Document:

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                                                                    EXHIBIT 10.1

October 16, 2002

James A. Cunningham, Jr.
32 Commonwealth Avenue
Great Barrington, MA  01230

Dear Jim:

This letter agreement (the "Agreement") sets forth the agreement that we have
reached regarding your resignation from your regular, full-time employment and
all offices and positions you hold with Berkshire Bank ("Berkshire Bank") and
Berkshire Hills Bancorp, Inc. (the "Holding Company") and their related and
affiliated entities (collectively, "Berkshire").

In exchange for the promises set forth below, you and Berkshire agree as
follows:

         1.    RESIGNATION

         You hereby resign effective as of October 16, 2002 (the "Resignation
Date") as President and Chief Executive Officer and from all other positions,
including any offices, directorships or employment that you hold with Berkshire
or any subsidiary or affiliate of Berkshire as well as with the Greater
Berkshire Foundation, Inc. and the Berkshire Hills Foundation. Said resignations
are hereby accepted by Berkshire. You agree that you will announce your
resignation in a manner consistent with the Press Release attached at Exhibit A.

         2.    PERIODIC POST RESIGNATION PAYMENTS

         Berkshire will make a lump sum payment within thirty (30) days of the
Effective Date (as defined in Section 16(c)) equal to the sum of the amounts set
forth or determined pursuant to Sections 2(a) through (e).

               (a) SEVERANCE PAY. Berkshire shall pay you $1,156,895, which
represents a pro rata bonus for 2002 of $25,709 plus three times the sum of (i)
your base salary rate of $342,784 plus (ii) incentive compensation of $34,278
which represents ten (10) percent of your base salary.

               (b) 401(K), ESOP, SUPPLEMENTAL PLAN. Berkshire will pay you
$140,205, which represents three times the total annual contribution of $46,735
that it made to your 401(k) ($14,000 year to date, 2002), the ESOP ($16,899),
and the Supplemental Plan ($15,836).

               (c) CLUB DUES, AUTOMOBILE AND CELLULAR PHONE. Berkshire will pay
you $20,553, which represents three times the annual amount paid on an after tax
basis to permit you to maintain your club membership at the Pittsfield Country
Club. In addition, Berkshire will transfer to you the title to the Lincoln
Navigator you are currently operating. You will be

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James A. Cunningham, Jr.
October 16, 2002
Page 2

responsible for all other costs and expenses associated with ownership and
operation of the automobile.

               (d) STOCK OPTIONS. Berkshire shall pay you $801,132.25 which
equals the difference between $24.00 and the option exercise price of $16.75
multiplied by 110,501 which is the number of shares of stock which you had an
unvested option to purchase as of the Resignation Date.

               (e) RESTRICTED STOCK. Berkshire shall pay you $1,473,360 which
equals $24.00 multiplied by 61,390, which is the number of shares of unvested
restricted stock in the Holding Company that have been issued to you. Berkshire
will also pay you $42,658.41 which represents an amount equal to the value of
the accumulated dividends for the unvested shares from the date of the initial
award of the restricted stock.

         3.    BENEFIT CONTINUATION

         To the extent permitted by the respective benefit plans, you will be
permitted to participate in medical and dental insurance plans during the
Severance Pay Period (defined as the period between the Resignation Date and
October 16, 2005) or until you are re-employed, whichever is earlier. Since the
terms of the life insurance and long term disability plans do not permit you to
participate after the Resignation Date, Berkshire will pay you $4,480.05, an
amount equal to three times the annual premiums of $1,493.35 for such benefits.
Your rights to medical and dental coverage under COBRA will run concurrently
with the coverage provided under this Agreement from the Resignation Date. Your
co-payment obligation for the continuation of medical and dental coverage will
be withheld from the lump sum payment. The co-payment obligation that will be
withheld is $4,530 which represents three times your annual co-payment of
$1,510.

         4.    SPLIT DOLLAR LIFE INSURANCE

         Berkshire will continue to pay split-dollar life insurance premiums
under the terms of the Split-Dollar Agreements during the Severance Pay Period.
The Split-Dollar Agreements include the following four policies: Security Life
of Denver (Policy No. 1544997); Security Life of Denver (Policy No. 1550180);
Nationwide Life (Policy No. N100380990); and Nationwide Life (Policy No.
101217940).

         5.    TAX TREATMENT

         Berkshire shall undertake to make deductions, withholdings and tax
reports with respect to payments and benefits under this Agreement to the extent
that it reasonably and in good faith determines that it is required to make such
deductions, withholdings and tax reports. Payments under this Agreement shall be
in amounts net of any such deductions or withholdings. Nothing in this Agreement
shall be construed to require Berkshire to make any payments to compensate

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James A. Cunningham, Jr.
October 16, 2002
Page 3

you for any adverse tax effect associated with any payments or benefits or for
any deduction or withholding from any payment or benefit.

         6.    RETURN OF PROPERTY

         You agree to return to Berkshire, on or before the Resignation Date,
all of its property, including, without limitation, computer equipment,
software, keys and access cards, credit cards, files and any other documents
(including computerized data and any copies made of any computerized data or
software) containing information concerning Berkshire, its business or its
business relationships (in the latter two cases, actual or prospective). In the
event that you discover that you continue to retain any such property after the
Resignation Date, you shall return it to Berkshire immediately.

         7.    CONFIDENTIAL INFORMATION

         You recognize and acknowledge that knowledge of the business activities
and plans for business activities of Berkshire is a valuable, special and unique
asset of Berkshire's business. You agree that you will not disclose at any time
any knowledge of the past, present, planned or considered business activities of
Berkshire to any person, firm, corporation, or other entity for any reason or
purpose whatsoever unless expressly authorized by the Board of Directors or
required by law. Notwithstanding the foregoing, you may disclose any knowledge
of banking, financial and/or economic principles, concepts or ideas which are
not solely and exclusively derived from the business plans and activities of
Berkshire. In the event that you breach or threaten to breach this Section 7,
Berkshire will be entitled to an injunction restraining you from disclosing, in
whole or in part, the knowledge of the past, present, planned or considered
business activities of Berkshire or from rendering any services to any person,
firm, corporation or other entity to whom such knowledge, in whole or in part,
has been disclosed or is threatened to be disclosed. Nothing herein will be
construed as prohibiting Berkshire from pursuing any other remedies available to
Berkshire for such breach or threatened breach, including the recovery of
damages from you.

         8.    NONCOMPETITION

         You agree not to compete with Berkshire for a period of one (1) year
following the Resignation Date in any city, town or county in which your normal
business office is located or in which Berkshire has an office or has filed an
application for regulatory approval to establish an office, determined as of the
Resignation Date, except as agreed to pursuant to a resolution duly adopted by
the Board of Directors. You agree that during such period and within said
cities, towns and counties, you shall not work for or advise, consult or
otherwise serve with, directly or indirectly, any entity whose business
materially competes with the depository, lending or other business activities of
Berkshire. Recognizing that irreparable injury will result to Berkshire, its
business and property in the event of your breach of this Section 8, you agree
that in the event of any such breach by you, Berkshire will be entitled, in
addition to any other remedies and damages available, to an injunction to
restrain the violation hereof by you, your

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James A. Cunningham, Jr.
October 16, 2002
Page 4

partners, agents, servants, employees and all persons acting for or under your
direction. You represent and admit that your experience and capabilities are
such that you can obtain employment in a business engaged in other lines and/or
of a different nature than Berkshire, and that the enforcement of a remedy by
way of injunction will not prevent you from earning a livelihood. Nothing herein
will be construed as prohibiting Berkshire or its subsidiaries from pursuing any
other remedies available to it for such breach or threatened breach, including
the recovery of damages from you.

         9.    RELEASE CLAIMS

               (a) BY YOU. In consideration for, among other terms, the payments
and benefits described in Sections 2, 3 and 4, you voluntarily release and
forever discharge Berkshire, its affiliated and related entities, its and their
respective predecessors, successors and assigns, its and their respective
employee benefit plans and fiduciaries of such plans, and the current and former
officers, directors, shareholders, employees, attorneys, accountants and agents
of each of the foregoing in their official and personal capacities (collectively
referred to as the "Releasees") generally from all claims, demands, debts,
damages and liabilities of every name and nature, known or unknown ("Claims")
that, as of the date when you sign this Agreement, you have, ever had, now claim
to have or ever claimed to have had against any or all of the Releasees. This
release includes, without limitation, all Claims:

         o    relating to your employment by and resignation from employment
              with Berkshire;

         o    arising from or out of the June 27, 2000 employment agreement
              between you and the Holding Company and/or the June 27, 2000
              employment agreement between you and Berkshire Bank;

         o    of wrongful discharge;

         o    of breach of contract;

         o    of retaliation or discrimination under federal, state or local
              law (including, without limitation, Claims of age discrimination
              or retaliation under the Age Discrimination in Employment Act,
              Claims of disability discrimination or retaliation under the
              Americans with Disabilities Act, and Claims of discrimination or
              retaliation under Title VII of the Civil Rights Act of 1964);

         o    under any other federal or state statute (including, without
              limitation, Claims under the Family Medical Leave Act and Claims
              under the Worker Adjustment and Retraining Notification Act);

         o    of defamation or other torts;

         o    of violation of public policy;

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James A. Cunningham, Jr.
October 16, 2002
Page 5

         o    for wages, bonuses, incentive compensation, vacation pay or any
              other compensation or benefits; and

         o    for damages or other remedies of any sort, including, without
              limitation, compensatory damages, punitive damages, injunctive
              relief and attorney's fees;

PROVIDED, however, that this release shall not affect your rights under this
Agreement, your rights under the May 21, 1997 split dollar life insurance
agreement between you and Berkshire Bank, or your rights to receive a
distribution of your vested account balances under the 401(k) Plan, ESOP and the
Supplemental Plan.

