-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, F/ErXGNJFwwduBTV1o451Od6EQ+Et97iOG4s1o9zAZWqijqI2IzoFbjsIA1wXzSO YR17EXbiajPlEYn0DzT9IQ== 0000928385-97-000040.txt : 19970113 0000928385-97-000040.hdr.sgml : 19970113 ACCESSION NUMBER: 0000928385-97-000040 CONFORMED SUBMISSION TYPE: S-1 PUBLIC DOCUMENT COUNT: 31 FILED AS OF DATE: 19970110 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ICF KAISER INTERNATIONAL INC CENTRAL INDEX KEY: 0000856200 STANDARD INDUSTRIAL CLASSIFICATION: HAZARDOUS WASTE MANAGEMENT [4955] IRS NUMBER: 541437073 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-1 SEC ACT: 1933 Act SEC FILE NUMBER: 333-19519 FILM NUMBER: 97503935 BUSINESS ADDRESS: STREET 1: 9300 LEE HWY CITY: FAIRFAX STATE: VA ZIP: 22031 BUSINESS PHONE: 7039343600 MAIL ADDRESS: STREET 1: 9300 LEE HWY CITY: FAIRFAX STATE: VA ZIP: 22031 FORMER COMPANY: FORMER CONFORMED NAME: ICF INTERNATIONAL INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN CAPITAL & RESEARCH CORP /DE/ DATE OF NAME CHANGE: 19910314 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PCI OPERATING CO INC CENTRAL INDEX KEY: 0001029298 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: S-1 SEC ACT: 1933 Act SEC FILE NUMBER: 333-19519-01 FILM NUMBER: 97503936 BUSINESS ADDRESS: STREET 1: 9300 LEE HIGHWAY CITY: FAIRFAX STATE: VA ZIP: 22031 BUSINESS PHONE: 7039343600 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CYGNA CONSULTING ENGINEERS & PROJECT MANAGEMENT INC CENTRAL INDEX KEY: 0001029323 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: CA FILING VALUES: FORM TYPE: S-1 SEC ACT: 1933 Act SEC FILE NUMBER: 333-19519-02 FILM NUMBER: 97503937 BUSINESS ADDRESS: STREET 1: 9300 LEE HIGHWAY CITY: FAIRFAX STATE: VA ZIP: 22031 BUSINESS PHONE: 7039343313 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ICF KAISER GOVERNMENT PROGRAMS INC CENTRAL INDEX KEY: 0001029325 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: S-1 SEC ACT: 1933 Act SEC FILE NUMBER: 333-19519-03 FILM NUMBER: 97503938 BUSINESS ADDRESS: STREET 1: 9300 LEE HIGHWAY CITY: FAIRFAX STATE: VA ZIP: 22031 BUSINESS PHONE: 7039343313 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SYSTEMS APPLICATIONS INTERNATIONAL INC CENTRAL INDEX KEY: 0001029326 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: S-1 SEC ACT: 1933 Act SEC FILE NUMBER: 333-19519-04 FILM NUMBER: 97503939 BUSINESS ADDRESS: STREET 1: 9300 LEE HIGHWAY CITY: FAIRFAX STATE: VA ZIP: 22031 BUSINESS PHONE: 7039343313 S-1 1 FORM S-1 REGISTRATION STATEMENT AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 10, 1997 REGISTRATION NO. 333- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------- FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------- ICF KAISER INTERNATIONAL, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 54-1437073 (STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NUMBER) AND SUBSIDIARY GUARANTORS CYGNA CONSULTING ENGINEERS AND PROJECT MANAGEMENT, INC. ICF KAISER GOVERNMENT PROGRAMS, INC. PCI OPERATING COMPANY, INC. SYSTEMS APPLICATIONS INTERNATIONAL, INC. (EXACT NAMES OF REGISTRANTS AS SPECIFIED IN THEIR RESPECTIVE CHARTERS) CALIFORNIA 94-2278222 DELAWARE 54-1761768 DELAWARE 54-1589711 DELAWARE 54-1770848 (STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NUMBER) 8711 (PRIMARY STANDARD INDUSTRIAL CLASSIFICATION CODE NUMBER) --------------- 9300 LEE HIGHWAY PAUL WEEKS, II, ESQ. FAIRFAX, VIRGINIA 22031 SENIOR VICE PRESIDENT, GENERAL COUNSEL (703) 934-3600 AND SECRETARY (ADDRESS, INCLUDING ZIP CODE, AND ICF KAISER INTERNATIONAL, INC. TELEPHONE NUMBER, INCLUDING AREA CODE, 9300 LEE HIGHWAY OF REGISTRANTS' PRINCIPAL EXECUTIVE FAIRFAX, VIRGINIA 22031 OFFICE) (703) 934-3600 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) COPY TO: JAMES J. MAIWURM, ESQ. CROWELL & MORING LLP 1001 PENNSYLVANIA AVENUE, N.W. WASHINGTON, D.C. 20004 (202) 624-2500 --------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. [X] If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [_] CALCULATION OF REGISTRATION FEE - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------
PROPOSED PROPOSED MAXIMUM TITLE OF EACH CLASS OF AMOUNT MAXIMUM AGGREGATE AMOUNT OF SECURITIES TO BE TO BE OFFERING PRICE OFFERING REGISTRATION REGISTERED REGISTERED PER UNIT(1) PRICE(1) FEE - ------------------------------------------------------------------------------- 12% Senior Notes due 2003, Series B ............... $15,000,000 100.5% $15,075,000 $4,568.18 - ------------------------------------------------------------------------------- Guarantees of 12% Senior Notes, Series B ........ $15,000,000 (2) (2) (2) - ------------------------------------------------------------------------------- Total ................... $15,000,000 100.5% $15,075,000 $4,568.18
- ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- (1) In accordance with Rule 457(f)(1), the registration fee is calculated based on the average of the bid and asked price on the over-the-counter market on January 6, 1997, of the 12% Senior Notes due 2003, Series A, of ICF Kaiser International, Inc. (2) No additional consideration will be paid by the recipients of the 12% Senior Notes due 2003, Series B, for the Guarantees. Pursuant to Rule 457(n) under the Securities Act of 1933, no separate fee is payable for the Guarantees. --------------- THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION, DATED JANUARY 10, 1997 PROSPECTUS ICF KAISER INTERNATIONAL, INC. OFFER TO EXCHANGE $1,000 IN PRINCIPAL AMOUNT OF ITS 12% SENIOR NOTES DUE 2003, SERIES B, WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, FOR EACH $1,000 IN PRINCIPAL AMOUNT OF ITS OUTSTANDING 12% SENIOR NOTES DUE 2003, SERIES A THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 1997, UNLESS EXTENDED. ---------- ICF Kaiser International, Inc. ("ICF Kaiser" or the "Company") hereby offers to exchange (the "Exchange Offer") up to $15,000,000 in aggregate principal amount of its new 12% Senior Notes due 2003, Series B (the "Exchange Notes"), for up to $15,000,000 in aggregate principal amount of its outstanding 12% Senior Notes due 2003, Series A (the "Old Notes" and, together with the Exchange Notes, the "Notes"), that were issued and sold in a transaction exempt from registration under the Securities Act of 1933, as amended (the "Securities Act"). The terms of the Exchange Notes are substantially identical (including principal amount, interest rate, maturity, security and ranking) to the terms of the Old Notes for which they may be exchanged pursuant to the Exchange Offer, except that the Exchange Notes (i) are freely transferable by holders thereof (except as provided below) and (ii) are not entitled to certain registration rights and certain additional interest provisions that are applicable to the Old Notes under the Registration Rights Agreement (as defined). The Exchange Notes will be issued under the indenture dated as of December 23, 1996 governing the Old Notes (the "Indenture"). The interest rate on the Exchange Notes will be 13% until the Company achieves and maintains $36 million of Earnings (as defined) for two consecutive quarters on a trailing twelve-month basis after deducting minority interests and before interest, taxes, depreciation and amortization calculated in accordance with generally accepted accounting principles. See "Description of the Notes--Interest Rate Increase." Interest on the Exchange Notes is payable semiannually on June 30 and December 31 of each year, commencing June 30, 1997. Interest on the Exchange Notes will accrue from December 31, 1996. The Exchange Notes are not redeemable prior to December 31, 1998. The Exchange Notes are redeemable, in whole or in part, at the option of the Company on or after December 31, 1998 at the redemption prices set forth herein, plus accrued and unpaid interest, if any, to the date of redemption. The Exchange Notes will be senior unsecured obligations of the Company, will rank senior to all subordinated indebtedness of the Company and will rank pari passu in right of payment with all existing and future senior indebtedness of the Company, including the Old Notes and indebtedness under the Credit Facility (as defined). As of September 30, 1996, after giving pro forma effect to the issuance of the Old Notes, borrowings under the Credit Facility and application of the proceeds therefrom, the Company would have had approximately $153.9 million of total indebtedness and $18.8 million secured indebtedness under the Credit Facility. The Exchange Notes will be unconditionally guaranteed by four wholly owned subsidiaries of the Company (the "Subsidiary Guarantors"). In the event of a Change of Control (as defined), the Company will be required to offer to purchase all Exchange Notes then outstanding at a purchase price equal to 101% of the aggregate principal amount of such Exchange Notes, plus accrued and unpaid interest, if any, to the date of purchase. (Continued on next page) ---------- HOLDERS OF OLD NOTES SHOULD CAREFULLY CONSIDER THE MATTERS SET FORTH IN "RISK FACTORS" BEGINNING ON PAGE 7 OF THIS PROSPECTUS PRIOR TO MAKING A DECISION WITH RESPECT TO THE EXCHANGE OFFER. ---------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ---------- THE DATE OF THIS PROSPECTUS IS , 1997 (Continued from previous page) The Old Notes were originally issued and sold on December 23, 1996 in a transaction not registered under the Securities Act, in reliance upon the exemption provided in Section 4(2) of the Securities Act and Rule 144A promulgated under the Securities Act. Accordingly, the Old Notes may not be reoffered, resold or otherwise pledged, hypothecated or transferred in the United States unless so registered or unless an applicable exemption from the registration requirements of the Securities Act is available. Based upon its view of interpretations provided to third parties by the Staff (the "Staff") of the Securities and Exchange Commission (the "Commission"), the Company believes that the Exchange Notes issued pursuant to the Exchange Offer in exchange for the Old Notes may be offered for resale, resold and otherwise transferred by holders thereof (other than any holder that is (i) an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act (an "Affiliate"), (ii) a broker-dealer who acquired Old Notes directly from the Company or (iii) a broker-dealer who acquired Old Notes as a result of market-making or other trading activities) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such Exchange Notes are acquired in the ordinary course of such holders' business and such holders are not engaged in, and do not intend to engage in, and have no arrangement or understanding with any person to participate in, a distribution of such Exchange Notes. Each broker-dealer that receives Exchange Notes for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of Exchange Notes. The Letter of Transmittal that is filed as an exhibit to the Registration Statement of which this Prospectus is a part (the "Letter of Transmittal") states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. Broker-dealers who acquired Old Notes as a result of market-making or other trading activities may use this Prospectus, as supplemented or amended, in connection with resales of Exchange Notes. The Company has agreed that, for a period of 180 days after the Exchange Date (as defined), it will make this Prospectus available to any broker-dealer for use in connection with any such resale. Any holder who tenders in the Exchange Offer for the purpose of participating in a distribution of the Exchange Notes and any other holder that cannot rely upon interpretations of the Staff must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. Old Notes initially purchased by qualified institutional buyers and institutional accredited investors were initially represented by a single, global Old Note in registered form, registered in the name of a nominee of The Depository Trust Company ("DTC"), as depository. The Exchange Notes exchanged for Old Notes represented by the global Old Note will be represented by one or more global Exchange Notes in registered form, registered in the name of the nominee of DTC. See "Book-Entry; Delivery and Form." Exchange Notes issued to persons other than qualified institutional buyers and institutional accredited investors in exchange for Old Notes held by such investors will be issued only in certificated, fully registered, definitive form. Except as described herein, Exchange Notes in definitive certificated form will not be issued in exchange for the global Old Note or interests therein. The Old Notes and the Exchange Notes constitute new issues of securities with no established public trading market. Any Old Notes not tendered and accepted in the Exchange Offer will remain outstanding. To the extent that Old Notes are not tendered or are tendered but are not accepted in the Exchange Offer, a holder's ability to sell such Old Notes could be adversely affected. Following consummation of the Exchange Offer, the holders of any remaining Old Notes will continue to be subject to the existing restrictions on transfer thereof and the Company will have no further obligation to such holders to provide for the registration under the Securities Act of the Old Notes except under certain limited circumstances. See "Old Notes Registration Rights; Additional Interest." No assurance can be given as to the liquidity of the trading market for the Old Notes or the Exchange Notes. The Old Notes are not listed on any securities exchange and the Company does not intend to apply for a listing of the Exchange Notes on a securities exchange. The Exchange Offer is not conditioned upon any minimum aggregate principal amount of Old Notes being tendered or accepted for exchange. The Exchange Offer will expire at 5:00 p.m., New York City time, on , 1997, unless extended (the "Expiration Date"). The date of acceptance for exchange of the Old Notes (the "Exchange Date") will be the first business day following the Expiration Date, upon surrender of the Old Notes. Old Notes tendered pursuant to the Exchange Offer may be withdrawn at any time prior to the Expiration Date; otherwise such tenders are irrevocable. The Company will not receive any proceeds from the Exchange Offer. The Company will pay all expenses incident to the Exchange Offer. AVAILABLE INFORMATION The Company and the Subsidiary Guarantors have filed with the Commission a Registration Statement on Form S-1 (together with all amendments, exhibits, schedules and supplements thereto, the "Registration Statement") under the Securities Act with respect to the Exchange Notes being offered hereby. This Prospectus, which forms a part of the Registration Statement, does not contain all of the information set forth in the Registration Statement, certain items of which are omitted as permitted by the rules and regulations of the Commission. For further information with respect to the Company, the Subsidiary Guarantors and the Exchange Notes, reference is hereby made to the Registration Statement. Statements contained in this Prospectus as to the contents of any contract or other document are not necessarily complete and, where such contract or other document is an exhibit to the Registration Statement, each such statement is qualified in all respects by the provisions in such exhibit, to which reference is hereby made. The Company is subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports and other information with the Commission. Reports, proxy and information statements, and other information filed by the Company may be inspected by anyone without charge at the Commission's Public Reference Room, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the following Regional Offices of the Commission: New York Regional Office, 7 World Trade Center, New York, New York 10048; and Chicago Regional Office, 500 West Madison Street, Chicago, Illinois 60661. Copies of such material may also be obtained at the Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, upon payment of prescribed fees. The Commission also maintains a Web site at http://www.sec.gov that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Commission. The Company's common stock is traded on the New York Stock Exchange. Reports, proxy material and other information concerning the Company may be inspected at the office of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005. In the event that the Company ceases to be subject to the reporting requirements of the Exchange Act, the Company has agreed that, so long as the Exchange Notes remain outstanding, it will file with the Commission and distribute to holders of the Exchange Notes copies of the financial information that would have been contained in annual reports and quarterly reports, including management's discussion and analysis of financial condition and results of operations, that the Company would have been required to file with the Commission pursuant to the Exchange Act. Such financial information shall include annual reports containing consolidated financial statements and notes thereto, together with an opinion thereon expressed by an independent public accounting firm, as well as quarterly reports containing unaudited condensed consolidated financial statements for the first three quarters of each fiscal year. i PROSPECTUS SUMMARY The following summary is qualified in its entirety by the detailed information and financial statements, including the notes thereto, appearing elsewhere in this Prospectus. The terms "Company" or "ICF Kaiser" in this Prospectus may refer to ICF Kaiser International, Inc. and/or any of its consolidated subsidiaries. Effective December 31, 1995, the Company changed its fiscal year end from February 28 to December 31. THE COMPANY ICF Kaiser International, Inc., through ICF Kaiser Engineers, Inc. and its other operating subsidiaries, is one of the nation's largest engineering, construction, program management and consulting services companies. The Company's Federal Programs, Engineers and Consulting Groups provide fully integrated services to domestic and foreign clients in the private and public sectors of the environment, infrastructure and basic metals and mining industry markets. For the latest nine-month period ended September 30, 1996, ICF Kaiser had gross and service revenue of $1,023.4 million and $433.6 million, respectively. Service revenue is derived by deducting the costs of subcontracted services and direct project costs from gross revenue and adding the Company's share of income (loss) of joint ventures and affiliated companies. As of November 30, 1996, the Company employed 5,176 people located in more than 80 offices worldwide. In the environmental market, the Company provides services in connection with the remediation of hazardous and radioactive waste, waste minimization and disposal, risk assessment, global warming and acid rain, alternative fuels and clean up of harbors and waterways. Demand for environmental services is driven by a number of factors, including: the need to improve the quality of the environment; federal, state and municipal regulation and enforcement; and increased liability associated with pollution-related injury and damage. ICF Kaiser is well-positioned to take advantage of the growing market arising from the increased awareness internationally of the need for additional and/or initial environmental regulations, studies and remediation. ICF Kaiser also provides services to the infrastructure market. This market is driven by the need to maintain and expand, among other things, ports, roads, highways, mass transit systems and airports. Increasingly, environmental concerns, such as wastewater treatment and reducing automotive air pollutant emissions, are a driving force behind new infrastructure and transportation initiatives. The Company has capitalized on its specialized technical and environmental skills to win projects that provide consulting, planning, design and construction services. Internationally, there is a critical need for infrastructure projects where population growth of major cities has been and will continue to be extremely high. The Company currently provides engineering and construction management services for mass transit and wastewater treatment facilities in many such major cities worldwide. ICF Kaiser assists its basic metals and mining industry clients by providing the engineering and construction skills needed to maintain and retrofit existing plants and replace aging production capacity with newer, more efficient and more environmentally responsible facilities. The Company's engineering and construction skills, as well as its access to process technologies, have helped establish it as a worldwide leader in serving the basic metals and mining industries, especially aluminum and steel. ICF Kaiser is currently expanding its operations internationally, particularly engineering and construction management services related to alumina production from bauxite, aluminum smelting and other basic industry facilities. The Company is currently working on several large, highly visible projects, including, but not limited to, (i) a five-year contract at the U.S. Department of Energy's Rocky Flats Environmental Technology site near Golden, Colorado, (ii) a two-year contract with Nova Hut, an integrated steel maker based in the Czech Republic, (iii) two four-year Total Environmental Restoration Contracts ("TERC") to perform environmental restoration work at federal installations for the U.S. Army Corps of Engineers, (iv) a five-year construction management contract 1 for the Boston Harbor wastewater treatment facility and (v) a three-year contract as the project manager at the light rail transit system in Manila. ICF Kaiser International, Inc. was incorporated in Delaware in 1987 under the name American Capital and Research Corporation. It is the successor to ICF Incorporated, a nationwide consulting firm organized in 1969. In 1988, the Company acquired the Kaiser Engineers business which dates from 1914. The Company's headquarters is located at 9300 Lee Highway, Fairfax, Virginia 22031- 1207, telephone number (703) 934-3600. THE EXCHANGE OFFER The Exchange Offer........ The Company is offering to exchange (the "Exchange Offer") up to $15,000,000 aggregate principal amount of its 12% Senior Notes due 2003, Series B (the "Exchange Notes"), for up to $15,000,000 ag- gregate principal amount of its outstanding 12% Se- nior Notes due 2003, Series A, that were issued and sold in a transaction exempt from registration un- der the Securities Act (the "Old Notes" and to- gether with the Exchange Notes, the "Notes"). The form and terms of the Exchange Notes are substan- tially identical (including principal amount, in- terest rate, maturity, security and ranking) to the form and terms of the Old Notes for which they may be exchanged pursuant to the Exchange Offer, except that the Exchange Notes are freely transferable by holders thereof except as provided herein (see "The Exchange Offer--Terms of the Exchange" and "--Terms and Conditions of the Letter of Transmittal") and are not entitled to certain registration rights and certain additional interest provisions that are ap- plicable to the Old Notes under a registration rights agreement dated as of December 23, 1996 (the "Registration Rights Agreement") between the Com- pany and BT Securities Corporation as initial pur- chaser (the "Initial Purchaser") of the Old Notes. Exchange Notes issued pursuant to the Exchange Of- fer in exchange for the Old Notes may be offered for resale, resold or otherwise transferred by holders thereof (other than any holder that is (i) an Affiliate of the Company, (ii) a broker-dealer who acquired Old Notes directly from the Company or (iii) a broker-dealer who acquired Old Notes as a result of market-making or other trading activi- ties), without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such Exchange Notes are acquired in the ordinary course of such holders' business and such holders are not engaged in, and do not in- tend to engage in, and have no arrangement or un- derstanding with any person to participate in, a distribution of such Exchange Notes. Minimum Condition......... The Exchange Offer is not conditioned upon any min- imum aggregate amount of Old Notes being tendered or accepted for exchange. Expiration Date........... The Exchange Offer will expire at 5:00 p.m., New York City time, on , 1997, unless extended (the "Expiration Date"). 2 Exchange Date............. The first date of acceptance for exchange for the Old Notes will be the first business day following the Expiration Date. Conditions to the Exchange Offer........... The obligation of the Company to consummate the Ex- change Offer is subject to certain conditions. See "The Exchange Offer--Conditions to the Exchange Of- fer." The Company reserves the right to terminate or amend the Exchange Offer at any time prior to the Expiration Date upon the occurrence of any such condition. Withdrawal Rights......... Tenders of Old Notes pursuant to the Exchange Offer may be withdrawn at any time prior to the Expira- tion Date. Any Old Notes not accepted for any rea- son will be returned without expense to the tendering holders thereof as promptly as practica- ble after the expiration or termination of the Ex- change Offer. Procedures for Tendering Old Notes................. See "The Exchange Offer--How to Tender." Federal Income Tax Consequences.............. The exchange of Old Notes for Exchange Notes by tendering holders will not be a taxable exchange for federal income tax purposes, and such holders should not recognize any taxable gain or loss as a result of such exchange. Use of Proceeds........... There will be no cash proceeds to the Company from the exchange pursuant to the Exchange Offer. Effect on Holders of Old Notes..................... As a result of the making of this Exchange Offer, and upon acceptance for exchange of all validly tendered Old Notes pursuant to the terms of this Exchange Offer, the Company will have fulfilled a covenant contained in the terms of the Old Notes and the Registration Rights Agreement, and, accordingly, the holders of the Old Notes will have no further registration or other rights under the Registration Rights Agreement, except under certain limited circumstances. See "Old Notes Registration Rights; Additional Interest." Holders of the Old Notes who do not tender their Old Notes in the Exchange Offer will continue to hold such Old Notes and will be entitled to all the rights and limitations applicable thereto under the Indenture. All untendered, and tendered but unaccepted, Old Notes will continue to be subject to the restrictions on transfer provided for in the Old Notes and the Indenture. To the extent that Old Notes are tendered and accepted in the Exchange Offer, the trading market, if any, for the Old Notes not so tendered could be adversely affected. See "Risk Factors--Consequences of Failure to Exchange Old Notes." 3 TERMS OF THE EXCHANGE NOTES The Exchange Offer applies to $15,000,000 aggregate principal amount of Old Notes. The form and terms of the Exchange Notes are substantially identical to the form and terms of the Old Notes, except that the Exchange Notes have been registered under the Securities Act and, therefore, will not bear legends restricting the transfer thereof. The Exchange Notes will evidence the same debt as the Old Notes and will be entitled to the benefits of the Indenture. See "Description of the Notes." Securities Offered........ $15,000,000 of 12% Senior Notes due 2003, Series B Maturity Date............. December 31, 2003 Interest Rate and Payment Dates.................... The Exchange Notes will bear interest at a rate of 12% per annum. Interest will accrue from December 31, 1996 and will be paid semiannually on June 30 and December 31 of each year, commencing June 30, 1997. Temporary Interest Rate Increase................. The interest rate on the Exchange Notes will be 13% until (i) the Company achieves and maintains for two consecutive quarters on a trailing twelve-month basis $36 million of earnings after deducting mi- nority interests and before interest, taxes, depre- ciation and amortization calculated in accordance with generally accepted accounting principles ("Earnings") or (ii) March 31, 1998, provided that the Company's Earnings are $36 million as of that date on a trailing twelve-month basis. If the Company's Earnings are not $36 million as of that date on a trailing twelve-month basis, then the in- terest rate will continue at 13% until the Company's Earnings are $36 million for one quarter on a trailing twelve-month basis. See "Description of the Notes--Interest Rate Increase." Optional Redemption....... The Exchange Notes are redeemable, in whole or in part, at the option of the Company on or after De- cember 31, 1998 at the redemption prices set forth herein, plus accrued and unpaid interest thereon, if any, to the redemption date. Change of Control......... In the event of a Change of Control, the Company will be required to offer to purchase all of the outstanding Exchange Notes at 101% of the principal amount thereof, plus accrued and unpaid interest thereon, if any, to the date of purchase. See "De- scription of the Notes--Change of Control." Ranking................... The Exchange Notes will be unsecured obligations of the Company, will rank senior to all subordinated indebtedness of the Company and will rank pari passu in right of payment with all existing and fu- ture senior indebtedness of the Company, including the Old Notes and indebtedness under the Credit Fa- cility (as defined). Guarantees................ The Exchange Notes will be unconditionally guaran- teed by the Subsidiary Guarantors. Certain Covenants......... The Indenture contains certain covenants that, among other things, limit: (i) the incurrence of additional indebtedness by the Company and its 4 Restricted Subsidiaries (as defined); (ii) the pay- ment of dividends; (iii) the repurchase of capital stock or subordinated indebtedness; (iv) the making of certain other distributions, loans and invest- ments; (v) the sale of assets and the sale of the stock of Restricted Subsidiaries; (vi) the creation of restrictions on the ability of Restricted Sub- sidiaries to pay dividends or make other payments to the Company; and (vii) the ability of the Com- pany and its Restricted Subsidiaries to enter into certain transactions with affiliates or to merge, consolidate or transfer substantially all assets. All of these limitations and restrictions are sub- ject to a number of important qualifications and exceptions. See "Description of the Notes--Certain Covenants." For additional information regarding the Exchange Notes, see "Description of the Notes." EXCHANGE OFFER; REGISTRATION RIGHTS; ADDITIONAL INTEREST Pursuant to the Registration Rights Agreement, the Company has agreed (i) to file the Registration Statement on or prior to February 6, 1997 with respect to the Exchange Offer, (ii) to use its best efforts to cause the Registration Statement to become effective under the Securities Act on or prior to April 27, 1997 and (iii) to use its best efforts to consummate the Exchange Offer on or prior to June 11, 1997. In the event that applicable interpretations of the Staff do not permit the Company to effect the Exchange Offer, or if for any reason the Exchange Offer is not consummated, the Company will use its best efforts to cause to become effective a shelf registration statement with respect to the resale of the Old Notes and to keep such shelf registration statement effective until December 23, 1999. The Company will be obligated to pay additional interest as liquidated damages to holders of the Old Notes under certain circumstances if the Company is not in compliance with its obligations under the Registration Rights Agreement. See "Old Notes Registration Rights; Additional Interest." RISK FACTORS SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED PRIOR TO MAKING A DECISION WITH RESPECT TO THE EXCHANGE OFFER. 5 SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA The summary historical consolidated financial data of the Company for the ten months ended December 31, 1995, and each year in the four-year period ended February 28, 1995, have been derived from the Company's audited consolidated financial statements. This information should be read in conjunction with the Consolidated Financial Statements and the related notes thereto appearing elsewhere in this Prospectus and "Management's Discussion and Analysis of Financial Condition and Results of Operations." The summary historical consolidated financial data of the Company as of September 30, 1995 and 1996 and for the nine-month periods then ended, have been prepared on the same basis as the consolidated financial statements and, in the opinion of the Company, include all normal and recurring adjustments (consisting of only normal recurring adjustments) necessary to present fairly the information set forth therein. Operating results for the nine months ended September 30, 1996 are not necessarily indicative of the results that may be expected for the fiscal year ended December 31, 1996. Certain reclassifications have been made to the prior period financial statements to conform to the presentation used in the September 30, 1996 financial statements. The data for the nine months ended September 30, 1995 and 1996 set forth below are unaudited.
TEN MONTHS NINE MONTHS ENDED YEAR ENDED FEBRUARY 28 OR 29, ENDED SEPTEMBER 30, ------------------------------------- DECEMBER 31, -------------------- 1992(1) 1993 1994(2) 1995 1995 1995 1996 -------- -------- -------- -------- ------------ -------- ---------- (DOLLARS IN THOUSANDS) STATEMENT OF OPERATIONS DATA: Gross revenue........... $710,873 $678,882 $651,657 $861,518 $916,744 $731,795 $1,023,410 Service revenue (3)..... 385,942 391,528 382,708 459,786 425,896 357,582 433,647 Unusual income (expense), net......... (67,054) 50 (8,709) -- 500 -- -- Operating income (loss)................. (43,963) 22,744 (5,230) 13,688 17,505 13,171 21,170 Interest expense, net... 10,347 6,921 6,722 13,000 11,202 10,629 11,885 Income (loss) before income taxes, minority interests, and extraordinary item..... (54,310) 14,894 (12,877) 1,239 6,303 2,542 9,285 Income tax provision (benefit).............. (13,794) 6,255 (349) 2,900 2,091 1,300 840 Minority interests...... -- -- -- -- 1,960 1,315 4,725 Extraordinary loss on early extinguishment of debt................... -- -- 5,969 -- -- -- -- Net income (loss)....... (40,516) 8,639 (18,497) (1,661) 2,252 (73) 3,720 Preferred stock dividends and accretion.............. 2,416 5,293 4,896 2,154 1,803 1,616 1,631 Redemption of preferred stock.................. -- -- 1,929 -- -- -- -- Net income (loss) available for common shareholders........... (42,932) 3,346 (25,322) (3,815) 449 (1,689) 2,089 BALANCE SHEET DATA (END OF PERIOD): Working capital......... $ 65,623 $ 85,861 $ 87,648 $ 91,640 $ 84,589 $ 84,422 $ 102,009 Total assets............ 318,947 293,076 281,198 281,422 369,517 373,074 374,535 Total indebtedness...... 86,332 74,391 123,042 127,311 125,153 121,561 133,384 Redeemable preferred stock.................. 45,161 44,824 20,212 19,617 19,787 19,736 19,940 Shareholders' equity.... 51,151 58,521 30,780 27,624 28,427 27,690 33,192 OTHER DATA: EBITDA (4).............. $ 32,250 $ 33,460 $ 13,038 $ 22,920 $ 23,402 $ 19,182 $ 24,285 Capital expenditures.... 3,644 4,638 1,388 2,426 1,759 1,720 4,905 Depreciation and amortization........... 9,159 10,766 9,559 9,232 8,357 7,326 7,840 Ratio of earnings to fixed charges (5)...... N/A 1.8x N/A 1.0x 1.2x 1.1x 1.2x
- -------- (1) Fiscal year 1992 reflects an after-tax charge of $52.4 million associated with the disposal and restructuring of certain businesses. (2) In fiscal year 1994, the Company adopted Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other than Pensions." (3) Service revenue is derived by deducting the costs of subcontracted services and direct project costs from gross revenue and adding the Company's share of the equity in income of unconsolidated joint ventures and affiliated companies. (4) EBITDA represents operating income (loss), excluding unusual items, plus depreciation and amortization minus minority interests. Management believes that EBITDA is generally accepted as providing useful information regarding a company's ability to service and/or incur debt. EBITDA should not be considered in isolation or as a substitute for net income, cash flows or other consolidated income or cash flow data prepared in accordance with generally accepted accounting principles or as a measure of a company's profitability or liquidity. (5) The ratio of earnings to fixed charges is calculated by dividing income from continuing operations before fixed charges and income taxes ("earnings") by fixed charges. Fixed charges consist of interest expense and that portion of rental expense that the Company believes to be representative of interest. In the years ended February 29, 1992 and February 28, 1994, earnings, as defined, were inadequate to cover fixed charges. The deficiencies were $54.3 million and $12.9 million for the years ended February 29, 1992 and February 28, 1994, respectively. 6 RISK FACTORS In addition to the other information contained in this Prospectus, before tendering their Old Notes for the Exchange Notes offered hereby, holders of Old Notes should consider carefully the following factors, which may be generally applicable to the Old Notes as well as to the Exchange Notes. CONSEQUENCES OF FAILURE TO EXCHANGE OLD NOTES Holders of Old Notes who do not exchange their Old Notes for Exchange Notes pursuant to the Exchange Offer will continue to be subject to the restrictions on transfer of such Old Notes, as set forth in the legend thereon, as a consequence of the issuance of the Old Notes pursuant to the exemptions from, or in transactions not subject to, the registration requirements of the Securities Act and applicable state securities laws. In general, the Old Notes may not be offered or sold, unless registered under the Securities Act and applicable state securities laws, or pursuant to an exemption therefrom. Except under certain limited circumstances, the Company does not intend to register the Old Notes under the Securities Act. In addition, any holder of Old Notes who tenders in the Exchange Offer for the purpose of participating in a distribution of the Exchange Notes may be deemed to have received restricted securities and, if so, will be required to comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. To the extent Old Notes are tendered and accepted in the Exchange Offer, the trading market, if any, for the Old Notes not so tendered could be adversely affected. See "The Exchange Offer" and "Old Notes Registration Rights; Additional Interest." COMPANY IS HIGHLY LEVERAGED On a pro forma basis, at September 30, 1996, assuming the issuance of the Old Notes, borrowings under the Credit Facility and application of the net proceeds therefrom, the Company would have had total indebtedness of $153.9 million, representing 82.4% of total capitalization. Effective March 8, 1996, the Company agreed to increase the interest rate on the Company's 12% Senior Subordinated Notes due 2003 (the "Existing Notes") by one percent until the Company achieves and maintains a specified level of earnings as defined in the Fourth Supplemental Indenture to the Indenture dated as of January 11, 1994 (as such Indenture has been and may be amended, restated, supplemented or otherwise modified from time to time, the "Existing Indenture") governing the Existing Notes. The Indenture governing the Notes contains an identical increased interest rate provision. The degree to which the Company is leveraged could have important consequences to holders of the Notes, including, but not limited to, the following: (i) the Company's ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, general corporate or other purposes may be limited; (ii) a substantial portion of the Company's cash flow from operations will be dedicated to the payment of the principal of, and interest on, its debt; (iii) the agreements governing the Company's long-term debt contain certain restrictive financial and operating covenants which could limit the Company's ability to expand; (iv) the Company's substantial leverage may make it more vulnerable to economic downturns and reduce its flexibility in responding to changing business and economic conditions; and (v) the level of the Company's leverage may make it more difficult for the Company to obtain performance and similar bonds. The ability of the Company to pay interest and principal on the Notes and to satisfy its other debt obligations will be dependent on the future operating performance of the Company, which could be affected by changes in economic conditions and other factors, including factors beyond the control of the Company. A failure to comply with the covenants and other provisions of its debt instruments could result in events of default under such instruments, which could permit acceleration of the debt under such instruments and in some cases acceleration of debt under other instruments that contain cross-default or cross-acceleration provisions. If the Company is unable to generate sufficient cash flow to meet its debt obligations, the Company may be required to renegotiate the terms of the instruments relating to its long-term debt or to refinance all or a portion of its long-term debt. However, there can be no assurance that the Company will be able to successfully renegotiate such terms or refinance its indebtedness, or, if the Company were able to do so, that the terms 7 available would be favorable to the Company. In the event that the Company were unable to refinance its indebtedness or obtain new financing under these circumstances, the Company would have to consider various other options such as the sale of certain assets to meet its required debt service, negotiation with its lenders to restructure applicable indebtedness or other options available to it under law. See "Management's Discussion and Analysis of Financial Condition and Results of Operations--Liquidity and Capital Resources." HISTORY OF NET LOSSES As shown in the following table, for three of the past five fiscal years, the Company has had net losses; fiscal 1992 reflects an after-tax charge of $52.4 million associated with the disposal and restructuring of certain businesses. The Company's cumulative deficit at September 30, 1996 was $30.8 million.
