Fill and Sign the Exchange Agreement Dated as of October 9 1991 among Danielson Form

§12.402 PROXY STATEMENTS: STRATEGY & FORMS Exhibit A EXCHANGE AGREEMENT EXCHANGE AGREEMENT dated as of October 9, 1991 among DANIELSON HOLDING CORPORATION, a California corporation (“Danielson”), MISSION AMERICAN INSURANCE COMPANY, a California corporation (“MAIC”), and each Participating KCP Minority Shareholder (as defined below). _________________________________________________________ MAIC, a wholly-owned subsidiary of Danielson, is the record owner of 3,526,148 shares of KCP Common Stock (as defined below); The KCP Minority Shareholders are, collectively, the record owners of 2,092,300 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. MERGERS AND ACQUISITIONS§12.402 February 1993 12-1575 “Exchange Agent” shall mean First Interstate. “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 (i) by the Special Committee of the Danielson Board of Directors and its financial advisor; (ii) by the holders of Danielson Common Stock pursuant to the Proxy Statement; (iii) by the Insurance Commissioner of the State of California (to the extent deemed necessary by Danielson and its counsel); and (iv) by any other governmental agency (including, without limitation, Blue Sky administrators) to the extent deemed necessary by Danielson and its counsel. “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 (other §12.402 PROXY STATEMENTS: STRATEGY & FORMS than securities having such power only by reason of the happening of a contingency) 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, 1.4625 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) $5.85 per share of KCP Common Stock for 170,940 shares of KCP Common Stock owned by Kramer Partners (for a total payment of $999,999) and (ii) 1.4625 shares of Danielson Common Stock for each of the remaining 379,927 shares of KCP Common Stock then owned by Kramer Partners. 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, each endorsed in blank, or accompanied by stock powers endorsed in blank, with signatures guaranteed by a commercial bank located in New York City or a member firm of the New York Stock Exchange or the American Stock Exchange, with all necessary stock transfer and documentary stamps affixed, which certificates and accompanying stock powers shall be held in escrow by the Exchange Agent until the Closing Date. On the Closing Date, MAIC shall direct the Exchange Agent to deliver to each Participating KCP Minority Shareholder a stock certificate registered in the name of such Shareholder representing any shares of Danielson Common Stock required to be delivered to such Shareholder pursuant to Section 2.01 above and a certified or bank check payable to the order of such Shareholder in the amount of any cash required to be paid to such Shareholder pursuant to Section 2.01 above. 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. MERGERS AND ACQUISITIONS§12.402 February 1993 12-1577 3.02 Approvals. etc. The making and performance by such Participating KCP Minority Shareholder of this Agreement have been duly authorized by all necessary organizational action of such Shareholder and do not and will not violate any provision of law or of the organizational documents of such Shareholder or result in a breach of, or constitute a default under, or require any consent (except such as have been duly obtained) pursuant to, any agreement or other instrument to which such Shareholder is a party or by which such shareholder or its properties may be bound or affected. No authorization, approval or consent of, or filing, declaration or registration with, or notice to, any foreign or domestic governmental or regulatory body or authority is necessary to be obtained or made by any Participating KCP Minority Shareholder in connection with the making or performance by such Shareholder of this Agreement, or the consummation by such Shareholder of the transactions contemplated hereby, other than such authorizations, approvals, consents, filings, declarations, registrations and notices as have already been obtained or made by such Shareholder. This Agreement constitutes the legal, valid, and binding obligation of such Shareholder, enforceable in accordance with its terms, except as the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors rights generally, and subject to the application of general principles of equity. 3.03 Independent Investigation; No Reliance. Such Participating KCP Minority Shareholder has been provided the materials described on Schedule 2 attached hereto and has had an opportunity to obtain and review such other documents and information concerning Danielson and the Exchange, and to ask questions and receive answers concerning Danielson and the transactions contemplated hereby, and such other matters as it has deemed necessary or appropriate in making its own evaluation of Danielson and Exchange, and it has, independently and based solely on such documents, information and evaluation, made its own appraisal and decision with respect to the Exchange and the value of the shares of Danielson Common Stock to be issued hereunder.