You agree that you shall not seek or accept damages of any nature, other
equitable or legal remedies for your own benefit, attorney's fees, or costs from
any of the Releasees with respect to any Claim. As a material inducement to
Berkshire to enter into this Agreement, you represent that you have not assigned
to any third party and you have not filed with any agency or court any Claim
released by this Agreement.

               (b) BY BERKSHIRE. Berkshire, on behalf of itself and its
predecessors, successors, assign, directors (but only in their capacities as
directors of Berkshire) and officers (but only in their capacities as officers
of Berkshire) voluntarily and irrevocably release and discharge you and your
successors, assigns, heirs, and survivors from any and all charges, complaints,
claims, promises, agreements, causes of action, damages and debts (including
attorney's fees and costs actually incurred) which any of them have, claim to
have, ever had or ever claimed to have had against you through the date hereof,
known or unknown, which relate to good faith acts or omissions by you during the
course of your employment with Berkshire undertaken or not undertaken in the
reasonable belief that such acts or omissions were in the best interest of
Berkshire.

         10.   NONDISPARAGEMENT

         You agree not to make any disparaging statements concerning Berkshire
or any of its affiliates or current or former officers, directors, shareholders,
employees or agents. You further agree not to take any actions or conduct
yourself in any way that would reasonably be expected to affect adversely the
reputation or goodwill of Berkshire or any of its affiliates or any of its
current or former officers, directors, shareholders, employees or agents.
Berkshire will instruct the members of its Board of Directors and its executive
management not to take any action or make any statement, written or oral, which
disparages or criticizes you or your management and business practices. The
provisions of this Section 10 shall not apply to any truthful statement required
to be made by you or Berkshire, as the case may be, in any legal proceeding or
governmental or regulatory investigation.

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James A. Cunningham, Jr.
October 16, 2002
Page 6

         11.   FUTURE COOPERATION

         You agree to cooperate reasonably with Berkshire and all of its
affiliates (including its outside counsel) in connection with the contemplation,
prosecution and defense of all phases of existing, past and future litigation,
regulatory or administrative actions about which Berkshire believes you may have
knowledge or information. You further agree to make yourself available at
mutually convenient times during and outside of regular business hours as
reasonably deemed necessary by Berkshire's counsel. Berkshire shall not utilize
this Section 11 to require you to make yourself available to an extent that
would unreasonably interfere with full-time employment responsibilities that you
may have. You agree to appear without the necessity of a subpoena to testify
truthfully in any legal proceedings in which Berkshire calls you as a witness.
Berkshire shall also reimburse you for any pre-approved reasonable business
travel expenses that you incur on Berkshire's behalf as a result of your
litigation cooperation services, after receipt of appropriate documentation
consistent with Berkshire's business expense reimbursement policy. You further
agree that you shall not voluntarily provide information to or otherwise
cooperate with any individual or entity that is contemplating or pursuing
litigation against any of the Releasees or that is undertaking any investigation
or review of any of the Releasees' activities or practices; PROVIDED, however,
that you may participate in or otherwise assist in any investigation or inquiry
conducted by the EEOC or the Massachusetts Commission Against Discrimination or
other state agency. Notwithstanding the foregoing, this provision shall not
apply to the extent that your breach of this Agreement consists of initiating a
legal action in which you contend that the release set forth in Section 9(a) is
invalid, in whole or in part, due to the provisions of 29 U.S.C. ss.626(f).

         12.   SUSPENSION OR TERMINATION OF PAYMENTS

         In the event that you fail to comply in a material manner with any of
your obligations under this Agreement, in addition to any other legal or
equitable remedies it may have for such breach Berkshire shall have the right to
terminate or suspend its payments to you under this Agreement. The termination
or suspension of such payments in the event of such breach by you will not
affect your continuing obligations under this Agreement. Notwithstanding the
foregoing, this provision shall not apply to the extent that your breach of this
Agreement consists of initiating a legal action in which you contend that the
release set forth in Section 9(a) is invalid, in whole or in part, due to the
provisions of 29 U.S.C. ss. 626(f).

         13.   LEGAL REPRESENTATION

         This Agreement is a legally binding document and your signature will
commit you to its terms. You acknowledge that you have been advised to discuss
all aspects of this Agreement with your attorney, that you have in fact retained
a personal attorney who has reviewed this Agreement and represented you
concerning it, that you have carefully read and fully understand all of the
provisions of this Agreement and that you are voluntarily entering into this
Agreement. Berkshire represents and warrants to you that all requisite company
authority, and all other consents necessary for the execution of this Agreement,
have been duly adopted and obtained,

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James A. Cunningham, Jr.
October 16, 2002
Page 7

and Berkshire has the full right, power and authority to execute, deliver, and
carry out the terms and conditions of this Agreement and all other documents
to be executed pursuant to, or in connection with, this Agreement.

         14.   ENFORCEMENT

               (a) JURISDICTION. You and Berkshire hereby agree that the
Superior Court of the Commonwealth of Massachusetts and the United States
District Court for the District of Massachusetts shall have the exclusive
jurisdiction to consider any matters related to this Agreement, including
without limitation any claim for violation of this Agreement. With respect to
any such court action, you (i) submit to the jurisdiction of such courts, (ii)
consent to service of process, and (iii) waive any other requirement (whether
imposed by statute, rule of court or otherwise) with respect to personal
jurisdiction or venue.

               (b) RELIEF. You agree that it would be difficult to measure any
harm caused to Berkshire that might result from any breach by you of your
promises set forth in Sections 6, 7, 8, 9, or 10 and that in any event money
damages would be an inadequate remedy for any such breach. Accordingly, you
agree that if you breach, or propose to breach, any portion of your obligations
under Sections 6, 7, 8, 9, or 10, Berkshire shall be entitled, in addition to
all other remedies it may have, to an injunction or other appropriate equitable
relief to restrain any such breach, without showing or proving any actual damage
to Berkshire and without the necessity of posting a bond. In the event that
Berkshire prevails in any action to enforce Section 6, 7, 8, 9, or 10, then you
also shall be liable to Berkshire for attorney's fees and costs incurred by
Berkshire in enforcing such provision(s). In addition, in the event that you
breach any portion of Section 8, you agree that the restrictions of Section 8
shall remain in effect for the period of such breach notwithstanding the period
of one (1) year set forth above and you further agree that the same restrictions
shall apply for a period of one (1) year commencing effective upon the cessation
of any such breach.

         15.   INDEMNIFICATION

         Berkshire shall indemnify you (and your heirs, executors and
administrators) to the fullest extent permitted under Delaware law against all
expenses and liabilities reasonably incurred by you in connection with or
arising out of any action, suit, or proceeding in which you may be involved by
reason of your having been a director or officer of Berkshire (whether or not
incurred before or after the Resignation Date). Such expenses and liabilities
will include, but will not be limited to, judgments, court costs and attorneys'
fees and the cost of reasonable settlements. Any payments made to you pursuant
to this Section 15 are subject to and conditioned on compliance with 12 U.S.C.
ss. 1828(k) and 12 C.F.R. Part 359 and any rules or regulations promulgated
thereunder.

         16.   NOTICES, ACKNOWLEDGMENTS AND OTHER TERMS

               (a) You are advised to consult with an attorney before signing
this Agreement.

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James A. Cunningham, Jr.
October 16, 2002
Page 8

               (b) You acknowledge and agree that Berkshire's promises in this
Agreement constitute consideration in addition to anything of value to which you
are otherwise entitled by reason of the termination of your employment.

               (c) You acknowledge that you have been given the opportunity, if
you so desired, to consider this Agreement for twenty-one (21) days before
executing it. If not signed by you and returned to Robert Wells so that it is
received by close of business on the twenty-second (22nd) day after your receipt
of the Agreement, this Agreement will not be valid. In addition, if you breach
any of the conditions of the Agreement within the twenty-one (21) day period,
the offer of this Agreement will be withdrawn and your execution of the
Agreement will not be valid. In the event that you execute and return this
Agreement within twenty-one (21) days or less of the date of its delivery to
you, you acknowledge that such decision was entirely voluntary and that you had
the opportunity to consider this letter agreement for the entire twenty-one (21)
day period. Berkshire acknowledges that for a period of seven (7) days from the
date of the execution of this Agreement, you shall retain the right to revoke
this Agreement by written notice delivered to Robert Wells before the end of
such period. This Agreement shall become effective upon the expiration of such
revocation period (the "Effective Date"). You acknowledge that the Bank may
elect to accept your resignation and announce it publicly at any time after you
tender a signed copy of this Agreement.

