Exchange Agreement Dated as of October 9, 1991 Among Danielson

EXCHANGE AGREEMENT

Exhibit A

EXCHANGE AGREEMENT dated as of among , a California corporation (“Danielson”), , a California corporation (“MAIC”), and each Participating KCP Minority Shareholder.

MAIC, a wholly-owned subsidiary of Danielson, is the record owner of shares of KCP Common Stock.

The KCP Minority Shareholders are, collectively, the record owners of shares of KCP Common Stock.

MAIC wishes to acquire from each KCP Minority Shareholder the shares of KCP Common Stock owned by such KCP Minority Shareholder, and each Participating KCP Minority Shareholder, by executing this Agreement, has indicated that it wishes to transfer to MAIC the shares of KCP Common Stock owned by it, all on the terms set forth in this Agreement.

In consideration of the mutual agreements contained herein, Danielson, MAIC and the Participating KCP Minority Shareholders, severally and not jointly, agree as follows:

I. CERTAIN DEFINITIONS.

1.01 Certain Definitions. As used herein:

“Business Day” shall mean any day on which commercial banks are not authorized or required to close in New York, New York.

“Closing Date” shall have the meaning ascribed to it in Article VIII below.

“Danielson Common Stock” shall mean the Common Stock, par value $.10 per share, of Danielson.

“Exchange Agent” shall mean .

“Exchange” shall mean the exchange of shares of KCP Common Stock owned by Participating KCP Minority Shareholders for the consideration provided for herein in accordance with the terms of this Agreement.

“KCP Common Stock” shall mean the common stock, par value $.01 per share, of KCP.

“KCP Minority Shareholder” shall mean each Person listed on Schedule I attached hereto.

“Kramer Partners” shall mean Kramer Capital Partners, L.P., a Delaware limited partnership.

“Lien” shall mean any mortgage, pledge, security agreement, conditional sale or other title retention agreement, lien, charge or other encumbrance, whether or not perfected.

“Morgan” shall have the meaning ascribed to it in Section 5.06 below.

“Participating KCP Minority Shareholder” shall mean each KCP Minority Shareholder which has executed this Agreement.

“Person” shall mean an individual, a corporation, a company, a voluntary association, a partnership, a trust, a joint venture, an unincorporated organization or a government or any agency, instrumentality or political subdivision thereof.

“Proxy Statement” shall mean a proxy statement, and all supplements and amendments thereto, prepared by Danielson for the purpose of obtaining all approvals required to be obtained under applicable law from holders of Danielson Common Stock for the consummation of the transactions contemplated hereby.

“Required Approvals” shall mean, collectively, the approval of the transactions contemplated by this Agreement.

“SEC” shall mean the United States Securities and Exchange Commission and any successor thereto.

“Securities Act” shall mean the Securities Act of 1933, as amended, or any successor legislation.

“Subsidiary” shall mean, with respect to any Person, any corporation of which at least a majority of the securities having ordinary voting power for the election of directors are at the time owned, directly or indirectly, by such Person and/or one or more Subsidiaries of such Person.

II. EXCHANGE.

2.01 Exchange. Each Participating KCP Minority Shareholder severally agrees, subject to the terms and conditions of this Agreement, to transfer to MAIC on the Closing Date all shares of KCP Common Stock owned by it (but not less than all such shares) in exchange for the following consideration:

(a) in the case of each Participating KCP Minority Shareholder other than Kramer Partners, shares of Danielson Common Stock for each share of KCP Common Stock owned by such Shareholder; and

(b) in the case of Kramer Partners (i) per share of KCP Common Stock for shares ... and (ii) shares of Danielson Common Stock for each of the remaining shares.

2.02 Exchange Procedures. Each Participating KCP Minority Shareholder shall deliver to the Exchange Agent, not later than the Business Day immediately preceding the Closing Date, a certificate or certificates representing the number of shares of KCP Common Stock owned of record by such Shareholder ...

III. REPRESENTATIONS AND WARRANTIES OF PARTICIPATING KCP MINORITY SHAREHOLDERS.

Each Participating KCP Minority Shareholder hereby severally represents and warrants to Danielson and MAIC that:

3.01 Ownership of KCP Common Stock. Such Participating KCP Minority Shareholder is the record owner, free and clear of all Liens, of the number of shares of KCP Common Stock set forth beside the name of such Shareholder on Schedule 1 attached hereto.

3.02 Approvals, etc. The making and performance by such Participating KCP Minority Shareholder of this Agreement have been duly authorized ...

3.03 Independent Investigation; No Reliance. Such Participating KCP Minority Shareholder has been provided the materials described on Schedule 2 attached hereto ...

3.04 Acquisition for Own Account. Such Participating KCP Minority Shareholder is acquiring the shares of Danielson Common Stock to be acquired by it for its own account for investment and not with a view to distribution ...

IV. REPRESENTATIONS AND WARRANTIES OF DANIELSON AND MAIC.

Danielson and MAIC each severally and not jointly represent and warrant to the Participating KCP Minority Shareholders that:

4.01 Corporate Existence and Power, etc. Danielson and MAIC are corporations duly incorporated, validly existing and in good standing under the laws of California.