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 the distribution thereof or with any present intention of distributing or selling all or any portion thereof. Such Shareholder is an “accredited investor” as such term is defined in Rule 501 under the Securities Act. Such Shareholder acknowledges that the shares of Danielson Common Stock to be acquired by it hereunder have not been registered under the Securities Act, and acknowledges and agrees that they may be resold (which resale is not now contemplated) only if registered pursuant to the provisions of the Securities Act or if an exemption from registration is available, or under circumstances where neither such registration nor such an exemption of required by law, and that such shares will bear a written legend to such effect. Each Participating KCP Minority Shareholder severally acknowledges that, in reliance upon, among other things, the foregoing representations of such Shareholder, Danielson has not registered under the Securities Act the shares of Danielson Common Stock to be issued hereunder. IV. REPRESENTATIONS AND WARRANTIES OF DANIELSON AND MAIC. §12.402 PROXY STATEMENTS: STRATEGY & FORMS Danielson and MAIC each severally and not jointly represents and warrants 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. Danielson and MAIC have corporate power to make and perform this Agreement. 4.02 Corporate Authority; Approvals. The making and performance by Danielson and MAIC of this Agreement have been duly authorized by all necessary corporate action and do not and will not violate any provision of law or of the articles of incorporation or by-laws of such corporation or result in a breach of, or constitute a default under, or require any consent (except such as have been, or will as of the Closing Date have been, duly obtained and furnished to each Participating KCP Minority Shareholder) or result in the creation of any Lien upon any property or assets of either under, any agreement or other instrument to which either is a party or by which either or their properties may be bound or affected. No authorization, approval or consent of, or filing, declaration of registration with, or notice to, any foreign or domestic governmental or regulatory body or authority is necessary to be obtained or made by such Danielson or MAIC in connection with the making or performance by Danielson or MAIC of this Agreement, or the consummation by Danielson or MAIC of the Exchange, other than such authorizations, approvals, consents, filings, declarations, registrations and notices as will have been obtained or made by Danielson or MAIC on or before the Closing Date.4.03 Binding Obligations. This Agreement constitutes the legal, valid and binding obligation of each of Danielson and MAIC, enforceable in accordance with its terms, except as the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally, and subject to the application of general principles of equity.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, and MAIC has all requisite power and authority to deliver such shares to the Participating KCP Minority Shareholders in accordance with the terms of 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, any one or more of which may be jointly waived in writing by Danielson and MAIC: 5.01 Accuracy of Representations and Warranties. The representations and MERGERS AND ACQUISITIONS§12.402 February 1993 12-1579 warranties of each Participating KCP Minority Shareholder shall be true and correct on the Closing Date, and Danielson and MAIC shall have received (i) a certificate to such effect executed by, or on behalf of, each Participating KCP Minority Shareholder and (ii) evidence satisfactory to Danielson and MAIC that such Participating KCP Minority Shareholder is an “accredited investor” as such term is defined in Rule 501 under the Securities Act. 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 which, if adversely determined might prevent or hinder consummation of the transactions contemplated hereby, result in the payment of substantial damages as a result of the consummation of such transactions or otherwise impair the benefits contemplated hereby. 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 (i) shall have assumed a debt obligation of Kramer Partners to Morgan Guaranty Trust Company of New York (“Morgan”) in the amount of $4,000,000 (representing total principal plus accrued and unpaid interest thereon through the date of assumption) and on terms no less favorable to KCP than those set forth in the Summary of Terms and Conditions for KCP Holding Company referred to in the commitment letter dated October 9, 1991 between Morgan and KCP; and (ii) shall have redeemed in connection with and as consideration for such debt assumption 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 MINORITYSHAREHOLDERS’ 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, any one or more of which may be waived as to it by such Shareholder: 6.01 Accuracy of Representations and Warranties. The representations and warranties of Danielson and MAIC shall be true and correct on the Closing Date, and each Participating KCP Minority Shareholder shall have received a certificate to such effect executed by, or on behalf of, Danielson and MAIC. §12.402 PROXY STATEMENTS: STRATEGY & FORMS 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 which, if adversely determined might prevent or hinder consummation of the transactions contemplated hereby, result in the payment of substantial damages as a result of the consummation of such transactions or to otherwise impair the benefits contemplated hereby.6.05 No Material Adverse Change. No material averse 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 for use by MAIC in consummating the transactions contemplated by this Agreement. 