               (d) By signing this Agreement, you acknowledge that you are doing
so voluntarily and knowingly, fully intending to be bound by this Agreement. You
also acknowledge that you are not relying on any representations by us or any
other representative of Berkshire concerning the meaning of any aspect of this
Agreement. You understand that this Agreement shall not in any way be construed
as an admission by Berkshire of any liability or any act of wrongdoing
whatsoever by Berkshire against you and that Berkshire specifically disclaims
any liability or wrongdoing whatsoever against you on the part of itself and its
respective officers, directors, shareholders, employees and agents. You
understand that if you do not to enter into this Agreement and bring any claims
against Berkshire, Berkshire will dispute the merits of those claims and contend
that it acted lawfully and for good business reasons with respect to you.

               (e) In the event of any dispute, this Agreement will be construed
as a whole, will be interpreted in accordance with its fair meaning, and will
not be construed strictly for or against either you or Berkshire.

               (f) Except to the extent that the law of Delaware will establish
the scope of Berkshire's obligations to indemnify you pursuant to Section 15 of
this Agreement, the law of the Commonwealth of Massachusetts will govern any
dispute about this Agreement, including any interpretation or enforcement of
this Agreement.

               (g) In the event that any provision or portion of a provision of
this Agreement shall be determined to be illegal, invalid or unenforceable, the
remainder of this Agreement shall be enforced to the fullest extent possible and
the illegal, invalid or unenforceable provision or

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James A. Cunningham, Jr.
October 16, 2002
Page 9

portion of a provision will be amended by a court of competent jurisdiction to
reflect the parties' intent if possible. If such amendment is not possible, the
illegal, invalid or unenforceable provision or portion of a provision will be
severed from the remainder of this Agreement and the remainder of this Agreement
shall be enforced to the fullest extent possible as if such illegal, invalid or
unenforceable provision or portion of a provision was not included.

               (h) This Agreement may be modified only by a written agreement
signed by you and authorized representatives of Berkshire.

               (i) This Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersedes all prior
agreements between the parties with respect to any related subject matter,
except for the May 21, 1997 split dollar life insurance agreement between you
and Berkshire Bank (except to the extent this Agreement expressly modifies that
split dollar life insurance agreement).

               (j) This Agreement shall be binding upon each of the parties and
upon their respective heirs, administrators, representatives, executors,
successors and assigns, and shall inure to the benefit of each party and to
their heirs, administrators, representatives, executors, successors, and
assigns.

Please indicate your agreement to the terms of this Agreement by signing and
returning to me the original of this letter within the time period set forth
above.

Very truly yours,

BERKSHIRE BANK

By:  /s/ Robert A. Wells                       October 16, 2002
     ---------------------------------         -------------------------------
     Title: Chairman                           Date

BERKSHIRE HILLS BANCORP, INC.

By:  /s/ Robert A. Wells                       October 16, 2002
     ---------------------------------         -------------------------------
     Title: Chairman                           Date

You are advised to consult with an attorney before signing this Agreement. The
foregoing is agreed to and accepted by:

/s/ James A. Cunningham, Jr.                   October 16, 2002
------------------------------------           -------------------------------
James A. Cunningham, Jr.                         DateQuickLinks
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Exhibit 4(a)    
  

 
 

AMENDED AND RESTATED
  PUT AGREEMENT    
  

        THIS AMENDED AND RESTATED PUT AGREEMENT (the "Agreement") is entered into as of the    day
of                    , 2002, by and among KAISER GOVERNMENT
PROGRAMS, INC., a Delaware corporation ("KGP"), KAISER GROUP HOLDINGS, INC., a Delaware corporation (the "Company"), KAISER K-H HOLDINGS, INC., a Delaware corporation
("K-H Holdings"), and THE BANK OF NEW YORK (the "Depositary"), as agent on behalf of those holders of Old Senior Notes (as hereinafter defined) who have elected to exchange their rights
under the Guarantee (as hereinafter defined) for the Put (as hereinafter defined) pursuant to the KGP Exchange Offer (as hereinafter defined) and their successors and assigns. 

RECITALS  

        WHEREAS, KGP previously issued a guarantee (the "Guarantee") of the 12.0% Senior Subordinated Notes due 2003 (the "Old Senior Notes") of Kaiser Group
International, Inc., a Delaware corporation ("Kaiser International"); 

        WHEREAS,
on September 1, 2000, KGP commenced an exchange offer pursuant to Section 3(a)(9) of the Securities Act of 1933 (the "KGP Exchange Offer") whereby holders of Old
Senior Notes could exchange their rights under the Guarantee for options (the "Puts") to sell to KGP, on the terms and subject to the conditions set forth herein, shares of Preferred Stock (as
hereinafter defined) issued to them under the Plan (as hereinafter defined) in partial satisfaction of Kaiser International's obligations under the Old Senior Notes; 

        WHEREAS,
certain holders of Old Senior Notes elected to exchange their rights under the Guarantee for the Puts pursuant to the KGP Exchange Offer; 

        WHEREAS,
on                        , 2002, the Company commenced an exchange offer whereby holders of Preferred Stock could exchange their
Preferred Stock and related rights under the Puts for
up to $40 million of the Company's 81/4% Senior Notes dues 2007 (the "New Senior Notes"), which exchange offer was conditioned on the consents to the amendment of this Agreement
by the holders of Preferred Stock representing two-thirds of the liquidation preference of the Preferred Stock subject to the Puts; and 

        WHEREAS,
such consents were obtained in connection with such exchange offer. 

 
 

ARTICLE I    
    
    DEFINITIONS    
  

Section 1.01 Certain Definitions  

        As used in this Agreement, the following terms shall have the following respective meanings: 

        "Affiliate" of any person means any person directly or indirectly controlling or controlled by or under direct or indirect common control
with such person. For purposes of this definition, "control", when used with respect to any person, means the power to direct the management and policies of such person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise, and the terms "controlling" and "controlled" have meanings correlative to the foregoing. 

1

 

        "Base Fixed Charges" means (i) all past accrued but unpaid cash dividends and interest on Base Obligations plus (ii) the
next scheduled quarterly payments of cash dividends and interest on Base Obligations. 

        "Base Obligations" means the liquidation preference of the Preferred Stock plus the principal amount of the New Senior Notes, in each case
outstanding after the completion of the exchange of New Senior Notes for Preferred Stock registered on the Company's Form S-4 Registration Statement filed with the Securities and
Exchange Commission, Registration No. 333-                        . 

        "Certificate(s)" means the certificates in the form of Exhibit A hereto representing the Puts. 

        "Company" means Kaiser Group Holdings, Inc., a Delaware corporation, and its successors and assigns. 

        "Depositary" means, with respect to the Puts, The Bank of New York (including its successors and assigns), which shall act as paying agent
with respect to exercise of the Puts. 

        "Excess Proceeds" means the net after-tax proceeds received by KGP from (i) any cash distributions from
Kaiser-Hill through K-H Holdings, that, on a quarterly basis, exceed 2.8 times the amount of cash required to pay (a) all Base Fixed Changes, (ii) the disposition
of any interest in Kaiser-Hill either by means of a disposition by KGP of shares of K-H Holdings or a disposition by K-H Holdings of all or part of its interest in
Kaiser-Hill, (iii) any extraordinary distribution from Kaiser-Hill through K-H Holdings, as reasonably determined by the Board of Directors of the Company,
and (iv) any interest paid on Excess Proceeds held by the Depositary. Any and all Excess Proceeds distributed to KGP by the Depositary pursuant to Section 3.04(d) shall become operating
capital of KGP and shall not be subject to any limitation on use or disposition under this Agreement or the Puts. For purposes of this definition, "net after-tax proceeds" means the
aggregate proceeds received by KGP as a result of any of the transactions described in clauses (i), (ii), (iii) or (iv) of this definition of "Excess Proceeds" after providing for any
and all taxes that may be or become due relating to such transaction by any member of the Company's consolidated tax group (for United States federal income tax purposes), as reasonably determined by
the Company. 

        "Final Report" means, with respect to each Period of Exercisability, the written report of the Depositary setting forth the name of each
Holder that has properly exercised its Put and the number of shares of Preferred Stock with respect to which such Holder has properly exercised its Put and the amount of all Excess Proceeds held by
the Depositary. 

        "Guarantee" means the Guarantee of KGP with respect to the Old Senior Notes. 

        "Holders" means the holders of Puts, comprised of holders of Old Senior Notes that exchanged their rights under the Guarantee for Puts,
together with any successors and assigns of such holders as regards Puts, as reflected from time to time on the Register for the Puts, except that no Affiliate of KGP or the Company shall be
considered to be a Holder for purposes of this Agreement. 