4.02 Corporate Authority; Approvals. The making and performance by Danielson and MAIC of this Agreement have been duly authorized ...

4.03 Binding Obligations. This Agreement constitutes the legal, valid and binding obligation of each of Danielson and MAIC ...

4.04 Proxy Statement. The Proxy Statement will comply in all material respects with all provisions of applicable state and Federal law and regulations.

4.05 No Material Adverse Change. No material adverse change in the assets, business, operations or financial condition of Danielson has occurred or become known since June 30, 1991.

4.06 Corporate Authority to Issue Common Stock. Danielson has all requisite power and authority to issue to MAIC the shares of Danielson Common Stock to be issued pursuant to this Agreement ...

V. CONDITIONS PRECEDENT TO DANIELSON’S AND MAIC’S OBLIGATIONS.

The obligations of Danielson and MAIC to consummate the transactions contemplated by this Agreement are subject to the satisfaction, on or before the Closing Date, of each of the following conditions:

5.01 Accuracy of Representations and Warranties. The representations and warranties of each Participating KCP Minority Shareholder shall be true and correct on the Closing Date.

5.02 Required Approvals. The Required Approvals shall have been obtained.

5.03 Listing of Additional Shares. The additional shares of Danielson Common Stock to be issued hereunder shall have been approved for listing upon notice of issuance on each securities exchange on which the Danielson Common Stock is listed on the Closing Date.

5.04 Absence of Litigation. No claim, action or suit shall be pending or threatened against any of the parties hereto or any of their affiliates ...

5.05 Delivery of Fairness Opinion. The Special Committee of the Board of Directors of Danielson shall have obtained an opinion from its financial advisor that the transactions contemplated hereby are fair to the holders of Danielson Common Stock.

5.06 Debt Assumption and Redemption of KCP Common Stock. KCP shall have assumed a debt obligation of Kramer Partners to Morgan Guaranty Trust Company of New York in the amount of $4,000,000 and shall have redeemed 683,761 shares of KCP Common Stock owned of record by Kramer Partners.

5.07 No Material Adverse Change. No material adverse change in the financial condition, business or business prospects of KCP shall have occurred since June 30, 1990.

VI. CONDITIONS PRECEDENT TO PARTICIPATING KCP MINORITY SHAREHOLDERS’ OBLIGATIONS

The obligation of each Participating KCP Minority Shareholder to consummate the transactions contemplated by this Agreement is subject to the satisfaction, on or before the Closing Date, of each of the following conditions:

6.01 Accuracy of Representations and Warranties. The representations and warranties of Danielson and MAIC shall be true and correct on the Closing Date.

6.02 Required Approval. The Required Approvals shall have been obtained.

6.03 Listing of Additional Shares. The additional shares of Danielson Common Stock to be issued hereunder shall have been approved for listing upon notice of issuance on each securities exchange on which the Danielson Common Stock is listed on the Closing Date.

6.04 Absence of Litigation. No claim, action or suit shall be pending or threatened against any of the parties hereto or any of their affiliates ...

6.05 No Material Adverse Change. No material adverse change in the financial condition, business or business prospects of Danielson shall have occurred since June 30, 1991.

6.06 Capital Contribution to MAIC. As a contribution to the capital of MAIC, Danielson shall have issued to MAIC 1,809,988 shares of Danielson Common Stock and shall have paid to MAIC $1,000,000.

VII. CONDITIONS PRECEDENT TO KRAMER CAPITAL’S OBLIGATIONS

The obligation of Kramer Capital to consummate the transactions contemplated by this Agreement is subject to the satisfaction, on or before the Closing Date, of each of the following conditions:

7.01 Debt Assumption. KCP shall have assumed a debt obligation of Kramer Partners to Morgan in the amount of $4,000,000.

7.02 Redemption of KCP Common Stock. In connection with and as consideration for the debt assumption, KCP shall have acquired, by redemption, 683,761 shares of KCP Common Stock previously owned of record by Kramer Partners.

VIII. CLOSING DATE; TERMINATION

Subject to the terms and conditions hereof, the closing of the transactions provided for in this Agreement shall take place on December 20, 1991 or later as noticed in writing. If the Closing Date shall not have occurred prior to December 31, 1991, the parties may terminate as provided.

IX. MISCELLANEOUS

9.01 Amendments and Waivers. The provisions of this Agreement may be amended, modified or waived only by an instrument in writing signed by the parties hereto.

9.02 Notices. All notices and other communications provided for herein shall be in writing and telecopied, mailed or delivered.

9.03 Complete Agreement; Inconsistent Agreements. This Agreement represents the complete agreement between the parties hereto as to all matters covered hereby.

9.04 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

9.05 Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.

9.06 Counterparts. This Agreement may be executed in any number of counterparts.

9.07 Jurisdiction; Service of Process. The parties submit to the non-exclusive jurisdiction of the courts specified herein.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

KCP MINORITY SHAREHOLDERS

Schedule 1

Schedule 2

1. Danielson Holding Corporation Annual Report on Form 10-K, for the period from August 15, 1990 through December 31, 1990.

2. Danielson Holding Corporation Form 10-Q, for the quarterly period ended March 31, 1990.

3. Danielson Holding Corporation Form 10-Q, for the quarterly period ended June 30, 1991.