TEN MONTHS NINE MONTHS YEAR ENDED FEBRUARY 28 OR 29, ENDED ENDED ---------------------------------- DECEMBER 31, SEPTEMBER 30, 1992 1993 1994 1995 1995 1996 -------- ------ -------- ------- ------------ ------------- (UNAUDITED) (DOLLARS IN THOUSANDS) Net income (loss)....... $(40,516) $8,639 $(18,497) $(1,661) $2,252 $3,720 Net income (loss) available for common shareholders........... (42,932) 3,346 (25,322) (3,815) 449 2,089
RECENT AND ANTICIPATED RESULTS For the three months ended September 30, 1996, the Company's operating income decreased $2.8 million from the corresponding period in 1995, primarily due to a decrease in operating income from engineering and construction operations. The Company's service revenue and operating results for the fourth quarter will be significantly lower than the third quarter. For the nine months ended September 30, 1996, the Company's Federal Programs Group had significant increases in costs associated with marketing activities in pursuit of large-scale projects, including approximately $2.1 million in 1996 associated with the Company's unsuccessful recompete bid on the U.S. Department of Energy's ("DOE") proposal at its Hanford site ("Hanford") and significant costs associated with other DOE proposals. In August 1996, the Company was informed that it was unsuccessful in its bid for the DOE's new management and integration contract at Hanford. The Company's existing contract at Hanford, the operating income from which has been significant to the Company's results, was set to expire in March 1997, and effectively was terminated by DOE on October 1, 1996. Management believes the impact on earnings due to the closeout of the Hanford contract will be material in the fourth quarter of 1996. Management also believes the impact on earnings due to the closeout of the Hanford contract will be material in future periods, unless replaced with new contracts or offset by savings from the Company's on- going cost reduction program. There can be no assurance, however, that the Company will be able to enter into new contracts or achieve cost savings that will, in the aggregate, totally offset the effect of the loss of the Hanford contract. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." In March 1996, the Company and Nova Hut, an integrated steel maker based in the Ostrava region of the Czech Republic, signed a two-year $102 million contract to provide engineering and construction services for the initial phase of a mini-mill project. The Company is currently negotiating a contract with Nova Hut for the next phase of the mini-mill project and expects to complete negotiations in the first quarter of 1997. If negotiations are successful, anticipated earnings associated with this contract for the next phase of work are expected to be material to the Company's operating results. There can be no assurance, however, that such negotiations will be completed. The Company has sold (the "Disposition") its interest in entities owning and operating a pulverized coal injection facility in Indiana ("PCI"). Although the sale will result in a gain in the fourth quarter of 1996, the negative effect of the sale in future periods on earnings and cash flows will be significant. See "Unaudited Pro Forma Consolidated Financial Statements." 8 LIMITED ABILITY TO INCUR ADDITIONAL DEBT Excluding borrowings under the Credit Facility, the Existing Indenture and the Indenture (together, the "Indentures") limit the Company's ability to incur additional Indebtedness (as defined). The amount of available additional indebtedness may be insufficient for working capital needs, potential acquisitions, significant capital expenditures, repayment of debt or other purposes. See "Description of the Notes--Certain Covenants--Limitations on Additional Indebtedness" and "Description of the Credit Facility." COMPANY DEPENDENT ON FEDERAL GOVERNMENT CONTRACTS A substantial portion of ICF Kaiser's revenues are derived from services performed directly or indirectly under contracts with various agencies and departments of the Federal government. During the ten months ended December 31, 1995, approximately 78% of the Company's consolidated gross revenue was derived from contracts with the U.S. Government. During the ten months ended December 31, 1995, the DOE accounted for approximately 68% of consolidated gross revenue; the U.S. Department of Defense ("DOD"), the U.S. Environmental Protection Agency ("EPA") and other Federal agencies collectively accounted for approximately 10% of the Company's consolidated gross revenue. The Company's existing contract at Hanford effectively was terminated by DOE on October 1, 1996. As a result, and based on the Company's current assessment of the closeout of the Hanford contract, management believes the impact on earnings will be material in the fourth quarter of 1996, as well as in future periods, unless replaced with new contracts and/or cost reductions. In response to the reduction and eventual elimination of the Hanford contract, in August 1996 the Company initiated a significant operational efficiency and cost savings program, together with management changes, with the objective of minimizing the long-term impact associated with the termination of the Hanford contract. See "--Recent and Anticipated Results." Contracts made with the U.S. Government generally are subject to annual approval of funding. Limitations imposed on spending by Federal government agencies, which might result from efforts to reduce the Federal deficit or for other reasons, may limit the continued funding of the Company's existing Federal government contracts and may limit the ability of the Company to obtain additional contracts or task orders under existing contracts. These limitations, if significant, could have a material adverse effect on the Company. The Company has a substantial number of cost-reimbursement contracts with the U.S. government, the costs of which are subject to audit by the U.S. government. As a result of pending audits relating to fiscal years 1986 forward, the government has asserted, among other things, that certain costs claimed as reimbursable under government contracts either were not allowable or not allocated in accordance with federal procurement regulations. The Company is actively working with the government to resolve these issues. The Company has provided for the potential effect of disallowed costs for the periods currently under audit and for periods not yet audited, although the amounts at issue have not been quantified by the government or the Company. This provision will be reviewed periodically as discussions with the government progress. Based on the information currently available, management believes the potential effects of these pending audits will not have a material adverse effect on the Company's financial position, results of operations or cash flows. All Federal contracts may be terminated by the U.S. Government at any time, with or without cause. There can be no assurance that existing or future Federal government contracts would not be terminated or that the government will continue to use the Company's services at levels comparable to current use. RISK ASSOCIATED WITH COMPANY'S PLEDGE OF ASSETS The Company and most of its subsidiaries have granted a security interest in substantially all of their accounts receivable and certain other assets to secure all debt incurred pursuant to the Credit Facility. The Company would not be able to incur additional debt (including additional debt permitted by the Indentures) if 9 the Company were required to pledge assets in connection with the incurrence of such additional debt. In the event of bankruptcy or liquidation of the Company there can be no assurance that sufficient assets would be available for payment of the Notes. LIMITED ABILITY TO MAKE ACQUISITIONS AND OTHER INVESTMENTS The Credit Facility limits the Company's ability to make acquisitions and other investments, and the Indentures limit the Company's ability to make restricted payments, including certain payments in connection with investments and acquisitions. Limitations in the Existing Indenture are based in part on the Company's Consolidated Net Income (as defined) during the period since August 31, 1993; the losses incurred by the Company during fiscal 1994 and 1995 have the effect of making this limitation very restrictive. The indebtedness, investment, acquisitions and restricted payments limitations in the Credit Facility and the Indentures discussed above mean that during the next several years it likely will be necessary for the Company to issue additional equity securities to fund any significant acquisitions and to invest significant amounts in joint ventures. These limitations may make it more difficult for the Company to compete effectively in its markets. FRAUDULENT CONVEYANCE LAWS The incurrence by the Company of indebtedness such as the Notes may be subject to review under relevant state and federal fraudulent conveyance laws if a bankruptcy case or lawsuit is commenced on behalf of unpaid creditors of the Company. Under these statutes, if a court were to find that (i) the Notes were incurred with the intent of hindering, delaying or defrauding creditors or that the Company received less than a reasonably equivalent value or fair consideration for the Notes and (ii) at the time the Notes were issued, the Company was insolvent, was rendered insolvent by the issuance of the Notes, was engaged in a business or transaction for which the assets remaining with the Company constituted unreasonably small capital, or intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they matured, such court could void the Company's obligations under the Notes, or subordinate the Notes to all other indebtedness of the Company. In that event, there would be no assurance that any repayment on the Notes would ever by recovered by holders of the Notes. The measure of insolvency for purposes of the foregoing would vary depending upon the law of the jurisdiction which is being applied. Generally, however, the Company would be considered to have been insolvent at the time the Notes were issued if the sum of its debts was then greater than all of its property at a fair valuation, or if the then fair saleable value of its assets was less than the amount that was then required to pay its probable liability on its existing debts as they become absolute and matured. There can be no assurance as to what standard a court would apply in order to determine whether the Company was "insolvent" as of the date the Notes were issued, or that, regardless of the method of valuation, a court would not determine that the Company was insolvent on that date. Nor can there be any assurance that a court would not determine, regardless of whether the Company was insolvent on the date the Notes were issued, that the payments constituted fraudulent transfers on another of the grounds listed above. LIMITATIONS ON CHANGE OF CONTROL In the event of a Change of Control, the Company would be required, subject to certain conditions, to offer to purchase all outstanding Existing Notes and Notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, thereon to the date of purchase. As of September 30, 1996, the Company did not have sufficient funds available to purchase all of the Existing Notes and Notes were they to be tendered in response to an offer made as a result of such a Change of Control. There can be no assurance that, at the time of a Change of Control, the Company will have sufficient cash to repay all amounts due under the Existing Notes and Notes. The terms of the Credit Facility prohibit the optional payment or prepayment or any redemption of the Existing Notes and Notes. If, following a Change of Control, the Company has insufficient funds to purchase all the Existing Notes and Notes tendered pursuant to such an offer, an event of default in respect of such Notes would occur. The Change of Control provisions of the Indentures may have the effect of discouraging attempts by a person or group to take control of the Company. See "Description of the Notes--Change of Control." 10 The Company's Restated Certificate of Incorporation, By-laws, Shareholder Rights Plan and certain other agreements contain provisions that could have the effect of delaying or preventing a change of control of the Company or affect the Company's ability to engage in certain extraordinary transactions. COMPANY DEPENDENT ON GOVERNMENTAL ENVIRONMENTAL REGULATION CONTINUING A substantial portion of the Company's business has been generated either directly or indirectly as a result of Federal and state laws, regulations and programs related to environmental issues. Accordingly, a reduction in the number or scope of these laws and regulations, or changes in government policies regarding the funding, implementation or enforcement of such laws, regulations and programs, could have a material adverse effect on the Company's business. In addition, any significant effort by the DOE to reduce the role of private contractors in environmental projects could have a material adverse effect on the Company. POTENTIAL ENVIRONMENTAL LIABILITY FOR COMPANY'S WORK The assessment, analysis, remediation, handling, management, and disposal of hazardous substances necessarily involve significant risks, including the possibility of damages or personal injuries caused by the escape of hazardous materials into the environment, and the possibility of fines, penalties or other regulatory action. These risks include potentially large civil and criminal liabilities for violations of environmental laws and regulations, and liabilities to customers and to third parties for damages arising from performing services for clients. Potential Liabilities Arising Out of Environmental Laws and Regulations All facets of the Company's business are conducted in the context of a rapidly developing and changing statutory and regulatory framework. The Company's operations and services are affected by and subject to regulation by a number of Federal agencies, including the EPA and the Occupational Safety and Health Administration, as well as applicable state and local regulatory agencies. The Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") addresses cleanup of sites at which there has been a release or threatened release of hazardous substances into the environment. Increasingly, there are efforts to expand the reach of CERCLA to make environmental contractors responsible for cleanup costs by claiming that environmental contractors are owners or operators of hazardous waste facilities or that they arranged for treatment, transportation, or disposal of hazardous substances. Several recent court decisions have accepted these claims. Should the Company be held responsible under CERCLA for damages caused while performing services or otherwise, it may be forced to bear such liability by itself, notwithstanding the potential availability of contribution or indemnity from other parties. The Resource Conservation and Recovery Act ("RCRA") governs hazardous waste generation, treatment, transportation, storage and disposal. RCRA, or EPA-approved state programs at least as stringent, govern waste handling activities involving wastes classified as "hazardous." Substantial fees and penalties may be imposed under RCRA and similar state statutes for any violation of such statutes and the regulations thereunder. Potential Liabilities Involving Clients and Third Parties In performing services for its clients, the Company could potentially be liable for breach of contract, personal injury, property damage and negligence (including improper or negligent performance or design, failure to meet specifications and breaches of express or implied warranties). The damages available to a client, should it prevail in its claims, are potentially large and could include consequential damages. Environmental contractors, in connection with work performed for clients, potentially face liabilities to third parties from various claims, including claims for property damage or personal injury stemming from a release of hazardous substances or otherwise. Claims for damage to third parties could arise in a number of ways, including through a sudden and accidental release or discharge of contaminants or pollutants during the performance of services; through the inability, despite reasonable care, of a remedial plan to contain or correct an ongoing 11 seepage or release of pollutants; through the inadvertent exacerbation of an existing contamination problem; or through reliance on reports or recommendations prepared by the Company. Personal injury claims could arise contemporaneously with performance of the work or long after completion of the project as a result of alleged exposure to toxic or hazardous substances. In addition, increasing numbers of claimants assert that companies performing environmental remediation should be adjudged strictly liable, i.e., liable for damages even though its services were performed using reasonable care, on the grounds that such services involved "abnormally dangerous activities." Clients frequently attempt to shift various of the liabilities arising out of remediation of their own environmental problems to contractors through contractual indemnities. Such provisions seek to require the Company to assume liabilities for damage or personal injury to third parties and property and for environmental fines and penalties including liabilities arising as a result of breaches by the Company of specified standards of care. For EPA contracts involving field services in connection with response actions under Superfund, a program established under CERCLA to clean up hazardous waste sites and provide for penalties and punitive damages for noncompliance with EPA orders, the Company is eligible for indemnification under Section 119 of CERCLA, for pollution and environmental damage liability resulting from release or threatened release of hazardous substances. Recently, EPA has constricted significantly the circumstances under which it will indemnify its contractors against liabilities incurred in connection with CERCLA projects. There are other proposals both in Congress and at the regulatory agencies to further restrict indemnification of contractors from third-party claims. Kaiser-Hill Company, LLC ("Kaiser Hill") (a limited liability company owned equally by the Company and CH2M Hill Companies, Ltd.) signed a five-year Performance Based Integrating Management contract in 1995 to perform work at the DOE's Rocky Flats Environmental Technology Site near Golden, Colorado. The terms of that contract govern any liability (including without limitation, a claim involving strict or absolute liability and any civil fine or penalty, expense or remediation cost, but limited to those of a civil nature), which may be incurred by, imposed on, or asserted against Kaiser-Hill arising out of any act or failure to act, condition, or exposure which occurred before Kaiser-Hill assumed responsibility on July 1, 1995 ("pre-existing conditions"). To the extent the acts or omissions of Kaiser-Hill constitute willful misconduct, lack of good faith, or failure to exercise prudent business judgment on the part of Kaiser-Hill's managerial personnel and cause or add to any liability, expense or remediation cost resulting from pre- existing conditions, Kaiser-Hill shall be responsible, but only for the incremental liability, expense or remediation caused by Kaiser-Hill. The contract further provides that Kaiser-Hill will not be reimbursed for liabilities and expenses to third parties caused by the willful misconduct or lack of good faith of Kaiser-Hill's managerial personnel or the failure to exercise prudent business judgment by Kaiser-Hill's managerial personnel. MARKET FOR COMPANY'S SERVICES HIGHLY COMPETITIVE The market for the Company's services is highly competitive. The Company and its subsidiaries compete with many other environmental consulting, engineering and construction firms ranging from small firms to large multinational firms having substantially greater financial, management, and marketing resources than the Company. Other competitive factors include quality of services, technical qualifications, reputation, geographic presence, price, and the availability of key professional personnel. See "Business--Competition and Contract Award Process." RISKS ASSOCIATED WITH COMPANY'S ABILITY TO ATTRACT AND RETAIN PROFESSIONAL PERSONNEL The Company's ability to retain and expand its staff of qualified professionals is an important factor in determining the Company's future success. The market for these professionals, especially environmental professionals, is competitive. There can be no assurance that the Company will continue to be successful in its efforts to attract and retain such professionals. 12 FLUCTUATIONS IN QUARTERLY FINANCIAL RESULTS The Company's quarterly financial results may be affected by a number of factors, including the commencement, completion or termination of major projects. Accordingly, results for any one quarter are not necessarily indicative of results for any other quarter or for the year. ABSENCE OF PUBLIC MARKET FOR THE EXCHANGE NOTES The Exchange Notes are being offered to the holders of the Old Notes. The Old Notes were offered and sold in December 1996 to a small number of institutional and accredited investors and are eligible for trading in the Private Offerings, Resale and Trading through Automated Linkages ("PORTAL") Market. The Company does not intend to apply for a listing of the Exchange Notes on a securities exchange. There is currently no established market for the Exchange Notes and there can be no assurance as to the liquidity of markets that may develop for the Exchange Notes, the ability of the holders of the Exchange Notes to sell their Exchange Notes or the price at which such holders would be able to sell their Exchange Notes. If such markets were to exist, the Exchange Notes could trade at prices that may be lower than the initial market values thereof, depending on many factors, including prevailing interest rates, the markets for similar securities, and the financial performance of the Company. The Initial Purchaser has made a market for the Old Notes. Although there is currently no market for the Exchange Notes, the Initial Purchaser has advised the Company that it currently intends to make a market in the Exchange Notes. However, the Initial Purchaser is not obligated to do so, and any such market making with respect to the Old Notes or the Exchange Notes may be discontinued at any time without notice. In addition, such market-making activities will be subject to the limits imposed by the Securities Act and the Exchange Act and may be limited during the Exchange Offer or the pendency of an applicable Shelf Registration Statement (as defined). The liquidity of, and trading market for, the Exchange Notes also may be adversely affected by general declines in the market for similar securities. Such a decline may adversely affect such liquidity and trading markets independent of the financial performance of, and prospects for, the Company. ORIGINAL ISSUE DISCOUNT The Old Notes were issued with original issue discount. Consequently, holders of Exchange Notes will have income for tax purposes arising from such original issue discount prior to the actual receipt of cash in respect of such income. See "Certain Federal Income Tax Considerations" for a more detailed discussion of the federal income tax consequences to the holders of the Exchange Notes of the exchange of Old Notes for Exchange Notes and the ownership and disposition of the Exchange Notes. If a bankruptcy case is commenced by or against the Company under the United States Bankruptcy Code (the "Bankruptcy Code"), the claim of a holder of any of the Notes with respect to the principal amount thereof may be limited to an amount equal to the sum of (i) the initial offering price allocable to the Old Notes and (ii) that portion of the original issue discount that is not deemed to constitute "unmatured interest" for purposes of the Bankruptcy Code. Any original issue discount that was not amortized as of any such bankruptcy filing would constitute "unmatured interest." USE OF PROCEEDS There will be no cash proceeds to the Company resulting from the Exchange Offer. The Company used the net proceeds received from the sale of the Old Notes to repurchase a portion of the Company's Series 2D Senior Preferred Stock having an aggregate liquidation preference of $20.0 million. The balance of the Series 2D Senior Preferred Stock was repurchased using borrowings under the Credit Facility. See "Unaudited Pro Forma Consolidated Financial Statements." 13 THE EXCHANGE OFFER PURPOSE OF THE EXCHANGE OFFER The sole purpose of the Exchange Offer is to fulfill the obligations of the Company under the Registration Rights Agreement with respect to the registration of the Old Notes. The Old Notes originally were issued and sold on December 23, 1996 (the "Issue Date"). Such sales were not registered under the Securities Act in reliance upon the exemption provided by Section 4(2) of the Securities Act and Rule 144A promulgated under the Securities Act. In connection with the sale of the Old Notes, the Company agreed to file with the Commission the Registration Statement, pursuant to which the Exchange Notes, consisting of another series of senior notes of the Company covered by such Registration Statement and containing substantially identical terms to the Old Notes, except as set forth in this Prospectus, would be offered in exchange for Old Notes tendered at the option of the holders thereof. If (i) because of any change in law or in currently prevailing interpretations of the Staff of the Commission the Company is not permitted to effect the Exchange Offer, (ii) the Exchange Offer is not consummated within 180 days of the Issue Date, (iii) in certain circumstances, after the consummation of the Exchange Offer, the Initial Purchaser continues to hold Exchange Notes and so requests, (iv) the holders of not less than a majority in aggregate principal amount of the Old Notes determine that the interests of the holders would be materially adversely affected by consummation of the Exchange Offer or (v) in the case of any holder of Old Notes that participates in the Exchange Offer, such holder does not receive Exchange Notes on the date of the exchange that may be sold without restriction under state and federal securities laws (other than due solely to the status of such holder as an Affiliate of the Company), then the Company will file with the Commission a registration statement (the "Shelf Registration Statement") to cover resales of the Old Notes by the holders thereof who satisfy certain conditions relating to the provision of information in connection with the Shelf Registration Statement. In the event that (i) the Company fails to file the Registration Statement, (ii) the Registration Statement or, if applicable, the Shelf Registration Statement, is not declared effective by the Commission or (iii) the Exchange Offer is not consummated or the Shelf Registration Statement ceases to be effective, in each case within specified time periods, the interest rate borne by the Old Notes will be increased. See "Old Notes Registration Rights; Additional Interest." TERMS OF THE EXCHANGE The Company hereby offers to exchange, upon the terms and subject to the conditions set forth herein and in the Letter of Transmittal accompanying the Registration Statement of which this Prospectus is a part, $1,000 in principal amount of Exchange Notes for each $1,000 in principal amount of Old Notes. The terms of the Exchange Notes are substantially identical to the terms of the Old Notes for which they may be exchanged pursuant to this Exchange Offer, except that the Exchange Notes generally will be freely transferable by holders thereof, and the holders of the Exchange Notes (as well as remaining holders of any Old Notes) are not entitled to certain registration rights and certain additional interest provisions that are applicable to the Old Notes under the Registration Rights Agreement. The Exchange Notes will evidence the same debt as the Old Notes and will be entitled to the benefits of the Indenture. See "Description of the Notes." The Exchange Offer is not conditioned upon any minimum aggregate principal amount of Old Notes being tendered or accepted for exchange. Based on its view of interpretations set forth in no-action letters issued by the Staff to third parties, the Company believes that Exchange Notes issued pursuant to the Exchange Offer in exchange for the Old Notes may be offered for resale, resold and otherwise transferred by holders thereof (other than any holder that is (i) an Affiliate of the Company, (ii) a broker-dealer who acquired Old Notes directly from the Company or (iii) a broker-dealer who acquired Old Notes as a result of market making or other trading activities) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such Exchange Notes are acquired in the ordinary course of such holders' business, and such holders are not engaged in, and do not intend to engage in, and have no arrangement or understanding with any person to participate in, a 14 distribution of such Exchange Notes. Any broker-dealer that resells Exchange Notes that were received by it for its own account pursuant to the Exchange Offer and any broker or dealer that participates in a distribution of such Exchange Notes may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit on any such resale of Exchange Notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. Broker-dealers who acquired Old Notes as a result of market-making or other trading activities may use this Prospectus, as supplemented or amended, in connection with resales of the Exchange Notes. The Company has agreed that, for a period of 180 days after the Exchange Date, it will make this Prospectus available to any broker-dealer for use in connection with any such resale. Any holder who tenders in the Exchange Offer for the purpose of participating in a distribution of the Exchange Notes or any other holder that cannot rely upon such interpretations must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. Tendering holders of Old Notes will not be required to pay brokerage commissions or fees or, subject to the instructions in the Letter of Transmittal, transfer taxes with respect to the exchange of the Old Notes pursuant to the Exchange Offer. The Exchange Notes will bear interest from December 31, 1996. Holders of Old Notes whose Old Notes are accepted for exchange will be deemed to have waived the right to receive any payment in respect of interest on the Old Notes accrued from December 31, 1996 to the date of the issuance of the Exchange Notes. Interest on the Exchange Notes is payable semiannually in arrears on June 30 and December 31 of each year, commencing June 30, 1997, accruing from December 31, 1996 at a rate of 12% per annum, subject to a temporary interest rate increase to 13% until the occurrence of certain events. See "Description of the Notes--Interest Rate Increase." EXPIRATION DATE; EXTENSIONS; TERMINATION; AMENDMENTS The Exchange Offer expires on the Expiration Date. The term "Expiration Date" means 5:00 p.m., New York City time, on , 1997 unless the Company in its sole discretion extends the period during which the Exchange Offer is open, in which event the term "Expiration Date" means the latest time and date on which the Exchange Offer, as so extended by the Company, expires. The Company reserves the right to extend the Exchange Offer at any time and from time to time prior to the Expiration Date by giving written notice to Bankers Trust Company (the "Exchange Agent") and by timely public announcement communicated by no later than 5:00 p.m. on the next business day following the Expiration Date, unless otherwise required by applicable law or regulation, by making a release to the Dow Jones News Service. During any extension of the Exchange Offer, all Old Notes previously tendered pursuant to the Exchange Offer will remain subject to the Exchange Offer. The initial Exchange Date will be the first business day following the Expiration Date. The Company expressly reserves the right to (i) terminate the Exchange Offer and not accept for exchange any Old Notes for any reason, including if any of the events set forth below under "Conditions to the Exchange Offer" shall have occurred and shall not have been waived by the Company and (ii) amend the terms of the Exchange Offer in any manner, whether before or after any tender of the Old Notes. If any such termination or amendment occurs, the Company will notify the Exchange Agent in writing and will either issue a press release or give written notice to the holders of the Old Notes as promptly as practicable. Unless the Company terminates the Exchange Offer prior to 5:00 p.m., New York City time, on the Expiration Date, the Company will exchange the Exchange Notes for Old Notes on the Exchange Date. This Prospectus and the related Letter of Transmittal and other relevant materials will be mailed by the Company to record holders of Old Notes and will be furnished to brokers, banks and similar persons whose names, or the names of whose nominees, appear on the lists of holders for subsequent transmittal to beneficial owners of Old Notes. 15 HOW TO TENDER The tender to the Company of Old Notes by a holder thereof pursuant to one of the procedures set forth below will constitute an agreement between such holder and the Company in accordance with the terms and subject to the conditions set forth herein and in the Letter of Transmittal. General Procedures A holder of an Old Note may tender the same by (i) properly completing and signing the Letter of Transmittal or a facsimile thereof (all references in this Prospectus to the Letter of Transmittal shall be deemed to include a facsimile thereof) and delivering the same, together with the certificate or certificates representing the Old Notes being tendered and any required signature guarantees (or a timely confirmation of a book-entry transfer (a "Book-Entry Confirmation") pursuant to the procedure described below), to the Exchange Agent at its address set forth on the back cover of this Prospectus on or prior to the Expiration Date or (ii) complying with the guaranteed delivery procedures described below. If tendered Old Notes are registered in the name of the signer of the Letter of Transmittal and the Exchange Notes to be issued in exchange therefor are to be issued (and any untendered Old Notes are to be reissued) in the name of the registered holder, the signature of such signer need not be guaranteed. In any other case, the tendered Old Notes must be endorsed or accompanied by written instruments of transfer in form satisfactory to the Company and duly executed by the registered holder and the signature on the endorsement or instrument of transfer must be guaranteed by a bank, broker, dealer, credit union, savings association, clearing agency or other institution (each an "Eligible Institution") that is a member of a recognized signature guarantee medallion program within the meaning of Rule 17Ad-15 under the Exchange Act. If the Exchange Notes and/or Old Notes not exchanged are to be delivered to an address other than that of the registered holder appearing on the note register for the Old Notes, the signature on the Letter of Transmittal must be guaranteed by an Eligible Institution. Any beneficial owner whose Old Notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender Old Notes should contact such holder promptly and instruct such holder to tender Old Notes on such beneficial owner's behalf. If such beneficial owner wishes to tender such Old Notes itself, such beneficial owner must, prior to completing and executing the Letter of Transmittal and delivering such Old Notes, either make appropriate arrangements to register ownership of the Old Notes in such beneficial owner's name or follow the procedures described in the immediately preceding paragraph. The transfer of record ownership may take considerable time. Book-Entry Transfer The Exchange Agent will make a request to establish an account with respect to the Old Notes at DTC (the "Book-Entry Transfer Facility") for purposes of the Exchange Offer within two business days after receipt of this Prospectus, and any financial institution that is a participant in the Book-Entry Transfer Facility's systems may make book-entry delivery of Old Notes by causing the Book-Entry Transfer Facility to transfer such Old Notes into the Exchange Agent's account at the Book-Entry Transfer Facility in accordance with the Book-Entry Transfer Facility's procedures for transfer. However, although delivery of Old Notes may be effected through book-entry transfer at the Book- Entry Transfer Facility, the Letter of Transmittal, with any required signature guarantees and any other required documents, must, in any case, be transmitted to and received by the Exchange Agent at the address specified on the back cover of this Prospectus on or prior to the Expiration Date or the guaranteed delivery procedures described below must be complied with. THE METHOD OF DELIVERY OF OLD NOTES AND ALL OTHER DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDER. IF SENT BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, RETURN RECEIPT REQUESTED, BE USED, PROPER INSURANCE BE OBTAINED, AND THE MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE TO PERMIT DELIVERY TO THE EXCHANGE AGENT ON OR BEFORE THE EXPIRATION DATE. 16 Unless an exemption applies under the applicable law and regulations concerning "backup withholding" of federal income tax, the Exchange Agent will be required to withhold, and will withhold, 31% of the gross proceeds otherwise payable to a holder pursuant to the Exchange Offer if the holder does not provide its taxpayer identification number (social security number or employer identification number, as applicable) and certify that such number is correct. Each tendering holder should complete and sign the main signature form and the Substitute Form W-9 included as part of the Letter of Transmittal, so as to provide the information and certification necessary to avoid backup withholding, unless an applicable exemption exists and is proved in a manner satisfactory to the Company and the Exchange Agent. Guaranteed Delivery Procedures If a holder desires to accept the Exchange Offer and time will not permit a Letter of Transmittal or Old Notes to reach the Exchange Agent before the Expiration Date, a tender may be effected if the Exchange Agent has received at its office listed on the Letter of Transmittal on or prior to the Expiration Date a letter, telegram or facsimile transmission from an Eligible Institution setting forth the name and address of the tendering holder, the principal amount of the Old Notes being tendered, the names in which the Old Notes are registered and, if possible, the certificate numbers of the Old Notes to be tendered, and stating that the tender is being made thereby and guaranteeing that within five New York Stock Exchange trading days after the date of execution of such letter, telegram or facsimile transmission by the Eligible Institution, the Old Notes, in proper form for transfer, will be delivered by such Eligible Institution together with a properly completed and duly executed Letter of Transmittal (and any other required documents). Unless Old Notes being tendered by the above-described method (or a timely Book-Entry Confirmation) are deposited with the Exchange Agent within the time period set forth above (accompanied or preceded by a properly completed Letter of Transmittal and any other required documents), the Company may, at its option, reject the tender. Copies of a Notice of Guaranteed Delivery which may be used by Eligible Institutions for the purposes described in this paragraph are available from the Exchange Agent. A tender will be deemed to have been received as of the date when the tendering holder's properly completed and duly signed Letter of Transmittal accompanied by the Old Notes (or a timely Book-Entry Confirmation) is received by the Exchange Agent. Issuances of Exchange Notes in exchange for Old Notes tendered pursuant to a Notice of Guaranteed Delivery or letter, telegram or facsimile transmission to similar effect (as provided above) by an Eligible Institution will be made only against deposit of the Letter of Transmittal (and any other required documents) and the tendered Old Notes (or a timely Book-Entry Confirmation). All questions as to the validity, form, eligibility (including time of receipt) and acceptance for exchange of any tender of Old Notes will be determined by the Company, whose determination will be final and binding. The Company reserves the absolute right to reject any or all tenders not in proper form or the acceptances for exchange of which may, in the opinion of counsel to the Company, be unlawful. The Company also reserves the absolute right to waive any of the conditions of the Exchange Offer or any defect or irregularities in tenders of any particular holder whether or not similar defects or irregularities are waived in the case of other holders. Neither the Company, the Exchange Agent nor any other person will be under any duty to give notification of any defects or irregularities in tenders or shall incur any liability for failure to give any such notification. The Company's interpretation of the terms and conditions of the Exchange Offer (including the Letter of Transmittal and the instructions thereto) will be final and binding. TERMS AND CONDITIONS OF THE LETTER OF TRANSMITTAL The Letter of Transmittal contains, among other things, the following terms and conditions, which are part of the Exchange Offer. The party tendering Old Notes for exchange (the "Transferor") exchanges, assigns and transfers the Old Notes to the Company and it revocably constitutes and appoints the Exchange Agent as the Transferor's agent and attorney-in-fact to cause the Old Notes to be assigned, transferred and exchanged. The Transferor represents 17 and warrants that it has full power and authority to tender, exchange, assign and transfer the Old Notes and to acquire Exchange Notes issuable upon the exchange of such tendered Old Notes, and that, when the same are accepted for exchange, the Company will acquire good and unencumbered title to the tendered Old Notes, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim. The Transferor also warrants that it will, upon request, execute and deliver any additional documents deemed by the Company to be necessary or desirable to complete the exchange, assignment and transfer of tendered Old Notes. The Transferor further agrees that acceptance of any tendered Old Notes by the Company and the issuance of Exchange Notes in exchange therefor shall constitute performance in full by the Company of its obligations under the Registration Rights Agreement and that the Company shall have no further obligations or liabilities thereunder (except in certain limited circumstances). All authority conferred by the Transferor will survive the death or incapacity of the Transferor and every obligation of the Transferor shall be binding upon the heirs, legal representatives, successors, assigns, executors and administrators of such Transferor. By tendering Old Notes and executing the Letter of Transmittal, the Transferor certifies that (a) it is not an Affiliate of the Company, that it is not a broker-dealer that owns Old Notes acquired directly from the Company or an Affiliate of the Company, that it is acquiring the Exchange Notes offered hereby in the ordinary course of such Transferor's business and that such Transferor has no arrangement with any person to participate in the distribution of such Exchange Notes, (b) that it is an Affiliate of the Company or of the Initial Purchaser of the Old Notes and that it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable to it, or (c) that it is a Participating Broker- Dealer (as defined in the Registration Rights Agreement) and that it will deliver a prospectus in connection with any resale of such Exchange Notes. By tendering Old Notes and executing the Letter of Transmittal, the Transferor further certifies that it is not engaged in and does not intend to engage in a distribution of the Exchange Notes. WITHDRAWAL RIGHTS Old Notes tendered pursuant to the Exchange Offer may be withdrawn at any time prior to the Expiration Date. For a withdrawal to be effective, a written or facsimile transmission notice of withdrawal must be timely received by the Exchange Agent at its address set forth on the back cover of this Prospectus prior to the Expiration Date. Any such notice of withdrawal must specify the person named in the Letter of Transmittal as having tendered Old Notes to be withdrawn, the certificate numbers of Old Notes to be withdrawn, the principal amount of Old Notes to be withdrawn, a statement that such holder is withdrawing its election to have such Old Notes exchanged, and the name of the registered holder of such Old Notes, and must be signed by the holder in the same manner as the original signature on the Letter of Transmittal (including any required signature guarantees) or be accompanied by evidence satisfactory to the Company that the person withdrawing the tender has succeeded to the beneficial ownership of the Old Notes being withdrawn. The Exchange Agent will return the properly withdrawn Old Notes promptly following receipt of notice of withdrawal. All questions as to the validity of notices of withdrawals, including time of receipt, will be determined by the Company and such determination will be final and binding on all parties. ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF EXCHANGE NOTES Upon the terms and subject to the conditions of the Exchange Offer, the acceptance for exchange of Old Notes validly tendered and not withdrawn and the issuance of the Exchange Notes will be made on the Exchange Date. The Exchange Agent will act as agent for the tendering holders of the Old Notes for the purposes of receiving Exchange Notes from the Company and causing the Old Notes to be assigned, transferred and exchanged. Upon the terms and subject to conditions of the Exchange Offer, delivery of Exchange Notes to be issued in exchange for accepted Old Notes will be made by the Exchange Agent promptly after acceptance of 18 the tendered Old Notes. Old Notes not accepted for exchange by the Company will be returned without expense to the tendering holders (or in the case of Old Notes tendered by book-entry transfer into the Exchange Agent's account at the Book-Entry Transfer Facility pursuant to the procedures described above, such non-exchanged Old Notes will be credited to an account maintained with such Book-Entry Transfer Facility) promptly following the Expiration Date or, if the Company terminates the Exchange Offer prior to the Expiration Date, promptly after the Exchange Offer is so terminated. CONDITIONS TO THE EXCHANGE OFFER Notwithstanding any other provision of the Exchange Offer, or any extension of the Exchange Offer, the Company will not be required to issue Exchange Notes in respect of any properly tendered Old Notes not previously accepted and may terminate the Exchange Offer (by oral or written notice to the Exchange Agent and by timely public announcement communicated by no later than 5:00 p.m. on the next business day following the Expiration Date, unless otherwise required by applicable law or regulation, by making a release to the Dow Jones News Service) or, at its option, modify or otherwise amend the Exchange Offer, if (a) there shall be threatened, instituted or pending any action or proceeding before, or any injunction, order or decree shall have been issued by, any court or governmental agency or other governmental regulatory or administrative agency or commission, (i) seeking to restrain or prohibit the making or consummation of the Exchange Offer or any other transaction contemplated by the Exchange Offer, (ii) assessing or seeking any damages as a result thereof or (iii) resulting in a material delay in the ability of the Company to accept for exchange some or all of the Old Notes pursuant to the Exchange Offer; (b) any statute, rule, regulation, order or injunction shall be sought, proposed, introduced, enacted, promulgated or deemed applicable to the Exchange Offer or any of the transactions contemplated by the Exchange Offer by any government or governmental authority, domestic or foreign, or any action shall have been taken, proposed or threatened, by any government, governmental authority, agency or court, domestic or foreign, that in the reasonable judgment of the Company might directly or indirectly result in any of the consequences referred to in clauses (a)(i) or (ii) above or, in the reasonable judgment of the Company, might result in the holders of Exchange Notes having obligations with respect to resales and transfers of Exchange Notes that are greater than those described in the interpretations of the Staff referred to on the cover page of this Prospectus, or would otherwise make it inadvisable to proceed with the Exchange Offer; or (c) a material adverse change shall have occurred in the business, condition (financial or otherwise), operations, or prospects of the Company. The foregoing conditions are for the sole benefit of the Company and may be asserted by it with respect to all or any portion of the Exchange Offer regardless of the circumstances (including any action or inaction by the Company) giving rise to such condition or may be waived by the Company in whole or in part at any time or from time to time in its sole discretion. The failure by the Company at any time to exercise any of the foregoing rights will not be deemed a waiver of any such right, and each right will be deemed an ongoing right that may be asserted at any time or from time to time. In addition, the Company has reserved the right, notwithstanding the satisfaction of each of the foregoing conditions, to terminate or amend the Exchange Offer. Any determination by the Company concerning the fulfillment or nonfulfillment of any conditions will be final and binding upon all parties. In addition, the Company will not accept for exchange any Old Notes tendered, and no Exchange Notes will be issued in exchange for any such Old Notes, if at such time any stop order shall be threatened or in effect with respect to the Registration Statement of which this Prospectus constitutes a part or qualification of the Indenture under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). 19 EXCHANGE AGENT Bankers Trust Company has been appointed as the Exchange Agent for the Exchange Offer. Letters of Transmittal must be addressed or transmitted to the Exchange Agent at: MAIL: HAND/OVERNIGHT DELIVERY: BY FACSIMILE: Bankers Trust Company Bankers Trust Company (212) 250-6961 Corporate Trust and Agency Group Corporate Trust and Agency Group (212) 250-6392 Reorganization Dept. Receipt & Delivery Window P.O. Box 1458 123 Washington Street, 1st Floor CONFIRM BY Church Street Station New York, New York 10006 TELEPHONE: New York, NY 10008-1458 (800) 735-7777 Delivery to an address other than as set forth herein, or transmissions of instructions via a facsimile number other than the ones set forth herein, will not constitute a valid delivery. SOLICITATION OF TENDERS; EXPENSES The Company has not retained any dealer-manager or similar agent in connection with the Exchange Offer and will not make any payments to brokers, dealers or others for soliciting acceptances of the Exchange Offer. The Company will, however, pay the Exchange Agent reasonable and customary fees for its services and will reimburse it for reasonable out-of-pocket expenses in connection therewith. The Company also will pay brokerage houses and other custodians, nominees and fiduciaries the reasonable out-of-pocket expenses incurred by them in forwarding tenders for their customers. The expenses to be incurred in connection with the Exchange Offer, including the fees and expenses of the Exchange Agent and printing, accounting, investment banking and legal fees, will be paid by the Company and are estimated to be approximately $130,568. No person has been authorized to given any information or to make any representations in connection with the Exchange Offer other than those contained in this Prospectus. If given or made, such information or representations should not be relied upon as having been authorized by the Company. Neither the delivery of this Prospectus nor any exchange made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since the respective dates as of which information is given herein. The Exchange Offer is not being made to (nor will tenders be accepted from or on behalf of) holders of Old Notes in any jurisdiction in which the making of the Exchange Offer or the acceptance thereof would not be in compliance with the laws of such jurisdiction. However, the Company may, at its discretion, take such action as it may deem necessary to make the Exchange Offer in any such jurisdiction and extend the Exchange Offer to holders of Old Notes in such jurisdiction. In any jurisdiction the securities laws or blue sky laws of which require the Exchange Offer to be made by a licensed broker or dealer, the Exchange Offer is being made on behalf of the Company by one or more registered brokers or dealers that are licensed under the laws of such jurisdiction. DISSENT AND APPRAISAL RIGHTS HOLDERS OF OLD NOTES WILL NOT HAVE DISSENTERS' RIGHTS OR APPRAISAL RIGHTS IN CONNECTION WITH THE EXCHANGE OFFER. FEDERAL INCOME TAX CONSEQUENCES The exchange of Old Notes for Exchange Notes by tendering holders will not be a taxable exchange for federal income tax purposes, and such holders should not recognize any taxable gain or loss as a result of such exchange. See "Certain Federal Income Tax Considerations." OTHER Participation in the Exchange Offer is voluntary and holders of Old Notes should consider carefully whether to accept the terms and conditions thereof. Holders of the Old Notes are urged to consult their financial and tax advisors in making their own decisions on what action to take with respect to the Exchange Offer. 20 As a result of the making of and upon acceptance for exchange of all validly tendered Old Notes pursuant to the terms of this Exchange Offer, the Company will have fulfilled a covenant contained in the terms of the Old Notes and the Registration Rights Agreement. Holders of the Old Notes who do not tender their Old Notes in the Exchange Offer will continue to hold such Old Notes and will be entitled to all the rights and limitations applicable thereto under the Indenture, except for any such rights under the Registration Rights Agreement that by their terms terminate or cease to have further effect as a result of the making of this Exchange Offer. See "Description of the Notes." All untendered Old Notes will continue to be subject to the restriction on transfer set forth in the Indenture. To the extent that Old Notes are tendered and accepted in the Exchange Offer, the trading market, if any, for any remaining Old Notes could be affected adversely. See "Risk Factors-- Consequences of Failure to Exchange Old Notes." The Company may in the future seek to acquire untendered Old Notes in open market or privately negotiated transactions, through subsequent exchange offers or otherwise. The Company has no present plan to acquire any Old Notes that are not tendered in the Exchange Offer. 21 CAPITALIZATION The following table sets forth the capitalization of the Company as of September 30, 1996 and as adjusted as of such date to give effect to the issuance of the Old Notes, borrowings under the Credit Facility, Disposition of PCI and the application of the assumed proceeds therefrom. This table should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this Prospectus.
SEPTEMBER 30, 1996 ------------------------- ACTUAL AS ADJUSTED ----------- ------------- (DOLLARS IN THOUSANDS) Debt: Credit Facility (a)................................. $ 13,000 $ 18,800 12% Senior Subordinated Notes due 2003, Series A(b)............................................... -- 14,700 Existing 12% Senior Subordinated Notes due 2003..... 120,339 120,339 Other............................................... 45 45 ----------- ----------- Total debt........................................ 133,384 153,884 Minority interests in subsidiaries.................... 6,441 6,441 9.75% Series 2D Senior Preferred Stock (c)............ 19,940 -- Common shareholders' equity (d)....................... 33,192 43,221 ----------- ----------- Total capitalization.............................. $192,957 $ 203,546 =========== ===========
- -------- (a) The Company used a borrowing of $5.8 million under the Credit Facility to repurchase partially the Series 2D Senior Preferred Stock on December 30, 1996. (b) The proceeds from the issuance and sale of the Old Notes were used to repurchase partially the Series 2D Senior Preferred Stock on December 30, 1996. The Old Notes are shown net of the $0.3 million discount associated with issuance. The Old Notes have not been adjusted for the approximate $0.1 million value assigned to the warrants issued concurrently with the Old Notes. (c) The Company repurchased the Series 2D Senior Preferred Stock with the net proceeds from the issuance of the Old Notes and borrowing under the Credit Facility. (d) Common shareholders' equity is adjusted to reflect the effects of the net gain on the Disposition of PCI, expenses associated with the borrowing under the Credit Facility and the remaining accretion on the Series 2D Senior Preferred Stock. Common shareholders' equity has not been adjusted for the approximate $0.1 million value assigned to the warrants issued concurrently with the Old Notes. See "Unaudited Pro Forma Consolidated Financial Statements." 22 SELECTED CONSOLIDATED FINANCIAL DATA The selected consolidated financial data of the Company for the ten months ended December 31, 1995, and each year in the four-year period ended February 28, 1995, have been derived from the Company's audited consolidated financial statements. This information should be read in conjunction with the Consolidated Financial Statements and the related notes thereto appearing elsewhere in this Prospectus and "Management's Discussion and Analysis of Financial Condition and Results of Operations." The selected consolidated financial data of the Company as of September 30, 1995 and 1996 and for the nine-month periods then ended, have been prepared on the same basis as the consolidated financial statements and, in the opinion of the Company, include all normal and recurring adjustments (consisting of only normal recurring adjustments) necessary to present fairly the information set forth therein. Operating results for the nine months ended September 30, 1996 are not necessarily indicative of the results that may be expected for the fiscal year ended December 31, 1996. Certain reclassifications have been made to the prior period financial statements to conform to the presentation used in the September 30, 1996 financial statements. The data for the nine months ended September 30, 1995 and 1996 set forth below are unaudited.