        "Kaiser-Hill" means Kaiser-Hill Company, LLC, a Colorado limited liability company and an indirect, 50% owned
subsidiary of KGP. 

        "Kaiser International" means Kaiser Group International, Inc, a Delaware corporation. 

        "KGP" means Kaiser Government Programs, Inc., a Delaware corporation. 

        "KGP Exchange Offer" means the offer commenced on September 1, 2000, pursuant to Section 3(a)(9) of the Securities Act of
1933, whereby holders of Old Senior Notes could exchange their rights under the Guarantee for options to sell to KGP, on the terms and subject to the 

2

 

conditions set forth herein, shares of the Preferred Stock issued to such holders under the Plan in partial satisfaction of Kaiser International's obligations under the Old Senior Notes. 

        "KGP Report" means, with respect to each Period of Exercisability, the report of KGP to the Depositary setting forth the aggregate
Purchase Price payable to each Holder, instructions with respect to the pro rata purchase of shares of Preferred Stock and the number of shares of Preferred Stock, if any, for which the Company must
cause new stock certificates to be issued to the holders thereof. 

        "K-H Holdings" means Kaiser K-H Holdings, Inc., a Delaware corporation, which is a wholly-owned subsidiary
of KGP and the owner of 50% of the interests in Kaiser-Hill. 

        "New Senior Notes" means the Company's 81/4% Senior Notes due 2007. 

        "Old Senior Notes" means Kaiser International's 12.0% Senior Subordinated Notes due 2003 issued pursuant to that certain Indenture dated
January 11, 1994, as amended, by and between Kaiser International and The Bank of New York, as Trustee. 

        "Notice of Exercise" means the notice from a Holder substantially in the form of Exhibit C specifying
the maximum number of shares of Preferred Stock with respect to which a Put is being exercised. 

        "Notice of Triggering Event" means the notice of a Triggering Event given to the Holders by the Depositary substantially in the form of
Exhibit B. 

        "Period of Exercisability" means, with respect to any Triggering Event, the thirty-(30) day period during which Holders may exercise Puts. 

        "Plan" means the Plan of Reorganization of Kaiser International and its debtor
subsidiaries, as confirmed by the Bankruptcy Court and as effective. 

        "Plan Effective Date" means December 18, 2000. 

        "Preferred Stock" means the Series 1 Redeemable Cumulative Preferred Stock, $0.01 par value, of the Company. 

        "Purchase Price" means, for any shares of Preferred Stock with respect to which a Put is exercised, (a) 100% of the liquidation
preference of such Preferred Stock, plus (b) all accrued and unpaid dividends thereon, as adjusted from time to time. 

        "Put(s)" means the option(s) to sell Preferred Stock evidenced by the Certificates, the terms and conditions of which are set forth
herein. 

        "Register" means the list of Holders maintained by the Transfer Agent. 

        "Transfer Agent" means The Bank of New York or any other entity appointed subsequently by KGP for the purpose of maintaining the Register
for the registration of ownership and registration of transfer of the Puts. 

        "Triggering Event" means any event that results in the receipt by KGP of Excess Proceeds (other than the payment of interest on Excess
Proceeds); provided, however, in the event that KGP receives Excess Proceeds within twelve (12) months of a previous Triggering Event, then such Triggering Event
shall be deemed to have occurred on the date that is the earlier of (i) twelve (12) months following the previous Triggering Event or (ii) the date on which there is an aggregate
of three million dollars ($3,000,000) or more of Excess Proceeds. 

3

 

 
 

ARTICLE II    
    
    GENERAL; FORM OF CERTIFICATE;
  EXECUTION, DELIVERY AND ISSUANCE OF CERTIFICATES    
  

Section 2.01 General  

        (a)  Each
Put shall represent an option of the Holder to require KGP to purchase, on a pro rata basis with the Preferred Stock and New Senior Notes, Preferred Stock at the
Purchase Price from Excess Proceeds, all subject to the terms and conditions set forth herein. Puts shall be effective only upon the Plan Effective Date and shall be exercisable only upon the
occurrence of a Triggering Event. Notwithstanding anything else provided herein or in any Certificate, all Puts shall expire at 5:00 p.m., New York City time, on December 31, 2007. 

        (b)  The
Puts shall be transferable, except that no transfer shall be effective unless reflected on the register for the Puts maintained by KGP or an entity appointed by KGP
to serve as the registrar and transfer agent for the Puts. Notwithstanding anything to the contrary in the immediately preceding sentence, the Puts shall cease to be transferable and shall become
nontransferable if the effect of any further transfer would be to cause KGP to be required to register the Puts as a class of securities under the applicable provisions of the Securities Exchange Act
of 1934. 

Section 2.02 Form of Certificate  

        (a)  Puts
shall be evidenced solely by certificates representing the option to sell Preferred Stock to KGP on the terms set forth herein and substantially in the form
attached as Exhibit A to this Agreement (the "Certificates"). 

        (b)  The
Certificates (i) shall be issued in registered form only; (ii) shall be dated the date of issuance (whether upon initial issuance, exchange or
replacement); and (iii) shall contain such legends and endorsements, each as provided by KGP, typed, stamped, printed, lithographed or engraved, as KGP
may deem appropriate and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any law, rule or regulation applicable to the Puts or KGP, or to conform to
customary usage. 

Section 2.03 Execution, Delivery and Issuance of Certificates  

        (a)  Certificates
evidencing the Puts shall be executed promptly by KGP on or after the Plan Effective Date and delivered to the Depositary for subsequent delivery to those
holders of Old Senior Notes that exchange their rights under the Guarantee. The Certificates shall be executed on behalf of KGP by its Chairman, Chief Executive Officer or President or by any of its
Vice Presidents, either manually or by facsimile signature. In case any officer of KGP whose signature shall have been placed upon any Certificates shall cease to be the Chairman, Chief Executive
Officer, President or a Vice President of KGP before issuance and delivery of the Certificates, such Certificates may, nevertheless, be issued and delivered with the same force and effect as though
such person had not ceased to be such officer of KGP. 

        (b)  The
Depositary shall promptly deliver the Certificates to the Holders at the address provided by such Holders in the KGP Exchange Offer letter of transmittal or
thereafter provided by any Holder in writing to the Depositary and KGP. 

4

 

 
 

ARTICLE III    
    
    EXERCISE OF PUTS    
  

Section 3.01 Shares Subject to Put; Deposit of Excess Proceeds; Pro Rata Purchase  

        (a)  Upon
the occurrence of a Triggering Event, subject to the limitations set forth in this Agreement, each Certificate shall entitle the Holder thereof to require KGP to
purchase, at the Purchase Price, any or all Preferred Stock issued to a Holder pursuant to the Plan in partial satisfaction of the Kaiser International's obligations under the Old Senior Notes or
subsequently purchased from such a Holder or any subsequent transferee. 

        (b)  Within
five (5) business days of receipt of any Excess Proceeds, KGP shall deliver the Excess Proceeds to the Depositary by wire transfer of immediately available
United States funds for the irrevocable benefit of the Holders. 

        (c)  KGP
shall purchase shares of Preferred Stock, on a pro rata basis, in accordance with the then outstanding liquidation preference of Preferred Stock and principal amount
of New Senior Notes, from the Holders based upon the number of shares of Preferred Stock with respect to which Puts have been properly exercised, but only up to the pro rata amount of the
then-existing Excess Proceeds available for the Preferred Stock. The rights of the holders of Preferred Stock to Excess Proceeds are pari
passu with the corresponding redemption rights of the New Senior Notes. KGP shall not be required to purchase any fractional shares. To the extent KGP cannot purchase Preferred
Stock precisely on a pro rata basis, KGP shall use its reasonable discretion in purchasing the maximum number of whole shares of Preferred Stock purchasable from the Excess Proceeds with respect to
which Puts have been properly exercised. 

Section 3.02 Notice of Triggering Event  

        Within
fifteen (15) days of the occurrence or deemed occurrence of a Triggering Event, KGP shall give the Depositary written notice that a Triggering Event has occurred. The
notice shall specify the Purchase Price per share of Preferred Stock payable to the Holders upon due exercise of the Puts and shall be accompanied by all documentation reasonably required by KGP in
connection with the exercise by the Holders of the Puts. Within five (5) business days, the Depositary shall issue a written notice of occurrence of a Triggering Event ("Notice of Triggering
Event") to each Holder (with a copy to KGP) at the address provided by such Holder in writing to the Depositary and KGP and contained in the Register. Such notice shall be dated the date of issuance
by the Depositary and shall be in the form of Exhibit B hereto and shall be accompanied by a form of Notice of Exercise and all other documentation reasonably
required by KGP or the Depositary in connection with exercise of the Puts. 