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 (in addition to the conditions set forth in Article VI above), any one or more of which may be waived by Kramer Partners: 7.01 Debt Assumption. KCP shall have assumed a debt obligation of Kramer Partners to Morgan in the amount of $4,000,000 (representing principal plus accrued and unpaid interest thereon through the date of assumption). 7.02 Redemption of KCP Common Stock. In connection with and as consideration for the debt assumption referred to in Section 7.01 above, 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 in the offices of Anderson Kill Olick & Oshinsky, P.C. in New York, New York on December 20, 1991 or, except as otherwise provided below, upon any later date set forth in a written notice signed on behalf of Danielson and delivered to each of the other parties hereto, which later date shall not be earlier than ten Business Days after the date of delivery of such notice to all parties (the “Closing Date”). Notwithstanding any other provision hereof, Danielson and MAIC shall each have the right to terminate this Agreement, and each Participating KCP Minority Shareholder shall have the right to terminate this Agreement as to it, MERGERS AND ACQUISITIONS§12.402 February 1993 12-1581 if the Closing Date shall not have occurred prior to December 31, 1991. IX. MISCELLANEOUS 9.01 Amendments and Waivers. The provisions of this Agreement may be amended, modified or waived only by an instrument or instruments 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 (i) in the case of Danielson or MAIC, to Danielson Holding Corporation, 767 Third Avenue, Fifth Floor, New York, New York 10017, Attn: C. Kirk Rhein, Jr., and (ii) in the case of each Participating KCP Minority Shareholder, to the intended recipient at the “Address for Notices” specified on Schedule 3 hereto (or, as to any party, at such other address as shall be designated by such party in a notice to each other party). Except as otherwise provided in this Agreement, all notices and other communications hereunder shall be deemed to have been duly given when transmitted by telecopier (with oral or telecopied confirmation of receipt), or personally delivered or, in the case of a mailed notice, seven Business Days after the date deposited in the mails, airmail postage prepaid, in each case given or addressed as aforesaid.9.03 Complete Agreement; Inconsistent Agreements. This Agreement represents the complete agreement between the parties hereto as to all matters covered hereby, and supersedes any prior agreements or understandings between the parties with respect thereto.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, all of which taken together shall constitute one and the same instrument, and any of the parties hereto may execute this Agreement by signing any such counterpart.9.07 Jurisdiction; Service of Process. (a) Any suit, action or proceeding to enforce this Agreement or any judgment entered by any court in respect thereof may be brought in the Supreme Court of the State of New York, County of New York, or in the U.S. District Court for the Southern District of New York, and each party hereby submits to the non-exclusive jurisdiction of such courts for the purpose of any suit, action or proceeding. Each party hereby further irrevocably consents to the service of process in any suit, action or proceeding in said courts by the mailing thereof by registered or certified airmail, postage prepaid, to such Obligor at its address for notices specified in Section 9.02 hereof. (b) Each party hereby irrevocably waives any objection which it may now or hereafter have to laying of venue of any suit, §12.402 PROXY STATEMENTS: STRATEGY & FORMS action or proceeding arising out of relating to the enforcement of this Agreement brought in the Supreme Court of the State of New York, County of New York, or the U.S. District Court for the Southern District of New York, and hereby further irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. (c) IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. DANIELSON HOLDING CORPORATION By_________________________________Title: MISSION AMERICAN INSURANCE COMPANY By_________________________________Title: KCP MINORITY SHAREHOLDERS KRAMER CAPITAL PARTNERS, L.P. By_________________________________Title: AMERICAN FINANCIAL CORPORATION By_________________________________ Title: LNC INVESTMENTS, INC. By_________________________________ Title: EQUITY STRATEGIES FUND, INC. By_________________________________ Title: MERGERS AND ACQUISITIONS§12.402 February 1993 12-1583 WHITMAN, HEFFERNAN RHEIN & CO., NC. By_________________________________Title: EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST OF KCP HOLDING COMPANY AND SUBSIDIARIES dated January 1, 1990 By_________________________________ as Trustee By_________________________________ as Trustee By_________________________________ as Trustee §12.402 PROXY STATEMENTS: STRATEGY & FORMS Schedule 1 Number of Shares of KCP Common KCP Minority Shareholder Stock Owned Kramer Capital Partners, L.P. 1,234,628 American Financial Corporation 115,341 LNC Investments, Inc. 31,451 Equity Strategies Fund, Inc. 515,328 Whitman Heffernan Rhein & Co., Inc. 90,289 Employees Stock Ownership Plan and Trust of KCP Holding Company and Subsidiaries dated January 1, 1990 105,263 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.