TEN MONTHS NINE MONTHS ENDED YEAR ENDED FEBRUARY 28 OR 29, ENDED SEPTEMBER 30, -------------------------------------- DECEMBER 31, -------------------- 1992(1) 1993 1994(2) 1995 1995 1995 1996 -------- -------- -------- -------- ------------ -------- ---------- (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) STATEMENT OF OPERATIONS DATA: Gross revenue........... $710,873 $678,882 $651,657 $861,518 $916,744 $731,795 $1,023,410 Service revenue (3)..... 385,942 391,528 382,708 459,786 425,896 357,582 433,647 Unusual income (expense), net......... (67,054) 50 (8,709) -- 500 -- -- Operating income (loss)................. (43,963) 22,744 (5,230) 13,688 17,505 13,171 21,170 Interest expense, net... 10,347 6,921 6,722 13,000 11,202 10,629 11,885 Income (loss) before income taxes, minority interests, and extraordinary item..... (54,310) 14,894 (12,877) 1,239 6,303 2,542 9,285 Income tax provision (benefit).............. (13,794) 6,255 (349) 2,900 2,091 1,300 840 Income (loss) before minority interests and extraordinary item..... (40,516) 8,639 (12,528) (1,661) 4,212 1,242 8,445 Minority interests...... -- -- -- -- 1,960 1,315 4,725 Net income (loss) before extraordinary item..... (40,516) 8,639 (12,528) (1,661) 2,252 (73) 3,720 Extraordinary loss on early extinguishment of debt................... -- -- 5,969 -- -- -- -- Net income (loss)....... (40,516) 8,639 (18,497) (1,661) 2,252 (73) 3,720 Preferred stock dividends and accretion.............. 2,416 5,293 4,896 2,154 1,803 1,616 1,631 Redemption of preferred stock.................. -- -- 1,929 -- -- -- -- Net income (loss) available for common shareholders........... (42,932) 3,346 (25,322) (3,815) 449 (1,689) 2,089 Primary and Fully Diluted Net Income (Loss) Per Common Share: Before extraordinary item.................. $ (2.25) $ 0.16 $ (0.92) $ (0.18) $ 0.02 $ (0.08) $ 0.10 Extraordinary loss on early extinguishment of debt............... -- -- (0.29) -- -- -- -- -------- -------- -------- -------- -------- -------- ---------- Total.................. $ (2.25) $ 0.16 $ (1.21) $ (0.18) $ 0.02 $ (0.08) $ 0.10 ======== ======== ======== ======== ======== ======== ========== BALANCE SHEET DATA (END OF PERIOD): Working capital......... $ 65,623 $ 85,861 $ 87,648 $ 91,640 $ 84,589 $ 84,422 $ 102,009 Total assets............ 318,947 293,076 281,198 281,422 369,517 373,074 374,535 Long-term liabilities... 85,675 75,602 130,752 133,130 125,818 126,953 139,063 Total indebtedness...... 86,332 74,391 123,042 127,311 125,153 121,561 133,384 Redeemable preferred stock.................. 45,161 44,824 20,212 19,617 19,787 19,736 19,940 Shareholders' equity.... 51,151 58,521 30,780 27,624 28,427 27,690 33,192 OTHER DATA: EBITDA (4).............. $ 32,250 $ 33,460 $ 13,038 $ 22,920 $ 23,402 $ 19,182 $ 24,285 Capital expenditures.... 3,644 4,638 1,388 2,426 1,759 1,720 4,905 Depreciation and amortization........... 9,159 10,766 9,559 9,232 8,357 7,326 7,840 Ratio of earnings to fixed charges (5)...... N/A 1.8x N/A 1.0x 1.2x 1.1x 1.2x
- ------- (1) Fiscal year 1992 reflects after-tax charge of $52.4 million associated with the disposal and restructuring of certain businesses. (2) In fiscal year 1994, the Company adopted Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other than Pensions." (3) Service revenue is derived by deducting the costs of subcontracted services and direct project costs from gross revenue and adding the Company's share of the equity in income of unconsolidated joint ventures and affiliated companies. (4) EBITDA represents operating income (loss), excluding unusual items, plus depreciation and amortization minus minority interests. Management believes that EBITDA is generally accepted as providing useful information regarding a company's ability to service and/or incur debt. EBITDA should not be considered in isolation or as a substitute for net income, cash flows or other consolidated income or cash flow data prepared in accordance with generally accepted accounting principles or as a measure of a company's profitability or liquidity. (5) The ratio of earnings to fixed charges is calculated by dividing income from continuing operations before fixed charges and income taxes ("earnings") by fixed charges. Fixed charges consist of interest expense and that portion of rental expense that the Company believes to be representative of interest. In the years ended February 29, 1992 and February 28, 1994, earnings, as defined, were inadequate to cover fixed charges. The deficiencies were $54.3 million and $12.9 million for the years ended February 29, 1992 and February 28, 1994, respectively. 23 UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS The following tables set forth historical financial information for the Company and pro forma financial information giving effect to the issuance of the Old Notes, borrowings under the Credit Facility, the Disposition of PCI and application of the assumed proceeds therefrom (collectively, the "Pro Forma Transactions"). The pro forma statement of operations data are presented as if the Pro Forma Transactions had occurred as of March 1, 1995, and the pro forma balance sheet is presented as if the Pro Forma Transactions had occurred on September 30, 1996. The pro forma adjustments are described in detail in the accompanying notes. These pro forma results have been prepared for comparative purposes only and do not purport to indicate what would have occurred had the transactions actually occurred at the dates indicated, or of results which may occur in the future. This pro forma financial information should be read in conjunction with the notes thereto and the historical consolidated financial statements of the Company included elsewhere in this Prospectus. 24 UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1996
(1) (2) (3) (4) PRO FORMA ADJUSTMENTS ----------------------- PRO FORMA ICF KAISER DISPOSITION OTHER AFTER HISTORICAL OF PCI ADJUSTMENTS ADJUSTMENTS ---------- ----------- ----------- ----------- (DOLLARS IN THOUSANDS) ASSETS Current Assets Cash and cash equivalents............ $ 21,022 $16,500 $ 13,950 (a) $ 37,022 5,550 (b) (20,000)(c) Contract receivables, net.................... 234,168 -- -- 234,168 Prepaid expenses and other current assets... 10,780 -- -- 10,780 Deferred income taxes... 11,938 2,613 23 (b) 14,574 -------- ------- -------- -------- Total Current Assets.. 277,908 19,113 (477) 296,544 -------- ------- -------- -------- Fixed Assets Furniture, equipment, and leasehold improvements........... 48,839 (1,365) -- 47,474 Less depreciation and amortization........... (36,595) 852 -- (35,743) -------- ------- -------- -------- 12,244 (513) -- 11,731 -------- ------- -------- -------- Other Assets Goodwill, net........... 50,510 -- -- 50,510 Investments in and advances to affiliates............. 12,168 (4,651) -- 7,517 Due from officers and employees.............. 986 -- -- 986 Other................... 20,719 -- 750 (a) 21,469 -------- ------- -------- -------- 84,383 (4,651) 750 80,482 -------- ------- -------- -------- $374,535 $13,949 $ 273 $388,757 ======== ======= ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Current portion of long- term debt.............. $ -- $ -- $ 5,800 (b) $ 5,800 Accounts payable and subcontractors payable................ 76,304 -- -- 76,304 Accrued salaries and employee benefits...... 59,721 -- -- 59,721 Accrued interest........ 4,061 -- -- 4,061 Other accrued expenses.. 14,869 -- -- 14,869 Deferred revenue........ 14,648 -- -- 14,648 Other................... 6,296 3,633 -- 9,929 -------- ------- -------- -------- Total Current Liabilities.......... 175,899 3,633 5,800 185,332 -------- ------- -------- -------- Long-term Liabilities Long-term debt, less current portion........ 133,384 -- 14,700 (a) 148,084 Other................... 5,679 -- -- 5,679 -------- ------- -------- -------- 139,063 -- 14,700 153,763 -------- ------- -------- -------- Commitments and Contingencies Minority Interests in Subsidiaries............. 6,441 -- -- 6,441 Redeemable Preferred Stock.................... 19,940 -- (19,940)(c) -- Common Stock.............. 224 -- -- 224 Additional Paid-in Capital.................. 67,158 -- -- 67,158 Notes Receivable Related to Common Stock.......... (1,732) -- -- (1,732) Retained Earnings (Deficit)................ (30,805) 10,316 (227)(b) (20,776) (60)(c) Cumulative Translation Adjustment............... (1,653) -- -- (1,653) -------- ------- -------- -------- $374,535 $13,949 $ 273 $388,757 ======== ======= ======== ========
25 UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 1996
(1) (2) (3) (4) PRO FORMA ADJUSTMENTS -------------------------- PRO FORMA ICF KAISER DISPOSITION OTHER AFTER HISTORICAL OF PCI ADJUSTMENTS ADJUSTMENTS ------------- ------------ ------------ ------------- (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Gross Revenue........... $ 1,023,410 $ (3,453) $ -- $ 1,019,957 Subcontract and direct material costs....... (592,295) 752 -- (591,543) Equity in income of joint ventures and affiliated companies............ 2,532 (2,025) -- 507 ------------- ---------- ---------- ------------- Service Revenue......... 433,647 (4,726) -- 428,921 Operating Expenses Direct cost of services and overhead............. 354,658 (1,290) -- 353,368 Administrative and general.............. 49,979 -- -- 49,979 Depreciation and amortization......... 7,840 (355) 70 (a) 7,555 ------------- ---------- ---------- ------------- Operating Income........ 21,170 (3,081) (70) 18,019 Other Income (Expense) Interest income....... 944 (12) -- 932 Interest expense...... (12,829) -- (1,491)(a) (13,912) 408 (d) ------------- ---------- ---------- ------------- Income (Loss) Before Income Taxes and Minority Interests..... 9,285 (3,093) (1,153) 5,039 Income tax provision (benefit)............ 840 (928) 1,600 (e) 1,512 ------------- ---------- ---------- ------------- Income (Loss) Before Minority Interests..... 8,445 (2,165) (2,753) 3,527 Minority interests in net income of subsidiaries......... 4,725 -- -- 4,725 ------------- ---------- ---------- ------------- Net Income (Loss)....... 3,720 (2,165) (2,753) (1,198) Preferred stock dividends and accretion............ 1,631 -- (1,631)(c) -- ------------- ---------- ---------- ------------- Net Income (Loss) Available for Common Shareholders........... $ 2,089 $ (2,165) $ (1,122) $ (1,198) ============= ========== ========== ============= Primary and Fully Diluted Net Income (Loss) Per Common Share.................. $ 0.10 $ (0.05) ============= ============= Primary and Fully Di- luted Weighted Average Common and Common Equivalent Shares Out- standing............... 21,955 21,955 ============= ============= OTHER DATA: EBITDA (f).............. $ 24,285 $ (3,436) $ -- $ 20,849 Cash interest expense... 11,840 -- 1,463 13,303 Capital expenditures.... 4,905 -- -- 4,905 Depreciation and amortization........... 7,840 (355) 70 7,555
26 UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS TEN MONTHS ENDED DECEMBER 31, 1995
(1) (2) (3) (4) PRO FORMA ADJUSTMENTS ----------------------- PRO FORMA ICF KAISER DISPOSITION OTHER AFTER HISTORICAL OF PCI ADJUSTMENTS ADJUSTMENTS ---------- ----------- ----------- ----------- (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Gross Revenue................. $916,744 $(4,004) $ -- $912,740 Subcontract and direct material costs............. (493,971) 753 -- (493,218) Equity in income of joint ventures and affiliated companies.................. 3,123 (1,240) -- 1,883 -------- ------- ------- -------- Service Revenue............... 425,896 (4,491) -- 421,405 Operating Expenses Direct cost of services and overhead................... 359,887 (1,292) -- 358,595 Administrative and general.. 40,647 -- 250 (b) 40,897 Depreciation and amortization............... 8,357 (433) 78 (a) 8,002 Unusual items, net.......... (500) -- -- (500) -------- ------- ------- -------- Operating Income.............. 17,505 (2,766) (328) 14,411 Other Income (Expense) Gain on disposition of investment................. -- 11,336 -- 11,336 Interest income............. 2,053 (10) -- 2,043 Interest expense............ (13,255) -- (1,656)(a) (14,548) 363 (d) -------- ------- ------- -------- Income (Loss) Before Income Taxes and Minority Interests ................... 6,303 8,560 (1,621) 13,242 Income tax provision (benefit).................. 2,091 1,712 (1,155)(e) 2,648 -------- ------- ------- -------- Income (Loss) Before Minority Interests ................... 4,212 6,848 (466) 10,594 Minority interests in net income of subsidiaries..... 1,960 -- -- 1,960 -------- ------- ------- -------- Net Income (Loss)............. 2,252 6,848 (466) 8,634 Preferred stock dividends and accretion.............. 1,803 -- (1,803)(c) -- -------- ------- ------- -------- Net Income Available for Common Shareholders.......... $ 449 $ 6,848 $ 1,337 $ 8,634 ======== ======= ======= ======== Primary and Fully Diluted Net Income Per Common Share...... $ 0.02 $ 0.40 ======== ======== Primary and Fully Diluted Weighted Average Common and Common Equivalent Shares Outstanding.................. 21,517 21,517 ======== ======== OTHER DATA: EBITDA (f).................... $ 23,402 $(3,199) $ (250) $ 19,953 Cash interest expense......... 12,500 -- 1,625 14,125 Capital expenditures.......... 1,759 -- -- 1,759 Depreciation and amortiza- tion......................... 8,357 (433) 78 8,002
27 NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS Column 1 has been prepared from the Company's historical consolidated financial statements included elsewhere in this Prospectus. Column 2 has been prepared from the Company's accounts and represents the effect of the Disposition of PCI and the entities associated with the Disposition. Column 3 represents unaudited pro forma adjustments that the Company considers necessary to give effect to the Pro Forma Transactions other than the Disposition of PCI. Column 4 represents the unaudited pro forma results of operations and financial position of the Company after giving effect to the Pro Forma Transactions. (a) To record the result of the issuance of the Old Notes that were used to repurchase partially the Series 2D Senior Preferred Stock on December 30, 1996. Estimated professional fees and discount of $0.3 million associated with the issuance of the Old Notes are shown as if they were amortized over 96 months. The Old Notes and common shareholders' equity have not been adjusted for the approximate $0.1 million value assigned to the warrants issued concurrently with the Old Notes. Annual interest expense on the Old Notes is assumed to be 13%. (b) To record the borrowings under the Credit Facility and associated expenses. The borrowings were used to repurchase the balance of the Series 2D Senior Preferred Stock on December 30, 1996. (c) To record the result of the repurchase of the Series 2D Senior Preferred Stock and the reversal of the effects of the associated dividends and accretion. (d) To record, as a result of the Pro Forma Transactions, the effect of the reduction in interest expense of the Credit Facility. It is assumed that a portion of the cash provided by the Pro Forma Transactions will be used to repurchase the Series 2D Senior Preferred Stock, that the balance will be reinvested in the Company's business activities and that such activities will provide funds to allow the Company to reduce borrowings under the Credit Facility. (e) To record the net effect on the income tax provision. (f) EBITDA represents operating income (loss), excluding unusual items, plus depreciation and amortization minus minority interests. Management believes that EBITDA is generally accepted as providing useful information regarding a company's ability to service and/or incur debt. EBITDA should not be considered in isolation or as a substitute for net income, cash flows or other consolidated income or cash flow data prepared in accordance with generally accepted accounting principles or as a measure of a company's profitability or liquidity. 28 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW The Company is one of the nation's largest engineering, construction, program management and consulting services companies, providing fully integrated capabilities to clients in three related market areas: environment, infrastructure and basic metals and mining industries. The Company provides services to domestic and foreign clients in both the private and public sectors. Change in Fiscal Year The Company changed from a fiscal year ending February 28 to a fiscal year ending December 31, effective December 31, 1995. As a result, the accompanying financial statements include consolidated operations for the ten months ended December 31, 1995 and for the years ended February 28, 1995 and 1994. See Note S to the consolidated financial statements for the ten months ended December 31, 1995 for unaudited comparative operating results for the ten months ended December 31, 1994. In addition, the comparative period financial statements for the nine months ended September 30, 1995 have been restated to conform with the presentation used in the September 30, 1996 financial statements. Operating Results for Nine Months Ended September 30, 1996 and 1995 The Company's operating income of $21.2 million for the nine months ended September 30, 1996 was an $8.0 million increase from the $13.2 million of operating income recorded for the nine months ended September 30, 1995. The increase in operating income partially resulted from a $3.9 million increase in operating income from the Company's operations at DOE's Hanford site, resulting from higher award fees earned at Hanford in 1996 and activities associated with the final phase of the Company's work at Hanford (see "Business Outlook"). An additional $6.8 million of the increase in operating income was due to earnings (before minority interests) from the Performance Based Integrating Management Contract at DOE's Rocky Flats Environmental Technology Site in Colorado ("Rocky Flats"). The Rocky Flats contract was awarded in April 1995 to Kaiser-Hill Company, LLC ("Kaiser-Hill"), a limited liability company owned equally by ICF Kaiser and CH2M Hill Companies, Ltd. ("CH2M Hill"). Work under the Rocky Flats contract began on July 1, 1995. Operating income for the Company's consulting group increased $1.3 million from 1995 to 1996, primarily due to new contracts and task orders awarded during 1996 and the recognition of revenue resulting from the acceleration in the cost approval process (see Note B to the consolidated financial statements for the nine months ended September 30, 1996). Prior to the third quarter of 1996, the Company had estimated and recorded revenue based on provisional rates. In 1996, the Company accelerated the procedures for obtaining approval from the U.S. government for the Company's actual costs incurred in current periods. As a result, in the third quarter of 1996, the Company's consulting group was able to accelerate its process of billing on certain cost- reimbursement contracts. The Company's operating income also increased $2.3 million for the nine months ended September 30, 1996 from the comparable period in 1995 as a result of the 1996 closing of an unprofitable business, and $1.1 million due to income from the Company's increased economic interest in an entity that owns the PCI facility. Additionally, the Company realized cost savings of certain corporate functions, resulting in an improvement in operating income in 1996. Finally, operating income from international operations increased $0.8 million, primarily due to improved operating results from the Company's Australian operations. Partially offsetting the operating income increases discussed above were declines of $4.6 million in operating income from engineering and construction operations and $4.2 million in operating income from other federal programs. The federal programs group had significant increases in its costs associated with marketing activities in pursuit of large-scale projects, including approximately $2.1 million of costs in 1996 associated with 29 the Company's unsuccessful re-compete bid on the Hanford contract (see "-- Business Outlook") and significant costs associated with other DOE proposals. The engineering and construction group also experienced higher costs in 1996 associated with marketing activities. In addition, the comparative 1995 results for engineering and construction operations had included operating income from a major transit project in the Philippines. Operating Results for Ten Months Ended December 31, 1995 and 1994 ICF Kaiser's operating income of $17.5 million for the ten months ended December 31, 1995 was a $4.6 million increase from the $12.9 million recorded for the ten months ended December 31, 1994. The increase in operating income (before minority interests) primarily resulted from a $5.7 million improvement in engineering and construction operations and $5.3 million in earnings from the Rocky Flats contract awarded in April 1995 to Kaiser-Hill. The improvement in engineering and construction operations was partially due to a major transit project in the Philippines, operating revenue of which had been previously deferred. Other improvements in engineering and construction operations were due to substantial growth in the group's industrial sector and a reduction in the group's overhead. An additional $3.0 million increase in operating income resulted from the Company's operations at Hanford because the award fees earned in 1995 were higher than those earned in 1994. A $4.9 million decline in the Company's operating income from other environmental work (excluding the Rocky Flats and Hanford contracts) partially offset the improvements in operating income discussed above between the ten- month periods ended December 31, 1995 and 1994. This decrease in other environmental operations was primarily due to a decline in operating income from private-sector environmental work, increases in bidding and proposal efforts required by large scale DOD and DOE contracts, and temporary delays in Federal environmental projects due to Federal government budgetary uncertainties. The Company's consulting operations also experienced a decline in operating revenues between the ten-month periods ended December 31, 1995 and 1994, resulting in a $0.9 million decrease in operating income for this group. The decrease was caused by a delay in task-order assignments under new contract awards and a significant increase in levels of business development activity. The Federal government's fiscal 1996 budget was not finalized during the ten months ended December 31, 1995, which led to the Federal governments operating under a continuing resolution (including two no-work furlough periods) since October 1, 1995. While under this resolution, the assignment of work under task-order contracts was delayed. A significant company-wide increase in marketing efforts further negatively impacted operating results for the ten months ended December 31, 1995 as compared to the ten months ended December 31, 1994. These efforts were in addition to the marketing activities discussed above within the environmental and consulting operations. The Company believes that ICF Kaiser's increased efforts in its business development activities should result in additional contract awards in both the public and private sectors of its business. Business Outlook The Company's contract backlog increased significantly to $4.4 billion at December 31, 1995 compared to $1.4 billion at February 28, 1995. The increase in backlog primarily resulted from the April 1995 award of the Rocky Flats contract, which added $3.0 billion to contract backlog. The fee structure for this five-year contract provides for a mixture of base and incentive fees earned through the achievement of cost reductions, attainment of certain milestones, and accomplishment of other goals. In August 1995, ICF Kaiser signed a contract estimated at $330 million to perform environmental restoration work at Federal installations for the U.S. Army Corps of Engineers ("USACE"), Baltimore District. This Total Environmental Restoration Contract ("TERC") is for four years with two, three-year options. The contract is a cost reimbursement delivery order contract, and the fee structure includes a combination of cost plus fixed fee, award fee, and incentive fees. In August 1995, ICF Kaiser also signed a five-year contract estimated at $50 million to provide environmental services to USACE, Savannah District. 30 The Company's contract backlog was $3.9 billion at September 30, 1996 compared to $4.4 billion at December 31, 1995. The overall reduction in backlog is primarily due to Hanford (see below). In September 1996, the Company signed another TERC contract estimated at $260 million to perform environmental restoration work at federal installations in the South Pacific Division of the U.S. Army Corps of Engineers, Sacramento District. The TERC contract is for four years, with two, three-year options and is a cost reimbursement delivery order contract. The fee structure includes a combination of cost plus fixed fee, award fee, and incentive fees. In September 1996, the Company also signed a five-year contract, valued at more than $60 million, to support EPA's Green Lights and ENERGY STAR programs. In March 1996, the Company signed a two-year, $102 million contract to provide engineering and construction services for the initial phase of a mini- mill project for Nova Hut, an integrated steel maker based in the Ostrava region of the Czech Republic. The Company is currently negotiating a contract with Nova Hut for the next phase of the mini-mill project. Earnings associated with this contract for the next phase of work are expected to be material to the Company's operating results. Management expects to complete negotiations on this contract in the first quarter of 1997. The Company has sold its interest in entities owning and operating the PCI facility, the earnings and cash flows from which have been significant to the Company, in order to improve the Company's cash position in light of substantial near-term cash requirements (see "--Liquidity and Capital Resources"). The closing occurred in December 1996. The sale will result in a gain in the period in which the sale was finalized. The Company anticipates that any cash proceeds resulting from the sale that are not used to satisfy the substantial near-term cash requirements will be reinvested in the Company's business. See "Unaudited Pro Forma Consolidated Financial Statements." In August 1996, the Company, through its subsidiary, ICF Kaiser Hanford Company, was informed that the team of which it was a member was unsuccessful in its bid for DOE's new management and integration contract at Hanford. The new contract was effective October 1, 1996. The Company's existing contract to perform services at Hanford expires in March 1997, but was effectively terminated by DOE on October 1, 1996. As a result, and based on the Company's current assessment of the closeout of the Hanford contract, management believes the impact on earnings will be material in the fourth quarter of 1996, as well as future periods, unless replaced. In response to the reduction and eventual elimination of the Hanford contract, in August 1996 the Company initiated a significant operational efficiency and cost savings program, together with management changes, with the objective of minimizing the long- term impact associated with the termination of the Hanford contract. To date, the results of the cost savings program have been encouraging. Termination of the Hanford contract is not expected to significantly impact cash flows in the fourth quarter but may have a significant impact after 1996 if the cost savings program is not successful (see "--Liquidity and Capital Resources"). Profitable operating results in the fourth quarter of fiscal year 1996 are dependent on the success of the Company's ongoing marketing efforts (including Nova Hut), results from the cost savings program discussed above, and a gain on sale of the entities owning and operating PCI. The Company's consulting group showed improvement in operating results between the nine-month periods ended September 30, 1996 and 1995, aided by the recognition of revenue resulting from the accelerated cost approval process (see "--Overview--Operating Results for Nine Months Ended September 30, 1996 and 1995"). EPA historically has been the consulting group's principal federal government customer; for several years the consulting group has been diversifying its client base to international, private sector, and non-EPA federal government entities. EPA now accounts for only approximately 50% of the consulting group's service revenue. In 1996, the consulting group increased its business development efforts to diversify its client base and expects to make further progress in diversification in 1997. As discussed in Operating Results, the Company's domestic engineering and construction business has not met its financial goals during 1996. As a result, the Company continues in its efforts to enhance profitability of these operations. These efforts include both a continuation of cost reduction efforts and increases in marketing. In conjunction with the cost reduction efforts the Company has recently completed a realignment of several of 31 its offices, including the termination of certain underutilized employees (see Note G to the consolidated financial statements for the nine months ended September 30, 1996). The Company will continue to seek other opportunities to save costs, and future actions may include additional office space consolidations and terminations. RESULTS OF OPERATIONS The following table summarizes key elements in the Consolidated Statements of Operations for the years ended February 28, 1994 and 1995, the ten months ended December 31, 1994 and 1995 and the nine months ended September 30, 1995 and 1996.
YEAR ENDED TEN MONTHS ENDED NINE MONTHS ENDED FEBRUARY 28, DECEMBER 31, SEPTEMBER 30, --------------- ------------------ ----------------------- 1994 1995 1994 1995 1995 1996 ------ ------ ----------- ------ ----------- ----------- (UNAUDITED) (UNAUDITED) (UNAUDITED) (DOLLARS IN MILLIONS) Gross revenue........... $651.7 $861.5 $732.4 $916.7 $731.8 $1,023.4 Service revenue......... $382.7 $459.8 $392.0 $425.9 $357.6 $ 433.6 Service revenue as a percentage of gross revenue................ 58.7% 53.4% 53.5% 46.5% 48.9% 42.4% Operating expenses as a percentage of service revenue: Direct cost of services and overhead............. 84.6% 85.5% 86.0% 84.5% 83.5% 81.8% Administrative and general.............. 12.0% 9.5% 8.7% 9.5% 10.8% 11.5% Depreciation and amortization......... 2.5% 2.0% 2.0% 2.0% 2.0% 1.8% Unusual items, net.... 2.3% -- -- (0.1)% -- -- Operating income (loss) as a percentage of service revenue........ (1.4)% 3.0% 3.3% 4.1% 3.7% 4.9%
Gross revenue represents services provided to customers with whom the Company has a primary contractual relationship. Included in gross revenue are costs of certain services subcontracted to third parties and other reimbursable direct project costs, such as materials procured by the Company on behalf of its customers. Service revenue is derived by deducting the costs of subcontracted services and direct project costs from gross revenue and adding the Company's share of the equity in income of unconsolidated joint ventures and affiliated companies. The Company believes that it is appropriate to analyze operating margins and other ratios in relation to service revenue because such revenue and ratios reflect the work performed directly by the Company. Operating profits (fees) generated by the Hanford and Rocky Flats contracts are based on performance and not revenue. A change in revenue between periods is likely to be disproportionate to the change in the fees earned. Consequently, changes in revenue may have an exaggerated impact on the Company's margins as measured on a percentage basis. In addition, because Kaiser-Hill is a consolidated subsidiary of the Company effective July 1, 1995, operating income includes the portion of income generated under the Rocky Flats contract attributable to CH2M Hill. CH2M Hill's interest in Kaiser-Hill is reflected as a minority interest in subsidiaries in the Company's financial statements (see Note C to the consolidated financial statements for the nine months ended September 30, 1996.) Nine Months Ended September 30, 1996 Versus Nine Months Ended September 30, 1995 Revenue. Gross revenue for the nine months ended September 30, 1996 increased $291.6 million, or 39.8%, to $1,023.4 million. The increase in gross revenue was primarily attributable to the commencement of work under the Rocky Flats contract which generated a $291.8 million increase in gross revenue during the nine months ended September 30, 1996. 32 Service revenue increased by $76.0 million for the nine-month period ended September 30, 1996 as compared to the nine-month period ended September 30, 1995. The increase was due primarily to an $82.3 million increase in service revenue generated under the Rocky Flats contract. Service revenue as a percentage of gross revenue decreased to 42.4% for the nine months ended September 30, 1996 from 48.9% for the nine months ended September 30, 1995. The decrease in service revenue as a percentage of gross revenue is a result of the nature of the Rocky Flats contract. A significant portion of the gross revenue derived from the Rocky Flats contract includes the costs of services subcontracted to third parties. Operating Expense. Direct cost of services and overhead increased $56.2 million between the nine-month periods ended September 30, 1996 and 1995. A $74.4 million increase in costs on the Rocky Flats contract was partially offset by a $13.0 million reduction in Hanford costs attributable to federal budget reductions at the Hanford site. The Company's direct cost of services and overhead as a percentage of service revenue for the nine months ended September 30, 1996 was comparable to the same period in the prior year. Administrative and general expense increased $11.4 million, or 29.4%, between the nine-month periods ended September 30, 1996 and 1995 and increased from 10.8% to 11.5% as a percentage of service revenue. The increase in these costs is primarily attributable to the Company's increased commitment to marketing activities in 1996, including costs associated with new marketing positions within the Company and proposing and bidding large-scale domestic and foreign contracts. The increase in administrative and general expenses as a percentage of service revenue resulting from increased marketing efforts was partially offset as a result of the increase in service revenue in 1996 from the Rocky Flats contract which does not have a proportionate increase in administrative and general expenses. Income Tax Expense. The Company's income tax provision was $0.8 million for the nine months ended September 30, 1996 compared with $1.3 million for the nine months ended September 30, 1995. The income tax provision for the nine months ended September 30, 1996 reflects a partial reversal of the valuation allowance for certain deferred tax assets. This partial reversal reduced tax expense by approximately $2.0 million for the nine-month period. The Company expects to have significant taxable income in the near-term from the sale of certain subsidiaries (see "--Business Outlook"). The remaining valuation allowance after this partial reversal in 1996 is for foreign tax benefits not currently assured of realization. Also, the income tax provision for the nine months ended September 30, 1996 was computed by excluding the minority interest in Kaiser-Hill's income because Kaiser-Hill is a flow-through entity for tax purposes and is partially owned by an outside party. This and the partial reversal of the valuation allowance had the effect of reducing the Company's effective tax rate. Since Kaiser-Hill commenced operations on July 1, 1995, its effect on the effective tax rate was relatively larger in the nine months ended September 30, 1996 than in 1995. Ten Months Ended December 31, 1995 Versus Ten Months Ended December 31, 1994 Revenue. Gross revenue for the ten months ended December 31, 1995 increased $184.3 million, or 25.2%, to $916.7 million. The increase in gross revenue was attributable to the commencement of work under the Kaiser-Hill contract which generated $277.7 million in gross revenue during the ten-month period. The increase was partially offset by a $98.6 million reduction in gross revenue under the Hanford contract due to Federal budget reductions at the Hanford site. Service revenue increased by $33.9 million for the ten-month period ended December 31, 1995 as compared to the ten months ended December 31, 1994. The increase was due primarily to $91.2 million of service revenue generated under the Rocky Flats contract, offset by a $57.8 million decrease in service revenue under the Hanford contract. Service revenue as a percentage of gross revenue decreased to 46.5% for the ten months ended December 31, 1995 from 53.5% for the ten months ended December 31, 1994 as a result of the nature of the Rocky Flats contract. A significant portion of the gross revenue derived from the Rocky Flats contract includes the costs of services subcontracted to third parties. Operating Expenses. Direct cost of services and overhead increased $22.8 million between the ten-month periods ended December 31, 1995 and 1994. Costs on the new Rocky Flats contract ($85.3 million) were offset 33 by a $60.9 million reduction in the Hanford contract costs (attributable to the Federal budget reductions discussed above). The remainder of the Company's direct cost of services and overhead as a percentage of service revenue for the ten months ended December 31, 1995 was comparable to the same period in the prior year. Administrative and general expenses increased $6.4 million, or 18.5%, between the ten-month periods ended December 31, 1995 and 1994 and increased from 8.7% to 9.5% as a percentage of service revenue. The increase in these costs was primarily attributable to the Company's increased marketing activities, including filling several key marketing positions and incurring relatively high levels of marketing expense associated with proposing and bidding large-scale DOD and DOE contracts. Interest Expense. ICF Kaiser's average debt outstanding and average effective interest rate for the ten months ended December 31, 1994 and 1995 were as follows.
TEN MONTHS ENDED -------------------------- DECEMBER 31, DECEMBER 31, 1994 1995 ------------ ------------ Average debt outstanding....................... $122,674,000 $123,701,000 Average effective interest rate................ 12.8% 12.9%
The average effective interest rate was comparable between the ten-month periods ended December 31, 1995 and 1994 due to consistent interest rates and indebtedness outstanding between the ten-month periods. The Company's principal debt outstanding consists of the Existing Notes (see "--Liquidity and Capital Resources"). Income Tax Expense. ICF Kaiser's income tax provision was $2.1 million and $3.0 million for the ten months ended December 31, 1995 and 1994, respectively. Although pretax income for the ten months ended December 31, 1995 was $3.5 million greater than pretax income for the comparable period ended December 31, 1994, the Company's effective tax rate decreased due to a reduction in permanent differences (such as the nondeductibility of goodwill) as a percentage of pretax income, increased foreign tax benefits, and minority interest earnings of a consolidated subsidiary (see Note H to the consolidated financial statements for the ten months ended December 31, 1995). The ten months ended December 31, 1994 also included a repatriation of overseas funds to the United States which could not then be currently offset by foreign tax credits, resulting in additional income taxes for that period (see "--Results of Operations--Year Ended February 28, 1995 Versus Year Ended February 28, 1994--Income Tax Expense"). Because of the reported losses for the year ended February 28, 1994, a $3.3 million valuation allowance was established in that year for deferred tax assets. Although the level of pretax income has increased substantially since that period (with a corresponding increase in taxable income), the Company maintained the valuation allowance as of December 31, 1995. At December 31, 1995, the Company had deferred tax assets of $0.7 million related to net operating loss carryforwards, of which $0.5 million expire in the next five years and $0.2 million expire in 2008. Additionally, the Company had deferred tax assets of $2.1 million related to tax credit carryforwards, the majority of which expire in 1998 to 2009. Unusual Items. During the ten months ended December 31, 1995, the Company recorded $0.5 million in additional income (net), consisting of the following unusual items: income in settlement of litigation against the Internal Revenue Service ("IRS"), associated with an affiliate of an acquired company, net of an accrual for related expenses ($6.8 million) (see "--Liquidity and Capital Resources"); a charge to accrue the net settlement cost and legal expenses of other litigation ($4.6 million); a charge to accrue for severance for the termination of 110 employees in the engineering and international groups ($1.0 million); and a charge to accrue for consolidation of office space ($0.7 million). Management expects that all actions associated with the termination of employees and office space consolidation will be completed by December 31, 1996. Year Ended February 28, 1995 Versus Year Ended February 28, 1994 Revenue. Gross revenue for the year ended February 28, 1995 increased 32.2% to $861.5 million, while service revenue increased 20.1% to $459.8 million, versus the year ended February 28, 1994. These increases 34 were attributable to the work performed at Hanford ($208.8 million of the gross revenue increase and $97.4 million of the service revenue increase). The Hanford revenue increases were offset partially by a decrease in the Company's engineering and construction revenue ($14.1 million gross revenue and $10.8 million service revenue). Service revenue as a percentage of gross revenue decreased to 53.4% for the year ended February 28, 1995, from 58.7% for the previous year, primarily because under an October 1993 amendment to the Hanford contract, the Company absorbed tasks utilizing a much higher proportion of subcontractors than Company personnel. Operating Expenses. The Company's direct cost of services and overhead was relatively flat as a percentage of service revenue for the year ended February 28, 1995 versus the previous year. Excluding Hanford, direct cost of services and overhead decreased to 76.2% of service revenue for the year ended February 28, 1995 from 79.2% for the year ended February 28, 1994. Administrative and general expense decreased $2.1 million. The decrease in these costs was attributable primarily to management cost-cutting initiatives. A restructuring plan initiated during the year ended February 28, 1994 to respond to operating losses included downsizing the work force, consolidating office space, renegotiating significant leases, and restructuring certain international operations. All actions have been completed, and there is no further liability outstanding as of December 31, 1995 associated with this plan. Interest Expense. ICF Kaiser's interest expense net of interest income (net interest) for the year ended February 28, 1995, increased $6.3 million from the prior year due to a recapitalization that took place in the fourth quarter of the year ended February 28, 1994 (see "--Liquidity and Capital Resources"). The increase in net interest was impacted favorably by $1.3 million in refunds of interest from the IRS recorded in the third quarter of the year ended February 28, 1995 associated with the Company's tax liabilities and those of an acquired company. The increase in net interest was offset partially by a reduction in preferred stock dividends. Income Tax Expense. The Company's income tax provision for the year ended February 28, 1995 was $2.9 million, even though pretax income was $1.2 million. This is due to several factors including the deemed dividend from the repatriation of overseas funds to the United States during the year ended February 28, 1995 that currently could not be offset by foreign tax credits and permanent differences, such as the nondeductibility of goodwill amortization. Nondeductible permanent differences comprised a very high percentage of pretax income. As such, the traditional percentage relationship between income tax expense and pretax income was not meaningful. LIQUIDITY AND CAPITAL RESOURCES Cash Flows for Nine Months Ended September 30, 1996 During the nine months ended September 30, 1996, cash and cash equivalents increased $4.7 million to $21.0 million. Operating activities generated $5.9 million in cash, primarily from operations at Kaiser-Hill which generated $8.8 million. An additional significant operating source of cash was $7.0 million received from the IRS in settlement of litigation (see "--Results of Operations--Ten Months Ended December 31, 1995 Versus Ten Months Ended December 31, 1994--Unusual Items"). Significant operating uses of cash included $15.4 million in interest payments on the Company's Existing Notes, a $3.7 million pension payment, and $4.2 million of payments for net settlement costs and legal expenses of litigation. The increase in contract receivables, net between December 31, 1995 and September 30, 1996 was primarily due to an increase in receivables under the Hanford contract resulting from the closeout of the contract. The decrease in prepaid expenses and other current assets in 1996 was attributable to collection from the IRS of $7.0 million, which was accrued in other current assets at December 31, 1995. The cash received from the IRS settlement is included in unusual items on the Statement of Cash Flows. 35 During the nine months ended September 30, 1996, net borrowings under the Company's Credit Facility provided $8.0 million in cash (see Note E to the consolidated financial statements for the nine months ended September 30, 1996). Borrowings under the Credit Facility were used to fund operations (including the pension payment made in September 1996). Other significant uses of cash in investing and financing activities included purchases of fixed assets ($4.9 million), payment of dividends ($2.0 million), and investments in joint ventures and affiliates ($1.2 million ). In July 1996, EPA approved the Company's provisional billing rates for the year ended February 28, 1995. This approval permitted the Company to submit invoices for billing rate variances on cost-plus contracts with U.S. government agencies for costs incurred during that year. The Company expects to collect in excess of $1.5 million on these billings in future periods. In October 1996, the Company also obtained approval for provisional billing rates for the ten months ended December 31, 1995 which is expected to result in more than $2.0 million in additional invoicing. Cash Flows for Ten Months Ended December 31, 1995 During the ten months ended December 31, 1995, cash and cash equivalents decreased $11.9 million to $16.4 million. Cash was primarily used in investing and financing activities for acquisitions and investments in joint ventures and affiliates ($2.0 million); purchases of fixed assets ($1.8 million); payments of dividends ($1.5 million); repurchases by the Company's insurance subsidiary of a portion of the Company's outstanding Existing Notes and related warrants ($1.4 million); and payments of other outstanding debt ($1.2 million). In addition, $6.1 million was used in operating activities. An interest payment of $7.5 million on the Company's Existing Notes was made in June 1995. An additional $7.5 million interest payment on the Existing Notes was due and paid on January 2, 1996. An increase in contract receivables, net between February 28, 1995 and December 31, 1995 was primarily due to $71.9 million in receivables from the commencement of work by Kaiser-Hill under the Rocky Flats contract. An increase in accounts payable, accrued expenses, and accrued salaries and employee benefits was also primarily due to the Rocky Flats contract which had $70.6 million of accounts payable, accrued expenses, and accrued salaries and employee benefits as of December 31, 1995. During the year ended February 28, 1995, the EPA approved the Company's revised provisional billing rates for fiscal years 1991 through 1994, thus authorizing the Company to submit invoices on cost-plus contracts with U.S. government agencies for work performed during these approved years. The Company collected in excess of $4 million as of December 31, 1995 on these contracts. Liquidity and Capital Resources Outlook Effective May 7, 1996, the Company's new $40 million Credit Facility replaced the then-existing revolving credit facility which was due to expire October 31, 1996. The Credit Facility contains Eurodollar and alternate base interest rate alternatives with margins dependent upon the Company's financial operating results and expires June 30, 1998. Effective December 17, 1996, the Company signed an amendment to the Credit Facility (the "Amendment") that approved the Disposition of PCI, provided for a temporary $5.0 million Over Advance Provision (as defined in the Amendment) and permitted the net proceeds from the issuance of the Old Notes and borrowings under the Over Advance Provision to be used to redeem the Series 2D Senior Preferred Stock. See "Description of the Credit Facility." The Credit Facility is provided by CoreStates Bank, N.A. as agent bank, and two other banks (the "Banks") with terms and covenants similar to those under the former credit facility. ICF Kaiser International, Inc. and certain of its subsidiaries, which are guarantors of the Credit Facility, granted the Banks a security interest in their accounts receivable and certain other assets, including the pledge of the stock of certain subsidiaries. The Credit Facility limits the payments of cash dividends on common stock and requires the maintenance of specified financial ratios. Total available credit is determined from a borrowing base calculation based on eligible accounts 36 receivable (billed and unbilled). As of September 30, 1996, the Company had $13.0 million in cash borrowings and $21.3 million of letters of credit outstanding under the Credit Facility. The letters of credit outstanding under the Credit Facility are generally required to support performance guarantees, primarily on international projects. The Company had $5.7 million of additional credit available under the Credit Facility as of September 30, 1996. As of January 7, 1997, the Company had no cash borrowings outstanding, $18.6 million of letters of credit outstanding and the additional credit available under the Credit Facility was $21.4 million. Kaiser-Hill has a $50 million receivables purchase facility to support its working capital requirements under the Rocky Flats contract. The receivables purchase facility requires Kaiser-Hill to maintain a specified tangible net worth and contains certain default provisions for delinquent receivables. Program fees consist of 0.30% per annum of the unused portion of the facility and 0.45% per annum of the used portion of the facility. The receivables purchase facility is non-recourse to Kaiser-Hill's owners, ICF Kaiser and CH2M Hill, and expires on June 30, 1998. The Company has sold its interest in the entities owning and operating PCI, the earnings and cash flows from which have been significant to the Company (see "--Overview--Business Outlook"). In January 1994, the Company issued its Existing Notes and 600,000 warrants, each to purchase one share of the Company's common stock at $5.00 per share. The net proceeds of the $125 million offering were used, in part, to retire senior subordinated notes and associated warrants, to repurchase preferred stock, and to repay the outstanding balance on the Company's then-existing revolving credit facility. The recapitalization resulted in a $6.0 million extraordinary charge (net of $0 tax benefit) for the early extinguishment of debt and a $1.9 million charge to net income available for common shareholders to repurchase redeemable preferred stock. As noted above, in November 1995, the Company's insurance subsidiary repurchased $1,450,000 of the Existing Notes and related warrants for $1.4 million. In March 1996, the interest rate on the Existing Notes was increased by one percent until the Company achieves and maintains a specified level of earnings (see Notes F and I to the consolidated financial statements for the ten months ended December 31, 1995). The Existing Notes mature on December 31, 2003 with semi-annual interest payments. The Company's Series 2D Senior Preferred Stock was subject to mandatory redemption on January 13, 1997 in the amount of $20 million plus accrued dividends. Because of technical limitations on the payment of dividends contained in the Existing Indenture, the Company did not pay the November 30, 1995 and February 29, 1996 accrued dividends in the aggregate amount of $975,000 until March 1996, following the signing of an amendment to the Indenture governing the Existing Notes which permitted the payment of all accrued and future dividends. As consideration for this amendment, the interest rate on the Existing Notes was increased as discussed above. The Company repurchased this preferred stock using the net proceeds of the issuance of the Old Notes and borrowings under the Credit Facility. As explained in "--Overview--Business Outlook," the loss of the Hanford contract may have a significant impact on the Company's cash flows after 1996 if the Company's cost savings and marketing programs are not successful. The Company believes it will be successful in its ability to generate adequate cash flows to fund operations throughout the next twelve months and in reducing overhead costs within the operating groups and corporate functions. IMPACT OF NEW ACCOUNTING STANDARDS The Financial Accounting Standards Board (FASB) recently issued Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," effective for financial statements for fiscal years beginning after December 15, 1995. It is the Company's current policy to evaluate all long-lived assets on a periodic basis for asset impairment. Therefore, the adoption of this statement has no material adverse effect on the Company's financial position or operations. 37 The FASB also recently issued Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS No. 123"), which encourages companies to adopt a fair value method of accounting for employee stock options and similar equity instruments. The fair value method requires compensation cost to be measured at the grant date based on the value of the award and is recognized over the service period. Alternatively, SFAS No. 123 requires the provision of pro forma disclosures of net income and earnings per share as if the fair value method had been adopted when the fair value method is not reflected in the financial statements. The Company has elected to provide pro forma disclosures. Therefore, the adoption of SFAS No. 123 will not have a material adverse effect on the Company's financial position or result of operations. The requirements of SFAS No. 123 are effective for financial statements for fiscal years beginning after December 15, 1995. 