Section 3.03 Exercise of Puts  

        Subject
to the terms and conditions set forth in this Agreement, Puts may be exercised by the Holders thereof only within the thirty (30) day period following the date of issuance
by the Depositary of a Notice of Triggering Event (the "Period of Exercisability") with respect to any Triggering Event by delivering to the Depositary: 

        (a)  A
Notice of Exercise in the form of Exhibit C specifying the maximum number of shares of Preferred Stock with respect to which the
Put is being exercised; 

        (b)  Any
stock certificate(s) representing the shares of Preferred Stock with respect to which the Put is being exercised, duly endorsed with signature guaranteed, or
accompanied by a properly completed separate stock power; 

        (c)  An
executed Substitute Form W-9; 

5

 

        (d)  The
Certificate(s); and 

        (e)  Such
other documentation reasonably required by KGP or the Depositary in connection with exercise of the Puts. 

Section 3.04 Reports of the Depositary; Payment of the Purchase Price; Distribution of Funds to KGP; Issuance of New Certificates  

        (a)  During
each Period of Exercisability, the Depositary shall provide daily reports to KGP, in the form requested by KGP, of the number of shares of Preferred Stock with
respect to which Puts have been properly exercised as of the previous business day. On the business day following expiration of each Period of Exercisability, the Depositary shall issue a written
report (a "Final Report") setting forth the name of each Holder that has properly exercised its Put, the number of shares of Preferred Stock with respect to which such Holder has properly exercised
its Put and the aggregate amount of all Excess Proceeds held by the Depositary. 

        (b)  Within
five (5) business days following receipt of the Final Report, KGP shall deliver to the Depositary (i) a report setting forth the aggregate Purchase
Price payable to each Holder, instructions with respect to the pro rata purchase of shares of Preferred Stock, and the number of shares of Preferred Stock, if any, for which the Company must cause new
stock certificates to be issued and the holders thereof (the "KGP Report"), and (ii) new Certificates representing the number of shares of Preferred Stock, if any, with respect to which each
Holder's Put remains unexercised. 

        (c)  Following
receipt of the items listed in subsection (b) of this Section, the Depositary shall promptly issue payment of the aggregate Purchase Price payable to
each Holder that has properly exercised its Put, along with new Certificates representing the number of shares of Preferred Stock, if any, with respect to which each Holder's Put remains unexercised.
The Depositary shall simultaneously deliver to the Company, all stock certificates representing the Preferred Stock tendered to it, along with the KGP Report setting forth the number of shares of
Preferred Stock, if any, for which the Company must cause new stock certificates to be issued and delivered to the holders thereof. 

        (d)  Following
payment of the Purchase Price in accordance with subsection (c) above, the Depositary shall distribute to KGP all funds that had been held by the
Depositary as Excess Proceeds but that were not required to be paid to Holders as a result of the exercise of Puts during the immediately preceding Period of Exercisability, except that the Depositary
shall retain and invest for the irrevocable benefit of the Holders of the Puts any Excess Proceeds that represent fractional shares not purchased by KGP as permitted by the provisions of this
Agreement. 

        (e)  The
Company agrees to promptly issue, or cause the transfer agent for the Preferred Stock to issue, stock certificates representing the shares of Preferred Stock not
purchased by KGP pursuant to the exercise of Puts and to deliver such stock certificates to the record holders in accordance with the instructions in the Notice of Exercise. 

 
 

ARTICLE IV    
    
    DEPOSITARY    
  

Section 4.01 Nature of Duties and Responsibilities Assumed  

        (a)  KGP
hereby appoints the Depositary to act as agent on behalf of the Holders as set forth in this Agreement. The Depositary hereby accepts the appointment as agent on
behalf of the Holders and agrees to perform that agency upon the terms and conditions set forth in this 

6

 

Agreement, by all of which KGP, K-H Holdings, the Company and the Holders, by their acceptance of this Agreement and the Puts, shall be bound. The Depositary shall not by any act under
this Agreement be deemed to make any representation as to validity or authorization of the Puts or the Certificates, or as to the number or kind or amount of any property, stock or other securities
deliverable upon exercise of any Put or the correctness of the representations of KGP or the Holders made in the documents that the Depositary receives. The Depositary shall not have any duty to
calculate or determine any adjustments with respect to the kind and amount of shares or other securities or any property receivable by Holders upon the exercise of Puts, and the Depositary shall have
no duty or responsibility in determining the accuracy or correctness of any such calculation. The Depositary shall not (i) be liable for any recital or statement of fact contained in this
Agreement or in the Certificates or for any action taken, suffered or omitted by it in good faith in the belief that any Certificate or any other document or any signature is genuine or properly
authorized, (ii) be responsible for any failure on the part of any Holder, KGP, K-H Holdings, or the Company to comply with any of its covenants and obligations contained in this
Agreement or in the Certificates or (iii) be liable for any act or omission in connection with this Agreement except for its own gross negligence, bad faith or willful misconduct. The
Depositary is hereby authorized to accept instructions with respect to the performance of its duties under this Agreement from the Chief Executive Officer, the President, any Vice President, the Chief
Financial Officer, the Treasurer, the Secretary or the Assistant Secretary of KGP and to apply to any such officer for instructions (which instructions will be promptly given in writing when
requested), and the Depositary shall not be liable for any action taken or suffered to be taken by it in good faith in accordance with the instructions of any such officer, except for its own gross
negligence, bad faith or willful misconduct, but in its discretion the Depositary may in lieu of such instructions accept other evidence of such or may require such further or additional evidence as
it may deem reasonable. Any application by the Depositary for written instructions from KGP may, at the option of the Depositary, set forth in writing any action proposed to be taken or omitted by the
Depositary under this Agreement and the date on and/or after which such action shall be taken or such omission shall be effective. The Depositary shall not be liable for any action taken by, or
omission of, the Depositary in accordance with a proposal included in such application on or after the date specified in such application (which date shall not be less than three business days after
the date any officer of KGP actually receives such application, unless any such officer shall have consented in writing to any earlier date) unless prior to taking any such action (or the effective
date in the case of an omission), the Depositary shall have received written instructions in response to such application specifying the action to be taken or omitted. 

        (b)  The
Depositary understands that from time to time it will receive from KGP Excess Proceeds, including, as is permitted by the provisions of this Agreement, Excess
Proceeds that will be distributed to Holders of the Puts on a delayed basis. The Depositary shall hold all such Excess Proceeds for the irrevocable benefit of the Holders of the Puts and shall invest
such Excess Proceeds in an interest-bearing account designated by KGP and identified as the KGP Excess Proceeds account, until such time as such Excess Proceeds are required to be distributed in
accordance with the provisions of this Agreement. 

        (c)  The
Depositary may execute and exercise any of the rights and powers vested in it under this Agreement or perform any duty under this Agreement either itself or by or
through its attorneys,
agents or employees, and the Depositary shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder. The Depositary shall not
be under any obligation or duty to institute, appear in or defend any action, suit or legal proceeding in respect of this Agreement, unless first indemnified to its satisfaction, but this provision
shall not affect the power of the Depositary to take such action as the Depositary may consider proper, whether with or without such indemnity. The Depositary shall promptly notify KGP and the Company
in writing of any claim made or action, suit or proceeding 

7

 

instituted against or arising out of or in connection with this Agreement. No provision of this Agreement shall require the Depositary to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties under this Agreement or in the exercise of its rights if there shall be reasonable grounds for believing that repayment of such funds or adequate
indemnification against such risk or liability is not reasonably assured to it. 

        (d)  KGP
will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further acts, instruments and assurances as
may reasonably be required by the Depositary in order to enable it to carry out or perform its duties under this Agreement. 

        (e)  The
Depositary shall not be liable except for the failure to perform such duties as are specifically set forth in this Agreement, and no implied covenants or obligations
shall be read into this Agreement against the Depositary, whose duties and obligations shall be determined solely by the express provisions of this Agreement. 

        (f)    The
Depositary may rely conclusively and shall be protected in acting upon any order, notice, demand, certificate, opinion or advice of counsel (including counsel chosen
by the Depositary), statement, instrument, report or other paper or document (not only as to its due execution and the validity and effectiveness of its provisions but also as to the truth and
acceptability of any information therein contained) which is believed by the Depositary to be genuine and to be signed or presented by the proper person or persons, except in case of the gross
negligence, bad faith or willful misconduct of the Depositary. The Depositary shall not be bound by any notice or demand, or any waiver, modification, termination or rescission of this Agreement or
any of the terms hereof, unless evidenced by a writing delivered to the Depositary signed by the proper party or parties and, if the duties or rights of the Depositary are affected, unless it shall
give its prior written consent thereto. 

        (g)  The
Depositary shall not be responsible for the sufficiency or accuracy of the form of, or the execution, validity, value or genuineness of, any document or property
received, held or delivered by it hereunder, or of any signature or endorsement thereof, or for any lack of endorsement thereon, or for any description therein, nor shall the Depositary be responsible
or liable to the other parties hereto or to anyone else in any respect on account of the identity, authority or rights of the persons executing or delivering or purporting to execute or deliver any
document or property or this Agreement. The Depositary shall have no responsibility with respect to the use or application of any funds or other property paid or delivered by the Depositary pursuant
to the provisions hereof. Except for its own gross negligence, bad faith or willful misconduct, the Depositary shall not be liable to the other parties
hereto or to anyone else for any loss which may be incurred by reason of any investment of any monies which it holds hereunder. 

