605 Facsimile: 909.944.6605
To Buyer: With a copy to:
Mr. Robert DeLoach H. Jess Senecal, Esq.
General Manager Lagerlof, Senecal, Bradley,
Cucamonga County Water District Gosney and Kruse
10440 Ashford Street 301 N. Lake Avenue, 10th Floor
P. O. Box 638 Pasadena, CA 91101
Rancho Cucamonga, CA 91730 Telephone: 626.793.9400
Telephone: 909.987.2591 Facsimile: 626.793.5900
Facsimile: 909.941.8069
To Escrow Holder:
Chicago Title Company
560 East Hospitality Lane
San Bernardino, CA 92408
Attn.: Kathy Benson
Telephone: 909.884.0448
Facsimile: 909.384.7893
A copy of any notice, demand or other communication given to or by Escrow
Agent or to or by either Party shall be given to the other Party at the same
time. Notice by United States Postal Service or delivery service as provided
herein shall be considered given on the earlier of the date on which said notice
is actually received by the Party to whom such notice is addressed, or as of the
date of delivery, whether accepted or refused, established by the United States
Postal service return
10
<PAGE>
receipt or such overnight carrier's proof of delivery, as the case may be. Any
such notice given by facsimile shall be deemed given upon receipt of the same by
the Party to which it is addressed.
14.13 Counterparts. This Agreement maybe executed in two counterparts, each of
which when executed shall be deemed an original, but both of which when taken
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the day and year first above written.
"District" "Kaiser"
Cucamonga County Water District Kaiser Ventures Inc.
By: /s/ Jerome M. Wilson By: /s/ Richard E. Stoddard
---------------------------- ---------------------------------------
Jerome M. Wilson Richard E. Stoddard, Chief Executive
Its: President Officer and Chairman of the Board
----------------------------
By: /s/ Robert A. DeLoach
----------------------------
Robert A. DeLoach
Its: Secretary/General Manager
----------------------------
11
<PAGE>
A Copy of any Exhibits Referenced
=================================
in the
======
Stock Purchase Agreement and Joint Escrow Instructions
======================================================
Will Be Furnished Upon Request
==============================
12
<PAGE>
KAISER VENTURES INC.
WRITTEN CONSENT
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, owning of record the number of shares of common stock of Kaiser
Ventures Inc. ("Kaiser") indicated on this Consent Card on December 28, 2000, in
lieu of holding a meeting for such purposes as permitted by the Delaware General
Corporation Law, does take the following action with respect to the sale of all
of Kaiser Ventures Inc.'s ownership interest in Fontana Union Water Company to
Cucamonga County Water District pursuant to the Stock Purchase Agreement and
Joint Escrow Instructions dated as of November 14, 2000 (the "Sale").
If you wish to consent, please indicate your consent by signing the reverse side
of this Consent Card. If you wish to withhold your consent, please mark
"Against" on the reverse side of this Consent Card.
(Continued and to be signed on reverse side.)
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
KAISER VENTURES INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
[ ]
<TABLE>
<S> <C> <C> <C>
1. Consent to the sale of all of If you wish to consent, simply sign below. UNLESS
Kaiser Ventures Inc.'s For Against OTHERWISE SPECIFIED ON THIS CONSENT. THE SHARES
ownership interest in Fontana REPRESENTED BY THIS CONSENT WILL BE VOTED FOR THE SALE.
Union Water Company to [_] [_]
Cucamonga County Water District
pursuant to the Stock Purchase
Agreement and Joint Escrow
instructions dated as of
November 14, 2000 (the "Sale").
SIGNATURE(S)_________________________ DATE________________
SIGNATURE(S)_________________________ DATE________________
NOTE: Please sign exactly as name appears hereon. Joint owners
should each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as
such.
</TABLE>
--------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
YOUR VOTE IS IMPORTANT!