38 BUSINESS ICF Kaiser International, Inc., through ICF Kaiser Engineers, Inc. and its other operating subsidiaries, is one of the nation's largest engineering, construction, program management and consulting services companies. The Company's Federal Programs, Engineers and Consulting Groups provide fully integrated services to domestic and foreign clients in the private and public sectors of the environment, infrastructure and basic metals and mining industry markets. For the latest twelve-month period ended September 30, 1996, ICF Kaiser had gross and service revenue of $1,337.5 million and $569.8 million, respectively, and EBITDA (as defined) of $30.8 million. Service revenue is derived by deducting the costs of subcontracted services and direct project costs from gross revenue and adding the Company's share of income (loss) of joint ventures and affiliated companies. As of November 30, 1996, the Company employed 5,176 people located in more than 80 offices worldwide. The Company was incorporated in Delaware in 1987 under the name American Capital and Research Corporation. It is the successor to ICF Incorporated, a nationwide consulting firm organized in 1969. In 1988, the Company acquired the Kaiser Engineers business, which dates from 1914. The Company's headquarters is located at 9300 Lee Highway, Fairfax, Virginia 22031-1207, telephone number (703) 934-3600. OVERVIEW OF MARKETS Environmental. In the environmental market, the Company provides services in connection with the remediation of hazardous and radioactive waste, waste minimization and disposal, risk assessment, global warming and acid rain, alternative fuels and clean up of harbors and waterways. Demand for ICF Kaiser's environmental consulting and engineering services is driven by a number of factors, including: the need to improve the quality of the environment; federal, state and municipal environmental regulation and enforcement; and increased liability associated with pollution-related injury and damage. Increasingly strict federal, state, and local government regulation has forced private industry and government agencies to clean up contaminated sites, to bring production facilities into compliance with current environmental regulations, and to minimize waste generation on an ongoing basis. In addition, ICF Kaiser is well-positioned to take advantage of the growing market arising from the increased awareness internationally of the need for additional and/or initial environmental regulations, studies and remediation. Significant environmental laws have been enacted in response to public concern about the environment. These laws and the implementing regulations affected nearly every industrial activity, and efforts to comply with the requirements of these laws create demand for the Company's services. The principal Federal legislation that has created a substantial market for the Company, and therefore has the most significant effect on the Company's business, includes the following: The Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") of 1980, as amended by the Superfund Amendments and Reauthorization Act ("SARA") of 1986, established the Superfund program to clean up existing, often abandoned hazardous waste sites and provides for penalties and punitive damages for noncompliance with the EPA orders. The Resource Conservation and Recovery Act ("RCRA") of 1976, as amended by the Hazardous and Solid Waste Amendments of 1984 ("HSWA"), provides a comprehensive scheme for the regulation of hazardous waste from the time of generation to its ultimate disposal (and sometimes thereafter), as well as the regulation of persons engaged in the treatment, storage and disposal of hazardous waste. The Clean Air Act as amended in 1970 empowered the EPA to establish and enforce National Ambient Air Quality Standards, National Emission Standards for Hazardous Air Pollutants and limits on the emission of various pollutants. The 1990 amendments to the Clean Air Act substantially increase the number of sources emitting a regulated air pollutant which will be required to obtain an operating permit; the amendments also address the issues of acid rain, ozone protection, and other areas in which the Company can provide expanded services. The Clean Water Act of 1972, originally the Federal Water Pollution Control Act of 1948, established a system of standards, permits and enforcement procedures for the discharge of pollutants to surface water from industrial, municipal, and other wastewater sources. The Toxic Substance Control Act, enacted in 1976, established requirements for identifying and controlling toxic chemical hazards to human health and the environment. 39 Infrastructure. The global infrastructure market is driven by the need to maintain and expand among other things, ports, roads, highways, mass transit systems and airports. Increasingly, environmental concerns, such as wastewater treatment and reducing automotive air pollutant emissions, have become a driving force behind new infrastructure and transportation initiatives. This market is primarily funded by government dollars, although the private sector is seeking an increased role, particularly in international projects. The Company has capitalized on its specialized technical and environmental skills to win projects that provide consulting, planning, design and construction services. Internationally, there is a critical need for infrastructure projects where population growth of major cities has been and will continue to be extremely high. The Company provides engineering and construction management services for mass transit and wastewater treatment facilities in major metropolitan areas worldwide. Industry. ICF Kaiser assists its basic metals and mining industry clients by providing the engineering and construction skills needed to maintain and retrofit existing plants and replace aging production capacity with newer, more efficient and more environmentally responsible facilities. The Company's engineering and construction skills, as well as its access to process technologies, have helped establish it as a worldwide leader in serving the basic metals and mining industries, especially aluminum and steel. ICF Kaiser is currently expanding its operations internationally, particularly engineering and construction management services related to alumina production from bauxite, aluminum smelting and other basic industry facilities. BUSINESS STRATEGY The Company's business strategy is based primarily on providing its clients: (i) full front-end capability; (ii) value-added services; (iii) access to technology; and (iv) the benefits of the Company's strategic relationships. Full Front-end Capability. The Company's front-end skills include policy analysis and consulting; scientific analysis and health/risk assessments; facility siting and environmental assessments; remedial investigations and feasibility studies; and engineering design. By possessing these skills, the Company's involvement at the outset of any project places it in a position to participate in any follow-on engineering and construction work. Value-added Services. The Company provides value-added services within those markets that relate to environmental services through specialized environmental knowledge that (i) helps clients understand environmental threats and opportunities and alternative ways in which such threats can be managed and opportunities capitalized on; (ii) allows creation of customized solutions, including remedial design and remedial action, for the clients' environmental problems; and (iii) combines problem identification, solution, and implementation. Access to Technology. The Company has access to technologies that can assist clients clean up existing waste sites, reduce waste generated by ongoing and new production processes, reduce and monitor emissions, improve the quality of finished products, assist in the production in the basic metal and mining industries, and reduce costs. To increase its overall participation in clients' projects, the Company continues to expand its access to leading environmental and process technologies through various methods, including licensing and joint ventures. Strategic Relationships. The Company has established business relationships through joint ventures, marketing agreements, and direct equity investments that extend its presence and reduce its business development risks. These relationships are particularly important in the management of the Company's international operations, and they help reduce the cost and risks associated with the Company's entering new geographic regions. BUSINESS GROUPS The Company is organized into three business groups: the Federal Programs Group; the ICF Kaiser Engineers Group; and the Consulting Group. 40 Federal Programs Group The Company derives a substantial portion of its revenues from contracts with various agencies and departments of the Federal government. The Federal Programs Group's major clients are the DOE and the DOD. U.S. Department of Energy. An important DOE mission has changed over the years--from nuclear weapons production to environmental cleanup of former nuclear weapons production sites. To help accomplish DOE's cleanup goals pursuant to this new mission, the Company actively supports DOE at the following facilities: Argonne National Laboratory, Idaho National Engineering Laboratory, Lawrence Livermore National Laboratory, Los Alamos National Laboratory, Mound Plant Site, Oak Ridge National Laboratory, two Sandia National Laboratories, Hanford Site and Rocky Flats. The Company provides many services at these facilities, including (i) conducting comprehensive assessments related to environment, safety, and health; (ii) quality assurance; (iii) security and safeguards; (iv) assessing, managing, and remediating existing hazardous and solid wastes, mixed wastes, radioactive materials, highly volatile chemical compounds, unidentified mixed wastes, and exploded/unexploded munitions; and (v) architect, engineer, construction, and site operations. In 1995, the Company, through Kaiser-Hill, won DOE's Performance Based Integrating Management contract at Rocky Flats. Rocky Flats is a former DOE nuclear weapons production facility. Under the five-year contract, Kaiser-Hill oversees plutonium stabilization and storage, environmental restoration, waste management, decontamination and decommissioning, site safety and security, and construction activities of subcontractor companies. Under the performance- based contract signed by Kaiser-Hill, the concept which was developed in the DOE's 1994 Contract Reform Initiative, 85% of Kaiser-Hill's fees are based on performance, while only 15% are fixed. Kaiser-Hill's contract commits it to dealing with urgent risks first, and measurable results in the following "urgent risk" areas determines its incentive fee: stabilize plutonium and plutonium residues for specific time frames; consolidate plutonium in a single building; and clean up and remove all high-risk "hot spot" contamination. Finally, Kaiser-Hill is expected to reduce the number of employees at the site by the end of the contract term. In August 1996, the Company was informed that the team of which it was a member was unsuccessful in its bid for DOE's new management and integration contract at the DOE's Hanford Site, Richland, Washington, where the Company had worked since 1987. The Company's existing contract at Hanford effectively was terminated by DOE on October 1, 1996. As a result, and based on the Company's current assessment of the closeout of the Hanford contract, management believes the impact on earnings will be material in the fourth quarter of 1996, as well as future periods, unless replaced. In response to the reduction and eventual elimination of the Hanford contract, in August 1996 the Company initiated a significant operational efficiency and cost savings program, together with management changes, with the objective of minimizing the long-term impact associated with the termination of the Hanford contract. Termination of the Hanford contract is not expected to significantly impact cash flows in the fourth quarter of fiscal year 1996 but may have a significant impact after 1996 if the cost savings program is not successful. Effective October 1, 1996, ICF Kaiser Hanford Company acquired the Hanford Site General Support Services Contract from the MACTEC Division of Management Analysis Company of Golden, Colorado. The Company undertook the contract in order to maintain a presence at Hanford and to further its strategic alliance with MACTEC. Under the contract, ICF Kaiser provides administrative, engineering, and technical support services for major DOE projects at the Hanford Site, including tank waste remediation programs. In addition, the Company will work closely with DOE to aid its strategic initiatives associated with site cleanup and facility transition. U.S. Department of Defense. DOD estimates that its environmental expense will be directed primarily to cleaning up hundreds of military bases with thousands of contaminated sites. There is an urgent need to ensure that the hazardous wastes present at these sites (often located near population centers) do not pose a threat to the surrounding population, and, in connection with the closure of many of the bases, there is an economic incentive 41 to make sure that the environmental restoration enables the sites of the former bases to be developed commercially by the private sector. DOD established the TERC program to clean up contaminated Army sites in a streamlined and efficient manner by partnering with private contractors. A TERC contract allows a single contractor to handle all aspects of remediation, resulting in quicker cleanup, more effective project management, and better coordination with federal and state regulators and the public. It also helps to build a culture of cooperation among the USACE, the contractor, the regulatory community, and the public. In September 1996, the Company signed a contract estimated at $260 million to perform environmental restoration work at federal installations in the South Pacific Division of the USACE. The TERC contract will be managed by the Sacramento District, lasts for four years with two, three-year options, and covers cleanup work at the Oakland (California) Army Base and at other Army bases and federal installations in California, Arizona, Nevada, and Utah. The Sacramento TERC was the second TERC awarded to ICF Kaiser. In August 1995, ICF Kaiser won the largest hazardous, toxic, and radioactive waste contract ever awarded by USACE, a $330 million TERC to remediate contaminated Army sites in USACE's Baltimore District. ICF Kaiser's Baltimore TERC covers cleanup work at Picatinny Arsenal in New Jersey, Aberdeen Proving Ground near Baltimore, and other Army bases and federal installations in New York, New Jersey, Pennsylvania, Delaware, Maryland, the District of Columbia, Virginia, and West Virginia. The Baltimore TERC is for four years with two three-year options. The contract is a cost reimbursement delivery order contract, and the fee structure includes a combination of cost plus fixed fee, award fee, and incentive fees. The Company also provides environmental services to USACE, Savannah (Georgia) District, under several contracts, including a $50 million contract to support the Corps' South Atlantic Division, as well as a $2 million contract under which the company is designing contaminated groundwater treatment systems at the Milan Army Ammunition Plant in Tennessee. Other Federal Government Work. Under a variety of smaller contracts, the Company provides the Federal government with numerous other services. Under an EPA contract awarded in 1995, the Company will continue to manage the EPA's quality assurance laboratory in Las Vegas, Nevada, and provide the laboratory with analytical support. The Company also supports the EPA's Superfund program under Alternative Remedial Contracting Strategy ("ARCS") contracts for remedial planning services. Architectural, engineering, and construction management services for facilities and infrastructure (such as post offices, court houses, and prisons) are provided to the U.S. Postal Service, Department of Justice, and General Services Administration. ICF Kaisers Engineers Group ICF Kaiser assists clients in private industry by providing the engineering and construction skills needed to maintain and retrofit existing plants and replace aging production capacity with newer, more environmentally responsible facilities. The Company has the engineering and construction skills, as well as access to process technologies, needed to establish a leadership position in serving the basic metals and mining industries, including aluminum, steel, copper, and coal. All of ICF Kaiser's markets are global in nature. To capitalize on international opportunities while minimizing its business development risks, the Company has established international business relationships through joint ventures, marketing agreements and direct equity investments. The Company has projects underway in over 25 countries. Environmental Consulting and Engineering Services. Demand for the Company's non-Federal environmental consulting and engineering services is driven by a number of factors, including: the need to improve the quality of the environment; environmental regulation and enforcement; and increased liability associated with pollution-related injury and damage. Significant environmental laws have been enacted in response to public concern over the environment, and these laws and the implementing regulations affect nearly 42 every industrial activity. Increasingly strict Federal, state and local government regulation has forced private industry and state and local agencies to clean up contaminated sites, to bring production facilities into compliance with current environmental regulations, and to minimize waste generation on an ongoing basis. Although growth in this private-sector market is being hampered by uncertainty over continuing Federal regulations, the Company generates new business by increasing and expanding the services it sells to existing clients and by targeting new markets for the Company's full-service capabilities. The Company's environmental services have progressed beyond study and analysis to remediation. Following on its established market position in the consulting and front-end analysis phase of environmental services, the Company now offers alternative remediation approaches that may involve providing on- site waste containment, on-site treatment, management of on-site/off-site remediation, or waste removal. The Company also designs new processes (and redesigns ongoing production processes) to minimize or eliminate the generation of hazardous waste. Currently, the Company also provides site investigations and feasibility studies, compliance planning and audits, risk assessment, permitting, community relations services, and construction and construction management. See "--Potential Environmental Liability." Industry Services. ICF Kaiser's engineering design, project management, and construction services to the industrial market involve work with the steel, aluminum, alumina, copper and other minerals and metals industries as well as chemicals, petrochemicals, and refineries. In the coke, coal, and coal chemicals area, ICF Kaiser's services have included inspection of coke plants for environmental compliance, facility design and construction, and equipment sales and services. The Company has provided services related to coal cleaning, handling, and environmental controls. The Company recently announced that it is negotiating to sell the PCI facility that it designed, built, currently operates and jointly owns under a multiyear tolling agreement. The international market provides opportunities for the Company's industrial services. The Company's largest industrial project will be a mini-mill project for Nova Hut. Under a two-year contract signed in March 1996, the Company will oversee the construction of the continuous slab caster portion of the mini- mill as well as future production and environmental upgrades to Nova Hut's existing integrated steel-making facilities. The Company will provide project management, engineering, procurement, construction management, start-up, commissioning, and training services. This initial phase of the mini-mill project, which is scheduled to initiate production in June 1998, is part of a two-phase endeavor in which the second phase will provide Nova Hut with a new rolling mill with the capability of producing one million metric tons per year of hot rolled steel product. The Company is currently negotiating a contract with Nova Hut for the second phase of the mini-mill project. The Company expects earnings from the next phase to be material to the Company's operating results. Management expects to complete negotiations on this contract in the first quarter of 1997, although there can be no assurance with respect thereto. The Company also is assisting the International Finance Corporation in securing the financing for the next phase of the mini-mill project. Infrastructure Services. The Company also is helping rebuild the infrastructure of roads, highways, transit systems, harbors, airports, facilities, and buildings in domestic and international markets. Budget constraints at the Federal, state, and local government levels have hindered domestic infrastructure market growth, but the Company remains active in major U.S. metropolitan areas: Chicago (light rail transit system); Seattle (light rail project); San Francisco (commuter rail line extension); Atlanta (general engineering consulting services to the Metropolitan Atlanta Rapid Transit Authority); and Miami (Intermodal Transit Center, a project that will tie together air, light/heavy rail, buses, highway systems, and parking facilities). In the international infrastructure market, the Company's large-scale construction infrastructure skills are at work in Portugal where the Company, as part of a joint venture, provides project and construction management services for the modification and reconstruction of the main rail link between the cities of Lisbon and Oporto. The Company also provides program management services for the overhaul and upgrade of Portugal's main intercity freight and passenger rail lines. Those skills also are at work in the Philippines where the Company, as part of a joint venture, provides front-to-back-end services for a light rail transit line in Manila. In Brazil, the Company is developing the plan to remediate and clean up Guanabara Bay. 43 The major ports of many of the world's cities have serious water pollution problems, and ICF Kaiser is helping to improve the condition of many harbors and waterways. In its largest harbor project, the Company continues as the construction manager of the cleanup of Boston Harbor, one of the largest environmental projects in the country, under a contract extension that runs through 1998. Since the inception of the project in 1988, the Company has served as its construction manager, and currently manages construction workers, engineers, architects, and support personnel working to construct a wastewater treatment plant on Deer Island in Boston Harbor. International Services. ICF Kaiser provides engineering, construction management, and consulting services through companies managed and staffed by local professionals in Australia, Taiwan, the Philippines, Mexico, Brazil, Portugal, France, England, Russia, and the Czech Republic, as well as project offices throughout the world. International projects include design engineering for the expansion of a major alumina refinery in Western Australia; and environmental remediation of hydrocarbon contamination in soil and groundwater in France and Mexico. Consulting Group The Consulting Group serves customers in domestic and international markets, including both public- and private-sector organizations. Among its major customers are U.S. government agencies, especially the EPA; U.S. private sector organizations, particularly major energy producers such as utilities and oil companies; and governments and businesses around the world, as well as various multinational banks, development organizations, and treaty organizations. The Consulting Group draws upon the talents of its multi- disciplinary professional staff to support customers within four primary lines of business. Environmental Consulting Services. This line of business assists customers in developing plans and policies, evaluating options for managing environmental responsibilities in the most cost-effective manner, and identifying and employing the best available technologies and practices. Life- cycle management strategies are emphasized. The group has special expertise in such areas as industrial and municipal waste management, air pollution control, chemical accident prevention, and ground-water and drinking water management. The Consulting Group also provides technical and regulatory support to the EPA's Office of Solid Waste, focusing on human health and ecological risk assessment and waste characterization. Global environmental issues are also a particular area of focus within the Consulting Group. Working with U.S. and international organizations that fund global environmental work and with numerous private sector organizations, the Consulting Group has conducted projects in over thirty countries and has been actively involved in supporting international environmental treaties. The group has achieved great success in implementing technology transfer programs through the creation of effective public-private partnerships. Working on global change issues for the EPA for 14 years, the Company supports the EPA's Global Change Division, providing services related to the reduction of methane and other greenhouse gases. In September 1996, the Consulting Group announced that it had signed a five- year contract, potentially valued at more than $60 million, to provide technical analysis and implementation support for EPA's Green Lights and ENERGY STAR programs. The Consulting Group has worked on EPA's voluntary public-private partnership programs on energy efficiency and methane reduction since their inception in 1990. In-career Education and Training Programs. Consulting services in this line of business range in subject matter from highly technical areas to broader, skill-based and management-oriented training. The Consulting Group's expertise in the development and delivery of workplace training, combined with expert knowledge in a wide variety of technologies and programmatic areas, enables it to provide high impact training that is specifically tailored to the needs of each customer organization. Environmental management programs cover regulation, technology, information reporting, emergency response, and pollution prevention. 44 Information Management Programs. The Company assists clients in developing decision support systems that facilitate the collection and use of information to track performance, identify opportunities and improve decision making. The group offers a number of sophisticated simulation models and proprietary applications. By combining consulting expertise with information technology skills, the group helps its customers deal with the unique challenges of their business environment. Energy and Natural Resource Management Services. This line of business supports the development of corporate and technical plans for managing power resources and energy projects, provides economic assessments of short- and long-term market conditions for various fuels, and serves as an expert foundation in litigation and regulatory proceedings. The Consulting Group assists its customers in identifying market opportunities, commercializing new technologies, and developing public policy. Its contributions involve linking an in-depth understanding of the energy markets with an ongoing involvement with energy technology. COMPETITION AND CONTRACT AWARD PROCESS The market for the Company's services is highly competitive. The Company and its subsidiaries compete with many other environmental consulting, engineering and construction firms ranging from small firms to large multinational firms having substantially greater financial, management, and marketing resources than the Company. Other competitive factors include quality of services, technical qualifications, reputation, geographic presence, price, and the availability of key professional personnel. Competition for private-sector work generally is based on several factors, including quality of work, reputation, price, and marketing approach. The Company's objective is to establish and maintain a strong competitive position in its areas of operations by adhering to its basic philosophy of delivering high-quality work in a timely fashion within its clients' budget constraints. Most of the Company's contracts with public-sector clients are awarded through a competitive bidding process that places no limit on the number or type of offerors. The process usually begins with a government Request for Proposal (RFP) that delineates the size and scope of the proposed contract. Proposals are evaluated by the government on the basis of technical merit (for example, response to mandatory solicitation provisions, corporate and personnel qualifications, and experience) and cost. The Company believes that its experience and ongoing work strengthen its technical qualifications and, thereby, enhance its ability to compete successfully for future government work. In both the private and public sectors, the Company, acting either as a prime contractor or as a subcontractor, may join with other firms to form a team that competes for a single contract or submits a single proposal. Because a team of firms almost always can offer a stronger set of qualifications than any firm standing alone, these teaming arrangements often are very important to the success of a particular competition or proposal. The Company maintains a large network of business relationships with other companies and has drawn repeatedly upon these relationships to form winning teams. The Company's subsidiaries operate under a number of different types of contract structures with its private- and public-sector clients, the most common of which are Cost Plus and Fixed Price. Under Cost Plus contracts, the Company's costs are reimbursed with a fee (either fixed or percentage of cost) and/or an incentive or award fee offered to provide inducement for effective project management. A variation of Cost Plus contracts are time and materials contracts under which the Company is paid at a specified fixed hourly rate for direct labor hours worked. Under Fixed Price contracts, the Company is paid a predetermined amount for all services provided as detailed in the design and performance specifications agreed to at the project's inception. CUSTOMERS The Company's clients include DOE, EPA, and DOD; major corporations in the energy, transportation, chemical, steel, aluminum, mining, and manufacturing industries; utilities; and a variety of state and local 45 government agencies throughout the United States. A substantial portion of the Company's work is repeat business from existing clients. In many cases, the Company has worked for the same client for many years, providing different services at different times. DOE accounted for approximately 68% of the Company's consolidated gross revenue for the ten months ended December 31, 1995; EPA accounted for another approximately 6%; and DOD and other Federal agencies collectively accounted for another approximately 4%. The Federal government accounted for approximately 73% of the Company's consolidated gross revenue in fiscal year 1995 and 65% in fiscal year 1994. The Company's international clients include both private firms and foreign government agencies in such countries as Australia, France, Portugal, and Taiwan. For the ten months ended December 31, 1995, foreign operations accounted for approximately 4.7% of the Company's consolidated gross revenue. For information concerning gross revenue, operating income, and identifiable assets of the Company's business by geographic area, see Note O to the Consolidated Financial Statements for the ten months ended December 31, 1995. BACKLOG Backlog refers to the aggregate amount of gross contract revenue remaining to be earned pursuant to signed contracts extending beyond one year. At September 30, 1996, the Company's contract backlog was approximately $3.9 billion in gross revenue, down from approximately $4.4 billion in gross revenue at December 31, 1995. The Company expects that approximately 6.4% of the total backlog at September 30, 1996, will be worked off during the last fiscal quarter of fiscal year 1996. Because of the nature of its contracts, the Company is unable to calculate the amount or timing of service revenue that might be earned pursuant to these contracts. The Rocky Flats contract with Kaiser-Hill represents approximately $2.3 billion of the Company's $3.9 billion backlog at September 30, 1996. The Company believes that backlog is not a predictor of future gross or service revenue. Differences in contracting practices between the public and private sectors result in the Company's backlog being weighted heavily toward contracts associated with agencies of the Federal government. Backlog under contracts with agencies of the Federal government that extend beyond the government's current fiscal year includes the full contract amount, including in many cases amounts anticipated to be earned in option periods and certain performance fees, even though annual funding of the amounts under such contracts generally must be appropriated by Congress before the agency may expend funds during any year under such contracts. In addition, the agency must allocate the appropriated funds to these specific contracts and thereafter authorize work or task orders to be performed under these specific contracts. Such authorizations are generally for periods considerably shorter than the duration of the work the Company expects to perform under a particular contract and generally cover only a percentage of the contract revenue. Because of these factors, the amount of Federal government contract backlog for which funds have been appropriated and allocated, and task orders issued, at any given date is a substantially smaller amount than the total Federal government contract backlog as of that date. In the event that option periods under any given contract are not exercised or funds are not appropriated, allocated or authorized to be spent under any given contract, the amount of backlog attributable to that contract would not result in revenue to the Company. All contracts and subcontracts with agencies of the Federal government are subject to termination, reduction, or modification at any time at the discretion of the government agency. ENVIRONMENTAL REGULATION Significant environmental laws have been enacted in response to public concern over the environment. These laws and the implementing regulations affect nearly every industrial activity. Efforts to comply with the requirements of these laws have increased demand for the Company's services. The principal Federal legislation having the most significant effect on the Company's business includes the following: The Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"). CERCLA, as amended by the Superfund Amendments and Reauthorization Act, established the Superfund program to clean 46 up hazardous waste sites and provides for penalties and punitive damages for noncompliance with EPA orders. Superfund may impose strict liability (joint and several as well as individual) on certain hazardous substance waste owners, operators, disposal "arrangers," transporters, and disposal facility owners and operators (Potentially Responsible Parties or PRPs) for the costs of removal or remedial action; for other necessary response costs and damages for injury, destruction, or loss of natural resources; and for the cost of health effects study. Under certain circumstances Federal funds may be used to pay for the cleanup. The Resource Conservation and Recovery Act ("RCRA"). RCRA, as amended by the Hazardous and Solid Waste Amendments of 1984, provides a comprehensive scheme for the regulation of hazardous waste from the time of generation to its ultimate disposal (and sometimes thereafter), as well as the regulation of persons engaged in the treatment, storage, and disposal of hazardous waste. The RCRA scheme includes both a permitting and a manifest tracking system and detailed regulations on the handling, treatment, transportation, storage, and disposal of hazardous and solid waste. Regulations have been issued pursuant to RCRA in the following areas (among others) of importance to the Company: permitting; remediation of releases associated with underground storage tanks; municipal solid waste disposal; waste minimization; corrective action; and treatment, transportation, and disposal of hazardous waste. HSWA has increased the number of hazardous waste generators subject to RCRA. HSWA also imposes land disposal restrictions/bans on certain listed and characteristic hazardous wastes that do not meet specified treatment standards. The Clean Air Act. Under the Clean Air Act, as amended in 1970 and 1990, EPA is empowered to establish and enforce National Ambient Air Quality Standards, National Emission Standards for Hazardous Air Pollutants, and limits on the emissions of various pollutants from specific types of facilities. The 1990 amendments require certain sources emitting an air pollutant regulated under the Clean Air Act to obtain an operating permit, which includes enforceable emissions limitations and compliance schedules. The Clean Air Act also addresses substantial expanded regulation of vehicle emissions, hazardous air pollutant emissions, stratospheric ozone protection, acid rain minimization (through the use of limitations on sulfur dioxide and nitrogen oxide emissions) and related enforcement issues. The use of "marketable allowances" to establish limits on total emissions while maintaining maximum market flexibility reflects a shift in environmental policy from command and control management to a more flexible approach. Other Statutes. Under the Safe Drinking Water Act of 1974, as amended, EPA is empowered to set drinking water standards for community water supply systems and to control subsurface injection of waste. The Clean Water Act, as amended in 1972 and 1990, established a system of standards, permits, and enforcement procedures for the discharge of pollutants to surface water from industrial, municipal and other wastewater sources. Under the Ocean Dumping Act of 1972, as amended in 1988, regulatory revisions to the Clean Water Act were made to eliminate ocean dumping of sludge. The Toxic Substance Control Act of 1976 establishes requirements for identifying and controlling toxic chemical hazards to human health and the environment. The Federal Insecticide, Fungicide, and Rodenticide Act of 1947, as amended in 1988, focuses on the health-based risk of pesticides and requires the registration of all pesticides, with a heavy emphasis on scientific data and risk assessment. The Oil Pollution Act of 1990 covers the discharge of oil and hazardous substances into navigable waters, adjoining shorelines or the exclusive economic zone of the United States. POTENTIAL ENVIRONMENTAL LIABILITY The assessment, analysis, remediation, handling, management, and disposal of hazardous substances necessarily involve significant risks, including the possibility of damages or personal injuries caused by the escape of hazardous materials into the environment, and the possibility of fines, penalties or other regulatory action. These risks include potentially large civil and criminal liabilities for violations of environmental laws and regulations, and liabilities to customers and to third parties for damages arising from performing services for clients. Potential Liabilities Arising Out of Environmental Laws and Regulations All facets of the Company's business are conducted in the context of a rapidly developing and changing statutory and regulatory framework. The Company's operations and services are affected by and subject to 47 regulation by a number of Federal agencies, including EPA, the Nuclear Regulatory Commission and the Occupational Safety and Health Administration, as well as applicable state and local regulatory agencies. As discussed above, CERCLA addresses cleanup of sites at which there has been a release or threatened release of hazardous substances into the environment. Increasingly, there are efforts to expand the reach of CERCLA to make environmental contractors responsible for cleanup costs by claiming that environmental contractors are owners or operators of hazardous waste facilities or that they arranged for treatment, transportation, or disposal of hazardous substances. Several recent court decisions have accepted these claims. Should the Company be held responsible under CERCLA for damages caused while performing services or otherwise, it may be forced to bear such liability by itself, notwithstanding the potential availability of contribution or indemnity from other parties. RCRA, also discussed above, governs hazardous waste generation, treatment, transportation, storage, and disposal. RCRA, or EPA-approved state programs at least as stringent, govern waste handling activities involving wastes classified as "hazardous." Substantial fees and penalties may be imposed under RCRA and similar state statutes for any violation of such statutes and the regulations thereunder. Potential Liabilities Involving Clients and Third Parties In performing services for its clients, the Company could potentially be liable for breach of contract, personal injury, property damage, and negligence (including improper or negligent performance or design, failure to meet specifications, and breaches of express or implied warranties). The damages available to a client, should it prevail in its claims, are potentially large and could include consequential damages. Environmental contractors, in connection with work performed for clients, potentially face liabilities to third parties from various claims, including claims for property damage or personal injury stemming from a release of hazardous substances or otherwise. Claims for damage to third parties could arise in a number of ways, including through a sudden and accidental release or discharge of contaminants or pollutants during the performance of services; through the inability, despite reasonable care, of a remedial plan to contain or correct an ongoing seepage or release of pollutants; through the inadvertent exacerbation of an existing contamination problem; or through reliance on reports or recommendations prepared by the Company. Personal injury claims could arise contemporaneously with performance of the work or long after completion of the project as a result of alleged exposure to toxic or hazardous substances. In addition, increasing numbers of claimants assert that companies performing environmental remediation should be adjudged strictly liable, i.e., liable for damages even though its services were performed using reasonable care, on the grounds that such services involved "abnormally dangerous activities." Clients frequently attempt to shift various of the liabilities arising out of remediation of their own environmental problems to contractors through contractual indemnities. Such provisions seek to require the Company to assume liabilities for damage or personal injury to third parties and property and for environmental fines and penalties. The Company has endeavored to protect itself from potential liabilities resulting from pollution or environmental damage by obtaining indemnification from its private-sector clients and intends to continue this practice in the future. Under most of these contracts, the Company has been successful in obtaining such indemnification; however, such indemnification generally is not available if such liabilities arise as a result of breaches by the Company of specified standards of care or if the indemnifying party has insufficient assets to cover the liability. The Company has a wholly owned subsidiary, ICF Kaiser Remediation Company, through which it intends to increase its remediation activities performed for public- and private-sector clients. The Company will continue its efforts to minimize the risks and potential liability associated with its remediation activities by performing all remediation contracts in a professional manner and by carefully reviewing any and all remediation contracts it signs in an effort to ensure that its environmental clients accept responsibility for their own environmental problems. For EPA contracts involving field services in connection with Superfund response actions, the Company is eligible for indemnification under Section 119 of CERCLA, for pollution and environmental damage liability 48 resulting from release or threatened release of hazardous substances. Some of the Company's clients (including private clients, DOE, and DOD) are Potentially Responsible Parties (PRPs) under CERCLA. Under the Company's contracts with these PRPs, the Company has the right to seek contribution from these PRPs for liability imposed on the Company in connection with its work at these clients' CERCLA sites and, with respect to Federal government clients, generally qualifies for the limitations on liabilities under CERCLA Section 119(a). In addition, in connection with contracts involving field services at DOE weapons facilities, including the DOE's Hanford site, the Company is indemnified under the Price-Anderson Act, as amended, against liability claims arising out of contractual activities involving a nuclear incident. Recently, EPA has constricted significantly the circumstances under which it will indemnify its contractors against liabilities incurred in connection with CERCLA projects. There are other proposals both in Congress and at the regulatory agencies to further restrict indemnification of contractors from third-party claims. As discussed above, Kaiser-Hill signed a Performance Based Integrating Management contract with DOE. The terms of that contract provide that Kaiser- Hill shall not be held responsible for, and DOE shall pay all costs associated with, any liability (including without limitation, a claim involving strict or absolute liability and any civil fine or penalty, expense, or remediation cost, but limited to those of a civil nature), which may be incurred by, imposed on, or asserted against Kaiser-Hill arising out of any act or failure to act, condition, or exposure which occurred before Kaiser-Hill assumed responsibility on July 1, 1995 ("pre-existing conditions"). To the extent the acts or omissions of Kaiser-Hill constitute willful misconduct, lack of good faith, or failure to exercise prudent business judgment on the part of Kaiser- Hill's managerial personnel and cause or add to any liability, expense, or remediation cost resulting from pre-existing conditions, Kaiser-Hill shall be responsible, but only for the incremental liability, expense, or remediation caused by Kaiser-Hill. The Kaiser-Hill contract further provides that Kaiser-Hill shall be reimbursed for the reasonable cost of bonds and insurance allocable to the Rocky Flats contract and for liabilities (and expenses incidental to such liabilities, including litigation costs) to third parties not compensated by insurance or otherwise. The exception to this reimbursement provision applies to liabilities caused by the willful misconduct or lack of good faith of Kaiser-Hill's managerial personnel or the failure to exercise prudent business judgment by Kaiser-Hill's managerial personnel. In connection with its services to its environmental, infrastructure, and industrial clients, the Company works closely with Federal and state government environmental compliance agencies, and occasionally contests the conclusions those agencies reach regarding the Company's compliance with permits and related regulations. To date, the Company never has paid a fine in a material amount or had material liability imposed on it for pollution or environmental damage in connection with its services. However, there can be no assurance that the Company will not have substantial liability imposed on it for any such damage in the future. INSURANCE The Company has a comprehensive risk management and insurance program that provides a structured approach to protecting the Company. Included in this program are coverages for general, automobile, pollution impairment, and professional liability; for workers' compensation; and for employer and property liability. The Company believes that the insurance it maintains, including self-insurance, is in such amounts and protects against such risks as is customarily maintained by similar businesses operating in comparable markets. At this time, the Company expects to continue to be able to obtain general, automobile, and professional liability; workers' compensation; and employers and property insurance in amounts generally available to firms in its industry. There can be no assurance that this situation will continue, and if insurance of these types is not available, it could have a material adverse effect on the Company. Consistent with industry experience and trends, the Company has obtained pollution insurance coverage on a claims-made basis, in amounts and on terms that are economically reasonable, against possible liabilities that may be incurred in connection with its conduct of its environmental business. An uninsured claim arising out of the Company's environmental activities, if successful and of sufficient magnitude, could have a material adverse effect on the Company. 49 REGULATION The Company has a substantial number of cost-reimbursement contracts with the U.S. government, the costs of which are subject to audit by the U.S. government. As a result of pending audits relating to fiscal years 1986 forward, the government has asserted, among other things, that certain costs claimed as reimbursable under government contracts either were not allowable or not allocated in accordance with federal procurement regulations. The Company is actively working with the government to resolve these issues. The Company has provided for the potential effect of disallowed costs for the periods currently under audit and for periods not yet audited, although the amounts at issue have not been quantified by the government or the Company. This provision will be reviewed periodically as discussions with the government progress. Based on the information currently available, management believes the potential effects of these pending audits will not have a material adverse effect on the Company's financial position, results of operations, or cash flows. The Company may from time to time, either individually or in conjunction with other government contractors operating in similar types of businesses, be involved in U.S. government investigations for alleged violations of procurement or other Federal laws and regulations. The Company currently is the subject of a number of U.S. government investigations and is cooperating with the responsible government agencies involved. No charges presently are known to have been filed against the Company by these agencies. Management does not believe that there will be any material adverse effect on the Company's financial position, operations, or cashflows as a result of these investigations. Federal agencies that are the Company's regular customers (including DOE, EPA, and DOD) have formal policies against awarding contracts that would present actual or potential conflicts of interest with other activities of the contractor. Because the Company provides a broad range of services in environmental and related fields for the Federal government, state governments, and private customers, there can be no assurance that government conflict-of-interest policies will not restrict the Company's ability to pursue business in the future. Because some of the Company's subsidiaries provide the Federal government with nuclear energy and defense-related services, these subsidiaries and a substantial number of their employees are required to have and maintain security clearances from the Federal government. These subsidiaries and their employees have been able to obtain these security clearances in the past, and the Company has no reason to believe that there would be any problems in this area in the future. However, there can be no assurance that the required security clearances will be obtained and maintained in the future. Because of its nuclear energy and defense-related services, the Company is subject to foreign ownership, control, and influence ("FOCI") regulations imposed by the Federal government and designed to prevent the release of classified information to contractors who are under foreign control or influence. Under these regulations, FOCI concerns may arise as a result of a variety of factors, including foreign ownership of substantial percentages of equity securities or debt, a high percentage of foreign revenue, and the number of directors and officers who are not U.S. citizens. Subsidiaries of the Company with facility security clearances or sensitive DOE contracts file reports with DOD and DOE with respect to events and changes that affect the potential for FOCI. The Company has implemented procedures designed to insulate such subsidiaries from any FOCI that might affect the Company. There can be no assurance that such measures will prevent FOCI policies from affecting the ability of the Company's subsidiaries to secure and maintain certain types of DOD and DOE contracts. EMPLOYEES As of November 30, 1996, ICF Kaiser employed 5,176 people, and the Company believes that its relations with its employees are good. Of the total employees, 2,005 persons are employed at Kaiser-Hill's Rocky Flats site in Colorado. A total of 1,361 of the Rocky Flats personnel are represented by the United Steelworkers of America, Local 8031. The Company believes that its relations with the unions are good. PROPERTIES All of the Company's operations are conducted either in leased facilities or in facilities provided by the Federal government or other clients. As of September 30, 1996, the Company leased an aggregate of 50 approximately one million square feet of space. The terms of these leases range from month-to-month to 15 years, and some may be renewed for additional periods. Some of the space leased by the Company has been subleased to other entities under subleases expiring from 1996 to 2000. The Company's headquarters is located at 9300 Lee Highway, Fairfax, Virginia 22031-1207, and its telephone number is (703) 934-3600. The Company's four regional headquarters are located at 1800 Harrison St., Oakland, California 94612-3430 Telephone (510) 419-6000; 6440 Southpoint Parkway, Jacksonville, FL 32216 Telephone (904) 279-7200; Gateway View Plaza, 1600 West Carson St., Pittsburgh, PA 15220 Telephone (412) 497-2000; and 3D International Tower, 1900 West Loop South, Suite 1350, Houston, TX 77027 Telephone (713) 623-5000. Other offices include Livermore, Los Angeles; Rancho Cordova, San Diego, San Francisco, San Rafael and Universal City, CA; Golden and Lakewood, CO; Washington, DC; Ft. Lauderdale and Miami, FL; Chicago, IL; Gary, IN; Ruston, LA; Edgewood, Baltimore and Silver Spring, MD; Boston, MA; Las Vegas, NV; Iselin, NJ; Albuquerque and Los Alamos, NM; Richmond, VA; Richland and Seattle, WA. The Company's international offices are located in Perth, Australia; Prague, Czech Republic; London, England; Paris, France; Mexico City, Mexico; Makatic City and Mandaluyong City, Philippines; Lisbon, Portugal; Moscow, Russia; and Taipei, Taiwan. LEGAL AND REGULATORY PROCEEDINGS The Company and its subsidiaries are involved in a number of lawsuits and government regulatory proceedings arising in the ordinary course of its business or arising in connection with the disposition or acquisition of certain businesses and investments. The Company believes that any ultimate liability resulting therefrom will not have a material adverse effect on its financial position, operations, or cash flows. In the course of the Company's normal business activities, various claims or charges have been asserted and litigation commenced against the Company arising from or related to properties, injuries to persons, and breaches of contract, as well as claims related to acquisitions and dispositions. Claimed amounts may not bear any reasonable relationship to the merits of the claim or to a final court award. In the opinion of management, an adequate reserve has been provided for final judgments, if any, in excess of insurance coverage, that might be rendered against the Company in such litigation. The Company may from time to time, either individually or in conjunction with other government contractors operating in similar types of businesses, be involved in U.S. government investigations for alleged violations of procurement or other Federal laws and regulations. The Company currently is the subject of a number of U.S. government investigations and is cooperating with the responsible government agencies involved. No charges presently are known to have been filed against the Company by these agencies. Management does not believe there will be any material adverse effect on the Company's financial position, operations, or cashflows as a result of these investigations. The Company has a substantial number of cost-reimbursement contracts with the U.S. government, the costs of which are subject to audit by the U.S. government. As a result of pending audits relating to fiscal years 1986 forward, the government has asserted, among other things, that certain costs claimed as reimbursable under government contracts either were not allowable or not allocated in accordance with federal procurement regulations. The Company is actively working with the government to resolve these issues. Management has provided for the potential effect of disallowed costs for the periods currently under audit and for periods not yet audited, although the amounts at issue have not been quantified by the government or the Company. This provision will be reviewed periodically as discussions with the government progress. Based on the information currently available, management believes the potential effects of these pending audits will not have a material adverse effect on the Company's financial position, results of operations, or cash flows. 51 MANAGEMENT Set forth below is certain information concerning the directors and executive officers of the Company.