        (h)  The
Depositary shall have the right to assume in the absence of written notice to the contrary from the proper person that a fact or an event by reason of which an
action would or might be taken by the Depositary does not exist or has not occurred without incurring liability to the other parties hereto or to anyone else for any action taken or omitted, or any
action suffered by it to be taken or omitted, in good faith and in the exercise of its own best judgment, in reliance upon such assumption. 

Section 4.02 Right to Consult Counsel  

        The
Depositary may at any time consult with legal counsel of its selection satisfactory to it (who may be legal counsel for KGP, the Company or any Holder), and the Depositary shall
incur no liability or responsibility to KGP, the Company or to any Holder for any action taken, suffered or omitted by it in good faith in accordance with the opinion or advice of such counsel. 

8

 

Section 4.03 Compensation and Reimbursement; Indemnification  

        KGP
agrees to pay to The Bank of New York from time to time such compensation for all services rendered by it in any capacity under this Agreement as the parties shall agree from time to
time and to reimburse The Bank of New York for reasonable expenses, advances and disbursements incurred in connection with the execution and administration of this Agreement (including the reasonable
compensation and the expenses of its counsel). KGP further agrees to indemnify The Bank of New York for, and to hold it harmless against, any and all loss, liability, damage, claim or expense incurred
without gross negligence, bad faith or willful misconduct on its part, arising out of or in connection with the acceptance and administration of this Agreement, including reasonable counsel fees,
costs and disbursements (it being understood that such fees, costs and disbursements include those incurred to enforce the provisions of this Agreement), or loss suffered by the Depositary in
connection with any action, suit or other proceeding or investigation brought against the Depositary involving any claim, or in connection with any claim or demand, which in any way, directly or
indirectly, arises out of or relates to this Agreement, the services of the Depositary hereunder, the monies or other property held by it hereunder or any income earned from investment of such monies.
The Depositary shall have a lien for the amount of any such expense or loss on the monies and other property held by it hereunder and shall be entitled to reimburse itself from such monies or property
for the amount of any such expense
or loss, provided that no such reimbursement by the Depositary shall excuse KGP from its obligations to purchase Preferred Stock that is the subject of a properly exercised Put under the terms of this
Agreement. For the purposes hereof, the term "expense or loss" shall include all amounts paid or payable to satisfy any claim, demand or liability, or in settlement of any claim, demand, action, suit
or proceeding settled with the express written consent of the Depositary, and all costs and expenses, including, but not limited to, reasonable counsel fees, costs and disbursements, paid or incurred
in investigating or defending against any such claim, demand, action, suit, proceeding or investigation. The provisions of this Section 4.03 shall survive the termination of this Agreement and
the resignation and replacement of the Depositary, and shall extend to the Depositary's service as Transfer Agent. 

Section 4.04 Depositary May Hold KGP and Company Securities  

        Except
as may be limited by applicable law, the Depositary and any stockholder, director, officer or employee of the Depositary may buy, sell or deal in any securities of KGP, the
Company or its Affiliates or become pecuniarily interested in transactions in which KGP, the Company or its Affiliates may be interested, or contract with or lend money to KGP, the Company or its
Affiliates or otherwise act as fully and freely as though it were not the Depositary under this Agreement. Nothing in this Agreement shall preclude the Depositary from acting in any other capacity for
KGP, the Company or for any other person. 

Section 4.05 Resignation and Removal; Appointment of Successor  

        (a)  No
resignation or removal of the Depositary and no appointment of a successor Depositary shall become effective until the acceptance of appointment by the successor
Depositary as provided in this Agreement. The Depositary may resign its duties and be discharged from all further duties and liability under this Agreement (except liability arising as a result of the
Depositary's own gross negligence, bad faith or willful misconduct) after giving written notice to KGP. KGP may remove the Depositary upon written notice, and the Depositary shall in such case be
discharged from all further duties and liabilities under this Agreement, except as set forth above. The Depositary shall, at KGP's expense, cause to be mailed (by first-class mail, postage prepaid) to
each Holder of a Put at its last address as shown on the register maintained by the Depositary a copy of said notice of resignation or notice of removal, as the case may be. Upon 

9

 

such resignation or removal, KGP shall appoint in writing a new Depositary. If KGP shall fail to make such appointment within a period of thirty (30) days after it has been notified in writing
of such resignation by the resigning Depositary or after such removal, then KGP shall become Depositary until a successor Depositary has been appointed, and the Holder of any Put may apply to any
court of competent jurisdiction for the appointment of a new Depositary. Any new Depositary, whether
appointed by KGP or by such a court, shall be a corporation doing business under the laws of the United States, any state of the United States, or the District of Columbia, in good standing and having
a combined capital and surplus of not less than $50,000,000. The combined capital and surplus of any such new Depositary shall be deemed to be the combined capital and surplus as set forth in the most
recent annual report of its condition published by such Depositary prior to its appointment, provided that such reports are published at least annually pursuant to law or to the requirements of a
federal or state supervising or examining authority. After acceptance in writing of such appointment by the new Depositary, it shall be vested with the same powers, rights, duties and responsibilities
as if it had been originally named as the Depositary, without any further assurance, conveyance, act or deed; but if for any reason it shall be necessary or expedient to execute and deliver any
further assurance, conveyance, act or deed, the same shall be done at the expense of KGP and shall be legally and validly executed and delivered by the resigning or removed Depositary. Not later than
the effective date of any such appointment, KGP shall give notice of the appointment to the resigning or removed Depositary. Failure to give any notice provided for in this Section, however, or any
defect in such notice, shall not affect the legality or validity of the resignation or removal of the Depositary or the appointment of a new Depositary, as the case may be. 

        (b)  Any
corporation into which the Depositary or any new Depositary may be merged or any corporation resulting from any consolidation to which the Depositary or any new
Depositary shall be a party or any person to whom the Depositary transfers substantially all of its corporate trust business shall be a successor Depositary under this Agreement without any further
act, provided that such corporation (i) would be eligible for appointment as successor to the Depositary under the provisions of Section 4.05(a) or (ii) is a wholly-owned
subsidiary of the Depositary. Any such successor Depositary shall promptly cause notice of its succession as Depositary to be mailed (by first class mail, postage prepaid) to each Holder at such
Holder's last address as shown on the register maintained by the Depositary. 

 
 

ARTICLE V    
    
    PUT TRANSFERS    
  

Section 5.01 Put Register  

        (a)  The
Puts shall be issued in registered form only. The Transfer Agent shall keep the Register in which, subject to such reasonable regulations as it may prescribe, it
shall provide for the registration of the initial ownership of the Puts and the registration of any subsequent transfers of the Puts, as provided in this Agreement. 

        (b)  All
Certificates issued upon any registration of transfer of Puts shall be the valid obligations of KGP, evidencing the same obligations and entitled to the same
benefits under this Agreement as the Certificates surrendered for such registration of transfer. 

Section 5.02 Registration of Transfer  

        (a)  Transfers
of Puts shall be effective only by the registration of such transfers upon the Register maintained by the Transfer Agent. Holders desiring to transfer Puts
shall present to the Transfer Agent for registration of transfer the Certificate(s) evidencing the Puts to be transferred, together with a Transfer Form in the form of
Exhibit D to this Agreement specifying the number 

10

 

of Puts that the Holder desires to transfer. Such Transfer Form shall be duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Transfer Agent, duly executed by
the Holder or its attorney duly authorized in writing. When Certificate(s) are properly presented to the Transfer Agent with a request to register the transfer of the Puts evidenced by the
Certificate(s) in accordance with the requirements under this Agreement, the Transfer Agent shall register the transfer as requested, except as set forth in Section 5.02(e). 

        (b)  As
part of such registration of transfer of Puts, the Transfer Agent shall cause to be issued to the transferee a Certificate evidencing the Puts transferred to it by
the transferring Holder. If a Holder is transferring fewer than all Puts evidenced by a Certificate presented for registration of transfer, the Transfer Agent shall issue to the presenting Holder a
new Certificate evidencing the Puts not being transferred. 

        (c)  No
service charge shall be payable by Holders for any registration of transfer of Puts. KGP may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of transfer of Puts. 

        (d)  The
Transfer Agent shall retain copies of all letters, notices and other written communications received pursuant to this Section 5.02. If KGP has appointed a
third party to serve as the Transfer Agent, KGP shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of
reasonable written notice to the Transfer Agent. 