NAME AGE POSITION(S) WITH COMPANY ---- --- ------------------------ James O. Edwards...... 53 Chairman of the Board and Chief Executive Officer Michael K. Goldman.... 44 Executive Vice President and Chief Administrative Officer Stephen W. Kahane..... 46 Executive Vice President and President of the Federal Programs Group Sudhakar Kesavan...... 42 Executive Vice President and President of the Consulting Group Edward V. Lower....... 51 Executive Vice President Richard K. Nason...... 54 Director, Executive Vice President and Chief Financial Officer Marcy A. Romm......... 37 Senior Vice President and Director of Human Resources Marc Tipermas......... 48 Director, Executive Vice President and Director of Corporate Development David Watson.......... 53 Executive Vice President and President of the ICF Kaiser Engineers Group Paul Weeks, II........ 53 Senior Vice President, General Counsel and Secretary Tony Coelho........... 54 Director Maynard H. Jackson.... 58 Director Thomas C. Jorling..... 56 Director Frederic V. Malek..... 59 Director Rebecca P. Mark....... 42 Director Robert W. Page, Sr.... 69 Director
James O. Edwards has been Chairman of the Board and Chief Executive Officer of ICF Kaiser International, Inc. since 1987. He also was President of ICF Kaiser International, Inc. from 1987 to 1990. In 1974, he joined ICF Incorporated, the predecessor of ICF Kaiser International, Inc. and was its Chairman and Chief Executive Officer from 1986 until the 1987 establishment of ICF Kaiser International, Inc. Mr. Edwards graduated from Northwestern University (B.S.I.E.) and Harvard University (M.B.A., High Distinction, George F. Baker Scholar). Michael K. Goldman has been an Executive Vice President since 1990 and the Chief Administrative Officer of the Company since 1995. He has held senior management positions in several of the Company's operating subsidiaries since 1980. Prior to joining the Company, Mr. Goldman was in the private practice of law. Mr. Goldman graduated from Harvard University (B.A., M.B.A. High Distinction, George F. Baker Scholar) and the University of California at Berkeley (J.D.). Stephen W. Kahane has been an Executive Vice President of the Company since 1993 and President of the Company's Federal Programs Group since its creation in 1995. He has held senior management positions in several of the Company's operating subsidiaries since 1985. From 1981 to 1985, Dr. Kahane held a number of management positions at Jacobs Engineering Group, Inc.; he headed Environmental and Hazardous Waste Programs and was a Vice President when he left that firm. Dr. Kahane graduated from the University of California, Los Angeles (B.A., M.S.P.H., D. Env.). Sudhakar Kesavan has been an Executive Vice President of the Company and President of the Company's Consulting Group since December 1996. He has held senior management positions in the Company's Consulting Group since 1983. Prior to joining the Company, Mr. Kesavan worked for the Indian subsidiary of the Royal Dutch/Shell company. Mr. Kesavan graduated from the Indian Institute of Technology (B. Tech), Indian Institute of Management (P.G.D.M.) and the Massachusetts Institute of Technology (S.M.). Edward V. Lower has been an Executive Vice President of the Company and a Group Executive Vice President and Regional Manager (Northeast and Mid- Atlantic) of the ICF Kaiser Engineers Group since December 1995. In 1991, Dr. Lower joined EA Engineering, Science and Technology, Inc. as President and Chief Operating Officer; he became a member of that company's Board of Directors in 1994. Prior to joining 52 EA Engineering, Dr. Lower worked for Union Carbide in a variety of positions, most notably vice president/general manager. Dr. Lower graduated from the University of Delaware (B.S.), LaSalle University (LL.B.), West Virginia University (M.B.A.), and New York University (M.A.; Ph.D.). Richard K. Nason has been an Executive Vice President and the Chief Financial Officer of the Company since December 1994; he had been a Senior Vice President and the Treasurer of the Company from April to December 1994. He joined the Company as Senior Vice President--Internal Audit in June 1993. From 1991 to 1993, Mr. Nason was Executive Vice President and Chief Financial Officer for The Artery Organization, Inc., a private real estate development and management company in Bethesda, Maryland. From 1988 to 1991, Mr. Nason was Senior Vice President for Finance and Planning for Griffin Homes, a real estate development and home building company in California. Mr. Nason was Senior Vice President of Marriott Corporation and its subsidiary Host International, Inc. from 1977 to 1988. Mr. Nason has been a director of ICF Kaiser International, Inc. since June 1995. Mr. Nason graduated cum laude from Washington and Jefferson College (B.A.) and the Wharton Graduate School of Finance and Commerce, University of Pennsylvania (M.B.A.). Marcy A. Romm has been Senior Vice President and Director of Human Resources of the Company since 1993. She has held Human Resources positions at ICF Kaiser since 1984. Ms. Romm graduated from George Washington University (B.A., M.B.A.). Marc Tipermas has been Executive Vice President and Director of Corporate Development for ICF Kaiser International, Inc. since 1993. In November 1996 he accepted line responsibility for the Consulting Group and staff responsibility for governmental relations. He has held senior management positions in several of ICF Kaiser's operating subsidiaries since joining the Company in 1981. From 1977 to 1981, Dr. Tipermas was employed by the U.S. Environmental Protection Agency where he was the Director of the Superfund Policy and Program Management Office from 1980 to 1981. Prior to joining EPA, he was Assistant Professor of Political Science at the State University of New York at Buffalo from 1975 to 1977. Dr. Tipermas has been a director of ICF Kaiser International, Inc. since 1993. Dr. Tipermas graduated from the Massachusetts Institute of Technology (S.B.) and Harvard University (A.M., Ph.D.). David Watson has been an Executive Vice President and President of the Company's International Operations Group since December 1995. He became President of the combined Kaiser Engineers and International Groups in November 1996. From 1989 to November 1995, he was with Day & Zimmerman International, Inc., an engineering and construction firm. From 1989 to 1993 he was President of that firm's Advanced Dzign Systems; in 1993 he led that firm's venture into the international marketplace by taking the position of President of D&Z International, an off-shore international unit, where he established a strategy to pursue engineering and construction work in China and Russia. Prior to joining Day & Zimmerman, Mr. Watson was with Stearns Catalytic, Inc. and Burmah Oil Company. Mr. Watson graduated from Loughborough University of Technology, Loughborough, Leicestershire, England (B. Tech.). Paul Weeks, II has been Senior Vice President, General Counsel and Secretary of ICF Kaiser International, Inc. since 1990. He joined ICF Incorporated in May 1987 as its Vice President, General Counsel, and Secretary. From 1973 to 1987 he was employed by Communications Satellite Corporation, where from 1983 to 1987 he was Assistant General Counsel for Corporate Matters. Mr. Weeks graduated from Princeton University (B.S.E.E.) and The National Law Center of George Washington University (J.D.). Tony Coelho has been Chairman and Chief Executive Officer of Coelho Associates, LLC, a financial consulting firm, since July 1995. He also has been Chairman and Chief Executive Officer of ETC, the Washington, D.C.-based education, training, and communications subsidiary of Tele-Communications, Inc. since October 1995. From 1989 to July 1995 he had been a Managing Director of Wertheim Schroder & Co. Incorporated, a New York-based international investment banking and securities firm; from 1990 to 1995 he also served as President and Chief Executive Officer of Wertheim Schroder Investment Services, Inc. Mr. Coelho was appointed by President Clinton to serve as Chairman of the President's Committee on Employment of People with Disabilities in 1994 and to serve as a member of the Commission on the Roles and Capabilities of the 53 United States Intelligence Community in 1995. From 1979 to 1989, Mr. Coelho was a member of the U.S. House of Representatives from California, and from 1986 to 1989, he served as House Majority Whip. Mr. Coelho has been a director of ICF Kaiser International, Inc. since 1990. He also is a director of Circus Circus Enterprises, Inc.; Crop Growers Corporation; Specialty Retail Group, Inc.; Service Corporation International; Tanknology Environmental, Inc.; and Tele-Communications, Inc. He is a director of the National Foundation for Affordable Housing Solutions, the National Organization on Disability, the National Rehabilitation Hospital and Very Special Arts, and is an Honorary Lifetime Director of the Epilepsy Foundation of America. Mr. Coelho also serves on Fleishman-Hillard, Inc.'s International Advisory Board. Maynard H. Jackson has been Chairman of Jackson Securities Incorporated, an investment banking firm, since 1994. Mr. Jackson returned to private business in 1994 after completing his third term as mayor of Atlanta. He had served three terms as mayor, from 1974 to 1982 and again from 1990 to 1994. From 1982 to 1990, Mr. Jackson was a managing partner in public finance with the law firm of Chapman and Cutler; he also managed his own law firm from 1970 to 1974. Mr. Jackson is a Trustee of Morehouse College and a Trustee of FGIC Public Trust. Mr. Jackson has been a director of ICF Kaiser International, Inc. since September 1995. Mr. Jackson graduated from Morehouse College (B.A.) and the School of Law at North Carolina Central University (J.D.). Thomas C. Jorling has been Vice President, Environmental Affairs, of International Paper Company since 1994. Mr. Jorling joined International Paper Company in 1994 following a 28-year career that included serving for seven years as the Commissioner of the New York State Department of Environmental Conservation. Prior to that, Mr. Jorling was a professor of environmental studies at Williams College and a visiting professor at the University of California at Santa Cruz. In addition, Mr. Jorling served from 1977 to 1979 as Assistant Administrator for Water and Hazardous Material at the U.S. Environmental Protection Agency. Mr. Jorling has been a director of ICF Kaiser International, Inc. since August 1995. Mr. Jorling graduated from the University of Notre Dame (B.S.), Washington State University (M.S.), and Boston College (LL.B.). Frederic V. Malek has been Chairman of Thayer Capital Partners, a merchant bank, since April 1993. In 1992, he was Campaign Manager, Bush-Quayle '92; he also has been Co-chairman of the Board of Directors of CB Commercial Group (formerly Coldwell Banker Commercial Group) since 1989. He was Vice Chairman of Northwest Airlines from July 1990 to December 1991. He was President of Northwest Airlines from October 1989 to July 1990. From September 1978 to December 1988, Mr. Malek served as Executive Vice President of Marriott Corporation and from January 1981 to May 1988 as President of Marriott's Hotels and Resorts Division. Mr. Malek has been a director of ICF Kaiser International, Inc. since 1989. He also serves as a director of American Management Systems, Inc.; Automatic Data Processing, Inc.; Avis, Inc.; CB Commercial Group; FPL Group, Inc.; Intrav, Inc.; Manor Care, Inc.; National Education Corp.; Northwest Airlines; and Paine Webber Mutual Funds. Mr. Malek graduated from the United States Military Academy (B.S.) and Harvard University (M.B.A.). Rebecca P. Mark has been Chairman and Chief Executive Officer of Enron Development Corp., the international project development arm of Enron Corp., since 1991. She is responsible for Enron's project development activities worldwide (excluding the U.S.) in power generation, pipelines, LNG, and liquid fuels. Ms. Mark joined Enron Corp. in 1982 and was a member of Enron Power Corp.'s executive management team from its establishment in 1986 to 1991. Before joining Enron, Ms. Mark held executive positions with Continental Resources Company and First City National Bank of Houston. Ms. Mark has been a director of ICF Kaiser International, Inc. since 1993. Ms. Mark also is a director of the Institute of the Americas. Ms. Mark graduated from Baylor University (B.A. and M.I.M.) and Harvard University (M.B.A.). Robert W. Page, Sr. retired as an Executive Vice President at McDermott International, Inc., an energy services company, in 1993. Prior to joining McDermott in 1990, Mr. Page served as Assistant Secretary of the Army for Civil Works. He also served as Chairman of the Panama Canal Commission. From 1981 to 1987, Mr. Page worked for Kellogg Rust, Inc., of Houston, Texas, where he held the positions of Chairman and Chief 54 Executive Officer. From 1976 to 1981, Mr. Page was President and Chief Executive Officer of Rust Engineering. Mr. Page has been a director of ICF Kaiser International, Inc. since 1993. He holds a B.S. in architectural engineering from Texas A & M University. COMPENSATION OF OUTSIDE DIRECTORS Directors who are not employees of the Company are paid $1,000 for attendance at each meeting of the Board of Directors and $750 for attendance at each meeting of a committee of the Board of Directors of which the director is a member. In addition, each non-employee director receives an annual retainer of $20,000, payable in advance in quarterly installments, and each is reimbursed for his or her expenses incurred in connection with his or her Board service. Directors of the Company who also are employees of the Company are not compensated separately for their service as directors. Under the ICF Kaiser International, Inc. Non-employee Directors Stock Option Plan, each director of the Company who is not an employee of the Company ("Non-employee director") receives a five-year option to purchase 3,000 shares of Common Stock on the day he or she commences his or her initial term of service as a director. In addition, each Non-employee director elected at or continuing in office following the Company's Annual Meeting of Shareholders receives an option to purchase 3,000 shares of Common Stock on the date of the meeting in each calendar year after the year in which the Non-employee director received his or her initial option grant. The purchase price of each share of Common Stock subject to an option granted under the plan is the fair market value of the Common Stock on the date the option is granted. Each option becomes fully exercisable at the close of business on the next business day following the date on which the option was granted. Options are not assignable or transferable other than by will or by the laws of descent and distribution. Options are exercisable during an optionee's lifetime only by the optionee or his or her guardian. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The Non-employee directors of the Company who are voting members of the Compensation Committee are Tony Coelho (Chairman), Thomas C. Jorling, and Frederic V. Malek. Gian Andrea Botta also was a voting member of the Committee until his resignation as a director upon the Company's repurchase of the Series 2D Senior Preferred Stock on December 30, 1996. The full Board of Directors has designated an employee director of the Company, James O. Edwards (the CEO of the Company) as an ex-officio, non-voting member of the Committee. SEC rules require that whenever there is insider or employee participation in compensation decisions, certain disclosures must accompany the identification of the participating insiders. The following paragraphs provide these required disclosures with respect to Mr. Botta (as the representative of EXOR America, Inc.) and Mr. Edwards (as an employee director). All transactions with Mr. Botta and Mr. Edwards were on market terms, including then-current market interest rates. Gian Andrea Botta. Mr. Botta is the President of EXOR America, Inc., which was the holder of the Company's Series 2D Senior Preferred Stock. The Company repurchased the Series 2D Senior Preferred Stock on December 30, 1996. EXOR America is an affiliate of the former holder of the Company's Series 2D Warrants, which the Company also repurchased on December 30, 1996. Pursuant to the terms of the Series 2D Senior Preferred Stock, EXOR America had the right to designate a nominee for election to the Board of Directors. From March 1, 1993 until December 30, 1996, Mr. Botta was EXOR America's nominee to the Board of Directors. James O. Edwards. As part of his employment agreement which is described in the "Executive Compensation--Agreements and Transactions with Executive Officers Named in the Summary Compensation Table (Three of Whom also are Directors)" of this Offering Memorandum, Mr. Edwards' then-outstanding indebtedness to the Company was restructured effective December 31, 1994. Mr. Edwards had been indebted to the Company under promissory notes dated January 14, 1991, September 22, 1991, and January 24, 1992, in the respective principal amounts (and per annum interest rates) of $622,740 (at 9%), $50,000 (at 9%), and $150,000 (at 8%) (collectively, the "Predecessor Notes"). As of December 31, 1994, the accrued interest on the 55 Predecessor Notes totaled $205,326.27. All of these loans had been provided to Mr. Edwards pursuant to his previous compensation agreement with the Company in return for agreements restricting his ability to sell his stock, were secured by a pledge of 130,665 shares of ICF Kaiser Common Stock (the "Pledged Shares"), and were non-recourse to Mr. Edwards. Mr. Edwards signed an amended and restated promissory note in the amount of $1,028,066.27 dated December 31, 1994, which is a continuation of the Predecessor Notes, bears interest at 6.34% per annum, is secured by the Pledged Shares, is non-recourse to Mr. Edwards, and is due on December 31, 1997 (with accrued interest from December 31, 1994). The largest aggregate amount of Mr. Edwards' indebtedness to the Company outstanding at any time since March 1, 1995 was $1,081,816. It is the Company's intention to retire the debt when the value of the collateral reaches the amount owed. Executive compensation paid to Mr. Edwards during the ten-month fiscal period ended December 31, 1995 and fiscal years 1995 and 1994 is described in the "Executive Compensation" section of this Offering Memorandum. 56 EXECUTIVE COMPENSATION The following table shows the compensation received by the Chief Executive Officer and the other four most highly compensated executive officers of the Company (the "Named Executive Officers") for the three fiscal periods ended December 1995. Because of the Company's fiscal year-end change, the fiscal period that ended December 31, 1995, is only a ten-month period. The table shows the amounts received by each Named Executive Officer for all three fiscal periods. SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION AWARDS -------------------------------- ------------------------------------ (A) (B) --------- (C) (D) (E) (F) (G) (I) NAME, PRINCIPAL BONUS OTHER ANNUAL RESTRICTED SECURITIES POSITION, AND SALARY ($) COMPENSATION STOCK UNDERLYING ALL OTHER FISCAL PERIOD ($) (1) ($) (2) AWARD(S) ($) OPTIONS/SARS (#) COMPENSATION --------------- -------- -------- -------------- ------------ ----------------------- ------------ James O. Edwards, Chairman and CEO(3) Ten-month 1995......... $295,673 $152,500 (2) 0 0 $111,938(3) Fiscal 1995............ $324,519 0 (2) 0 53,000 new options $113,166(3) 97,000 repriced options Fiscal 1994............ $299,519 0 (2) 0 0 $123,596(3) Stephen W. Kahane, Executive Vice President(4) Ten-month 1995......... $219,808 0 (2) 0 0 $ 12,235(4) Fiscal 1995............ $249,423 $ 60,000 (2) 0 66,666 new options $ 13,136(4) 33,334 repriced options Fiscal 1994............ $220,000 0 (2) 0 0 $ 23,007(4) Richard K. Nason, Executive Vice President and CFO(5) Ten-month 1995......... $190,865 $ 25,000 (2) 0 0 $ 12,558(5) Fiscal 1995............ $168,749 0 (2) 0 52,000 options $ 13,341(5) Fiscal 1994............ $100,077 0 (2) 0 0 $ 8,932(5) Alvin S. Rapp, Executive Vice President(6) Ten-month 1995......... $245,096 $ 50,000 (2) 0 0 $ 11,608(6) Fiscal 1995............ $274,519 $150,000 $200,022(2)(7) 0 0 $278,702(6) Fiscal 1994............ $ 62,500 $147,159 (2) $418,499 100,000 options $ 35,729(6) Marc Tipermas, Executive Vice President(7) Ten-month 1995......... $248,942 $110,000 (2) 0 0 $ 11,788(7) Fiscal 1995............ $274,423 $ 45,000 (2) 0 74,463 new options $ 12,878(7) 50,537 repriced options Fiscal 1994............ $220,000 0 (2) 0 0 $ 22,735(7)
- ------- NOTE: Because of the Company's fiscal year-end change, the fiscal period ended December 31, 1995, is only a ten-month period. Fiscal 1995 is a twelve- month period running from March 1, 1994, through February 28, 1995. Fiscal 1994 is a twelve-month period running from March 1, 1993, through February 28, 1994. (1) The amounts shown in this column were paid for services rendered during the ten months ended December 31, 1995, and include amounts paid during 1996 that were attributed to ten-month 1995 service. (2) Any amounts shown in the "Other Annual Compensation" column do not include any perquisites and other personal benefits because the aggregate amount of such compensation for each of the Named Executive Officers did not exceed the lesser of (i) $50,000 or (ii) 10% of the combined salary and bonus for the Named Executive Officer for the stated fiscal period. 57 (3) The amounts shown in column (i) of the table for Mr. Edwards comprise the following: Ten-month 1995 $100,000 Special cash payment due under Mr. Edwards' previous December 1990 compensation agreement $ 9,552 Company contribution under the Company's Retirement Plan for ten-month 1995 made in September 1996 $ 1,666 Company match under the Company's Section 401(k) Plan $ 720 Imputed income for Company-paid life insurance Fiscal 1995 $100,000 Special cash payment under Mr. Edwards' December 1990 compensation agreement $ 2,726 Company match under the Company's Section 401(k) Plan $ 9,576 Company contribution under the Company's Retirement Plan for FY95 made in November 1995 $ 864 Imputed income on Company-paid life insurance Fiscal 1994 $100,000 Special cash payment under Mr. Edwards' December 1990 compensation agreement $ 16,563 Company contribution under the Company's Retirement Plan for FY94 made in November 1995 $ 1,452 Company match under the Company's Section 401(k) Plan $ 4,717 Company 2% contribution under the Company's Employee Stock Ownership Plan for FY94 made in November 1994 $ 864 Imputed income on Company-paid life insurance (4) The amounts shown in column (i) of the table for Dr. Kahane comprise the following: Ten-month 1995 $ 2,248 Company match under the Company's Section 401(k) Plan $ 9,552 Company contribution under the Company's Retirement Plan for ten-month 1995 made in September 1996 $ 435 Imputed income for Company-paid life insurance Fiscal 1995 $ 3,254 Company match under the Company's Section 401(k) Plan $ 9,576 Company contribution under the Company's Retirement Plan for FY95 made in November 1995 $ 306 Imputed income for Company-paid life insurance Fiscal 1994 $ 16,563 Company contribution under the Company's Retirement Plan for FY94 made in FY95 $ 1,421 Company match under the Company's Section 401(k) Plan $ 4,717 Company 2% contribution under the Company's Employee Stock Ownership Plan for FY94 made in FY95 $ 306 Imputed income for Company-paid life insurance (5) Mr. Nason became an executive officer of the Company in December 1994; he became an employee of the Company in June 1993. The amounts shown in column (i) of the table for Mr. Nason comprise the following: Ten-month 1995 $ 614 Imputed income for Company-paid life insurance $ 9,552 Company contribution under the Company's Retirement Plan for ten-month 1995 made in September 1996 $ 2,392 Company match under the Company's Section 401(k) Plan Fiscal 1995 $ 3,121 Company match under the Company's Section 401(k) Plan $ 9,576 Company contribution under the Company's Retirement Plan for FY95 made in November 1995. $ 644 Imputed income for Company-paid life insurance Fiscal 1994 $ 785 Company match under the Company's Section 401(k) Plan $ 355 Imputed income for Company-paid life insurance premium $ 5,773 Company contribution under the Company's Retirement Plan for FY94 made in FY95 $ 2,019 Company 2% contribution under the Company's Employee Stock Ownership Plan for FY94 made in FY95 (6) Mr. Rapp joined the Company in November 1993 (fiscal year 1994). The amount shown in column (e) for fiscal year 1995 was an amount reimbursed for the payment of taxes. The amount shown in column (f) for fiscal year 1994 is the value of 88,105 shares of Restricted Stock awarded to Mr. Rapp under the Company's Stock Incentive Plan determined by multiplying the number of shares by the $4.75 closing price per share of the Company's Common Stock on the New York Stock Exchange on November 8, 1993, the date of the grant. The restriction on these shares was lifted on November 9, 1994, when they vested; Mr. Rapp owns no other shares of Restricted Stock. The amounts shown in column (i) of the table for Mr. Rapp comprise the following: Ten-month 1995 $ 1,778 Company match under the Company's Section 401(k) Plan $ 9,552 Company contribution under the Company's Retirement Plan for ten-month 1995 made in September 1996 $ 278 Imputed income for Company-paid life insurance Fiscal 1995 $ 2,353 Company match under the Company's Section 401(k) Plan $ 46,219 Reimbursed expenses associated with relocation from California to Virginia $219,155 Forgiveness of interest-free loans made to facilitate the sale of Mr. Rapp's California residence and his purchase of a Virginia residence (includes imputed interest amounts) $ 880 Reimbursed accounting expenses associated with tax considerations for Mr. Rapp's employment arrangement $ 9,576 Company contribution under Company's Retirement Plan for FY95 made in November 1995 $ 519 Imputed income for Company-paid life insurance Fiscal 1994 $ 462 Company match under the Company's Section 401(k) Plan $ 35,152 Reimbursed expenses associated with relocation from California to Virginia $ 115 Imputed income for Company-paid life insurance
58 (7) The amounts shown in column (i) of the table for Dr. Tipermas comprise the following: Ten-month 1995 $ 2,236 Company match under the Company's Section 401(k) Plan $ 9,552 Company contribution under the Company's Retirement Plan for ten-month 1995 made in September 1996 Fiscal 1995 $ 3,302 Company match under the Company's Section 401(k) Plan $ 9,576 Company contribution under the Company's Retirement Plan for FY95 made in November 1995 Fiscal 1994 $16,563 Company contribution under the Company's Retirement Plan for FY94 made in FY95 $ 1,455 Company match under the Company's Section 401(k) Plan $ 4,717 Company 2% contribution under the Company's Employee Stock Ownership Plan for FY94 made in FY95
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTIONS/SAR VALUES
(D) (B) NUMBER OF SECURITIES (E) SHARES (C) UNDERLYING UNEXERCISED VALUE OF UNEXERCISED ACQUIRED VALUE OPTIONS/SARS IN-THE-MONEY (A) ON EXERCISE REALIZED AT 12/31/95(#) OPTIONS/SARS AT 12/31/95 NAME (#) ($) EXERCISABLE/UNEXERCISABLE ($) EXERCISABLE/UNEXERCISABLE(*) ---- ----------- -------- ------------------------- -------------------------------- James O. Edwards........ 0 0 37,500/112,500 $65,250/$195,750 Stephen W. Kahane....... 0 0 50,000/50,000 $38,500/$38,500 Richard K. Nason........ 0 0 13,834/58,166 $8,898/$21,323 Alvin S. Rapp........... 0 0 40,000/60,000 (**) Marc Tipermas........... 0 0 62,500/62,500 $48,125/$48,125
- -------- (*) Calculated using the NYSE closing price of the Common Stock on December 29, 1995 ($4.25 per share) less the per share option exercise price multiplied by the number of exercisable or unexercisable options, as the case may be. (**) Mr. Rapp's options are not in-the-money. SENIOR EXECUTIVE OFFICERS SEVERANCE PLAN In April 1994 the Compensation Committee of the Board of Directors approved the adoption of the Company's Senior Executive Officers Severance Plan (the "SEOSP"). In December 1994, the SEOSP was amended to clarify (a) that once an officer becomes a participant in the SEOSP, he or she will continue to be eligible for SEOSP benefits throughout his or her employment by the Company and (b) that the SEOSP is intended to set a minimum severance benefit for the participant. If a participant is entitled to a greater benefit under his or her employment agreement with the Company, then such arrangement prevails over the lower SEOSP benefit. The eligible participants in the SEOSP are the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, the General Counsel, the Senior Vice President and Director of Human Resources, and any Executive Vice President and other officers of rank equivalent to Executive Vice President as designated by the Compensation Committee. As of November 30, 1996, there were eight persons whose severance payments are governed by the SEOSP. A participant is eligible to receive severance payments if the Company terminates his or her employment without "cause" or if the participant terminates his or her employment for "good reason." "Cause" and "good reason" are defined in the SEOSP. Severance benefits equal to three months of average salary will be paid if the participant's length of employment is three years or less; severance benefits equal to one month of average salary for each year of service (up to a maximum of 18 months) will be paid if a participant's length of employment is four or more years. Average salary is defined in the SEOSP as the participant's average monthly gross salary excluding all bonus for the nine months prior to employment termination. Severance benefits may be paid under the SEOSP in two installments or, with the approval of the Compensation Committee, in a lump sum. The SEOSP provides that severance pay will not be considered compensation for purposes of the Retirement Plan or the Section 401(k) Plan; severance pay will not increase Years of Service for those Plans' purposes. No severance benefits have been paid under the Plan since the SEOSP was adopted. 59 AGREEMENTS AND TRANSACTIONS WITH NAMED EXECUTIVE OFFICERS (THREE OF WHOM ALSO ARE DIRECTORS) James O. Edwards. Effective December 31, 1994, the Company entered into a three-year employment agreement with Mr. Edwards for his services as Chairman and Chief Executive Officer of the Company. In addition to delineating Mr. Edwards' areas of responsibility and reporting line, the agreement provides for his salary; annual bonus compensation to be determined by the Compensation Committee; severance payments as provided under the Company's Senior Executive Officers Severance Plan; eligibility under the Company's employee benefit plans; cancellation of 97,000 existing options (89,000 of which were vested) to purchase the Company's Common Stock at exercise prices ranging from $9.51 to $16.23; the grant of 150,000 options (expiring on November 15, 1999, and vesting in 37,500 increments over four years beginning May 15, 1995) at fair market value on the date of grant ($2.51 on September 1, 1994); and a one-year non-competition period following voluntary or "for cause" employment termination. The Company's transactions with Mr. Edwards are described in the "Compensation Committee Interlocks and Insider Participation" section of this Offering Memorandum. Stephen W. Kahane. Effective March 1, 1994, the Company entered into a three-year employment agreement with Dr. Kahane for his services as an Executive Vice President and as Group President of the Company's re-named Federal Programs Group. In addition to delineating Dr. Kahane's areas of responsibility and reporting line, the agreement provides for his annual salary; annual bonus compensation to be determined by the Compensation Committee of the Company's Board of Directors (in amounts specified in the agreement and with minimum cash bonuses of $30,000 to be paid at the beginning of each of fiscal years 1996 and 1997); severance payments as provided under the Company's Senior Executive Officers Severance Plan; eligibility under the Company's employee benefit plans; cancellation of 40,000 existing options to purchase the Company's Common Stock at exercise prices ranging from $8.25 to $9.51; the grant of 100,000 options (vesting in 25,000 increments over four years and expiring on November 15, 1999) at fair market value on the date of grant ($3.48 on April 4, 1994); and a one-year non-competition period following voluntary or "for cause" employment termination. Alvin S. Rapp. In November 1993, the Company entered into an employment agreement with Mr. Rapp for his services as an Executive Vice President and as Group President of the Company's re-named ICF Kaiser Engineers Group. In addition to delineating Mr. Rapp's areas of responsibility and reporting line, the agreement provides for his salary, bonuses, options, other employee benefits, and interest-free loans to facilitate the sale of Mr. Rapp's California residence and the purchase of a new residence near the Company's Virginia headquarters. As of September 30, 1996, two of these loans had been forgiven under the terms of the employment agreement because the proceeds from the sale of Mr. Rapp's California residence were less than anticipated. The third loan (dated January 20, 1994) has a balance of $300,000 as of September 30, 1996, is secured by Mr. Rapp's Virginia residence, and is due and payable in full on the earliest to occur of (a) January 20, 1999, (b) termination of Mr. Rapp's employment by the Company, (c) provision of reasonably satisfactory substitute collateral, or (d) the occurrence of a defined event of default. The largest aggregate amount of Mr. Rapp's indebtedness to the Company outstanding at any time since March 1, 1994 was $648,546. As of November 8, 1996, Mr. Rapp is an employee, but no longer an executive officer, of the Company. Marc Tipermas. Effective March 1, 1994, the Company entered into a three- year employment agreement with Dr. Tipermas for his services as Executive Vice President and Director of Corporate Development of the Company. Dr. Tipermas also is a director of the Company. In addition to delineating Dr. Tipermas' areas of responsibility and reporting line, the agreement provides for his salary; annual bonus compensation to be determined by the Compensation Committee of the Company's Board of Directors (in amounts specified in the agreement); severance payments as provided under the Company's Senior Executive Officers Severance Plan; eligibility under the Company's employee benefit plans; cancellation of 60,000 existing options to purchase the Company's Common Stock at exercise prices ranging from $8.25 to $9.51; the grant of 125,000 options (vesting in 31,250 increments over four years and expiring on November 15, 1999) at fair market value on the date of grant ($3.48 on April 4, 1994); and a one-year non-competition period following voluntary or "for cause" employment termination. 60 AGREEMENTS AND TRANSACTIONS WITH OTHER EXECUTIVE OFFICERS Michael K. Goldman. Effective February 28, 1994, the Company and Mr. Goldman agreed to terminate Mr. Goldman's Amended Executive and Compensation Agreements originally signed in December 1990. Effective March 1, 1994, the Company and Mr. Goldman entered into an employment arrangement under which Mr. Goldman (a) serves as an employee of the Company at a specified annual salary; (b) received the $50,000 special cash payment provided for in his December 1990 Compensation Agreement; and (c) was designated, with certain specified restrictions, as a participant in the Senior Executive Officers Severance Plan. In addition, all then-unvested options previously granted to Mr. Goldman vested as of March 1, 1994. The Company and Mr. Goldman also agreed to amend the terms of Mr. Goldman's outstanding loan with the Company as follows: the principal shall be due upon demand by the Company but no later than February 28, 1999; interest from May 16, 1994, shall accrue on the outstanding principal at 6% per annum; and payment of interest will be deferred until such time as the principal is due. No interest shall accrue or be payable on such deferred interest. Mr. Goldman's loan is secured by 33,134 shares of the Company's Common Stock and is non-recourse to Mr. Goldman. The Company and Mr. Goldman agreed that if the value of the pledged stock is less than the then- outstanding amount of principal and interest at the time of loan repayment demand (or February 28, 1999, at the latest), then the Company will retire the principal and interest by considering the pledged shares to have been sold back to the Company (within the constraints set forth in the Company's debt and equity instruments). The outstanding balance as of September 30, 1996, was $191,647, plus accrued interest. The largest aggregate amount of Mr. Goldman's indebtedness to the Company outstanding at any time since March 1, 1995 was $191,647. 61 SECURITY OWNERSHIP
NAME AND ADDRESS OF 5% SHAREHOLDERS, BENEFICIAL PERCENT OF DIRECTORS, AND EXECUTIVE OFFICERS OWNERSHIP(A) COMMON STOCK ------------------------------------ ------------ ------------ DIRECTORS Tony Coelho........................................ 17,000 (b) * James O. Edwards................................... 424,431 (c) 1.9% Maynard H. Jackson................................. 6,000 (d) * Thomas C. Jorling.................................. 6,000 (e) * Frederic V. Malek.................................. 30,000 (f) * Rebecca P. Mark.................................... 12,000 (g) * Richard K. Nason................................... 53,459 (h) * Robert W. Page, Sr................................. 12,000 (i) * Marc Tipermas...................................... 260,262 (j) 1.2% EXECUTIVE OFFICERS NAMED IN THE SUMMARY COMPENSATION TABLE James O. Edwards................................... 424,431 (c) 1.9% Chairman and Chief Executive Officer Stephen W. Kahane.................................. 139,447 (k) * Executive Vice President Richard K. Nason................................... 53,459 (h) * Executive Vice President Alvin S. Rapp...................................... 128,180 (l) * Executive Vice President Marc Tipermas...................................... 260,262 (j) 1.2% Executive Vice President All Directors and Executive Officers as a Group (16 persons)............................. 1,195,814 (m) 5.2% 5% COMMON SHAREHOLDERS ICF Kaiser International, Inc. Employee Stock 1,871,965 (n) 8.4% Ownership Trust................................... ICF Kaiser International, Inc. Retirement Plan..... 957,807 (o) 4.3% State of Wisconsin Investment Board................ 2,055,000 (p) 9.2% Cowen & Company.................................... 2,422,300 (q) 10.9%
- -------- * = ownership of less than 1% (a) Except as noted below, all information in the above table is as of December 31, 1996. To calculate the voting percentage, it was assumed that the individual or entity exercised all of his/her/its exercisable options, but that no other individuals or entities exercised theirs. A person is deemed to be a beneficial owner of the Company's stock if that person has voting or investment power (or voting and investment powers) over any shares of capital stock or has the right to acquire such shares within 60 days from December 30, 1996. With respect to the total number of shares held by the Company's Employee Stock Ownership Trust (the "ESOP"), the share information is current as of September 30, 1996; the unaudited information with respect to the number of shares allocated to individuals' accounts is current as of September 30, 1996. With respect to ownership of shares which are held in the Company's Section 401(k) Plan but allocated to individuals' accounts, the unaudited information is current as of September 30, 1996. For shares shown in the following footnotes as being held by the Company's Retirement Plan or in directed investment accounts in the Company's Retirement Plan, the unaudited information is current as of September 30, 1996. (b) Mr. Coelho's share ownership includes 15,000 shares that may be acquired within 60 days of December 31, 1996, upon the exercise of stock options. He also owns 2,000 other shares. (c) Mr. Edwards' share ownership includes 2,909 shares allocated to his ESOP account, 4,215 shares allocated to his Section 401(k) Plan account, 62,274 shares in his directed investment account under the Retirement Plan, and 75,000 shares that may be acquired within 60 days of December 31, 1996, upon the exercise of stock options. He also beneficially owns 280,033 other shares. Mr. Edwards disclaims beneficial ownership of the 2,900 shares of Common Stock owned by his spouse's IRA which are not included in the total shown for Mr. Edwards in the table. Mr. Edwards is a member of the ESOP Plan Committee and the Retirement Plan Committee; as such, he has shared investment power over 1,871,965 and 957,807 shares held by the ESOP and Retirement Plan, respectively. He has shared voting power over 717,301 shares held by the Retirement Plan that are not held in directed investment accounts. Mr. Edwards disclaims beneficial ownership of the shares held by the ESOP and the Retirement Plan. 62 (d) Mr. Jackson's share ownership includes 6,000 shares that may be acquired within 60 days of December 31, 1996, upon the exercise of stock options. (e) Mr. Jorling's share ownership includes 6,000 shares that may be acquired within 60 days of December 31, 1996, upon the exercise of stock options. (f) Mr. Malek's share ownership includes 15,000 shares that may be acquired within 60 days of December 31, 1996, upon the exercise of stock options. He also owns 15,000 other shares. (g) Ms. Mark's share ownership includes 12,000 shares that may be acquired within 60 days of December 31, 1996, upon the exercise of stock options. (h) Mr. Nason's share ownership includes 212 shares allocated to his ESOP account, 12,413 shares allocated to his Section 401(k) Plan account, and 38,834 shares that may be acquired within 60 days of December 31, 1996, upon the exercise of stock options. He also owns 2,000 other shares. (i) Mr. Page's share ownership includes 12,000 shares that may be acquired within 60 days of December 31, 1996, upon the exercise of stock options. (j) Dr. Tipermas' share ownership includes 8,028 shares allocated to his ESOP account, 12,734 shares in his directed investment account under the Retirement Plan, and 62,500 shares that may be acquired within 60 days of December 31, 1996, upon the exercise of stock options. He also owns 177,000 other shares. (k) Dr. Kahane's share ownership includes 7,079 shares allocated to his ESOP account, 5,946 shares in his directed investment account under the Retirement Plan, and 50,000 shares that may be acquired within 60 days of December 31, 1996, upon the exercise of stock options. He also owns 76,422 other shares. (l) Mr. Rapp's share ownership includes 60,000 shares that may be acquired within 60 days of December 31, 1996, upon the exercise of stock options. He also owns 68,180 other shares. (m) This total includes 39,968 shares allocated to ESOP accounts, 18,823 shares in Section 401(k) Plan accounts, 84,376 shares in directed investment accounts under the Retirement Plan, and 341,556 shares that may be acquired within 60 days of December 31, 1996, upon the exercise of stock options. The 698,091 balance of the shares are owned directly. (n) The ESOP Trustee is Vanguard Fiduciary Trust Company, 200 Vanguard Blvd., Malvern, PA 19355. All of the shares of Common Stock held by the ESOP are allocated to individual ESOP participants' accounts and are voted by those participants. The ESOP Plan Committee has investment power over all of the shares of Common Stock held by the ESOP, the members of which are James O. Edwards, Michael K. Goldman, and Marcy A. Romm. Each ESOP Plan Committee member disclaims beneficial ownership of the shares of Common Stock held by the ESOP. The individual shareholdings of Mr. Edwards are shown above in footnote (c). Mr. Goldman beneficially owns 94,856 shares of Common Stock, 11,334 of which are shares that may be acquired within 60 days of December 31, 1996, upon the exercise of stock options. Ms. Romm beneficially owns 25,983 shares of Common Stock, 5,813 of which are shares that may be acquired within 60 days of December 31, 1996, upon the exercise of stock options. The ESOP Plan Committee's address is 9300 Lee Highway, Fairfax, VA 22031. (o) The Retirement Plan Trustee is Vanguard Fiduciary Trust Company, 200 Vanguard Blvd., Malvern, PA 19355. The members of the Retirement Plan Committee are James O. Edwards, Michael K. Goldman, and Marcy A. Romm; the individual shareholdings of the members are shown in footnotes (c) and (n). Mr. Goldman does not have any shares of Common Stock in his directed investment account under the Retirement Plan; Ms. Romm has 1,973 shares in her directed investment account. Of the 957,807 shares of Common Stock held by the Retirement Plan, a total of 240,506 at September 30, 1996, were held in directed investment accounts in which the participants have voting and investment powers over their allocated shares. The Retirement Plan Committee has investment and voting powers over the remaining shares held by the Retirement Plan in the ICF Stock Fund. The Retirement Plan Committee's address is 9300 Lee Highway, Fairfax, VA 22031. (p) State of Wisconsin Investment Board, P.O. Box 7842, Madison, WI 53707. The information with respect to the shares of Common Stock beneficially owned by the State of Wisconsin Investment Board is based on a Report on Schedule 13G (Amendment No. 3 dated February 13, 1996) which was filed with the SEC and which reports share ownership information as of December 31, 1995. (q) Cowen & Company, Financial Square, New York, New York, 10005-3597. The information with respect to the shares of Common Stock beneficially owned by Cowen & Company is based on a Report on Schedule 13G dated February 13, 1996, which was filed with the SEC reporting share ownership information as of December 31, 1995. 63 DESCRIPTION OF THE CREDIT FACILITY Effective on May 7, 1996, the Company entered into a revolving credit and letter of credit facility (the "Credit Facility"), with a syndicate of three banks (the "Banks"). The agent for the Banks (the "Agent") is CoreStates Bank, N.A. Capitalized terms and acronyms used but not defined in this description of the Credit Facility have the meanings assigned to them in the agreement governing the Credit Facility. Effective December 17, 1996, the Company and the Banks signed an Amendment to the Credit Facility (the "Amendment") that approved the Disposition of PCI, provided for a temporary Over Advance Provision (as defined in the Amendment) and permitted the net proceeds from the issuance of the Old Notes and borrowings under the Over Advance Provision to be used to redeem the Series 2D Senior Preferred Stock. Material terms of the Credit Facility and the Amendment are summarized below. Borrowing Availability and Termination Date. Under the Credit Facility, loans may be made to the Company and letters of credit may be issued at the request of the Company for an aggregate amount of the lesser of (i) $40 million or (ii) the Borrowing Base (85% of Eligible Billed Accounts Receivable and Certain Unbilled Accounts Receivable up to a maximum of $10 million). If the Company sells assets other than in the ordinary course of business while the Credit Facility is in effect, the borrowing availability will be reduced by the net cash proceeds from each sale; however, there is no mandatory reduction for the first approximately $5 million in aggregate net cash proceeds. The Credit Facility terminates on June 30, 1998. Under the Amendment, the Credit Facility has been increased to $45 million until March 31, 1997 and excludes the Disposition of PCI from the mandatory facility reduction requirement following certain asset sales. Interest. The Credit Facility and the Amendment contain LIBOR and Base Rate options, each with applicable margins determined from time to time based on the ratio of the Company's EBITDA to Consolidated Interest Expense, payable monthly. Under the Credit Facility and the Amendment, EBITDA is defined, for any period, as Consolidated Net Income plus the sum of (a) Consolidated Interest Expense, (b) income tax expense, (c) depreciation expense, (d) amortization expense, (e) extraordinary or unusual losses or other losses not incurred in the ordinary course of business included in the calculation of net income, (f) any non-cash charge against net income required to be recognized in connection with the issuance of capital stock to employees (whether upon lapse of vesting restrictions, exercise of employee options or otherwise) and (g) any non-cash charge against net income required to be recognized in connection with employee benefit plans less extraordinary or unusual gains or other gains not incurred in the ordinary course of business included in the calculation of net income, in each case to the extent such items are taken into account in determining Consolidated Net Income. Fee. The Company pays certain fees and commissions to the Banks, including a commitment fee of 5/8% per annum on the unused portion of the Credit Facility. Outstanding letters of credit bear a fee equal to the LIBOR applicable margin in effect over the period, payable quarterly. The Company paid certain fees and commissions for the Amendment. Subsidiary Guarantee. Certain Subsidiaries of the Company including the four Subsidiary Guarantors under the Indentures (the "Credit Facility Subsidiary Guarantors") entered into a joint and several guarantee of the Company's payment obligations under the Credit Facility. Each of the Credit Facility Subsidiary Guarantors also agreed to a number of covenants in favor of the Agent, including covenants (each with specified exceptions) (i) not to create, incur or permit to exist any Lien on its Collateral, (ii) not to sell, transfer, lease, or otherwise dispose of any of its Collateral, (iii) not to amend, modify, terminate or waive any provision of any agreement giving rise to an Account in a manner that could have a materially adverse effect upon the value of the Account as Collateral, and (iv) not to grant discounts, compromises, or extensions of Accounts except in the ordinary course of business. Collateral. To secure the payment and the punctual performance of all of the Obligations under the Credit Facility, the Company and each of the Credit Facility Subsidiary Guarantors granted to the Banks a general continuing lien upon and security interest in all the Collateral. The Collateral is defined as including all now- 64 existing or hereafter acquired or arising (i) Accounts, (ii) General Intangibles, Chattel Paper and Instruments derived from or related to any Accounts, (iii) guarantees of any Accounts and all other security held for the payment or satisfaction thereof, (iv) goods or services the sale or lease of which gave rise to any Account, including returned goods, (v) the balance of any deposit, agency or other account with any Bank, (vi) Discounted Treasuries delivered by the Company or the Credit Facility Subsidiary Guarantors to the Agent pursuant to the Credit Facility and (vii) books, records and other property at any time evidencing or related to the foregoing, together with all products and Proceeds (including insurance Proceeds) of any of the foregoing. Under the Amendment, the Collateral also includes all intangible assets of the Company. The Company has pledged all of the stock of certain of its domestic subsidiaries and 65% of the stock of certain foreign subsidiaries as further security under the Credit Facility. Financial Covenants. The Credit Facility contains financial covenants that require the Company to maintain certain financial ratios above or below specified limits, including, but not limited to, those described below. The Company has agreed that it will not permit the ratios of (i) EBITDA less Capital Expenditures plus Consolidated Lease Expenses to Consolidated Fixed Charges (the "Fixed Charge Coverage Ratio") and (ii) EBITDA to Consolidated Interest Expense (the "Interest Coverage Ratio"), computed on a consolidated, rolling four quarters basis to be less than those set forth below:
PERIOD ENDING FIXED CHARGE COVERAGE RATIO INTEREST COVERAGE RATIO ------------- --------------------------- ----------------------- June 30, 1997........ 1.15:1.00 1.70:1.00 June 30, 1998........ 1.20:1.00 1.75:1.00
Under the Amendment, the Fixed Charge Coverage Ratio from the date of the Amendment to September 30, 1997 has been reduced to 1.05:1.00 and the Interest Coverage Ratio has been reduced to 1.50:1.00 until September 30, 1997. The Company also covenanted that it will not permit the ratio of Senior Funded Indebtedness to EBITDA on the last day of any fiscal quarter, as of such day for the immediately preceding four fiscal quarters, to be greater than 2.5:1.0. Under the Amendment, the Company agreed that it will not permit the ratio of Total Funded Indebtedness to EBITDA on the last day of any fiscal quarter, as of such day for the immediately preceding four fiscal quarters, to be less than those set forth below:
TOTAL FUNDED INDEBTEDNESS TEST PERIOD TO EBITDA ----------- ------------------------- December 31, 1996 through March 30, 1997........ 6.25:1.00 March 31, 1997 through June 30, 1997............ 6.00:1.00 July 1, 1997 through September 30, 1997......... 5.50:1.00 October 1, 1997 through December 31, 1997....... 5.00:1.00 January 1, 1998 through June 30, 1998........... 4.75:1.00
Finally, the Company covenanted that it will not permit the ratio of Indebtedness for Borrowed Money to Total Capitalization on the last day of any fiscal quarter ending in the periods set forth below to be greater than the ratio set forth opposite such period:
INDEBTEDNESS FOR BORROWED MONEY TO TEST PERIOD TOTAL CAPITALIZATION RATIO ----------- ---------------------------------- May 7, 1996 through December 31, 1996............................... 0.77:1.00 January 1, 1997 through June 30, 1998............................... 0.75:1.00
Under the Amendment, the ratio of Indebtedness for Borrowed Money to Total Capitalization is 0.86:1.00 from the date of the Amendment through the termination of the Credit Facility. Under the Credit Facility as amended by the Amendment, the Company and its Subsidiaries agreed not to assume, incur, or create any Indebtedness for Borrowed Money except for (i) the loans and letters of credit under 65 the Credit Facility, (ii) Subordinated Debt, (iii) Non-Recourse Indebtedness, (iv) the Notes and (v) certain other Indebtedness for Borrowed Money specified in the Credit Facility. Restrictive Covenants. The Credit Facility contains other customary negative covenants and restrictions, including, without limitation, restrictions on (i) the creation of liens, (ii) mergers, consolidations, and other extraordinary transactions, (iii) guarantees, (iv) loans, and (v) transfers and sale of assets. Investments in project related joint ventures are limited to $500,000 in any 12-month period, and investments in project finance ventures are limited to an aggregate of $7.5 million. In addition, the Credit Facility limits Acquisitions to an aggregate of $5 million (excluding the value of the Company's Capital Stock used for Acquisitions), with any single Acquisition not to exceed $2 million; the Amendment provides that except for one specified investment, no acquisitions or investments can be made during the time the Over Advance Provision is outstanding. The Credit Facility also contains restrictions against the Company's making any redemptions, repurchases, dividends or distributions of any kind in respect of its Capital Stock, other than redemptions, repurchases, dividends or distributions payable in the form of the Company's Capital Stock or with the net proceeds of the sale of the Company's Capital Stock (other than to a Subsidiary or employee stock ownership plan of the Company). Events of Default. The Credit Facility provides for various events of default, including, among others: (i) the failure to pay any principal or interest on, or any other amount owing in respect of any loans under the Credit Facility when due and payable, (ii) the breach of certain specified covenants and restrictive covenants contained in the Credit Facility; (iii) the failure by the Company or any Subsidiary to pay when due any Indebtedness for Borrowed Money in excess of $1 million (other than that incurred pursuant to the Credit Facility); (iv) the failure of the Company to observe or perform any agreement, term, condition, or covenant relating to Indebtedness for Borrowed Money in the aggregate that remains unpaid, undischarged, unbonded, in excess of $1 million, where such failure gives the holders the right to accelerate payment thereof; (v) the occurrence of certain events of insolvency or bankruptcy (voluntary or involuntary); (vi) the entering of one or more judgments or decrees against the Company or any Subsidiary involving an aggregate liability in excess of $1 million in the aggregate that remains unpaid, undischarged, unbonded, undischarged or unstayed for 30 days; and (vii) the attachment of or levy or garnishment on assets of the Company or any Subsidiary in an aggregate amount in excess of $1 million which have not been dissolved or satisfied within 30 days. Other Provisions. Affirmative covenants of the Company and its Subsidiaries include the obligations (i) to provide the Banks with financial statements, reports, and compliance certificates; (ii) to maintain their necessary and useful properties in good working order and condition; (iii) to comply in all material respects with ERISA provisions; (iv) to continue to engage in businesses of the same general type as now conducted; (v) to maintain insurance; and (vi) to promptly pay and discharge all of their debt, taxes, and lawful claims for labor, materials, and supplies. DESCRIPTION OF $125 MILLION OF 12% SENIOR SUBORDINATED NOTES DUE 2003 On January 11, 1994, the Company completed a sale of $125,000,000 principal amount of 12% Senior Subordinated Notes due 2003. The terms of these Existing Notes are identical in all material respects to the terms of the Old Notes and the Exchange Notes offered pursuant to this Prospectus, except that (i) unlike the Old Notes, the Existing Notes were registered under the Securities Act and therefore do not have legends restricting their transfer, (ii) the Holders of the Existing Notes have priority over the Holders of the Notes with respect to the repurchase of the Existing Notes from the cash and Cash Equivalent portion of the Net Proceeds of Asset Sales (capitalized terms have the meanings assigned to them in the Existing Indenture relating to the Existing Notes), (iii) certain definitions and covenants included in the Existing Indenture refer to, or have the effect as of, the date of, or dates preceding the date of, the Existing Indenture (January 11, 1994), whereas such definitions and covenants in the Indenture relating to the Old Notes and the Exchange Notes refer to, or have effect as of, the date of, or dates preceding the date of, the Indenture (December 23, 1996) and (iv) the Existing Notes are subordinated in right of payment to all existing and future senior indebtedness of the Company. 66 DESCRIPTION OF THE NOTES The Exchange Notes will be issued pursuant to an Indenture dated as of December 23, 1996 (the "Indenture") between the Company and The Bank of New York, as trustee (the "Trustee"), which also serves as the Trustee under the Existing Indenture. The terms of the Exchange Notes are the same in all respects (including principal amount, interest rate, maturity, security and ranking) as the terms of the Old Notes for which they may be exchanged pursuant to the Exchange Offer, except that the Exchange Notes (i) are freely transferable by holders thereof (except as provided below) and (ii) are not entitled to certain registration rights and certain additional interest provisions that are applicable to the Old Notes under the Registration Rights Agreement. Unless the context otherwise requires, all references herein to the "Notes" shall include the Old Notes and the Exchange Notes. The following is a summary of the material terms and provisions of the Notes. The terms of the Notes include those set forth in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act. The Notes are subject to all such terms. The following summary does not purport to be a complete description of the Notes and is subject to the detailed provisions of, and qualified in its entirety by reference to, the Indenture and the Notes. Capitalized terms that are used but not otherwise defined herein have the meanings assigned to them in the Indenture. The Bank Credit Agreement referred to in the Indenture and herein is the Credit Facility. Certain definitions from the Indenture are set forth below under "--Certain Definitions." GENERAL The Notes are senior unsecured obligations of the Company. The Notes bear interest at 12% per annum, payable on June 30 and December 31 of each year, to holders of record at the close of business on June 15 or December 15, as the case may be, immediately preceding the relevant interest payment date. The Notes will mature on December 31, 2003. The Exchange Notes will bear interest from December 31, 1996. Holders of Old Notes whose Old Notes are accepted for exchange will be deemed to have waived the right to receive any payment in respect of interest on the Old Notes accrued from December 31, 1996 to the date of the issuance of the Exchange Notes. The Exchange Notes will be issued only in registered form, without coupons, in denominations of $1,000 and integral multiples thereof. Principal of, premium, if any, and interest on the Old Notes is payable and on the Exchange Notes will be payable, and the Notes may be presented for registration of transfer or exchange, at the office of the Trustee. Payments may be paid by check mailed to the registered addresses of the holders of record (the "Holders") of the Notes. The Holders must surrender their Notes to the Paying Agent to collect principal payments. The Company may require payment of a sum sufficient to cover any transfer tax or other governmental charge payable in connection with certain transfers or exchanges of the Notes. Initially, the Trustee under the Existing Indenture will be the Paying Agent and the Registrar under the Indenture. The Company or any of its Subsidiaries subsequently may act as the Paying Agent and the Registrar, and the Company may change any Paying Agent and any Registrar without prior notice to the Holders. INTEREST RATE INCREASE The interest rate on the Old Notes is increased and on the Exchange Notes will be increased by one percent (from 12% to 13%) until the Company achieves and maintains $36 million of earnings after deducting minority interests and before interest, taxes, depreciation, and amortization calculated in accordance with generally accepted accounting principles ("Earnings"). The Company will measure its Earnings for trailing twelve month periods, each period to end on the last day of a fiscal quarter and to extend no further than March 31, 1998 (each a "Quarterly Measurement Period"). If, prior to March 31, 1998, the Company's Earnings equal or exceed $36 million for two consecutive Quarterly Measurement Periods, then the interest rate will revert to 12%. However, if the Company's Earnings do not equal or exceed $36 million for any subsequent Quarterly Measurement Period, up to and including the Quarterly Measurement Period ending March 31, 1998, the interest rate will 67 increase to 13% until the Company's Earnings again equal or exceed $36 million for one fiscal quarter on a trailing twelve month basis. The Company's Earnings for the trailing twelve month period ended September 30, 1996, were approximately $31.3 million. RANKING The Old Notes are and the Exchange Notes will be senior unsecured obligations of the Company, rank senior to all subordinated indebtedness of the Company and rank pari passu in right of payment with all existing and future senior indebtedness of the Company, including indebtedness under the Credit Facility. SUBSIDIARY GUARANTEES Four wholly owned subsidiaries of the Company (the "Subsidiary Guarantors") have unconditionally guaranteed the payment of the principal, premium, if any, and interest on the Notes. The Subsidiary Guarantors are Cygna Consulting Engineers and Project Management, Inc., ICF Kaiser Government Programs, Inc., PCI Operating Company, Inc. and Systems Applications International, Inc. Cygna Consulting Engineers and Project Management, Inc. is incorporated under the laws of the State of California, and the other Subsidiary Guarantors are incorporated under the laws of the State of Delaware. All four Subsidiary Guarantors are Subsidiary Guarantors under the Existing Indenture and the Bank Credit Agreement. OPTIONAL REDEMPTION OF THE NOTES The Notes may not be redeemed prior to December 31, 1998, but will be redeemable at the option of the Company, in whole or in part, at any time on or after December 31, 1998, at the following redemption prices (expressed as percentages of principal amount), together with accrued and unpaid interest, if any, thereon to the redemption date, if redeemed during the 12-month period beginning December 31:
OPTIONAL YEAR REDEMPTION PRICE ---- ---------------- 1998.................................. 108.0% 1999.................................. 106.4 2000.................................. 104.8 2001.................................. 103.2 2002.................................. 101.6
If less than all of the Notes are to be redeemed at any time, selection of the Notes to be redeemed will be made by the Trustee from among the outstanding Notes on a pro rata basis, by lot or by any other method permitted in the Indenture. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at the registered address of such Holder. On and after the redemption date, interest will cease to accrue on the Notes or portions thereof called for redemption. CHANGE OF CONTROL Upon the occurrence of a Change of Control, the Company will offer (a "Change of Control Offer") to purchase all outstanding Notes at a purchase price equal to 101% of the aggregate principal amount of the Notes, plus accrued and unpaid interest, if any, to the date of purchase. Within 30 days after any Change of Control, the Company, or the Trustee at the Company's request, will mail or cause to be mailed to all Holders on the date of the Change of Control a notice stating: (i) that a Change of Control has occurred and that the Holders have the right to require the Company to purchase any or all of the outstanding Notes at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase; (ii) the circumstances and relevant facts regarding such Change of Control; (iii) the purchase date; and (iv) the instructions that Holders must follow in order to have their Notes purchased. Any Change of Control Offer will be conducted in compliance with applicable tender offer rules, 68 including Section 14(e) of the Securities Exchange Act of 1934, as amended, and Rule 14e-1 thereunder. The Change of Control purchase feature of the Notes in certain circumstances may discourage a sale or takeover of the Company or make such a sale or takeover more difficult. Change of Control is defined to include the sale, lease, conveyance, or other disposition of all or "substantially all" of the Company's assets. Although there is a developing body of case law interpreting the phrase "substantially all," there is no precise established definition of the phrase under applicable law. Accordingly, the ability of a holder of Notes to require the Company to repurchase such Notes as a result of a transfer or lease of the Company's assets to another person may be uncertain. There can be no assurance that, at the time of a Change of Control, the Company will have sufficient cash to repay all amounts due under the Existing Notes and the Notes. CERTAIN COVENANTS Limitations on Additional Indebtedness. The Indenture provides that (i) the Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume, guarantee, extend the maturity of or otherwise become liable with respect to (collectively, "incur"), any Indebtedness (including without limitation Acquired Indebtedness), other than (a) Junior Subordinated Indebtedness incurred by the Company in compliance with the provisions of the immediately following sentence or (b) Indebtedness between the Company and its Wholly Owned Restricted Subsidiaries (provided that such Indebtedness of the Company to any Wholly Owned Restricted Subsidiary is expressly subordinated in right of payment to the Notes) or among such Wholly Owned Restricted Subsidiaries (provided, however, that any subsequent issue or transfer of any Capital Stock that results in any such Wholly Owned Restricted Subsidiary ceasing to be a Wholly Owned Restricted Subsidiary or any transfer of such Indebtedness (other than to a Wholly Owned Restricted Subsidiary) shall be deemed, in each case, to constitute the incurrence of such Indebtedness by the Company) and (ii) the Company will not permit any of its Restricted Subsidiaries to issue (except to the Company or any of its Wholly Owned Restricted Subsidiaries) any Capital Stock having a preference in liquidation or with respect to the payment of dividends, unless, after giving effect thereto, the Company's Consolidated Fixed Charge Coverage Ratio on the date thereof would be at least: (1) 2.25 to 1, if such date is on or prior to February 28, 1998; and (2) 2.50 to 1, if such date is after February 28, 1998, in each case determined on a pro forma basis as if the incurrence of such additional Indebtedness or the issuance of such Capital Stock, as the case may be, and the application of the net proceeds therefrom, had occurred at the beginning of the four-quarter period used to calculate the Company's Consolidated Fixed Charge Coverage Ratio. In addition, after the date hereof the Company will not directly or indirectly incur any Junior Subordinated Indebtedness unless, after giving effect thereto, the Company's Consolidated Fixed Charge Coverage Ratio on the date thereof would be at least 1.50 to 1, in each case determined on a pro forma basis as if the incurrence of such additional Indebtedness, and the application of the net proceeds therefrom, had occurred at the beginning of the four-quarter period used to calculate the Company's Consolidated Fixed Charge Coverage Ratio. Notwithstanding the immediately preceding paragraph, the Company and its Restricted Subsidiaries may: (i) incur Indebtedness under the Bank Credit Agreement in an amount not to exceed $60,000,000; (ii) incur Indebtedness not otherwise permitted by any other provision hereof, so long as the aggregate principal amount of Indebtedness incurred under this clause (ii) does not exceed 7.5% of the Consolidated Tangible Assets of the Company; and (iii) incur Refinancing Indebtedness. In addition, notwithstanding the provisions of Section 5.04(a): (A) Subsidiaries of the Company that are not Wholly Owned Restricted Subsidiaries may incur Indebtedness to the Company of any of its Wholly Owned Restricted Subsidiaries in the amounts and subject to the restrictions in Section 5.05(iii) and (B) Single Purpose Subsidiaries of the Company may incur Non-Recourse Indebtedness to the extent permitted by Section 5.05(iv). 69 Notwithstanding the two preceding paragraphs, the Company may not incur any Indebtedness if such Indebtedness is subordinated or junior in ranking in any respect to any Senior Indebtedness unless such Indebtedness is Junior Subordinated Indebtedness. In addition, the Company may not incur any secured Indebtedness which is not Senior Indebtedness unless contemporaneously therewith effective provision is made to secure the Notes equally and ratably with such secured Indebtedness for so long as such secured Indebtedness is secured by a Lien. Limitations on Subsidiary Debt and Preferred Stock. The Indenture further provides that the Company will not permit any of its Restricted Subsidiaries, directly or indirectly, to create, incur, assume, guarantee, extend the maturity of or otherwise become liable with respect to (collectively, "incur"), any Indebtedness (which, with respect to any Restricted Subsidiary, includes without limitation preferred stock of such Restricted Subsidiary) except: (i) guarantees by any Restricted Subsidiary of the payment of the principal of, premium, if any, and interest on the Indebtedness incurred pursuant to the Bank Credit Agreement and in compliance with the provisions of Section 5.11; (ii) Indebtedness issued to and held by the Company or a Wholly Owned Restricted Subsidiary of the Company (provided, however, that any subsequent issue or transfer of any Capital Stock that results in any such Wholly Owned Restricted Subsidiary ceasing to be a Wholly Owned Restricted Subsidiary or any transfer of such Indebtedness (other than to a Wholly Owned Restricted Subsidiary) shall be deemed, in each case, to constitute the incurrence of such Indebtedness by such Restricted Subsidiary); (iii) Indebtedness to the Company or any of its Wholly Owned Restricted Subsidiaries incurred by Subsidiaries of the Company that are not Wholly Owned Restricted Subsidiaries that are engaged in Permitted Businesses in an aggregate amount (together with all Designated Investments made in Subsidiaries that are not Wholly Owned Restricted Subsidiaries in compliance with the provisions of Section 5.06(b)(E)) not to exceed 5% of Consolidated Tangible Assets; and (iv) Non-Recourse Indebtedness incurred by a Single Purpose Subsidiary. Limitations on Restricted Payments. The Indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, make any Restricted Payment if at the time of such Restricted Payment: (i) a Default or Event of Default shall have occurred and be continuing or shall occur as a consequence thereof; (ii) the Company would be unable to incur an additional $1.00 of Senior Indebtedness under the covenant described in the first sentence of the first paragraph under "Limitations on Additional Indebtedness;" or (iii) the amount of such Restricted Payment, when added to the aggregate amount of all Restricted Payments (other than those made pursuant to the provisions of clause (A), (C), (D), (E) or (G) of the immediately following paragraph) made after the date of this Indenture exceeds the sum of: (a) 50% of the Company's Consolidated Net Income accrued during the period from September 30, 1996 to the end of the Company's most recent fiscal quarter for which financial results have been reported at the time of such Restricted Payment (or, if such aggregate Consolidated Net Income shall be a deficit, minus 100% of such aggregate deficit); plus (b) the aggregate amount of Net Reductions in Investments attributable to Designated Investments made by the Company or any Subsidiary subsequent to the date of this Indenture; provided, however, that (1) the Net Reductions in Investments attributable to any Designated Investment for purposes of this calculation shall not exceed the amount of such Designated Investment, (2) to the extent that cash or Cash Equivalents included in any Net Reductions in Investments pursuant to the definition thereof have been or will be included in the computation of Consolidated Net Income for purposes of determining the ability of the Company or any of its Restricted Subsidiaries to make Restricted Payments under clause (iii)(a) of this paragraph, such cash or Cash Equivalents shall not also be included in computing Net Reductions in Investments for purposes of this clause (iii)(b) and (3) the Company will not be permitted to make any Restricted Payment described in clause (i) or (ii) of the definition of Restricted Payment from any Net Reductions in Investments. 70 Notwithstanding the foregoing, the provisions of clauses (ii) and (iii) of the immediately preceding paragraph will not prevent: (A) the Company or any Wholly Owned Restricted Subsidiary from making Investments in Subsidiaries, in an aggregate amount not to exceed $4,000,000, pursuant to contractual obligations in existence on the date of the Indenture or directly related to projects in existence on the date of the Indenture; (B) the Company from paying any dividend within 60 days after the date of its declaration if such dividend could have been paid on the date of its declaration without violation of this covenant; (C) the Company from purchasing or redeeming and retiring any shares of Capital Stock of the Company, and paying accrued and unpaid dividends on such shares at the time of such repurchase or redemption, in exchange for, or out of the net proceeds of a substantially concurrent sale (other than to a Subsidiary of the Company or an employee stock ownership plan) of shares of Qualified Capital Stock of the Company; (D) the Company or any Subsidiary from making (1) Investments pursuant to the provisions of employee benefit plans of the Company or any of its Subsidiaries in an aggregate amount not to exceed $500,000 in any fiscal year, or (2) making loans to officers of the Company in connection with any relocation of residence, approved by a majority of the independent members of the Board of Directors of the Company, provided that the aggregate amount of Investments and loans under this clause (D) shall not exceed $1 million in any fiscal year; (E) the Company or any Wholly Owned Restricted Subsidiary from making Designated Investments (1) in Subsidiaries that are not Wholly Owned Restricted Subsidiaries in an aggregate amount (together with Indebtedness incurred by or on behalf of Subsidiaries that are not Wholly Owned Restricted Subsidiaries in compliance with the provisions of clause (iii) of the covenant described under "Limitations on Subsidiary Debt and Preferred Stock) not to exceed 5% of Consolidated Tangible Assets or (2) in Joint Ventures in an aggregate amount not to exceed 5% of Consolidated Tangible Assets, provided that: (x) the Person in whom the Investment is made is engaged only in Permitted Businesses; (y) the Company, directly or through Wholly Owned Restricted Subsidiaries of the Company, controls, under an operating and management agreement or otherwise, the day to day management and operation of such Person or otherwise has the right to exercise significant influence over the management and operation of such Person in all material respects (including without limitation the right to control or veto any material act or decision); and (z) after giving effect to such Investment, the aggregate amount of Indebtedness and Investments made by the Company and its Subsidiaries in such Person does not exceed $5 million; (F) the Company or any Wholly Owned Restricted Subsidiary from making Designated Investments in Subsidiaries that are not Wholly Owned Restricted Subsidiaries or in Joint Ventures; provided that such Designated Investments are made solely from (1) the net proceeds of a substantially concurrent sale (other than to a Subsidiary of the Company or an employee stock ownership plan) of shares of Qualified Capital Stock of the Company, (2) 50% of the Company's Consolidated Net Income accrued during the period from September 30, 1996 to the end of the Company's most recent fiscal quarter for which financial results have been reported at the time of such Restricted Payment, or (3) the aggregate amount of Net Reductions in Investments (not to exceed the aggregate amount of such Designated Investments) made by the Company or any Subsidiary subsequent to the date of the Indenture; (G) the Company from redeeming for cash all (but not less than all) of the outstanding shares of the Company's Series 2D Senior Preferred Stock; provided, however, that such redemption shall not be at a price in excess of the redemption price set forth in Section 17.01 of the Company's Amended and Restated Certificate of Incorporation in effect as of January 11, 1994; and provided, further, that prior to January 13, 1997, the Company shall not redeem any of the outstanding shares of the Company's Series 2D Senior Preferred Stock until the Company delivers to the Trustee an Officers' Certificate certifying that the Company's earnings before interest and taxes for the most recent twelve (12) month period calculated in accordance with generally accepted accounting principles equaled or exceeded $27 million. Nothing contained in this further proviso shall affect the Company's right to redeem the Series 2D Senior Preferred Stock no later than January 13, 1997; or 71 (H) the Company from (1) making all regular quarterly dividends, each such quarterly dividend payment not to exceed $487,500 in the aggregate or $2,437.50 per share, on the outstanding shares of the Company's Series 2D Senior Preferred Stock; and (2) making all payments of any dividends of up to 9.75% on the aggregate unpaid amount of any regular quarterly dividend on the outstanding shares of the Company's Series 2D Senior Preferred Stock from the date such regular quarterly dividend should have been paid to the date of the payment of such dividend; in consideration thereof, and except as provided below, the Company increased the Interest payable on the Notes by one percent (1%) (the "Additional Interest") from the date of the Indenture, such Additional Interest payable as provided for in the Notes. The Company files its financial results with the Securities and Exchange Commission on quarterly and annual reports, and these reports include the Company's earnings after deducting minority interests and before interest, taxes, depreciation, and amortization calculated in accordance with generally accepted accounting principles ("Earnings"). The Company will measure its Earnings for trailing twelve month periods, each period to end on the last day of a fiscal quarter and extend no further than March 31, 1998 (each a "Quarterly Measurement Period"). If the Company's Earnings equal or exceed $36 million for two consecutive Quarterly Measurement Periods, then the Company is relieved of its obligation to pay any future Additional Interest. However, if the Company's Earnings do not equal or exceed $36 million for any subsequent Quarterly Measurement Period, up to and including the Quarterly Measurement Period ending March 31, 1998, the Company is obligated to commence paying Additional Interest until the Company's Earnings again equal or exceed $36 million on a trailing twelve month basis calculated quarterly. Limitations on Restrictions on Distributions from Subsidiaries. The Indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, create or otherwise cause or suffer to exist or become effective any consensual Payment Restriction with respect to any of its Restricted Subsidiaries, except for (i) Payment Restrictions covering not more than $1,000,000 in the aggregate of retained earnings of ICF Kaiser Servicios Ambientales, S.A. de C.V., (ii) any such Payment Restriction contained in Existing Indebtedness or existing contracts to which the Company or any of its Restricted Subsidiaries are parties, (iii) any such Payment Restriction under any agreement evidencing any Acquired Indebtedness that was permitted to be incurred pursuant to the provisions of this Indenture, provided that such Payment Restriction only applies to assets that were subject to such restrictions and encumbrances prior to the acquisition of such assets by the Company or its Restricted Subsidiaries and (iv) any such Payment Restriction arising in connection with Refinancing Indebtedness; provided that any such Payment Restrictions that arise under such Refinancing Indebtedness are not, taken as a whole, more restrictive than those under the agreement creating or evidencing the Indebtedness being refunded or refinanced. Limitations on Transactions with Affiliates. The Indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, make any loan, advance, guarantee or capital contribution to or for the benefit of, or sell, lease, transfer or otherwise dispose of any of its properties or assets to or for the benefit of, or make any Investment in, or purchase or lease any property or assets from, or enter into or amend any contract, agreement or understanding with or for the benefit of, any Affiliate of the Company or any of its Subsidiaries (each an "Affiliate Transaction"), other than Affiliate Transactions in the ordinary course of business and consistent with past practice that are fair to the Company of such Restricted Subsidiary, as the case may be, and are on terms at least as favorable as would have been obtainable at such time from an unaffiliated party, unless the Board of Directors of the Company or such Restricted Subsidiary, as the case may be, pursuant to a Board Resolution reasonably and in good faith determines that such Affiliate Transaction is fair to the Company or such Restricted Subsidiary, as the case may be, and is on terms at least as favorable as would have been obtainable at such time from an unaffiliated party. In addition, the Company will not, and will not permit any of its Restricted Subsidiaries to, enter into any Affiliate Transaction or series of Affiliate Transactions involving or having a value of more than (i) $1 million unless a majority of the members of the Board of Directors of the Company who are not affiliated with any other party to such Affiliate Transaction reasonably and in good faith shall have determined that such Affiliate Transaction or series of Affiliate Transactions is fair to the Company or such Restricted Subsidiary, as the case may be, and is on terms at least as favorable as would have been obtainable at such time from an unaffiliated party and (ii) $5 million unless the Company or such 72 Restricted Subsidiary, as the case may be, has received an opinion from an Independent Financial Advisor to the effect that the financial terms of such Affiliate Transaction are fair to the Company or such Restricted Subsidiary, as the case may be, from a financial point of view. The provisions of the foregoing paragraph shall not apply to: (i) transactions exclusively between or among the Company and any of its Wholly Owned Restricted Subsidiaries or exclusively between or among any of the Company's Wholly Owned Restricted Subsidiaries, provided that such transactions are not otherwise prohibited by the Indenture; (ii) arms-length transactions between the Company or any of its Wholly Owned Restricted Subsidiaries and the other owners of any Subsidiary or Joint Venture described in the last sentence of the definition of Affiliate; and (iii) reasonable compensation, indemnification and other benefits paid or made available to officers, directors and employees of the Company or any Subsidiary for services rendered in such Person's capacity as an officer, director or employee. Limitations on Asset Sales. The Indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, consummate any Asset Sale unless: (i) the Company or its Restricted Subsidiaries receive consideration at the time of such Asset Sale at least equal to the fair market value of the assets or Capital Stock included in such Asset Sale; (ii) the aggregate fair market value of the consideration from such Asset Sale (other than consideration in the form of assumption of Indebtedness of the Company or one or more of its Restricted Subsidiaries from which the Company or such Restricted Subsidiaries, as the case may be, are released) that is not in the form of cash or Cash Equivalents shall not, when aggregated with the fair market value of all other non-cash or non-Cash Equivalent consideration received by the Company and its Restricted Subsidiaries from all previous Asset Sales since the date of this Indenture that have not yet been converted into cash or Cash Equivalents, exceed 5% of Consolidated Tangible Assets of the Company at the time of such Asset Sale; and (iii) if the aggregate fair market value of the assets or Capital Stock to be sold in such Asset Sale exceeds $3 million such Asset Sale has been approved by the Company's Board of Directors. Within six months after consummation of any such Asset Sale (the Business Day closest to the end of such six-month period is referred to as the "Asset Sale Offer Date"), the Company shall, or shall cause the applicable Restricted Subsidiary to: (i) reinvest the cash and Cash Equivalent portion of the Net Proceeds of such Asset Sale in a manner that would constitute a Related Business Investment; (ii) apply or cause to be applied the cash and Cash Equivalent portion of the Net Proceeds of such Asset Sale to repay outstanding Senior Indebtedness of the Company or any Restricted Subsidiary, provided, however, that any such repayment of Indebtedness under any revolving credit facility or similar agreement shall result in a permanent reduction in the lending commitment relating thereto in an amount equal to the principal amount so repaid; or (iii) apply or cause to be applied the cash and Cash Equivalent portion of the Net Proceeds of such Asset Sale that is neither reinvested as provided in clause (i) nor applied to the repayment of Senior Indebtedness as provided in clause (ii), (x) first to the purchase of Existing Notes tendered to the Company at a purchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, thereon to the date of purchase, pursuant to an offer to purchase made by the Company as set forth in Article 3 and Section 5.09 of the Existing Indenture and the Indenture (an "Asset Sale Offer") and (y) second to the purchase of the Notes tendered to the Company at a purchase price equal to 100% of the principal thereof, plus accrued and unpaid interest, if any, thereon to the date of purchase, pursuant to an Asset Sale Offer, provided, however, that the Company may defer the Asset Sale Offer for the Existing Notes until the amount subject thereto would be at least $5 million, and provided, further, that the Company may defer the Asset Sale Offer for the Notes until remaining amount subject thereto would be at least $5 million. Notwithstanding the foregoing provisions: (i) to the extent that any or all of the Net Proceeds of any Foreign Asset Sale are prohibited or delayed by applicable local law from being repatriated to the United States, the portion of such Net Proceeds so affected will not be required to be applied in the manner set forth in this covenant but may be retained by the applicable Foreign Subsidiary so long, but only so long, as the applicable local law will not permit repatriation to the United States (the Company hereby agreeing to cause the applicable Foreign Subsidiary promptly to take all actions required by the applicable local law to permit such repatriation) and, once such repatriation of any such affected Net Proceeds is permitted under the applicable local law, such 73 repatriation will be immediately effected and such repatriated Net Proceeds will be applied in a manner set forth in this covenant; and (ii) to the extent that the Board of Directors has determined in good faith that repatriation of any or all of the Net Proceeds of any Foreign Asset Sale would have a material adverse tax consequence, the Net Proceeds so affected may be retained by the applicable Foreign Subsidiary for so long as such material adverse tax consequence would continue. Each Asset Sale Offer: (i) will be mailed to the record Holders of the Notes as shown on the register of Holders of Notes, with a copy to the Trustee; (ii) will specify the purchase date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed and not later than 240 days after the date of the Asset Sale giving rise to such Asset Sale Offer); and (iii) otherwise will comply with the procedures set forth in the Indenture. Upon receiving notice of the Asset Sale Offer, Holders of Notes may elect to tender their Notes in whole or in part in integral multiples of $1,000 in exchange for cash. To the extent Holders properly tender Notes in an amount exceeding the amount of Net Proceeds used to make the Asset Sale Offer, Notes of tendering Holders will be repurchased on a pro rata basis (based on amounts tendered). The Company will comply with the requirements of Section 14(e) under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes pursuant to any Asset Sale Offer. Restrictions on Sale of Stock of Subsidiaries. The Indenture provides that the Company may not sell or otherwise dispose of any of the Capital Stock of any Restricted Subsidiary of the Company unless: (i) (a) (x) the Company shall retain ownership of more than 50% of the Common Equity of such Restricted Subsidiary or (y) all of the Capital Stock of such Restricted Subsidiary shall be sold or otherwise disposed of, and (b) the Net Proceeds from any such sale or disposition are applied in a manner consistent with the provisions described under "Limitations on Asset Sales"; or (ii) the Company elects to treat the amount of its remaining investment in any such Restricted Subsidiary that has become a Joint Venture as a result of such sale or other disposition as an Investment in such Joint Venture subject to the provisions described under "Limitations on Restricted Payments." Limitations on Mergers and Certain Other Transactions. The Indenture provides that the Company, in a single transaction or a series of related transactions, will not (i) consolidate or merge with or into, or sell, lease, convey or otherwise dispose of all or substantially all of its assets, or assign any of its obligations under the Notes or the Indenture, to any Person or (ii) adopt a Plan of Liquidation unless, in either case: (a) the Person formed by or surviving such consolidation or merger (if other than the Company) or to which such sale, lease, conveyance or other disposition or assignment shall be made (or, in the case of a Plan of Liquidation, one Person to which assets are transferred) (collectively, the "Successor"), is a corporation organized and existing under the laws of the United States or any State thereof or the District of Columbia, and the Successor assumes by supplemental indenture in a form satisfactory to the Trustee all of the obligations of the Company under the Notes and the Indenture; (b) immediately prior to and immediately after giving effect to such transaction and the assumption of the obligations as set forth in clause (a) above and the incurrence of any Indebtedness to be incurred in connection therewith, no Default or Event of Default shall have occurred and be continuing; and (c) immediately after and giving effect to such transaction and the assumption of the obligations as set forth in clause (a) above and the incurrence of any Indebtedness to be incurred in connection therewith, and the use of any net proceeds therefrom on a pro forma basis, (1) the Consolidated Tangible Net Worth of the Company or the Successor, as the case may be, would be at least equal to the Consolidated Tangible Net Worth of the Company immediately prior to such transaction and (2) the Company or the Successor, as the case may be, could incur at least $1.00 of additional Senior Indebtedness under the covenant described under "Limitations on Additional Indebtedness." In addition, the Indenture will provide that the Company will not permit any Single Purpose Subsidiary that has outstanding Indebtedness to consolidate or merge with any other Person other than a Person the activities of which are limited to ownership of a portion of the same project in which the reference Single Purpose Subsidiary owns an interest. 74 The foregoing provisions of the Indenture will not prohibit a transaction the sole purpose of which (as determined in good faith by the Board of Directors and evidenced by a Board Resolution) is to change the state of incorporation of the Company or a Single Purpose Subsidiary, as the case may be, and such transaction does not have as one of its purposes the evasion of the limitations described above. Limitations on Guarantees. The Indenture provides that the Company will not permit any of its Restricted Subsidiaries to guarantee any Indebtedness (other than (i) the Guarantors and (ii) guarantees delivered pursuant to the Bank Credit Agreement by Subsidiaries of the Company who have delivered similar guarantees prior to the date of the Indenture) unless the Company causes each such Subsidiary to execute and deliver to the Trustee, prior to or concurrently with the issuance of such guarantee, a supplemental indenture, in form satisfactory to the Trustee, pursuant to which such Subsidiary unconditionally guarantees the payment of principal of, premium, if any, and interest on the Notes. Any such guarantee will be substantially in the form of the Subsidiary Guarantee included as an Exhibit to the Indenture. See "-- Subsidiary Guarantees." EVENTS OF DEFAULT An "Event of Default" is defined in the Indenture as (i) failure by the Company to pay interest on any of the Notes when it becomes due and payable and the continuance of any such failure for 30 days; (ii) failure by the Company to pay the principal or premium of any of the Notes when they become due and payable, whether at stated maturity, upon redemption, upon acceleration or otherwise (including failure to make payment pursuant to a Change in Control Offer or an Asset Sale Offer); (iii) failure by the Company to comply with any covenant in the Indenture and continuance of such failure for 60 days after notice of such failure has been given to the Company by the Trustee or by the Holders of at least 25% of the aggregate principal amount of the Notes then outstanding; (iv) failure by the Company or any of its Subsidiaries to make any payment when due or during any applicable grace period, and the continuation of such failure for seven days, in respect of any Indebtedness of the Company or any of its Subsidiaries that has an aggregate outstanding principal amount of $2 million or more, other than Non-Recourse Indebtedness of a Single Purpose Subsidiary; (v) a default under any Indebtedness, other than Non-Recourse Indebtedness of a Single Purpose Subsidiary, if such default results in the holder or holders of such Indebtedness causing such Indebtedness to become due prior to its stated maturity and the principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness the maturity of which has been so accelerated, aggregate $2 million or more at any one time outstanding; (vi) one or more final judgments or orders that exceed $2 million in the aggregate for the payment of money have been entered by a court or courts of competent jurisdiction against the Company or any of its Subsidiaries and such judgment or judgments have not been satisfied, stayed, annulled, or rescinded within 60 days of being entered; and (vii) certain events of bankruptcy, insolvency or reorganization involving the Company or any of its Subsidiaries. If an Event of Default (other than an Event of Default resulting from bankruptcy, insolvency or reorganization involving the Company) occurs and is continuing under the Indenture, the Trustee by written notice to the Company, or the Holders of at least 25% in aggregate principal amount of the Notes then outstanding by written notice to the Company and the Trustee, may declare all amounts owing under the Notes to be due and payable immediately. If an Event of Default results from bankruptcy, insolvency or reorganization involving the Company, all outstanding Notes shall become due and payable without any further action or notice. In certain cases, the Holders of a majority in aggregate principal amount of the Notes then outstanding may waive an existing Default or Event of Default and its consequences, except that a default in the payment of principal of, premium, if any, and interest on the Notes cannot be so waived. The Holders may not enforce the provisions of the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the Notes then outstanding may direct the Trustee in its exercise of any trust or power; however, such direction may not conflict with the terms of the Indenture. The Trustee may withhold from the Holders notice of any continuing Default or Event of Default (except any Default or Event of Default in payment of principal of, premium, if any, or interest on the Notes) if the Trustee determines that withholding such notice is in the Holders' interest. 75 The Company is required to deliver to the Trustee annually a statement regarding compliance with the Indenture and, upon any Officer of the Company becoming aware of any Default or Event of Default, a statement specifying such Default or Event of Default and what action the Company is taking or proposes to take with respect thereto. DISCHARGE OF INDENTURE The Indenture permits the Company to terminate all of its obligations under the Indenture, other than the obligation to pay the principal of, premium, if any, and interest on the Notes, and certain other obligations at any time by (i) depositing in trust with the Trustee, under an irrevocable trust agreement, money, or U.S. government obligations in an amount sufficient to pay principal of, premium, if any, and interest on the Notes to their maturity or redemption, and (ii) complying with certain other conditions, including delivery to the Trustee of an opinion of counsel or a ruling received from the Internal Revenue Service to the effect that Holders will not recognize income, gain, or loss for Federal income tax purposes as a result of the Company's exercise of such right and will be subject to Federal income tax on the same amount and in the same manner and at the same times as would have been the case otherwise. AMENDMENT, SUPPLEMENT AND WAIVER Unless the consent of each Holder affected has been obtained, the Company may not: (i) extend the maturity of any Note; (ii) affect the terms of any scheduled payment of interest on or principal of the Notes (including without limitation any redemption provisions); (iii) modify or eliminate any of the provisions of the Indenture relating to a Change of Control; or (iv) reduce the percentage of Holders necessary to consent to an amendment, supplement, or waiver to the Indenture. Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented, and any existing Default under, or compliance with any provision of, the Indenture may be waived (other than any continuing Default or Event of Default in the payment of the principal of, premium, if any, or interest on the Notes or that resulted from the failure to comply with the covenant described under "Change of Control") with the consent of Holders of at least a majority in principal amount of the then outstanding Notes. Without the consent of any Holder, the Company and the Trustee may amend or supplement the Indenture or the Notes to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for the assumption of the Company's obligations to Holders in the case of a merger or acquisition, or to make any change that does not adversely affect the rights of any Holder. CONCERNING THE TRUSTEE The Indenture contains certain limitations on the rights of the Trustee, should it become a creditor of the Company, to obtain payment of claims in certain cases or to realize on certain property received in respect of any such claim as security or otherwise. The Trustee is permitted to engage in other transactions; however, if it acquires any conflicting interest as defined in the Indenture, it must eliminate such conflict or resign. The Indenture provides that, in case an Event of Default occurs and is not cured, the Trustee is required, in the exercise of its power, to use the degree of care of a prudent person in similar circumstances in the conduct of his own affairs. Subject to such provisions, the Trustee is under no obligation to exercise any of its rights or powers under the Indenture at the request of any Holder, unless such Holder shall have offered to the Trustee security and indemnity satisfactory to the Trustee. CERTAIN DEFINITIONS Set forth below is a summary of certain of the defined terms that are used in the Indenture. Reference is made to the Indenture for the full definition of all such terms and certain other terms. 