        (e)  The
Transfer Agent shall maintain an accurate count of the aggregate number of holders of Puts as contained in the Register. Whenever the aggregate number of Put holders
shall be such that KGP, in its sole discretion exercised in good faith, believes that any requested transfer of Puts would result in a requirement to register the Puts under the Securities Exchange
Act of 1934, KGP shall have the absolute right to direct the Transfer Agent to refuse to register such requested transfer, in which case the Transfer Agent shall not register any such requested
transfer. The Transfer Agent (together with the Company and KGP, if not serving as the Transfer Agent) shall not be liable for any such refusal to register a requested transfer under the circumstances
described in this Section 5.02(e), except for its gross negligence, bad faith or willful misconduct. 

 
 

ARTICLE VI    
    
    COVENANTS    
  

Section 6.01 Covenant of KGP  

        KGP
covenants that it shall not incur any indebtedness for borrowed money (other than guarantees of indebtedness of Kaiser-Hill in accordance with its historical practices
and the guarantee of the redemption rights of the New Senior Notes that correspond with the Puts) unless approved by Holders representing a majority of the number of shares of Preferred Stock with
respect to which Puts are then outstanding. 

Section 6.02 Covenant of K-H Holdings  

        K-H
Holdings covenants that it shall distribute to KGP any and all (a) cash received by K-H Holdings from time to time from Kaiser-Hill and
(b) proceeds received by K-H Holdings from the disposition by K-H Holdings of all or part of its interest in Kaiser-Hill, in each case as promptly as
practicable following such receipt from Kaiser-Hill. 

11

 
 
 

ARTICLE VII    
    
    MISCELLANEOUS    
  

Section 7.01 Rights of Action  

        All
rights of action in respect of this Agreement are vested in the Holders of the Puts, and any Holder of any Put, without the consent of the Depositary or any Holder of any other Put,
may, on such Holder's own behalf and for such Holder's own benefit, enforce, and may institute and maintain any suit, action or proceeding against the Company suitable to enforce, or otherwise in
respect of, such Holder's rights under this Agreement, including the right to exercise such Holder's Puts in the manner provided in this Agreement. 

Section 7.02 Money and Other Property Deposited with the Depositary  

        Any
money, securities or other property which at any time shall be deposited by KGP or on its behalf with the Depositary pursuant to this Agreement shall be assigned, transferred and set
over to the Depositary in trust for the purpose for which such moneys, securities or other property shall have been deposited; but such moneys, securities or other property need not be segregated from
other funds, securities or other property of the Depositary except to the extent required by law. The Depositary shall distribute any money deposited with it for payment and distribution to any Holder
by mailing by first-class mail a check in such amount as is appropriate, to such Holder at the address shown on the Register maintained by the Depositary, or as it may be otherwise directed in writing
by KGP. Any money or other property deposited with the Depositary for payment and distribution to any Holder that remains unclaimed for two years, less one day, after the date the money was deposited
with the Depositary shall be paid to KGP upon its request. 

Section 7.03 Payment of Taxes  

        (a)  KGP
will pay all taxes and other governmental charges that may be imposed on KGP or the Depositary in respect of any issuance or delivery of the Puts. KGP will not be
required, however, to pay any tax or other charge imposed in connection with surrender of any Certificate upon the exercise of Puts, and in case of such payment, KGP, the Depositary and the Company
shall not be required to issue any Certificate or any stock certificate or security or pay any cash or distribute any property until such tax or charge has been paid by the Holder or it has been
established to the satisfaction of KGP, the Depositary and the Company that no such tax or other charge is due. 

        (b)  To
the extent that the Depositary determines in good faith that it is or may be liable for the payment of taxes, including withholding taxes, in respect to income
derived from the investment of Excess Proceeds or any payment made hereunder, the Depositary may pay such taxes or make the appropriate withholding and payment. Without limiting the generality of the
foregoing, the Depositary may withhold from any payment of monies made by it hereunder such amount as the Depositary estimates to be sufficient to provide for the payment of such taxes not yet paid,
and may use the sum withheld for that purpose. The Depositary shall be indemnified and held harmless against any liability for taxes or for withholding, and for any penalties or interest in respect of
taxes or withholding, as more fully provided in Section 4.03. 

Section 7.04 Surrender of Certificates  

        Any
Certificate surrendered for exercise shall be promptly canceled by the Depositary. The Depositary shall return such canceled Certificates to KGP; provided, if any mutilated
Certificate is surrendered to the Depositary and KGP and the Depositary receive evidence to their satisfaction of the destruction, loss or theft of any Certificate, and there is delivered to KGP and
the 

12

 

Depositary such security or indemnity as may be reasonably required by them to save each of them harmless, then KGP shall execute and upon its written request the Depositary shall deliver, in
exchange for any such mutilated Certificate or in lieu of any such destroyed, lost or stolen Certificate, a replacement Certificate of like tenor. 

        Upon
the issuance of any new Certificate under this Section 7.04, KGP may require the payment by the Holder of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation to such issuance and other expenses (including the reasonable fees and expenses of the Depositary) in connection with such issuance. 

        Every
new Certificate executed and delivered pursuant to this Section 7.04 in lieu of any destroyed, lost or stolen Certificate shall constitute an original contractual obligation
of KGP, whether or not the destroyed, lost or stolen Certificate shall be at any time enforceable by anyone, and the Holder of such replacement Certificate shall be entitled to the benefits of this
Agreement equally and proportionately with any and all other Certificates duly executed and delivered under this Agreement. 

        The
provisions of this Section 7.04 are exclusive and shall preclude (to the extent lawful) all other rights or remedies with respect to the replacement of mutilated, destroyed,
lost or stolen Certificates. 

Section 7.05 Notice  

        Any
notice or communication by KGP, the Company or the Depositary to the others is duly given if in writing and delivered in person, mailed by first-class mail (registered or certified,
return receipt requested), or sent by telecopier or overnight air courier guaranteeing next day delivery, to the other's address: 

	 	 	If to KGP or the Company:
	

 	
 	

Kaiser Government Programs, Inc.

9302 Lee Highway

Fairfax, Virginia 22031-1207

Fax: (703) 934-3973

Attention: President and Chief Executive Officer
	

 	
 	

or
	

 	
 	

Kaiser Group Holdings, Inc.

9302 Lee Highway

Fairfax, Virginia 22031-1207

Fax: (703) 934-3973

Attention: President and Chief Executive Officer
	

 	
 	

cc: Chief Financial Officer
	

 	
 	

If to the Depositary:
	

 	
 	

The Bank of New York

101 Barclay Street, 8 W

New York, New York 10286

Fax: (212) 815-5707

Attention: Corporate Trust Administration

        KGP,
the Company or the Depositary by notice to the others may designate additional or different addresses for subsequent notices or communications. 

13

 

        All
notices and communications by KGP, the Company or the Depositary to the others shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if telecopied; and the next business day after timely delivery to the courier, if sent by
overnight air courier guaranteeing next day delivery. 

        All
distributions, notices or communications required or permitted to be made or given to a Holder shall be mailed by first-class mail to the Holder's address shown in the Register.
Failure to mail a
notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. 

        If
a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it. 

Section 7.06 Persons Benefiting  

        This
Agreement shall be binding upon and inure to the benefit of KGP, K-H Holdings, the Company and the Depositary, and their respective successors and assigns. Nothing in
this Agreement is intended or shall be construed to confer upon any person, other than KGP, K-H Holdings, the Company, the Depositary and the Holders, any right, remedy or claim under or
by reason of this or any part of this Agreement. 

Section 7.07 Counterpart Originals  

        The
parties may sign any number of copies of this Agreement. Each signed copy shall be an original, but all of them together represent the same agreement. 

Section 7.08 Amendments  

        KGP,
K-H Holdings and the Company may, without the consent of the Holders of the Puts, by supplemental agreement or otherwise, make any changes or corrections in this
Agreement (a) to cure any ambiguity or correct or supplement any provision in this Agreement which may be defective or inconsistent with any other provision in this Agreement or to correct any
clerical omission or mistake or manifest error contained in this Agreement, (b) to add to the covenants and agreements for the benefit of the Holders, or surrender any rights or power reserved
to or conferred upon KGP or the Company in this Agreement, or (c) that do not adversely affect the interests of the Holders in any material respect. Any other changes or amendments to this
Agreement may be made, by supplemental agreement or otherwise, upon the consent of holders of Preferred Stock representing two-thirds of the liquidation preference of Preferred Stock that
is subject to the Puts. The Depositary shall join with
KGP, K-H Holdings and the Company in the execution and delivery of any such supplemental agreements unless it affects the Depositary's own rights, duties or immunities under this
Agreement, in which case such party may, but shall not be required to, join in such execution and delivery. Prior to executing any such supplemental agreement, the Depositary shall be entitled to
receive, and shall be protected in relying upon, certificates of KGP, K-H Holdings and the Company and an opinion of counsel which state that the proposed supplemental agreement is in
compliance with the terms of this Section 7.08. 

Section 7.09 Governing Law  

        THIS AGREEMENT AND EACH PUT ISSUED UNDER THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.

14

 

Section 7.10 Headings  

        The
headings of the Articles and Sections of this Agreement have been inserted for convenience of reference only, are not to be considered a part of this Agreement and shall in no way
modify or restrict any of the terms or provisions of this Agreement. 