76 "Acquired Indebtedness" means: (i) with respect to any Person that becomes a direct or indirect Subsidiary of the Company after the date of this Indenture, Indebtedness of such Person and its Subsidiaries existing at the time such Person becomes a Subsidiary of the Company that was not incurred in connection with, or in contemplation of, such Person becoming a Subsidiary of the Company; and (ii) with respect to the Company or any of its Subsidiaries, any Indebtedness assumed by the Company or any of its Subsidiaries in connection with the acquisition of an asset from another Person that was not incurred by such other Person in connection with, or in contemplation of, such acquisition. "Affiliate" of any Person means any Person (i) which directly or indirectly controls or is controlled by, or is under direct or indirect common control with, the referent Person, (ii) which beneficially owns or holds 10% or more of any class of the Voting Stock of the referent Person or (iii) of which 10% or more of the Voting Stock (or, in the case of a Person which is not a corporation, 10% or more of the equity interest) is beneficially owned or held by the referent Person. For purposes of this definition, control of a Person shall mean 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. Notwithstanding the foregoing, the term "Affiliate" shall not include, with respect to the Company or any Wholly Owned Subsidiary of the Company, (a) any Wholly Owned Subsidiary of the Company or (b) any Subsidiary of the Company that is not a Wholly Owned Subsidiary or any Joint Venture, provided that such Subsidiary or Joint Venture is not under the control of, and does not have any Capital Stock (other than directors' qualifying shares) or Indebtedness owned or held by, any Affiliate of the Company. "Asset Sale" for any Person means the sale, lease, transfer or other disposition or series of sales, leases, transfers or other dispositions (including without limitation by merger or consolidation, and whether by operation of law or otherwise) of any of that Person's assets (including without limitation the sale or other disposition of Capital Stock of any Subsidiary of such Person, whether by such Person or by such Subsidiary), whether owned on the date of this Indenture of subsequently acquired, excluding, however: (i) any sale, lease, transfer or other disposition between the Company and any of its Wholly Owned Restricted Subsidiaries; (ii) any transfer of assets of the Company or any of its Restricted Subsidiaries that constitutes and is treated as a Designated Investment; (iii) any transfer of assets of the Company or any of its Restricted Subsidiaries that constitutes a Change of Control and that is governed by and effected in accordance with the provisions of Section 5.03 and Article 6; and (iv) any sale, lease, transfer or other disposition, or series of sales, leases, transfers or other dispositions, of assets having a purchase price or transaction value, as the case may be, of $1,000,000 or less, provided that no Default or Event of Default exists at the time of such sale. "Attributable Indebtedness", when used with respect to any Sale and Leaseback Transaction, means, as at the time of determination, the greater of (i) the fair market value of the property subject to such Sale and Leaseback Transaction and (ii) the present value (discounted at a rate equivalent to the Company's then-current weighted average cost of funds for borrowed money as at the time of determination, compounded on a semi-annual basis) of the total obligations of the lessee for rental payments during the remaining term of the lease included in any such Sale and Leaseback Transaction. "Bank Credit Agreement" means the Credit Agreement dated as of May 6, 1996 among the Company, certain banks and CoreStates Bank, N.A. as such agreement has been and may be amended, restated, supplemented or otherwise modified from time to time, and includes any successor bank credit agreement. "Bankruptcy Law" means Title 11, U.S. Code or any similar Federal, state or foreign law for the relief of debtors. "Board Resolution" for any Person means a duly adopted resolution of the Board of Directors of such Person. "Capital Stock" of any Person means any and all shares, rights to purchase, warrants or options (whether or not currently exercisable), participations or other equivalents of or interests in (however designated) the equity 77 (including without limitation common stock, preferred stock and partnership and joint venture interests) of such Person. "Capitalized Lease Obligations" of any Person means the obligations of such Person to pay rent or other amounts under a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP, and the amount of such obligation shall be the capitalized amount thereof determined in accordance with GAAP. "Cash Equivalents" means: (i) obligations issued or unconditionally guaranteed by the United States of America or any agency thereof or obligations issued by any agency or instrumentality thereof and backed by the full faith and credit of the United States of America; (ii) commercial paper rated the highest grade by Moody's Investors Service, Inc. and Standard & Poor's Corporation and maturing not more than one year from the date of creation thereof; and (iii) readily marketable direct obligations issued by any state of the United States of America or any political subdivision thereof having one of the two highest rating categories obtainable from either Moody's Investors Service, Inc. or Standard & Poor's Corporation. "Change of Control" means any of the following: (i) the sale, lease, conveyance or other disposition of all or substantially all of the Company's assets as an entirety or substantially as an entirety to any Person or "group" (within the meaning of Section 13(d)(3) of the Exchange Act) in one or a series of transactions, provided that a transaction where the holders of all classes of Common Equity of the Company immediately prior to such transaction own, directly or indirectly, more than 50% of the aggregate voting power of all classes of Common Equity of such Person or group immediately after such transactions shall not be a Change of Control; (ii) the acquisition by the Company and any of its Subsidiaries of 50% or more of all classes of Common Equity of the Company in one transaction or a series of related transactions; (iii) the approval by the Company of a Plan of Liquidation of the Company; (iv) any transaction or series of transactions (as a result of a tender offer, merger, consolidation or otherwise) that results in, or that is in connection with, (a) any Person, including a "group" (within the meaning of Section 13(d)(3) of the Exchange Act) that includes such Person, acquiring "beneficial ownership" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% or more of the aggregate voting power of all classes of Common Equity of the Company or any Person that possesses "beneficial ownership" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% or more of the aggregate voting power of all classes of Common Equity of the Company, or (b) less than 50% (measured by the aggregate voting power of all classes) of the Company's Common Equity being registered under Section 12(b) or 12(g) of the Exchange Act; or (v) a majority of the Board of Directors of the Company not being comprised of Continuing Directors. "Common Equity" of any Person means all Capital Stock of such Person that is generally entitled to (i) vote in the election of directors of such Person or (ii) if such Person is not a corporation, vote or otherwise participate in the selection of the governing body, partners, managers or others that will control the management and policies of such Person. "Consolidated Amortization Expense" of any Person for any period means the amortization expense of such Person and its Restricted Subsidiaries for such period (to the extent included in the computation of Consolidated Net Income of such Person), determined on a consolidated basis in accordance with GAAP. "Consolidated Depreciation Expense" of any Person for any period means the depreciation expense of such Person and its Restricted Subsidiaries for such period (to the extent included in the computation of Consolidated Net Income of such Person), determined on a consolidated basis in accordance with GAAP. "Consolidated Fixed Charge Coverage Ratio" of any Person means, with respect to any determination date, the ratio of (i) EBITDA for such Person's prior four full fiscal quarters for which financial results have been reported immediately preceding the determination date to (ii) the aggregate Fixed Charges of such Person for such four fiscal quarters; provided, however, that if any calculation of the Company's Consolidated Fixed Charge Coverage Ratio requires the use of any quarter beginning prior to the date of this Indenture, such 78 calculation shall be made on a pro forma basis, giving effect to the issuance of the Notes and the use of the net proceeds therefrom as if the same had occurred at the beginning of the four-quarter period used to make such calculation; and provided, further, that if any such calculation requires the use of any quarter prior to the date that any Asset Sale was consummated, or that any Indebtedness was incurred, or that any acquisition was effected, by the Company or any of its Restricted Subsidiaries, such calculation shall be made on a pro forma basis, giving effect to each such Asset Sale, incurrence of Indebtedness or acquisition, as the case may be, and the use of any proceeds therefrom, as if the same had occurred at the beginning of the four- quarter period used to make such calculation. "Consolidated Income Tax Expense" means, for any Person for any period, the provision for taxes based on income and profits of such Person and its Restricted Subsidiaries to the extent such income or profits were included in computing Consolidated Net Income of such Person for such period. "Consolidated Net Income" of any Person for any period means the net income (or loss) of such Person and its Restricted Subsidiaries for such period determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded from such net income (to the extent otherwise included therein), without duplication: (i) the net income (or loss) of any Person (other than a Restricted Subsidiary of the reference Person) in which any Person other than the referent Person has an ownership interest, except to the extent that any such income has actually been received by the referent Person or any of its Wholly Owned Restricted Subsidiaries in the form of cash dividends or similar cash distributions during such period; (ii) except to the extent includible in the consolidated net income of the referent Person pursuant to the foregoing clause (i), the net income (or loss) of any Person that accrued prior to the date that (a) such Person becomes a Restricted Subsidiary of the referent Person or is merged into or consolidated with the referent Person or any of its Restricted Subsidiaries or (b) the assets of such Person are acquired by the referent Person or any of its Restricted Subsidiaries; (iii) the net income (or loss) of any Restricted Subsidiary of the referent Person to the extent that the declaration or payment of dividends or similar distributions by such Restricted Subsidiary of that income is not permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary during such period (provided that the amount of loss excluded pursuant to this clause (iii) shall not exceed that amount of net income excluded pursuant to this clause (iii)); (iv) any gain (but not loss, except pursuant to clause (vii) below), together with any related provisions for taxes on any such gain, realized during such period by the referent Person or any of its Restricted Subsidiaries upon (a) the acquisition of any securities, or the extinguishment of any Indebtedness, of the referent Person or any of its Restricted Subsidiaries or (b) any Asset Sale by the referent Person or any of its Restricted Subsidiaries; (v) any extraordinary gain (but not extraordinary loss, except pursuant to clause (vii) below), together with any related provision for taxes on any such extraordinary gain, realized by the referent Person or any of its Restricted Subsidiaries during such period; (vi) in the case of a successor to such Person by consolidation, merger or transfer of its assets, any earnings of the successor prior to such merger, consolidation or transfer of assets; and (vii) in the case of the Company, any extraordinary loss directly related to the repurchase or repayment, substantially concurrently with the sale of the Notes, of (a) the Company's 13.5% Senior Subordinated Notes due 1999 and warrants issued in connection with the issuance of such notes, (b) the Bank Credit Agreement and (c) the Company's Series 2C Senior Preferred Stock and related Series 2C Warrants. "Consolidated Net Tangible Assets" of any Person as of any date means the Consolidated Tangible Assets of such Person and its Restricted Subsidiaries less the total current liabilities of such Person and its Restricted Subsidiaries, on a consolidated basis as of such date. "Consolidated Tangible Assets" of any Person as of any date means the total assets of such Person and its Restricted Subsidiaries (excluding any assets that would be classified as "intangible assets" under GAAP) on a consolidated basis at such date, determined in accordance with GAAP, less all write-ups subsequent to September 30, 1996 in the book value of any asset owned by such Person or any of its Restricted Subsidiaries. "Consolidated Tangible Net Worth" of any Person as of any date means the stockholders' equity (including any preferred stock that is classified as equity under GAAP, other than Disqualified Stock) of such Person and 79 its Restricted Subsidiaries (excluding any equity adjustment for foreign currency translation for any period subsequent to September 30, 1996 and any assets that would be classified as "intangible assets" under GAAP) on a consolidated basis at such date, as determined in accordance with GAAP, less all write-ups subsequent to September 30, 1996 in the book value of any asset owned by such Person or any of its Restricted Subsidiaries. "Continuing Director" of the Company as of any date means a member of the Board of Directors of the Company who (i) was a member of the Board of Directors of the Company on the date of this Indenture or (ii) was nominated for election or elected to the Board of Directors of the Company with the affirmative vote of at least a majority of the directors who were Continuing Directors at the time of such nomination or election. "Default" means any event, act or condition that is, or after notice or the passage of time or both would be, an Event of Default. "Designated Investments" means Investments made after the date of this Indenture in (i) any Subsidiary of the Company that is not a Wholly Owned Restricted Subsidiary or (ii) any Joint Venture, provided that such Subsidiary or Joint Venture is engaged in one or more Permitted Businesses. "Disqualified Stock" means any Capital Stock that, by its terms, by the terms of any agreement related thereto or by the terms of any security into which it is convertible, puttable or exchangeable, is, or upon the happening of any event or the passage of time would be, required to be redeemed or repurchased by the issuer thereof or any of its Subsidiaries, whether or not at the option of the holder thereof, or matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, in whole or in part, on or prior to the final maturity date of the Notes. "EBITDA" means, with respect to any Person for any period, without duplication, the sum of the amounts for such period of (i) Consolidated Net Income, (ii) Consolidated Income Tax Expense, (iii) Consolidated Amortization Expense (but only to the extent not included in Fixed Charges), (iv) Consolidated Depreciation Expense, (v) Fixed Charges and (vi) all other non- cash items reducing the Consolidated Net Income of such Person and its Restricted Subsidiaries, in each case determined on a consolidated basis in accordance with GAAP (provided, however, that the amounts set forth in clauses (ii) through (vi) shall be included only to the extent such amounts reduce Consolidated Net Income), less the aggregate amount of all non-cash items, determined on a consolidated basis, to the extent such items increase Consolidated Net Income. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Existing Indebtedness" means all of the Indebtedness of the Company and its Restricted Subsidiaries that is outstanding on the date of this Indenture. "Existing Indenture" means the Indenture dated as of January 11, 1994, as such Indenture has been and may be amended, restated, supplemented or otherwise modified from time to time. "Fixed Charges" means, with respect to any Person for any period, the aggregate amount of (i) interest, whether expensed or capitalized, paid, accrued or scheduled to be paid or accrued during such period (except to the extent accrued in a prior period) in respect of all Indebtedness of such Person and its Restricted Subsidiaries (including (a) original issue discount on any Indebtedness and (b) the interest portion of all deferred payment obligations, calculated in accordance with the effective interest method, in each case to the extent attributable to such period) and (ii) dividend requirements on preferred stock of such Person and its Subsidiaries (whether in cash or otherwise), but not including dividends payable solely in shares of Qualified Capital Stock, paid, accrued or schedules to be paid or accrued during such period (except to the extent accrued in a prior period), and excluding items eliminated in consolidation. For purposes of this definition, (1) interest on a Capitalized Lease Obligation shall be deemed to accrue at the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP, (2) interest on Indebtedness that is determined on a fluctuating basis shall be deemed to have accrued at a fixed rate per annum equal to the rate of interest of such Indebtedness in effect on the last day 80 of the period with respect to which Fixed Charges are being calculated, (3) interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate or other rates, shall be deemed to have been based upon the rate actually chosen, or, if none, then based upon such optional rate chosen as such Person may designate and (4) Fixed Charges shall be increased or reduced by the net cost (including without limitation amortization of discount) or benefit associated with Hedging Obligations attributable to such period. For purposes of clause (ii) above, dividend requirements (other than dividends payable solely in shares of Qualified Capital Stock) shall be increased to any amount representing the pretax earnings that would be required to cover such dividend requirements; accordingly, the increased amount shall be equal to a fraction, the numerator of which is such dividend requirements and the denominator of which is 1 minus the applicable actual combined Federal, state, local and foreign income tax rate of such Person and its Subsidiaries (expressed as a decimal), on a consolidated basis, for the fiscal year immediately preceding the date of the transaction giving rise to the need to calculate Fixed Charges. "Foreign Asset Sale" means any Asset Sale in respect of the Capital Stock or assets of a Foreign Subsidiary. "Foreign Subsidiary" means any Subsidiary of the Company that is organized under the laws of any jurisdiction other than the United States of America, any state thereof or the District of Columbia. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession of the United States, as in effect on January 11, 1994. "Hedging Obligations" of any Person means the obligations of such Person pursuant to any interest rate swap agreement, foreign currency exchange agreement, interest rate collar agreement, option or futures contract or other similar agreement or arrangement relating to interest rates or foreign exchange rates. "Indebtedness" of any Person at any date means, without duplication: (i) all liabilities, contingent or otherwise, of such Person for borrowed money (whether or not the recourse of the lender is to the whole of the assets of such Person or only to a portion thereof); (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments; (iii) all obligations of such Person in respect of letters of credit or other similar instruments (or reimbursement obligations with respect thereto), other than standby letters of credit issued for the benefit of, or surety or performance bonds issued by, such Person in the ordinary course of business to the extent such letters of credit are not drawn upon; (iv) all obligations of such Person with respect to Hedging Obligations; (v) all obligations of such Person to pay the deferred and unpaid purchase price of property or services, except trade payables and accrued expenses incurred by such Person in the ordinary course of business in connection with obtaining goods, materials or services, which payable is not overdue according to industry practice or the original terms of sale unless such payable is being contested in good faith; (vi) the maximum fixed repurchase price of all Disqualified Stock of such Person; (vii) all Capitalized Lease Obligations of such Person; (viii) all Indebtedness of others secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person, other than a pledge by a Single Purpose Subsidiary of the Capital Stock of an Unrestricted Subsidiary or Joint Venture of such Single Purpose Subsidiary to secure Indebtedness of such Unrestricted Subsidiary or Joint Venture incurred to finance a project constituting one or more Permitted Businesses; (ix) all Indebtedness of others guaranteed by, or otherwise the Liability of, such Person to the extent of such guarantee or Liability; and (x) all Attributable Indebtedness. The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above, the maximum liability of such Person for any such contingent obligations at such date and, in the case of clause (viii), the fair market value of any asset subject to a Lien securing the Indebtedness of others on the date that the Lien attaches. For purposes of the first sentence hereof, the "maximum fixed repurchase price" of any Disqualified Stock that does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Stock as if such Disqualified Stock were purchased on any date on which Indebtedness shall 81 be required to be determined pursuant to this Indenture, and if such price is based upon, or measured by, the fair market value of such Disqualified Stock (or any equity security for which it may be exchanged or converted), such fair market value shall be determined in good faith by the Board of Directors of such Person, which determination shall be evidenced by a Board Resolution. "Independent Financial Advisor" means an accounting, appraisal or investment banking firm of nationally recognized standing that is, in the reasonable judgment of the Company's Board of Directors, qualified to perform the task for which it has been engaged and disinterested and independent with respect to the Company and its Affiliates. "Investments" of any Person means (i) all investments by such Person in any other Person in the form of loans, advances or capital contributions or similar credit extensions constituting Indebtedness of such Person, and any guarantee of Indebtedness of any other Person, (ii) all purchases (or other acquisitions for consideration) by such Person of Indebtedness, Capital Stock or other securities of any other Person and (iii) all other items that would be classified as investments (including without limitation purchases of assets outside the ordinary course of business) on a balance sheet of such Person prepared in accordance with GAAP; provided, however, that advances to non- executive employees and extensions of trade credit and advances to customers and suppliers and other contractual and trade relationships, requiring repayment within reasonable commercial periods, to the extent made in the ordinary course of business consistent with past practice and in accordance with normal industry practice, shall not be deemed to constitute Investments. "Joint Venture" means (i) a corporation of which less than a majority of the aggregate voting power of all classes of the Common Equity is owned by the Company or its Restricted Subsidiaries and (ii) any entity other than a corporation in which the Company and its Restricted Subsidiaries own less than a majority of the Common Equity of such entity. "Junior Subordinated Indebtedness" of the Company at any date means Indebtedness of the Company which by its terms, or by the terms of any agreement or instrument pursuant to which such Indebtedness is issued, (i) is expressly subordinated in right of payment to the Notes and (ii) provides that no payment of principal of such Indebtedness by way sinking fund, mandatory redemption, defeasance or otherwise is required to be made by the Company (including without limitation at the option of the holder hereof) at any time prior to the maturity of the Notes. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or other similar encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including without limitation any conditional sale or other title retention agreement, and any lease in the nature thereof, any option or other agreement to sell, and any filing of, or agreement to give, any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction). "Net Proceeds" with respect to any Asset Sale by any Person means the aggregate net proceeds received by such Person from such Asset Sale (including without limitation the amount of cash applied to repay Indebtedness secured by any asset involved in such Asset Sale or otherwise received as consideration for the assumption or incurrence of liabilities incurred in connection with or in anticipation of such Asset Sale) after (i) provision for all income or other taxes measured by or resulting from such Asset Sale or the transfer of the proceeds of such Asset Sale to such Person and (ii) payment of all brokerage commissions and the underwriting and other fees and expenses related to such Asset Sale, whether such proceeds are in cash or property (valued at the fair market value thereof at the time of receipt as determined in good faith by the Board of Directors of such Person, which determination shall be evidenced by a Board Resolution). "Net Reductions in Investments" means the amount of cash and Cash Equivalents, less all fees and expenses incurred or accrued in connection with the realization or collection of such cash and Cash Equivalents, and after giving effect to all taxes payable with respect thereto, received with respect to any Designated Investment, whether from the payment of interest on Indebtedness, dividends, repayments of loans or advances 82 or other transfers of assets from the Person in which such Designated Investment was made, but only to the extent that such cash or Cash Equivalents have been paid to the Company or one or more Wholly Owned Restricted Subsidiaries of the Company in compliance with all applicable laws, rules and regulations and all relevant documents, agreements and instruments. "Non-Recourse Indebtedness" of a Single Purpose Subsidiary means Indebtedness for which (i) the sole legal recourse for collection of principal, premium, if any, and interest on such Indebtedness is against (a) the specific property identified in the instruments evidencing or securing such Indebtedness and such property was acquired with the proceeds of such Indebtedness or such Indebtedness was incurred within 90 days of the acquisition of such property or (b) the Capital Stock of such Single Purpose Subsidiary, provided that such Single Purpose Subsidiary has no assets other than the specific property acquired with the proceeds of such Indebtedness plus a reasonable amount of working capital, (ii) no assets of such Single Purpose Subsidiary, other than those assets identified in clause (i)(a) of this definition, may be realized upon in collection of principal, premium, if any, or interest on such Indebtedness and (iii) neither the Company nor any Restricted Subsidiary of the Company, other than the referent Single Purpose Subsidiary, is directly or indirectly liable to make any payment thereon, has made any guarantee or payment or performance of such Indebtedness or has pledged or granted any lien or encumbrances on any assets as collateral or security with respect thereto, other than the Capital Stock of the referent Single Purpose Subsidiary. "Payment Restriction", with respect to a Subsidiary of any Person, means any encumbrance, restriction or limitation, whether by operation of the terms of its charter or by reason of any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation, on the ability of (i) such Subsidiary to (a) pay dividends or make other distributions on its Capital Stock or make payments on any obligation, liability or Indebtedness owed to such Person or any other Subsidiary of such Person, (b) make loans or advances to such Person or any other Subsidiary of such Person or (c) transfer any of its properties or assets to such Person or any other Subsidiary of such Person or (ii) such Person or any other Subsidiary of such Person to receive or retain any such (a) dividends, distributions or payments, (b) loans or advances or (c) transfer of properties or assets. "Permitted Businesses" means the businesses of providing consulting, engineering or construction services to public and private sector clients in the environment, energy, infrastructure and industry markets. "Permitted Investments" means: (i) direct obligations of the United States of America or any agency thereof, or obligations guaranteed by the United States of America or any agency thereof, in each case maturing within 180 days of the date of acquisition thereof; (ii) certificates of deposit or Eurodollar deposits, due within 180 days of the date of acquisition thereof, with a commercial bank which is organized under the laws of the United States of America or any state thereof having capital funds of at least $500,000,000 or more; and (iii) commercial paper given the highest rating by two established national credit rating agencies and maturing not more than 180 days from the date of acquisition thereof. "Person" means any individual, corporation, partnership, joint venture, incorporated or unincorporated association, joint-stock company, trust, unincorporated organization or government or other agency or political subdivision thereof or other entity of any kind. "Plan of Liquidation", with respect to any Person, means a plan that provides for, contemplates or the effectuation of which is preceded or accompanied by (whether or not substantially contemporaneously, in phases or otherwise): (i) the sale, lease, conveyance or other disposition of all or substantially all of the assets of such Person otherwise than as an entirety or substantially as an entirety; and (ii) the distribution of all or substantially all of the proceeds of such sale, lease, conveyance or other disposition and all or substantially all of the remaining assets of such Person to Holders of Capital Stock of such Person. "Qualified Capital Stock" means Capital Stock that is not Disqualified Stock. 83 "Refinancing Indebtedness" means Indebtedness of the Company or a Restricted Subsidiary of the Company issued in exchange for, or the proceeds from the issuance and sale of disbursement of which are used substantially concurrently to repay, redeem, refund, refinance, discharge or otherwise retire for value, in whole or in part (collectively, "repay"), or constituting an amendment, modification or supplement to or a deferral or renewal of (collectively, an "amendment"), any Indebtedness of the Company or any of its Restricted Subsidiaries existing immediately after the original issuance of the Notes or incurred pursuant to the provisions of Section 5.40 in a principal amount not in excess of the principal amount of the Indebtedness so refinanced; provided that: (i) the Refinancing Indebtedness is the obligation of the same Person, and is subordinated to the Notes, if at all, to the same extent, as the Indebtedness being repaid; (ii) the Refinancing Indebtedness is scheduled to mature either (a) no earlier than the Indebtedness being repaid or (b) after the maturity date of the Notes; and (iii) the portion, if any, of the Refinancing Indebtedness that is scheduled to mature on or prior to the maturity date of the Notes has a Weighted Average Life to Maturity at the time such Refinancing Indebtedness is incurred that is equal to or greater than the Weighted Average Life to Maturity of the portion of the Indebtedness being repaid that is scheduled to mature on or prior to the maturity date of the Notes. "Related Business Investment" means any Investment directly by the Company or one or more of its Wholly Owned Restricted Subsidiaries in any business that is closely related to or complements the business of the Company and its Subsidiaries as such business exists on the date hereof. "Restricted Debt Payment" means any purchase, redemption, defeasance (including without limitation in substance or legal defeasance) or other acquisition or retirement for value, directly or indirectly, by the Company or a Subsidiary of the Company, prior to the scheduled maturity or prior to any scheduled repayment of principal or sinking fund payment, as the case may be, in respect of Indebtedness of the Company that is subordinate in right of payment to the Notes other than a Restricted Debt Payment made with the proceeds of a substantially concurrent sale (other than to a Subsidiary of the Company or an employee stock ownership plan) of the Company's Qualified Capital Stock, provided that all Indebtedness so purchased, redeemed, defeased or otherwise acquired or retired for value promptly is surrendered for cancellation to the trustee for such Indebtedness. "Restricted Investment", with respect to any Person, means any Investment by such Person in any of its Affiliates or in any Person other than a Wholly Owned Restricted Subsidiary other than (i) a Permitted Investment or (ii) an Investment made with the proceeds of a substantially concurrent sale (other than to a Subsidiary of the Company or an employee stock ownership plan) of the Company's Qualified Capital Stock. "Restricted Payment" means with respect to any Person: (i) the declaration of any dividend (other than a dividend declared by a Wholly Owned Restricted Subsidiary to holders of its Common Equity) or the making of any other payment or distribution of cash, securities or other property or assets in respect of such Person's Capital Stock, except that a dividend payable solely in Qualified Capital Stock of such Person shall not constitute a Restricted Payment (for purposes of this clause (i), the declaration of any such dividend, or the making of any other such distribution, by any Restricted Subsidiary shall only constitute an Restricted Payment to the extent of the amounts paid or payable to Persons other than the Company or a Wholly Owned Restricted Subsidiary); (ii) any payment on account of the purchase, redemption, retirement or other acquisition for value of such Person's Capital Stock or any other payment or distribution made in respect thereof, either directly or indirectly); (iii) any Restricted Investment; or (iv) any Restricted Debt Payment. "Restricted Subsidiary" means each of the Subsidiaries of the Company which, as of the determination date, is not an Unrestricted Subsidiary of the Company. "Sale and Leaseback Transaction" means with respect to any Person an arrangement with any bank, insurance company or other lender or investor or to which such lender or investor is a party, providing for the leasing by such Person or any of its Subsidiaries of any property or asset of such Person or any of its Subsidiaries which has been or is being sold or transferred by such Person or such Subsidiary to such lender or investor or to any Person to whom funds have been or are to be advanced by such lender or investor on the security of such 84 property or asset. Notwithstanding the foregoing, no transaction exclusively between the Company and any Wholly Owned Restricted Subsidiary shall be deemed to constitute a Sale and Leaseback Transaction. "Senior Indebtedness" means all Indebtedness of the Company other than Indebtedness that is specifically designated, by the terms of the instrument creating or evidencing the same, as not being senior in right of payment to the Notes. "Single Purpose Subsidiary" of any Person means a Subsidiary of such Person which has no Subsidiaries other than Unrestricted Subsidiaries and the activities of which are limited to (i) ownership of all or a portion of the interests in a single project constituting one or more Permitted Businesses, either directly or through the ownership of Capital Stock of another Person and (ii) the development, engineering, design, project management, construction or operation of such project. "Subsidiary" of any Person means (i) any corporation of which at least a majority of the aggregate voting power of all classes of the Common Equity is owned by such Person directly or through one or more other Subsidiaries of such Person and (ii) any entity other than a corporation in which such Person, directly or indirectly, owns at least a majority of the Common Equity of such entity. "Unrestricted Subsidiary" means American Venture Holdings, Inc., a Delaware corporation, American Venture Investments Incorporated, a Delaware corporation, Excell Development Construction, Inc., a Delaware corporation, ICF Kaiser Holdings Unlimited, Inc., a Delaware corporation, ICF Leasing Corporation, Inc., a Delaware corporation, International Systems, Inc., a Colorado corporation, Cygna Consulting Engineers and Project Management, Inc., a California corporation, ICF Kaiser Engineers Eastern Europe, Inc., a Delaware corporation, and ICF Kaiser Netherlands, B.V., a Netherlands corporation, and each of the other Subsidiaries of the Company so designated by a resolution adopted by the Board of Directors of the Company and whose creditors have no direct or indirect recourse (including without limitation recourse with respect to the payment of principal of or interest on Indebtedness of such Subsidiary) to the Company or a Restricted Subsidiary other than a Lien on the Capital Stock of such Unrestricted Subsidiary; provided, however, that (a) no Subsidiary may be an Unrestricted Subsidiary if it owns any Capital Stock of a Restricted Subsidiary and (b) the Board of Directors of the Company will be prohibited after the date of this Indenture from designating as an Unrestricted Subsidiary any Subsidiary existing on the date of this Indenture. The Board of Directors of the Company may designate an Unrestricted Subsidiary to be a Restricted Subsidiary, provided that (i) any such designation shall be deemed to be an incurrence by the Company and its Restricted Subsidiaries of the Indebtedness (if any) of such designated Subsidiary for purposes of the provisions of Section 5.04 as of the date of such designation and (ii) immediately after giving effect to such designation and the incurrence of any such additional Indebtedness, the Company and its Restricted Subsidiaries could incur $1.00 of additional Senior Indebtedness pursuant to the provisions of Section 5.04. Any such designation or redesignation by the Board of Directors shall be evidenced to the Trustee by the filing with the trustee of a certified copy of the Board Resolution of the Company giving effect to such designation or redesignation and an Officers' Certificate certifying that such designation or redesignation complied with the foregoing conditions and setting forth the underlying calculations of such Officers' Certificate, and upon which certificate the trustee shall conclusively rely without any investigation whatsoever. "Voting Stock", with respect to any Person, means securities of any class of Capital Stock of such Person entitling the holders thereof (whether at all times or only so long as no senior class of stock has voting power by reason of any contingency) to vote in the election of members of the board of directors of such Person. "Weighted Average Life to Maturity", when applied to any Indebtedness at any date, means the number of years obtained by dividing (i) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payment of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment by (ii) the then outstanding principal amount of such Indebtedness. 85 "Wholly Owned Restricted Subsidiary" of the Company means a Restricted Subsidiary of the Company, of which 100% of the Common Equity (except for directors' qualifying shares of certain minority interests owned by other Persons solely due to local law requirements that there be more than one stockholder, but which interest is not in excess of what is required for such purpose) is owned directly by the Company or through one or more Wholly Owned Restricted Subsidiaries of the Company. "Wholly Owned Subsidiary" of the Company means a Subsidiary of the Company, of which 100% of the Common Equity (except for directors' qualifying shares or certain minority interests owned by other Persons solely due to local law requirements that there be more than one stockholder, but which interest is not in excess of what is required for such purpose) is owned directly by the Company or one or more Wholly Owned Subsidiaries of the Company. 86 CERTAIN FEDERAL INCOME TAX CONSIDERATIONS The following discussion is a summary of the material United States Federal income tax consequences relevant to the exchange of Old Notes for Exchange Notes and the ownership and disposition of the Exchange Notes by holders acquiring Exchange Notes pursuant to the Exchange Offer, and represents the opinion of Crowell & Moring LLP, special tax counsel to the Company, insofar as it relates to matters of law and legal conclusions. The discussion is based on the current provisions of the Internal Revenue Code of 1986, as amended (the "Code"), applicable Treasury Regulations, judicial authority and administrative rulings and practice. Any of such authorities are subject to change at any time by legislative, judicial or administrative action. Any such changes may be applied retroactively in a manner that could adversely affect a holder of the Exchange Notes. Further, there can be no assurance that the Internal Revenue Service (the "IRS") will not take a contrary view, and no rulings from the IRS have been or will be sought. This summary is for general informational purposes only and does not purport to address specific tax consequences that may be relevant to certain persons (including, for example, foreign persons, financial institutions, broker-dealers, insurance companies or tax-exempt organizations and persons in special situations such as those who hold Exchange Notes as part of a straddle). EACH HOLDER OF OLD NOTES IS URGED TO CONSULT ITS OWN TAX ADVISORS WITH RESPECT TO FEDERAL INCOME TAX CONSIDERATIONS THAT MAY BE SPECIFIC TO IT, AS WELL AS WITH RESPECT TO ANY STATE, LOCAL OR FOREIGN TAX CONSIDERATIONS OF THE EXCHANGE OF OLD NOTES FOR EXCHANGE NOTES AND OF HOLDING OR DISPOSING OF THE EXCHANGE NOTES. EXCHANGE OF NOTES The exchange of Exchange Notes for Old Notes pursuant to the Exchange Offer should not be treated as a taxable exchange for federal income tax purposes because, other than the fact that the Exchange Notes will be registered, the terms of the Exchange Notes will be identical in all material respects to the terms of the Old Notes. The Holder must continue to include interest and original issued discount in income as if the exchange had not occurred. INTEREST AND ORIGINAL ISSUE DISCOUNT In general, a Holder of a debt instrument issued with original issue discount ("OID") must include a portion of the OID in gross income as interest in each taxable year or portion thereof in which the Holder holds the debt instrument even if the Holder has not received a cash payment in respect of such OID. Because the original Holders of the Old Notes also purchased warrants, each Old Note will be treated as part of an "investment unit" for federal income tax purposes. Under Treasury Regulations regarding OID (the "OID Regulations"), the issue price of an investment unit is equal to the first price at which a substantial amount of units are sold to the public (not including bond houses, brokers, or similar persons or organizations acting in the capacity of an underwriter, placement agent or wholesaler). The issue price of a unit is then allocated between the securities comprising each unit based on their relative fair market values. Under the OID Regulations, the issuer's allocation is binding on all holders of the securities, unless a holder explicitly discloses to the IRS that its allocation differs from that of the issuer. The Company has allocated approximately $1.00 as the issue price of each warrant. This allocation reflects the Company's judgment as to the value of the warrants at the time of issuance. This allocation is not binding on the IRS. Each Old Note bears OID equal to the excess of its "stated redemption price at maturity" over its "issue price." The stated redemption price at maturity of an Old Note and of an Exchange Note is the sum of its stated principal amount and all other payments including interest payments due thereunder. The OID Regulations, as modified by the contingent payment debt instrument rules described below, will apply to the Exchange Notes. 87 A Holder is generally required to include OID in income periodically over the term of an Exchange Note without regard to when the cash or other payments attributable to such income are received. In general, a Holder must include in gross income for Federal income tax purposes the sum of the daily portions of OID with respect to the Exchange Note for each day during the taxable year on which such Holder holds the Exchange Note ("Accrued OID"). The daily portion is determined by allocating to each day of any accrual period within a taxable year a pro rata portion of the OID allocable to such accrual period. The amount of such OID is equal to the adjusted issue price of the Exchange Note (the issue price of the Old Note increased by the Accrued OID for all prior accrual periods and decreased by any cash payments on the Old Note and the Exchange Note) at the beginning of the accrual period multiplied by the yield to maturity of the Exchange Note. For purposes of computing OID, the Company will use six-month accrual periods that generally correspond to the stated interest payment periods of the Exchange Notes, with the exception of an initial short accrual period. Any payment made under an Exchange Note will be treated first as a payment of OID (which was previously includable in income) to the extent of OID that has accrued as of the date of payment and has not been allocated to prior payments and second as a payment of principal (which, generally, is not includable in income). CONTINGENT PAYMENT DEBT INSTRUMENTS The Exchange Notes provide that if certain Earnings targets are achieved by the Company, the Temporary Interest Rate of 13 percent will be reduced to 12 percent. See "Description of the Notes--Interest Rate Increase." Because the Exchange Notes provide for a change in the interest rate in the event a contingency is satisfied, the Exchange Notes will be treated as contingent payment debt instruments and will be subject to different OID rules than debt instruments providing only for noncontingent payments. Treasury Regulations provide that, with respect to a contingent payment debt instrument issued for money such as the Exchange Notes (the "Contingent Payment Debt Regulations"), interest on an Exchange Note must be taken into account under the so-called noncontingent bond method, whether or not the amount of any interest payment is fixed or determinable. The amount of interest that is taken into account for each accrual period is determined by constructing a projected payment schedule for the debt instrument and applying rules similar to those described above for accruing OID on a noncontingent debt instrument. If the actual amount of a contingent payment is not equal to the projected amount, appropriate adjustments are made to reflect the difference. Under this method, the amount of income, deductions, gain and loss with respect to an Exchange Note has been computed based on the following steps: Step 1: The Company has determined the "comparable yield" of an Exchange Note by computing the yield at which the Company could issue a fixed-rate debt instrument with terms and conditions similar to those of the Exchange Notes. Step 2: A "projected payment schedule" which will produce the comparable yield has been determined by the Company. The projected payment schedule includes each noncontingent payment on an Exchange Note and an amount for each contingent payment based on the expected value of the contingent payment as of the issue date. Step 3: The daily portions of interest on an Exchange Note for a taxable year have been determined by multiplying the comparable yield times the adjusted issue price of an Exchange Note at the beginning of an accrual period, and allocating to each day in the accrual period the ratable portion of interest accruing in the period. The "adjusted issue price" of an Exchange Note is equal to the Exchange Note's issue price (as defined above), increased by any interest previously accrued (without regard for adjustments described in the following paragraph), and decreased by the amount of any noncontingent payment and the projected amount of any contingent payment previously made on the Exchange Note. Step 4: Adjustments are then made to the amount of interest attributable to an Exchange Note during a taxable year for any differences between projected and actual contingent payments. A positive adjustment is made if the amount of a contingent payment is more than the projected amount of the contingent payment. A negative adjustment is made if the amount of a payment is less than the projected amount of the payment. 88 Positive and negative adjustments are netted at the end of a tax year, and a net positive adjustment is treated as additional interest to a Holder, while a net negative adjustment would reduce the amount of interest that a Holder would otherwise account for with respect to an Exchange Note. The Company's calculation of the comparable yield on the Exchange Notes and the Company's projected payment schedule are used to determine a Holder's interest, accruals and adjustments unless these determinations are unreasonable and the Holder explicitly discloses to the IRS that its projected payment schedule differs from that of the issuer. The Company will provide the projected payment schedule to the Trustee for distribution to Holders of the Exchange Notes. SALE OR RETIREMENT OF NOTES A Holder's basis in an Exchange Note will be increased by the interest previously accrued by the Holder on the Exchange Note as described above (determined without regard for any adjustments), and decreased by the amount of any noncontingent payment and the projected amount of any contingent payment previously made on the Exchange Note. Upon the sale, exchange, retirement or other disposition of an Exchange Note, a Holder will generally recognize gain or loss equal to the difference between the amount realized on the disposition and the Holder's adjusted tax basis in the Exchange Note. If any contingent payment remains unpaid at the time of sale, exchange or retirement of the Note, including a contingent payment due on the retirement of an Exchange Note, then any gain recognized by a Holder is treated as ordinary interest income for federal income tax purposes. Any loss recognized by a Holder on the sale, exchange or retirement of an Exchange Note is ordinary loss to the extent that the Holder's total interest inclusions on the Exchange Note exceed the total net negative adjustments on the Exchange Note that the Holder took into account as ordinary loss. BOND PREMIUM, MARKET DISCOUNT, ACQUISITION PREMIUM NOT TO APPLY The Contingent Payment Debt Regulations provide that the premium and discount rules of the OID Regulations do not apply to Contingent Payment Debt Instruments. Instead, a Holder that purchases an Exchange Note for more or less than the Exchange Note's adjusted issue price accrues interest on the Exchange Notes based on the projected payment schedule determined as of the issue date by the Company. However, upon acquisition, the Holder must allocate any difference between the Exchange Note's adjusted issue price and the Exchange Note's basis to daily portions of interest or to projected payments over the remaining term of the Exchange Note. Where a Holder's basis is greater than the Exchange Note's adjusted issue price, the allocation is treated as a negative adjustment as described above. Where a Holder's basis is less than the Exchange Note's adjusted issue price, the allocation is treated as a positive adjustment as described above. The Contingent Payment Debt Regulations are very complex and this summary does not purport to be a complete analysis or listing of all the potential tax consequences which may be relevant to a decision to purchase the Exchange Notes. Investors are urged to consult their own tax advisers regarding the application of the Contingent Payment Debt Regulations to an investment in the Exchange Notes. BACKUP WITHHOLDING A Holder of an Exchange Note may be subject to backup withholding at the rate of 31% with respect to interest paid on an Exchange Note and gross proceeds upon the sale or retirement of an Exchange Note unless such holder (a) is a corporation or other exempt recipient and, when required, demonstrates this fact or (b) provides, when required, a correct taxpayer identification number, certifies that backup withholding is not in effect and otherwise complies with applicable requirements of the backup withholding rules. Furthermore, a Holder of an Exchange Note that does not provide the Company with the Holder's correct taxpayer identification number may be subject to penalties imposed by the IRS. Backup withholding will be made when cash payments are made with respect to the Exchange Notes. Backup withholding is not an additional tax; any amounts so withheld are creditable against the Holder's federal income tax liability. 89 OLD NOTES REGISTRATION RIGHTS; ADDITIONAL INTEREST The Company and the Initial Purchaser have entered into a registration rights agreement (the "Registration Rights Agreement") pursuant to which the Company agreed, for the benefit of the holders of the Old Notes, that it would, at its own cost, (i) within 45 days after the date of original issuance of the Old Notes (December 23, 1996) (the "Issue Date"), file this Registration Statement with respect to this Exchange Offer for the Exchange Notes, which will have terms identical in all material respects to the Old Notes (except that the Exchange Notes will not contain terms with respect to transfer restrictions), (ii) use its best efforts to cause this Registration Statement to be declared effective under the Securities Act within 135 days after the Issue Date and (iii) use its best efforts to consummate the Exchange Offer within 180 days after the Issue Date. The Company will keep the Exchange Offer open for not less than 20 business days (or longer if required by applicable law) after the date notice of the Exchange Offer is mailed to the holders of the Old Notes. For each Old Note surrendered to the Company pursuant to the Exchange Offer, the holder of such Old Note will receive an Exchange Note having a principal amount equal to that of the surrendered Old Note. Interest on each Exchange Note will accrue from December 31, 1996, the last interest payment date on which interest was paid on the Old Notes surrendered pursuant to the Exchange Offer. The Registration Rights Agreement also provides an agreement to include in this Prospectus certain information necessary to allow a broker-dealer who holds Old Notes that were acquired for its own account as a result of market- making activities or other ordinary course trading activities (other than Old Notes acquired directly from the Company or one of its Affiliates) and any other person subject to the prospectus delivery requirements of the Securities Act to exchange such Old Notes pursuant to the Exchange Offer and to satisfy the prospectus delivery requirements in connection with resales of Exchange Notes received by such person in the Exchange Offer and to maintain the effectiveness of this Registration Statement and to amend and supplement this Prospectus contained therein for such purposes for a period not to exceed 180 days after consummation of the Exchange Offer. Under existing interpretations of the Commission contained in several no- action letters to third parties, the Exchange Notes would in general be freely tradable after the Exchange Offer without further registration under the Securities Act. However, any holder of Old Notes who is an Affiliate of the Company within the meaning of the Securities Act or who intends to participate in the Exchange Offer for the purpose of distributing the Exchange Notes (i) will not be able to rely on the interpretation of the staff of the Commission, (ii) will not be able to tender its Old Notes in the Exchange Offer and (iii) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any sale or transfer of the Old Notes unless such sale or transfer is made pursuant to an exemption from such requirements. Each holder of Old Notes who participates in the Exchange Offer will be required to represent that at the time of commencement of the Exchange Offer such holder will have no arrangement or understanding with any Person to participate in the distribution of the Exchange Notes in violation of the provisions of the Securities Act and that such holder is not an Affiliate of the Company within the meaning of the Securities Act and is not acting on behalf of any persons or entities who could not truthfully make the foregoing representations. In the event that (i) any changes in law or the applicable interpretations of the staff of the Commission do not permit the Company to effect the Exchange Offer, (ii) the Exchange Offer is not consummated within 180 days after the Issue Date, (iii) if, under certain circumstances, after the consummation of the Exchange Offer, the Initial Purchaser continues to hold Exchange Notes and so requests, (iv) the holders of not less than a majority in aggregate principal amount of the Registrable Notes (as defined in the Registration Rights Agreement) determine that the interests of the holders would be materially adversely affected by consummation of the Exchange Offer or (v) in the case of any holder that participates in the Exchange Offer, such holder does not receive Exchange Notes on the date of the exchange that may be sold without restriction under state and Federal securities laws (other than due solely to the status of such holder as an Affiliate of the Company within the meaning of the Securities Act), then the Company shall promptly deliver to the holders and the Trustee written notice thereof and, at its cost, as promptly as reasonably practicable, file the Shelf Registration Statement. 90 The Company shall use its best efforts to cause the Shelf Registration Statement to be declared effective under the Securities Act as promptly as reasonably practicable and to keep the Shelf Registration Statement continuously effective under the Securities Act until three years after the Issue Date or such shorter period ending when all Old Notes covered by the Shelf Registration Statement have been sold in the manner set forth and as contemplated in the Shelf Registration Statement. The Company will, in the event of the filing of a Shelf Registration Statement, provide to each holder of the Old Notes copies of the prospectus that is a part of the Shelf Registration Statement, notify each such holder when the Shelf Registration Statement for the Old Notes has become effective and take certain other actions as are required to permit unrestricted resales of the Old Notes. A holder of Old Notes that sells such Old Notes pursuant to the Shelf Registration Statement generally will be required to be named as a selling securityholder in the related prospectus and to deliver a prospectus to purchasers, will be subject to certain of the civil liability provisions under the Securities Act in connection with such sales and will be bound by the provisions of the Registration Rights Agreement that are applicable to such a holder (including certain indemnification obligations). In addition, each holder of the Old Notes will be required to deliver information to be used in connection with the Shelf Registration Statement and to provide comments on the Shelf Registration Statement within the time periods set forth in the Registration Rights Agreement in order to have its Old Notes included in the Shelf Registration Statement and to benefit from the provisions regarding liquidated damages set forth in the following paragraph. Although the Company intends that this Registration Statement become effective, there can be no assurance that it will become effective. If the Company fails to comply with the above provisions or if the Registration Statement fails to become effective, then, as liquidated damages, additional interest (the "Additional Interest") shall become payable in respect of the Old Notes as follows: (i) if this Registration Statement or the Shelf Registration Statement is not filed within 45 days after the Issue Date, Additional Interest shall be accrued on the Old Notes over and above the stated interest at a rate of 0.50% per annum for the first 90 days immediately following the 45th day after the Issue Date, such Additional Interest rate increasing by an additional 0.50% per annum at the beginning of each subsequent 90-day period; (ii) if this Registration Statement or the Shelf Registration Statement is not declared effective within 135 days after the Issue Date, then, commencing on the 136th day after the Issue Date, Additional Interest shall be accrued on the Old Notes over and above the stated interest at a rate of 0.50% per annum for the first 90 days immediately following the 135th day after the Issue Date, such Additional Interest rate increasing by an additional 0.50% per annum at the beginning of each subsequent 90-day period; or (iii) if either (A) the Company has not exchanged the Exchange Notes for all Old Notes validly tendered in accordance with the terms of the Exchange Offer on or prior to 180 days after the Issue Date, or (B) this Registration Statement ceases to be effective at any time prior to the time that the Exchange Offer is consummated or (C) if applicable, the Shelf Registration Statement has been declared effective and such Shelf Registration Statement ceases to be effective at any time prior to the third anniversary of the Issue Date, then Additional Interest shall accrue on the Old Notes (over and above any interest otherwise payable on the Old Notes) at a rate of .50% per annum for the first 90 days commencing on (x) the 181st day after the Issue Date, in the case of clause (A) above, or (y) the date this Registration Statement ceases to be effective without being declared effective within five business days, in the case of clause (B) above, or (z) the day the Shelf Registration Statement ceases to be effective, in the case of clause (C) above, such Additional Interest rate increasing by an additional 0.50% per annum at the beginning of each subsequent 90-day period: provided, however, that the Additional Interest rate on the Old Notes may not exceed 2% per annum in the aggregate; provided further, that (1) upon the filing of this Registration Statement or a Shelf Registration Statement (in the case of clause (i) above), (2) upon the effectiveness of this Registration Statement or a Shelf Registration Statement (in the case of clause (ii) above), or (3) upon the exchange of Exchange Notes for all Old Notes tendered (in the case of clause (iii)(A) above) or upon the effectiveness of this Registration Statement that has ceased to remain effective (in the case of clause (iii)(B) above), or upon the effectiveness of the Shelf Registration Statement that has ceased to remain effective (in the case of clause (iii)(C) above), Additional 91 Interest on the Old Notes as a result of such clause (i), (ii) or (iii) above (or the relevant subclause thereof), as the case may be, shall cease to accrue. Any amounts of Additional Interest due pursuant to clause (i), (ii) or (iii) above will be payable in cash, semiannually on each June 30 and December 31 of each year, commencing with the first such date occurring after any such Additional Interest commences to accrue. The amount of Additional Interest will be determined by multiplying the applicable Additional Interest rate by the principal amount of the Notes, multiplied by a fraction, the numerator of which is the number of days such Additional Interest rate was applicable during such period (determined on the basis of a 360-day year consisting of twelve 30-day months) and the denominator of which is 360. The summary herein of certain provisions of the Registration Rights Agreement does not purport to be complete and is subject to, and is qualified in its entirety by reference to, all the provisions of the Registration Rights Agreement, a copy of which is an exhibit to this Registration Statement and is available without charge by writing to the Company at 9300 Lee Highway, Fairfax, Virginia, 22031, Attention: Secretary or by telephone at (703) 934- 3600. OLD NOTES TRANSFER RESTRICTIONS Because the following restrictions will apply to any Old Notes held by holders who do not participate in the Exchange Offer, holders of Old Notes are advised to consult legal counsel prior to making any offer, resale, pledge or transfer of any of the Old Notes. None of the Old Notes have been registered under the Securities Act and they may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Accordingly, the Old Notes were sold only (i) to a limited number of "qualified institutional buyers" (as defined in Rule 144A promulgated under the Securities Act) ("QIBs") in compliance with Rule 144A; (ii) to a limited number of other institutional "accredited investors" (as defined in Rule 501(a)(1), (2), (3) or (7) promulgated under the Securities Act) ("Accredited Investors") that, prior to their purchase of any Old Notes delivered to the Initial Purchaser a letter containing certain representations and agreements; and (iii) outside the United States to persons other than U.S. persons ("foreign purchasers," which term shall include dealers or other professional fiduciaries in the United States acting on a discretionary basis for foreign beneficial owners (other than an estate or trust)) in reliance upon Regulation S under the Securities Act. As used herein, the term "United States" and "U.S. person" have the meanings given to them in Regulation S under the Securities Act. Each purchaser of Old Notes has been deemed to have represented and agreed as follows: 1. It purchased the Old Notes (and the related guarantees) for its own account or account with respect to which it exercises sole investment discretion and that it and any such account is (i) a QIB, and is aware that the sale to it is being made in reliance on Rule 144A; (ii) an Accredited Investor; or (iii) a foreign purchaser that is outside the United States (or a foreign purchaser that is a dealer or other fiduciary as referred to above). 