(The
balance of this page intentionally left blank.) 

15

 

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

	 	 	KAISER GOVERNMENT PROGRAMS, INC.
	

 	
 	

By:	
 	

 Name:

Title:
	

 	
 	

KAISER GROUP HOLDINGS, INC.
	

 	
 	

By:	
 	

 Name:

Title:
	

 	
 	

KAISER K-H HOLDINGS, INC.
	

 	
 	

By:	
 	

 Name:

Title:
	

 	
 	

THE BANK OF NEW YORK,

as Depositary
	

 	
 	

By:	
 	

 Name:

Title:

16

   EXHIBIT A  

	No.	 	Relating to            shares of Preferred Stock

[Form of Put Certificate] 

VOID
AFTER 5:00 P.M.

NEW YORK, NEW YORK TIME, DECEMBER 31, 2007 

PUTS
TO SELL PREFERRED STOCK OF

KAISER GROUP HOLDINGS, INC. 

        This
certifies that                        (the "Holder") is the registered Holder of a Put (the "Put"). This Put Certificate is issued
under and in accordance with an Amended and Restated Put
Agreement (the "Put Agreement") dated                        , 2002 by and among Kaiser Government Programs, Inc., a Delaware
corporation (the "Purchaser"), Kaiser Group Holdings, Inc. a
Delaware corporation (the "Company"), Kaiser K-H Holdings, Inc., a Delaware corporation ("K-H Holdings"), and The Bank of New York, as depositary (the "Depositary"), and
is subject to the terms and provisions contained in the Put Agreement, to which terms and provisions the Holder of this Put Certificate consents by acceptance of this Put Certificate. The Put may not
be exercised by any party other than the Holder. Each Put entitles the Holder, subject to the provisions contained in this Put Certificate and in the Put Agreement, to require the Purchaser to
purchase from the Holder up to the number of shares of Series 1 Redeemable Cumulative Preferred Stock, $0.01 par value, of the Company (the "Preferred Stock") set forth above, subject to
adjustment as provided herein, on the terms and for the consideration set forth in the Put
Agreement. The Put evidenced by this Put Certificate may be exercised in whole or in part only after the occurrence of a Triggering Event (as defined in the Put Agreement). The Put shall not be
exercisable after and shall terminate and become void as of the close of business on December 31, 2007. 

        The
Put Agreement is incorporated in this Put Certificate by reference and made a part of this Put Certificate. Reference is hereby made to the Put Agreement for a full statement of the
respective rights, limitations of rights, duties and obligations of the Purchaser, the Company, K-H Holdings, the Depositary and the Holder of the Put. Capitalized terms not defined in
this Put Certificate have the meanings ascribed to them in the Put Agreement. A copy of the Put Agreement may be obtained for inspection by the Holder of this Put Certificate upon written request to
the Company at 9302 Lee Highway, Fairfax, Virginia 22031-1207, Attention: Sandra Narbesky. 

        Upon
the occurrence of a Triggering Event, the Holder may exercise this Put by surrendering at the office of the Depositary, (a) this Put Certificate; (b) a properly
completed Notice of Exercise; (c) all certificate(s) representing the shares of Preferred Stock with respect to which the Put is being exercised, duly endorsed with signature guaranteed, or
accompanied by a properly completed separate stock power; (d) a properly completed Substitute Form W-9; and (e) such other documentation 

A-1

 

reasonably required by the Purchaser or the Depositary in connection with exercise of the Puts, as set forth in the Notice of Triggering Event. 

	 	 	KAISER GOVERNMENT PROGRAMS, INC.
	

 	
 	

By:	

 Name:

Title:
	

DATED:	
 	

 	

 
	

	
 	

 	

 

A-2

 

[Form of Reverse of Put Certificate] 

KAISER
GOVERNMENT PROGRAMS, INC. 

        This
Put Certificate and all rights under this Put Certificate are transferable by the registered Holder of this Put Certificate, in whole or in part, on the register maintained by the
Transfer Agent, upon surrender of this Put Certificate for registration of transfer at the office of the Transfer Agent maintained for such purpose, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Transfer Agent duly executed by, the registered Holder of this Put Certificate or its attorney duly authorized in writing, with signature guaranteed
as specified in the attached Transfer Form, except that no transfer or assignment shall be effective, and any attempted transfer or assignment shall be null and void, if the effect of such transfer or
assignment would be to cause the Purchaser to be required to register the Puts as a class of securities under the applicable provisions of the Securities Exchange Act of 1934, as amended. Upon any
partial exercise or transfer, the Purchaser will issue and deliver to the Holder a new Put Certificate with respect to any portion not exercised or transferred. No service charge shall be made for
issuance or transfer of Put Certificates, but the Purchaser may require payment by the Holder of a sum sufficient to cover any tax or other governmental charge payable in connection with any exercise
or partial exercise or transfer or partial transfer. 

        The
number of shares of Preferred Stock purchasable upon exercise of this Put is subject to adjustment, as reasonably determined by the Company, upon the occurrence of any stock
dividends, stock splits and reclassification affecting the Preferred Stock. 

        The
Puts do not entitle any Holder to any of the rights of a stockholder of the Purchaser or the Company. 

        This
Put Certificate and the Put Agreement are subject to amendment as provided in the Put Agreement. 

        This
Put Certificate and all rights under this Put Certificate shall be governed by and construed in accordance with the laws of the State of New York, without regard to principles of
conflicts of laws. 

A-3

   EXHIBIT B  

        NOTICE OF TRIGGERING EVENT 

        The
Depositary hereby provides notice to the Holders that a Triggering Event has occurred under the Put Agreement. The Depositary further provides notice that Excess Proceeds of
$                        are available to purchase, on a pro rata basis, up to a maximum
of                        shares of Preferred Stock that are subject to the Puts, from Holders that complete and deliver a
Notice of Exercise and the related required documentation within 30 days of the date of this Notice of Triggering Event, on the terms and conditions specified in the Put Certificate and the Put
Agreement. 

Date:                        ,
200            

	 	 	THE DEPOSITARY:
	

 	
 	

By:	
 	

 Name:

Title:

B-1

   EXHIBIT C  

        NOTICE OF EXERCISE

(to be executed only upon exercise of Put) 

        The
undersigned hereby irrevocably elects to exercise the Put with respect to up to a maximum of                        shares of
Preferred Stock that are subject to the Put represented by the
enclosed Put Certificate, on the terms and conditions specified in the Put Certificate and the Put Agreement referred to in the Put Certificate. The Holder hereby surrenders all right, title and
interest in the Preferred Stock (as defined in the Put Agreement), delivers the stock certificate(s) representing the Preferred Stock, and directs that the purchase price therefor shall be paid to the
Holder and delivered to the address specified below. 

Date:                        ,        

	

 	

1	
 	

 
	
 (Signature of Owner)	 	 	 
	

 	

 	
 	

 (Name Printed in Full)
	

 	

 	
 	

 (Street Address)
	

 	

 	
 	

 (City)        (State)        (ZIP Code)
	

 	

 	
 	

Signature Guaranteed by:
	

 	

 	
 	

	1
	The
signature must correspond with the name as written upon the face of the Put Certificate in every particular, without alteration or enlargement or any change
whatsoever, and must be guaranteed. 

C-1

   EXHIBIT D  

        TRANSFER FORM 

        FOR
VALUE RECEIVED the undersigned registered Holder of this Put Certificate hereby sells, assigns and transfers unto the Assignee(s) named below all of the rights of the undersigned
under this Put Certificate, with respect to the number of Puts set forth below: 

	Name of Assignee(s)
 
	 	Address
 
	 	Social Security or other identifying number of assignee(s)
 
	 	Number of Puts to be Transferred (expressed as number of preferred shares)
 

	

	

and does hereby irrevocably constitute and appoint the Transfer Agent as the undersigned's attorney to make such transfer on the register maintained by the Transfer Agent for that purpose, with full
power of substitution in the premises. 

Date:                    ,        

	 	 	 	1
	 	 	
 (Signature of Owner)	 
	

 	
 	

 (Street Address)	

 
	

 	
 	

 (City)        (State)        (ZIP Code)	

 
	

 	
 	

Signature Guaranteed by:	

 
	

 	
 	

	

 

	1
	The
signature must correspond with the name as written upon the face of the Put Certificate in every particular, without alteration or enlargement or any change
whatsoever, and must be guaranteed. 

D-1

QuickLinks

Exhibit 4(a)

AMENDED AND RESTATED PUT AGREEMENT

ARTICLE I DEFINITIONS

ARTICLE II GENERAL; FORM OF CERTIFICATE; EXECUTION, DELIVERY AND ISSUANCE OF CERTIFICATES

ARTICLE III EXERCISE OF PUTS

ARTICLE IV DEPOSITARY

ARTICLE V PUT TRANSFERS

ARTICLE VI COVENANTS

ARTICLE VII MISCELLANEOUS

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