2. It acknowledged that the Old Notes have not been registered under the Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except as set forth below. 3. It shall not resell or otherwise transfer any of such Old Notes within three years after the original issuance of the Notes except (i) to the Company or any subsidiary thereof, (ii) inside the United States to a QIB in compliance with Rule 144A, (iii) inside the United States to an Accredited Investor that, prior to such transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to the Trustee a signed letter containing certain representations and agreements relating to the restrictions on transfer of the Old Notes (the form of which letter can be obtained from the Trustee), (v) outside the United States in compliance 92 with Regulation S under the Securities Act, (v) pursuant to the exemption from registration provided by Rule 144 promulgated under the Securities Act (if available), or (vi) pursuant to an effective registration under the Securities Act. 4. It agreed that it will give to each person to whom it transfers Old Notes notice of any restrictions on transfer of such Old Notes. 5. It understands that the Old Notes bear, and if not exchanged pursuant to the Exchange Offer will continue to bear, a legend substantially to the following effect unless otherwise agreed by the Company and the holder thereof: THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A PROMULGATED UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501 (a) (1), (2), (3) OR (7) PROMULGATED UNDER THE SECURITIES ACT) (AN "ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S PROMULGATED UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE ISSUER THEREOF OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A PROMULGATED UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHED (OR HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S PROMULGATED UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 PROMULGATED UNDER THE SECURITIES ACT (IF AVAILABLE), OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY, IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE ISSUER SUCH CERTIFICATIONS, WRITTEN LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE RESPECTIVE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. 6. It acknowledged that the Trustee will not be required to accept for registration of transfer any Old Note acquired by it, except upon presentation of evidence satisfactory to the Company and the Trustee that the restrictions set forth herein have been complied with. 7. It acknowledged that the Company, the Initial Purchaser and others will rely upon the truth and accuracy of the foregoing acknowledgments, representations and agreements and agreed that if any of the acknowledgments, representations or agreements deemed to have been made by its purchase of Old Notes are no longer accurate, it shall promptly notify the Company and the Initial Purchaser. If it acquired any Notes as a fiduciary or agent for one or more investor accounts, it represented that it has sole investment 93 discretion with respect to each such account and it has full power to make the foregoing acknowledgments, representations and agreements on behalf of each account. Holders of Old Notes shall not sell or transfer Old Notes to, and each purchaser of Old Notes represented and covenanted that it did not acquire the Old Notes for or on behalf of, any pension or welfare plan (as defined in Section 3 or the Employee Retirement Income Security Act of 1974 ("ERISA")), except that such a purchase for or on behalf of a pension or welfare plan shall be permitted: (1) to the extent such purchase is made by or on behalf of a bank collective investment fund maintained by the purchaser in which no plan (together with any other plans maintained by the same employer or employee organization) has an interest in excess of 10% of the total assets in such collective investment fund and the applicable conditions of Prohibited Transaction Exemption 91-38 issued by the Department of Labor are satisfied; (2) to the extent such purchase is made by or on behalf of an insurance company pooled separate account maintained by the purchaser in which, at any time while the Units are outstanding, no plan (together with any other plans maintained by the same employer or employee organization) has an interest in excess of 10% of the total of all assets in such pooled separate account and the applicable conditions of Prohibited Transaction Exemption 90-1 issued by the Department of Labor are satisfied; (3) to the extent such purchase is made on behalf of a plan by (A) an investment adviser registered under the Investment Advisers Act of 1940 that had as of the last day of its most recent fiscal year total assets under its management and control in excess of $50,000,000 and had shareholders' or partners' equity in excess of $750,000, as shown in its most recent balance sheet prepared in accordance with generally accepted accounting principles, or (B) a bank as defined in Section 202(a) of the Investment Advisers Act of 1940 with equity capital in excess of $1,000,000 as of the last day of its most recent fiscal year and, in either case, such investment adviser or bank is otherwise a qualified professional asset manager, as such term is used in Prohibited Transaction Exemption 84-14 issued by the Department of Labor, and the assets of such plan when combined with the assets of other plans established or maintained by the same employer (or affiliate thereof) or employee organization and manager by such investment advisor or bank, do not represent more than 20% of the total client assets managed by such investment advisor or bank and the applicable conditions of Prohibited Transaction Exemption 84-14 are otherwise satisfied; or (4) to the extent such plan is a governmental plan (as defined in Section 3 of ERISA) which is not subject to the provisions of Title I of ERISA or Section 4975 of the Code. Each purchaser of Old Notes also represented that (a) if it is an insurance company, no part of the funds used to purchase the Old Notes purchased by it constitutes assets allocated to any separate account maintained by it such that the use of such funds constitutes a transaction in violation of Section 406 of ERISA or a Prohibited Transaction, as such term is defined in Section 4975 of the Code, which could be subject to, respectively, a civil penalty assessed pursuant to Section 502 of ERISA or a tax imposed by Section 4975 of the Code and (b) if it is not an insurance company, that no part of the funds used to purchase the Old Notes purchased by it constitutes assets allocated to any trust, plan or account which contains the assets of any employee pension benefit plan, welfare plan or account prohibited pursuant to the preceding paragraph of this "Transfer Restrictions." Holders of Old Notes are advised that the Prohibited Transaction Exemptions described above do not relieve a fiduciary or other party from all prohibited transaction provisions of the Code and ERISA and from ERISA's general fiduciary responsibilities including, but not limited to, a fiduciary's obligation to discharge his, her, or its duties solely in the interests of participants and beneficiaries. As a result of the foregoing restrictions, holders of Old Notes are advised to consult legal counsel prior to making any offer, resale, pledge, hypothecation or other transfer or disposition of the Old Notes or any interest therein. 94 BOOK-ENTRY; DELIVERY AND FORM Old Notes are represented by a single, global Old Note in registered form, registered in the name of the nominee of DTC. The Exchange Notes exchanged for Old Notes represented by the global Old Note will be represented by one or more global Exchange Notes in registered form (the "Global Note"), registered in the name of the nominee of DTC. Exchange Notes issued to persons other than QIBs or Accredited Investors in exchange for Old Notes held by such investors will be issued only in certificated, fully registered, definitive form ("Certificated Notes"). Except as described herein, Exchange Notes in the form of Certificated Notes will not be issued in exchange for the Global Note or interests therein. THE GLOBAL NOTE The Company expects that pursuant to procedures established by the DTC (i) upon deposit of the Global Note, DTC or its custodian will credit, on its internal system, portions of the Global Note which shall comprise the corresponding respective principal amount of the Global Note to the respective accounts of Persons who have accounts with such depository and (ii) ownership of the Exchange Notes will be shown on, and the transfer of ownership thereof will be effected only through, records maintained by DTC or its nominee (with respect to interests of participants) and the records of participants (with respect to interests of Persons other than participants). Ownership of beneficial interests in the Global Note will be limited to Persons who have accounts with DTC ("participants") or Persons who hold interests through participants. QIBs may hold their interests in the Global Note directly through DTC if they are participants in such system, or indirectly through organizations that are participants in such system. So long as DTC, or its nominee, is the registered owner or holder of the Global Note, DTC or such nominee will be considered the sole owner or holder of the Exchange Notes represented by the Global Note for all purposes under the Indenture. No beneficial owner of an interest in the Global Note will be able to transfer such interest except in accordance with DTC's applicable procedures, in addition to those provided for under the Indenture. Payments of the principal of, premium (if any) and interest on, the Global Note will be made to DTC or its nominee, as the case may be, as the registered owner thereof. None of the Company, the Trustee or any Paying Agent will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in the Global Note or for maintaining, supervising or reviewing any records relating to such beneficial ownership interest. The Company expects DTC or its nominee, upon receipt of any payment of the principal of, premium (if any) and interest on, the Global Note, will credit participants' accounts with payments in amounts proportionate to their respective beneficial interests in the principal amount of such Global Note as shown on the records of DTC or its nominee. The Company also expects that payments by participants to owners of beneficial interests in any such Global Note held through such participants will be governed by standing instructions and customary practice, as is now the case with securities held for the accounts of customers registered in the names of nominees for such customers. Such payments will be the responsibility of such participants. Transfers between participants in DTC will be effected in the ordinary way in accordance with DTC rules and be settled in clearinghouse funds. If a holder requires physical delivery of a Certificated Note for any reason, including to sell Exchange Notes to Persons in states that require physical delivery of such Exchange Notes or to pledge such Exchange Notes, such holder must transfer its interest in the Global Note in accordance with the normal procedures of DTC and the procedures set forth in the Indenture. DTC has advised the Company that DTC will take any action permitted to be taken by a holder of Exchange Notes (including the presentation of Exchange Notes for exchange as described below) only at the direction of one or more participants to whose account the DTC interests in the Global Note is credited and only in respect 95 of such portion of the aggregate principal amount of Exchange Notes as to which such participant or participants has or have given such direction. However, if there is an Event of Default under the Indenture, DTC will exchange the Global Note for Certificated Notes which it will distribute to its participants. DTC has advised the Company as follows: DTC is a limited purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the Uniform Commercial Code and a "Clearing Agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities for its participants and facilitate the clearance and settlement of securities transactions between participants through electronic book-entry changes in accounts of its participants, thereby eliminating the need for physical movement of certificates. Participants include securities brokers and dealers, banks, trust companies and clearing corporations and certain other organizations. Indirect access to the DTC system is available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly ("indirect participants"). Although DTC has agreed to the foregoing procedures in order to facilitate transfers of interests in the Global Note among participants of DTC, it is under no obligation to perform such procedures, and such procedures may be discontinued at any time. Neither of the Company nor the Trustee will have any responsibility for the performance by DTC or its participants or indirect participants of their respective obligations under the rules and procedures governing their operations. CERTIFICATED NOTES If DTC is at any time unwilling or unable to continue as a depository for the Global Note and a successor depository is not appointed by the Company within 90 days, the Company will issue Certificated Notes in exchange for the Global Note. PLAN OF DISTRIBUTION Based on interpretations by the Staff set forth in no-action letters issued to third parties, the Company believes that Exchange Notes issued pursuant to the Exchange Offer in exchange for the Old Notes may be offered for resale, resold and otherwise transferred by holders thereof (other than any holder that is (i) an Affiliate of the Company, (ii) a broker-dealer who acquired Old Notes directly from the Company or (iii) a broker-dealer who acquired Old Notes as a result of market-making or other trading activities) without compliance with the registration and prospectus delivery provisions of the Securities Act provided that such Exchange Notes are acquired in the ordinary course of such holders' business, and such holders are not engaged in, and do not intend to engage in, and have no arrangement or understanding with any person to participate in, a distribution of such Exchange Notes; provided that broker-dealers ("Participating Broker-Dealers") receiving Exchange Notes in the Exchange Offer will be subject to a prospectus delivery requirement with respect to resales of such Exchange Notes. To date, the Staff has taken the position that Participating Broker-Dealers may fulfill their prospectus delivery requirements with respect to transactions involving an exchange of securities such as the exchange pursuant to the Exchange Offer (other than a resale of an unsold allotment from the sale of the Old Notes to the Initial Purchaser) by means of this Prospectus. Pursuant to the Registration Rights Agreement, the Company has agreed to permit Participating Broker Dealers and other persons, if any, subject to similar prospectus delivery requirements to use this Prospectus in connection with the resale of such Exchange Notes. The Company has agreed that, for a period of 180 days after the Exchange Date, it will make this Prospectus, and any amendment or supplement to this Prospectus, available to any broker-dealer that requests such documents in the Letter of Transmittal. Each holder of the Old Notes who wishes to exchange its Old Notes for Exchange Notes in the Exchange Offer will be required to make certain representations to the Company as set forth in "The Exchange Offer--Terms and Conditions of the Letter of Transmittal." In addition, each holder who is a broker-dealer and who 96 receives Exchange Notes for its own account in exchange for Old Notes that were acquired by it as a result of market-making activities or other trading activities will be required to acknowledge that it will deliver a prospectus in connection with any resale by it of such Exchange Notes. The Company will not receive any proceeds from any sale of Exchange Notes by broker-dealers. Exchange Notes received by broker-dealers for their own account pursuant to the Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the Exchange Notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or at negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer and/or the purchasers of any such Exchange Notes. Any broker-dealer that resells Exchange Notes that were received by it for its own account pursuant to the Exchange Offer and any broker or dealer that participates in a distribution of such Exchange Notes may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit on any such resale of Exchange Notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. The Company has agreed to pay all expenses incidental to the Exchange Offer other than commissions and concession of any brokers or dealers and will indemnify holders of Registrable Notes (as defined in the Registration Rights Agreement) (including any brokers-dealers) against certain liabilities, including liabilities under the Securities Act, as set forth in the Registration Rights Agreement. LEGAL MATTERS Matters relating to the legality of the Exchange Notes and the related Guarantees have been passed upon for the Company by Paul Weeks, II, Esq., Senior Vice President, General Counsel and Secretary of the Company. As of December 31, 1996, Mr. Weeks owned 36,011 shares of Common Stock, of which 6,474 are held by the Company's ESOP and allocated to his ESOP account and 862 of which are held in a directed investment account under the Company's Retirement Plan. As of December 31, 1996, Mr. Weeks had options to purchase 26,667 shares of Common Stock (11,667 of which are exercisable during the 60- day period beginning December 31, 1996). EXPERTS The ICF Kaiser International, Inc. and Subsidiaries consolidated balance sheets as of December 31, 1995, and February 28, 1995, and the consolidated statements of operations, shareholders' equity and cash flows for the ten months ended December 31, 1995, and for each of the two years in the period ended February 28, 1995, are included in this Prospectus in reliance on the report of Coopers & Lybrand L.L.P., independent accountants, given on the authority of that firm as experts in accounting and auditing. 97 ICF KAISER INTERNATIONAL, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Balance Sheets--September 30, 1996 and December 31, 1995.. F-2 Consolidated Statements of Operations--Nine Months Ended September 30, 1996 and 1995......................................................... F-3 Consolidated Statements of Cash Flows--Nine Months Ended September 30, 1996 and 1995......................................................... F-4 Notes to Consolidated Financial Statements............................. F-5-9 Report of Independent Accountants...................................... F-10 Consolidated Balance Sheets as of December 31, 1995, and February 28, 1995.................................................................. F-11 Consolidated Statements of Operations for the ten months ended December 31, 1995, and for the years ended February 28, 1995 and February 28, 1994....... F-12 Consolidated Statements of Shareholders' Equity for the ten months ended December 31, 1995, and for the years ended February 28, 1995 and February 28, 1994....... F-13 Consolidated Statements of Cash Flows for the ten months ended December 31, 1995, and for the years ended February 28, 1995 and February 28, 1994....... F-14 Notes to Consolidated Financial Statements............................. F-15-38
F-1 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARES)
SEPTEMBER 30, DECEMBER 31, 1996 1995 ------------- ------------ (UNAUDITED) ASSETS Current Assets Cash and cash equivalents......................... $ 21,022 $ 16,357 Contract receivables, net......................... 234,168 228,239 Prepaid expenses and other current assets......... 10,780 20,911 Deferred income taxes............................. 11,938 11,934 -------- -------- Total Current Assets............................ 277,908 277,441 -------- -------- Fixed Assets Furniture, equipment, and leasehold improvements.. 48,839 42,909 Less depreciation and amortization................ (36,595) (33,369) -------- -------- 12,244 9,540 -------- -------- Other Assets Goodwill, net..................................... 50,510 49,259 Investments in and advances to affiliates......... 12,168 10,213 Due from officers and employees................... 986 1,053 Other............................................. 20,719 22,011 -------- -------- 84,383 82,536 -------- -------- $374,535 $369,517 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Current portion of long-term debt................. $ -- $ 5,041 Accounts payable and subcontractors payable....... 76,304 86,429 Accrued salaries and employee benefits............ 59,721 53,060 Accrued interest.................................. 4,061 7,414 Other accrued expenses............................ 14,869 18,594 Income taxes payable.............................. 399 801 Deferred revenue.................................. 14,648 14,327 Other............................................. 5,897 7,186 -------- -------- Total Current Liabilities....................... 175,899 192,852 -------- -------- Long-term Liabilities Long-term debt, less current portion.............. 133,384 120,112 Other............................................. 5,679 5,706 -------- -------- 139,063 125,818 -------- -------- Commitments and Contingencies Minority Interests in Subsidiaries.................. 6,441 2,633 Redeemable Preferred Stock, Liquidation value $20,000............................................ 19,940 19,787 Common Stock, par value $.01 per share: Authorized--90,000,000 shares Issued and outstanding--22,351,209 and 21,263,828 shares........................................... 224 213 Additional Paid-in Capital.......................... 67,158 64,654 Notes Receivable related to Common Stock............ (1,732) (1,732) Retained Earnings (Deficit)......................... (30,805) (32,894) Cumulative Translation Adjustment................... (1,653) (1,814) -------- -------- $374,535 $369,517 ======== ========
See notes to consolidated financial statements. F-2 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
NINE MONTHS ENDED SEPTEMBER 30, --------------------- 1996 1995 ---------- --------- (UNAUDITED) GROSS REVENUE.......................................... $1,023,410 $ 731,795 Subcontract and direct material costs................ (592,295) (377,281) Equity in income of joint ventures and affiliated companies........................................... 2,532 3,068 ---------- --------- SERVICE REVENUE........................................ 433,647 357,582 OPERATING EXPENSES Direct cost of services and overhead................. 354,658 298,466 Administrative and general........................... 49,979 38,619 Depreciation and amortization........................ 7,840 7,326 ---------- --------- OPERATING INCOME....................................... 21,170 13,171 OTHER INCOME (EXPENSE) Interest income...................................... 944 1,488 Interest expense..................................... (12,829) (12,117) ---------- --------- INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS...... 9,285 2,542 Income tax provision................................. 840 1,300 ---------- --------- INCOME BEFORE MINORITY INTERESTS....................... 8,445 1,242 Minority interests in net income of subsidiaries..... 4,725 1,315 ---------- --------- NET INCOME (LOSS)...................................... 3,720 (73) Preferred stock dividends and accretion.............. 1,631 1,616 ---------- --------- NET INCOME (LOSS) AVAILABLE FOR COMMON SHAREHOLDERS.... $ 2,089 $ (1,689) ========== ========= Primary and Fully Diluted Net Income (Loss) Per Common Share................................................. $ 0.10 $ (0.08) ========== ========= Primary and Fully Diluted Weighted Average Common and Common Equivalent Shares Outstanding.................. 21,955 21,427 ========== =========
See notes to consolidated financial statements. F-3 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
NINE MONTHS ENDED SEPTEMBER 30, ------------------- 1996 1995 -------- --------- (UNAUDITED) OPERATING ACTIVITIES: Net income (loss)........................................ $ 3,720 $ (73) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization........................... 7,840 7,326 Provision for losses on contract receivables............ 1,255 1,382 Provision for deferred income taxes..................... (386) 916 Earnings in excess of cash distributions from joint ventures and affiliated companies...................... (282) (1,547) Unusual items, net...................................... 1,498 -- Minority interests in net income of subsidiaries........ 4,725 1,315 Changes in operating assets and liabilities, net of acquisitions: Contract receivables, net.............................. (7,379) (105,645) Prepaid expenses and other current assets.............. 2,139 (10,885) Other assets........................................... (1,293) (3,841) Accounts payable and accrued expenses.................. (4,698) 101,017 Income taxes payable................................... (402) (1,210) Deferred revenue....................................... 546 2,350 Other liabilities...................................... (1,510) 380 Other operating activities.............................. 156 -- -------- --------- Net Cash Provided by (Used in) Operating Activities.. 5,929 (8,515) -------- --------- INVESTING ACTIVITIES: Purchase of fixed assets................................. (4,905) (1,720) Sale of fixed assets..................................... 22 768 Sale of subsidiaries and subsidiary assets............... -- 735 Investments in subsidiaries and affiliates, net of cash acquired................................................ (1,241) (2,240) -------- --------- Net Cash Used in Investing Activities................ (6,124) (2,457) -------- --------- FINANCING ACTIVITIES: Borrowings under credit facility agreement............... 65,000 13,000 Principal payments on credit facility agreement.......... (57,000) (13,000) Principal payments on other borrowings................... -- (1,238) Reacquisition of senior subordinated notes and related warrants................................................ (46) -- Distribution of income to minority interest.............. (823) -- Subsidiary capital contribution from minority interest... -- 500 Proceeds from issuances of common stock.................. 313 383 Repurchases of common stock.............................. -- (256) Preferred stock dividends................................ (1,965) (975) Debt issuance costs...................................... (449) -- Other financing activities............................... (247) 55 -------- --------- Net Cash Provided by (Used in) Financing Activities.. 4,783 (1,531) -------- --------- Effect of Exchange Rate Changes on Cash.................. 77 (863) -------- --------- Increase (Decrease) in Cash and Cash Equivalents......... 4,665 (13,366) Cash and Cash Equivalents at Beginning of Period......... 16,357 27,967 -------- --------- Cash and Cash Equivalents at End of Period............... $ 21,022 $ 14,601 ======== ========= SUPPLEMENTAL INFORMATION: Cash payments for interest............................... $ 16,182 $ 15,712 Cash payments (refunds) for income taxes................. $ 945 $ (28) NON-CASH TRANSACTIONS: Issuance of common stock in connection with acquisitions............................................ $ 1,600 $ 765 Issuance of common stock pursuant to an agreement with a former employee......................................... $ 500 $ --
See notes to consolidated financial statements. F-4 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE A--BASIS OF PRESENTATION The accompanying consolidated financial statements of ICF Kaiser International, Inc. and subsidiaries (the Company) (including Kaiser-Hill Company, LLC, effective July 1, 1995), except for the December 31, 1995 balance sheet, are unaudited and have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. These statements should be read in conjunction with the Company's audited consolidated financial statements and footnotes thereto for the ten months ended December 31, 1995 and the information included in the Company's Transition Report to the Securities and Exchange Commission on Form 10-K for the ten months ended December 31, 1995. Certain reclassifications have been made to the prior period financial statements to conform to the presentation used in the September 30, 1996 financial statements. NOTE B--SIGNIFICANT ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities (see Note F) at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In 1996, the Company accelerated the procedures for obtaining approval from the U.S. government for the Company's actual costs incurred in current periods. As a result, in the third quarter of 1996, the Company's consulting group was able to accelerate its process of billing on certain cost- reimbursement contracts. The net effect of this accelerated process is the recognition of an additional $2.3 million of operating income in the third quarter of 1996. NOTE C--MINORITY INTERESTS IN SUBSIDIARIES Certain of the Company's subsidiaries are partially owned by outside parties. For financial reporting purposes, the assets, liabilities, results of operations, and cash flows of these subsidiaries are included in the Company's consolidated financial statements and the outside parties' interests are reflected as minority interests. NOTE D--NET INCOME (LOSS) PER COMMON SHARE Net income (loss) per common share is computed using net income (loss) available for common shareholders, as adjusted under the modified treasury stock method, and the weighted average number of common stock and common stock equivalents outstanding during the periods presented. Common stock equivalents include stock options and warrants and additional shares which will be or may be issued in connection with acquisitions. The adjustments required by the modified treasury stock method and for acquisition-related contingencies were anti-dilutive for the loss period presented and immaterial to the income periods presented. Therefore, the adjustments were excluded from earnings per share computations. NOTE E--LONG-TERM DEBT The Company's $40 million revolving credit facility became effective May 7, 1996, replacing the former credit facility which was due to expire October 31, 1996. The new credit facility expires June 30, 1998 and is provided by CoreStates Bank, as agent bank, and two other banks (the Banks) with terms and covenants similar to those under the former credit facility. ICF Kaiser International, Inc. and certain of its subsidiaries, which are guarantors of the new credit facility, have granted the Banks a security interest in their accounts receivable and F-5 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) (UNAUDITED) certain other assets. The new credit facility limits the payments of cash dividends on common stock and requires the maintenance of specified financial ratios. Total available credit is determined from a borrowing base calculation based on eligible accounts receivable (billed and unbilled). NOTE F--CONTINGENCIES In the course of the Company's normal business activities, various claims or charges have been asserted and litigation commenced against the Company arising from or related to properties, injuries to persons, and breaches of contract, as well as claims related to acquisitions and dispositions. Claimed amounts may not bear any reasonable relationship to the merits of the claim or to a final court award. In the opinion of management, an adequate reserve has been provided for final judgments, if any, in excess of insurance coverage, that might be rendered against the Company in such litigation. The Company may from time to time, either individually or in conjunction with other government contractors operating in similar types of businesses, be involved in U.S. government investigations for alleged violations of procurement or other federal laws and regulations. The Company currently is the subject of a number of U.S. government investigations and is cooperating with the responsible government agencies involved. No charges presently are known to have been filed against the Company by these agencies. Management does not believe that there will be any material adverse effect on the Company's financial position, results of operations, or cash flows as a result of these investigations. The Company has a substantial number of cost-reimbursement contracts with the U.S. government, the costs of which are subject to audit by the U.S. government. As a result of pending audits relating to fiscal years 1986 forward, the government has asserted, among other things, that certain costs claimed as reimbursable under government contracts either were not allowable or not allocated in accordance with federal procurement regulations. The Company is actively working with the government to resolve these issues. Management has provided for the potential effect of disallowed costs for the periods currently under audit and for periods not yet audited, although the amounts at issue have not been quantified by the government or the Company. This provision will be reviewed periodically as discussions with the government progress. Based on the information currently available, management believes the potential effects of these pending audits will not have a material adverse effect on the Company's financial position, results of operations, or cash flows. NOTE G--UNUSUAL ITEMS During the ten months ended December 31, 1995, the Company recorded $0.5 million in additional income (net), consisting of the following unusual items: income in settlement of litigation against the IRS, associated with an affiliate of an acquired company, net of an accrual for related expenses ($6.8 million); a charge to accrue the net settlement cost and legal expenses of other litigation ($4.6 million); a charge to accrue for severance for the termination of 110 employees in the engineering and international groups ($1.0 million); and a charge to accrue for consolidation of office space ($0.7 million). During the nine months ended September 30, 1996, the net litigation income was received and $4.2 million of net settlement costs and legal expenses were paid. As of September 30, 1996, the Company had substantially completed its termination of employees in the Company's engineering group and its consolidation of office space. The termination of employees in several foreign offices within the international group is approximately 50% complete as of September 30, 1996 and management expects that all actions will be completed by December 31, 1996. As of September 30, 1996, a $0.1 million accrual remains outstanding associated with the termination of employees in the international group. F-6 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) (UNAUDITED) NOTE H--GUARANTOR SUBSIDIARIES In connection with the registration of 12% Senior Notes due 2003, Series B (Exchange Notes), the Company is required to provide financial information for four wholly owned subsidiaries of ICF Kaiser International, Inc. (Subsidiary Guarantors). The Subsidiary Guarantors unconditionally guarantee the payment of the principal, premium, if any, and interest on the Company's $15 million of 12% Senior Notes due 2003, Series A issued in December 1996 (Series A Notes) and the Exchange Notes. The Company is offering to exchange the Exchange Notes for the Series A Notes. The Subsidiary Guarantors are Cygna Consulting Engineers and Project Management, Inc., ICF Kaiser Government Programs, Inc., PCI Operating Company, Inc., and Systems Applications International, Inc. Presented below is condensed consolidating financial information for ICF Kaiser International, Inc. (Parent Company), the Subsidiary Guarantors, and the non-guarantor subsidiaries as of and for the nine months ended September 30, 1996. Investments in subsidiaries have been presented using the equity method of accounting. ICF Kaiser International, Inc. does not have a formal tax sharing arrangement with its subsidiaries and has allocated taxes to its subsidiaries based on the Company's effective tax rate. In the Company's opinion, separate financial statements for Subsidiary Guarantors would not provide additional information that is material to investors. Therefore, the Subsidiary Guarantors are combined in the presentation below. F-7 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) (UNAUDITED) ICF KAISER INTERNATIONAL, INC. CONDENSED CONSOLIDATING BALANCE SHEET SEPTEMBER 30, 1996 (UNAUDITED, IN THOUSANDS)
ICF KAISER PARENT SUBSIDIARY NON-GUARANTOR INTERNATIONAL, INC. COMPANY GUARANTORS SUBSIDIARIES ELIMINATIONS CONSOLIDATED -------- ---------- ------------- ------------ ------------------- ASSETS Current Assets Cash and cash equivalents.......... $ (327) $ 8,272 $ 14,546 $ (1,469) $ 21,022 Contract receivables, net.................. (4,311) 73,179 165,300 -- 234,168 Intercompany receivables, net..... 129,572 (7,055) (122,517) -- -- Prepaid expenses and other current assets............... 4,696 732 8,377 (3,025) 10,780 Deferred income taxes................ 13,119 (789) (392) -- 11,938 -------- ------- --------- -------- -------- Total Current Assets............. 142,749 74,339 65,314 (4,494) 277,908 -------- ------- --------- -------- -------- Fixed Assets Furniture, equipment, and leasehold improvements......... 6,843 3,556 38,440 -- 48,839 Less depreciation and amortization......... (3,167) (2,919) (30,509) -- (36,595) -------- ------- --------- -------- -------- 3,676 637 7,931 -- 12,244 -------- ------- --------- -------- -------- Other Assets Goodwill, net......... -- -- 50,510 -- 50,510 Investments in and advances to affiliates........... 58,899 41 13,292 (60,064) 12,168 Due from officers and employees............ 353 144 489 -- 986 Other................. 4,642 2,700 13,377 -- 20,719 -------- ------- --------- -------- -------- 63,894 2,885 77,668 (60,064) 84,383 -------- ------- --------- -------- -------- $210,319 $77,861 $ 150,913 $(64,558) $374,535 ======== ======= ========= ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Current portion of long-term debt....... $ -- $ -- $ -- $ -- $ -- Accounts payable and other accrued expenses............. 12,778 34,634 46,200 (2,439) 91,173 Accrued salaries and employee benefits.... (798) 30,650 29,869 -- 59,721 Accrued interest...... 4,143 -- 4 (86) 4,061 Income taxes payable.. (2,622) -- 3,021 -- 399 Deferred revenue...... (103) 518 14,233 -- 14,648 Other................. 4,077 31 1,789 -- 5,897 -------- ------- --------- -------- -------- Total Current Liabilities........ 17,475 65,833 95,116 (2,525) 175,899 -------- ------- --------- -------- -------- Long-term Liabilities Long-term debt, less current portion...... 135,301 -- 45 (1,962) 133,384 Other................. 2,758 -- 2,921 -- 5,679 -------- ------- --------- -------- -------- 138,059 -- 2,966 (1,962) 139,063 -------- ------- --------- -------- -------- Minority Interests in Subsidiaries........... -- 6,441 -- -- 6,441 Redeemable Preferred Stock.................. 19,940 -- -- -- 19,940 Common Stock............ 224 108 167 (275) 224 Additional Paid-in Capital................ 67,158 224 44,825 (45,049) 67,158 Notes Receivable Related to Common Stock........ (1,732) -- -- -- (1,732) Retained Earnings (Deficit).............. (30,805) 5,255 9,492 (14,747) (30,805) Cumulative Translation Adjustment............. -- -- (1,653) -- (1,653) -------- ------- --------- -------- -------- $210,319 $77,861 $ 150,913 $(64,558) $374,535 ======== ======= ========= ======== ========
F-8 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) (UNAUDITED) ICF KAISER INTERNATIONAL, INC. CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED, IN THOUSANDS)
ICF KAISER PARENT SUBSIDIARY NON-GUARANTOR INTERNATIONAL, INC. COMPANY GUARANTORS SUBSIDIARIES ELIMINATIONS CONSOLIDATED -------- ---------- ------------- ------------ ------------------- Gross Revenue........... $ 1,165 $ 442,478 $ 581,405 $ (1,638) $1,023,410 Subcontract and direct material costs....... (524) (302,444) (289,327) -- (592,295) Equity in income of joint ventures and affiliated companies and subsidiaries..... 11,707 -- 3,127 (12,302) 2,532 -------- --------- --------- -------- ---------- Service Revenue......... 12,348 140,034 295,205 (13,940) 433,647 Operating Expenses Operating expenses.... (4,771) 130,515 280,534 (1,641) 404,637 Depreciation and amortization......... 1,638 904 5,298 -- 7,840 -------- --------- --------- -------- ---------- Operating Income........ 15,481 8,615 9,373 (12,299) 21,170 Interest income....... 223 286 675 (240) 944 Interest expense...... (12,832) (129) (54) 186 (12,829) -------- --------- --------- -------- ---------- Income Before Income Taxes and Minority Interests.............. 2,872 8,772 9,994 (12,353) 9,285 Income tax (provision) benefit.............. 848 (789) (899) -- (840) -------- --------- --------- -------- ---------- Income Before Minority Interests.............. 3,720 7,983 9,095 (12,353) 8,445 Minority interests in net income of subsidiaries......... -- (4,725) -- -- (4,725) -------- --------- --------- -------- ---------- Net Income.............. 3,720 3,258 9,095 (12,353) 3,720 Preferred stock dividends and accretion............ 1,631 -- -- -- 1,631 -------- --------- --------- -------- ---------- Net Income Available for Common Shareholders.... $ 2,089 $ 3,258 $ 9,095 $(12,353) $ 2,089 ======== ========= ========= ======== ========== ICF KAISER INTERNATIONAL, INC. CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS NINE MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED, IN THOUSANDS) Net Cash Provided by (Used in) Operating Activities............. $ (7,619) $ 9,014 $ 4,639 $ (105) $ 5,929 -------- --------- --------- -------- ---------- INVESTING ACTIVITIES Investments in subsidiaries and affiliates, net of cash acquired............... -- -- (1,241) -- (1,241) Purchases of fixed assets................. (2,488) (257) (2,160) -- (4,905) Proceeds from sale of fixed assets........... -- -- 22 -- 22 -------- --------- --------- -------- ---------- Net Cash Used in Investing Activities........... (2,488) (257) (3,379) -- (6,124) -------- --------- --------- -------- ---------- FINANCING ACTIVITIES Borrowings under credit facility agreement..... 65,000 -- -- -- 65,000 Principal payments on credit facility and other borrowings....... (57,247) -- 247 -- (57,000) Reacquisition of senior subordinated notes and related warrants....... -- -- (46) -- (46) Distribution of income to minority interest... -- (823) -- -- (823) Proceeds from issuances of common stock........ 313 -- -- -- 313 Preferred stock dividends.............. (1,965) -- -- -- (1,965) Debt issuance costs..... (449) -- -- -- (449) Other financing activities............. -- -- (247) -- (247) -------- --------- --------- -------- ---------- Net Cash Provided by (Used in) Financing Activities........... 5,652 (823) (46) -- 4,783 -------- --------- --------- -------- ---------- Effect of Exchange Rate Changes on Cash........ -- -- 77 -- 77 -------- --------- --------- -------- ---------- Increase (Decrease) in Cash and Cash Equivalents............ (4,455) 7,934 1,291 (105) 4,665 Cash and Cash Equivalents at Beginning of Period.... 4,128 1,015 12,578 (1,364) 16,357 -------- --------- --------- -------- ---------- Cash and Cash Equivalents at End of Period................. $ (327) $ 8,949 $ 13,869 $ (1,469) $ 21,022 ======== ========= ========= ======== ==========
F-9 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholders ICF Kaiser International, Inc. We have audited the consolidated balance sheets of ICF Kaiser International, Inc. and subsidiaries as of December 31, 1995 and February 28, 1995, and the related consolidated statements of operations, shareholders' equity and cash flows for the ten months ended December 31, 1995 and the years ended February 28, 1995 and 1994 and the related financial statement Schedule II, Valuation and Qualifying Accounts. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of ICF Kaiser International, Inc. and subsidiaries as of December 31, 1995 and February 28, 1995, and the consolidated results of their operations and their cash flows for the ten months ended December 31, 1995, and for each of the two years in the period ended February 28, 1995, in conformity with generally accepted accounting principles. In addition, in our opinion, the financial statement schedule referred to above, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information required to be included therein. Coopers & Lybrand L.L.P. Washington, D.C. March 8, 1996, except for Note T, as to which the date is January 7, 1997 F-10 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARES)
DECEMBER 31, FEBRUARY 28, 1995 1995 ------------ ------------ ASSETS Current Assets Cash and cash equivalents.......................... $ 16,357 $ 28,233 Contract receivables, net.......................... 228,239 139,860 Prepaid expenses and other current assets.......... 20,911 10,872 Deferred income taxes.............................. 11,934 13,553 -------- -------- Total Current Assets............................. 277,441 192,518 -------- -------- Fixed Assets Furniture, equipment, and leasehold improvements... 42,909 42,557 Less depreciation and amortization................. (33,369) (29,648) -------- -------- 9,540 12,909 -------- -------- Other Assets Goodwill, net...................................... 49,259 47,945 Investments in and advances to affiliates.......... 10,213 8,022 Due from officers and employees.................... 1,053 1,826 Other.............................................. 22,011 18,202 -------- -------- 82,536 75,995 -------- -------- $369,517 $281,422 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Current portion of long-term debt.................. $ 5,041 $ 578 Accounts payable and subcontractors payable........ 86,429 33,452 Accrued salaries and employee benefits............. 53,060 30,549 Accrued interest................................... 7,414 2,528 Other accrued expenses............................. 18,594 13,359 Income taxes payable............................... 801 644 Deferred revenue................................... 14,327 11,013 Other.............................................. 7,186 8,755 -------- -------- Total Current Liabilities........................ 192,852 100,878 -------- -------- Long-term Liabilities Long-term debt, less current portion............... 120,112 126,733 Other.............................................. 5,706 6,397 -------- -------- 125,818 133,130 -------- -------- Commitments and Contingencies Minority Interests in Subsidiaries................... 2,633 173 Redeemable Preferred Stock, liquidation value $20,000............................................. 19,787 19,617 Common Stock, par value $.01 per share: Authorized--90,000,000 shares Issued and outstanding--21,263,828 and 21,011,369 shares............................................ 213 210 Additional Paid-in Capital........................... 64,654 63,786 Notes Receivable Related to Common Stock............. (1,732) (1,732) Retained Earnings (Deficit).......................... (32,894) (33,343) Cumulative Translation Adjustment.................... (1,814) (1,297) -------- -------- $369,517 $281,422 ======== ========
See notes to consolidated financial statements. F-11 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
TEN MONTHS ENDED YEAR ENDED FEBRUARY 28, DECEMBER 31, ------------------------ 1995 1995 1994 ------------ ----------- ----------- GROSS REVENUE........................... $ 916,744 $ 861,518 $ 651,657 Subcontract and direct material costs................................ (493,971) (405,819) (272,169) Equity in income of joint ventures and affiliated companies................. 3,123 4,087 3,220 --------- ----------- ----------- SERVICE REVENUE......................... 425,896 459,786 382,708 OPERATING EXPENSES Direct cost of services and overhead.. 359,887 393,096 323,828 Administrative and general............ 40,647 43,770 45,842 Depreciation and amortization......... 8,357 9,232 9,559 Unusual items, net.................... (500) -- 8,709 --------- ----------- ----------- OPERATING INCOME (LOSS)................. 17,505 13,688 (5,230) OTHER INCOME (EXPENSE) Gain (loss) on sale of investment..... -- 551 (925) Interest income....................... 2,053 1,799 1,490 Interest expense...................... (13,255) (14,799) (8,212) --------- ----------- ----------- INCOME (LOSS) BEFORE INCOME TAXES, MINORITY INTERESTS, AND EXTRAORDINARY ITEM................................... 6,303 1,239 (12,877) Income tax provision (benefit)........ 2,091 2,900 (349) --------- ----------- ----------- INCOME (LOSS) BEFORE MINORITY INTERESTS AND EXTRAORDINARY ITEM................. 4,212 (1,661) (12,528) Minority interests in net income of subsidiaries......................... 1,960 -- -- --------- ----------- ----------- NET INCOME (LOSS) BEFORE EXTRAORDINARY ITEM................................... 2,252 (1,661) (12,528) Extraordinary loss on early extinguishment of debt............... -- -- (5,969) --------- ----------- ----------- NET INCOME (LOSS)....................... 2,252 (1,661) (18,497) Preferred stock dividends and accretion............................ 1,803 2,154 4,896 Redemption of redeemable preferred stock................................ -- -- 1,929 --------- ----------- ----------- NET INCOME (LOSS) AVAILABLE FOR COMMON SHAREHOLDERS........................... $ 449 $ (3,815) $ (25,322) ========= =========== =========== Primary and Fully Diluted Net Income (Loss) Per Common Share: Before extraordinary item............. $ 0.02 $ (0.18) $ (0.92) Extraordinary loss on early extinguishment of debt............... -- -- (0.29) --------- ----------- ----------- Total............................... $ 0.02 $ (0.18) $ (1.21) ========= =========== =========== Primary and Fully Diluted Weighted Average Common and Common Equivalent Shares Outstanding..................... 21,517 20,957 20,886 ========= =========== ===========
See notes to consolidated financial statements. F-12 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (IN THOUSANDS, EXCEPT SHARES)
SERIES 1 JUNIOR NOTES CONVERTIBLE RECEIVABLE PREFERRED STOCK COMMON STOCK ADDITIONAL RELATED RETAINED CUMULATIVE ESOP ---------------- --------------------- PAID-IN TO COMMON EARNINGS TRANSLATION GUARANTEED SHARES PAR VALUE SHARES PAR VALUE CAPITAL STOCK (DEFICIT) ADJUSTMENT BANK LOAN ------ --------- ---------- --------- ---------- ---------- --------- ------------ ---------- Balance, March 1, 1993.. 69 $6,900 21,303,807 $213 $65,040 $(2,725) $ (4,206) $(1,701) $(5,000) Net loss............... -- -- -- -- -- -- (18,497) -- -- Preferred stock dividends............. -- -- -- -- -- -- (4,670) -- -- Preferred stock accretion............. -- -- -- -- -- -- (226) -- -- Redemption of redeemable preferred stock................. -- -- -- -- -- -- (1,929) -- -- Repurchase of preferred stock................. (69) (6,900) -- -- 2,050 -- -- -- -- Issuances of common stock................. -- -- 231,249 2 1,056 -- -- -- -- Repurchases of common stock................. -- -- (610,468) (6) (3,716) -- -- -- -- Issuance of warrants... -- -- -- -- 900 -- -- -- -- Repurchase of warrants.............. -- -- -- -- (1,909) -- -- -- -- Payments received on notes receivable...... -- -- -- -- -- 993 -- -- -- Decrease in loan balance............... -- -- -- -- -- -- -- -- 5,000 Foreign currency translation adjustment............ -- -- -- -- -- -- -- (40) -- Other.................. -- -- -- -- 151 -- -- -- -- --- ------ ---------- ---- ------- ------- -------- ------- ------- Balance, February 28, 1994................... -- -- 20,924,588 209 63,572 (1,732) (29,528) (1,741) -- Net loss............... -- -- -- -- -- -- (1,661) -- -- Preferred stock dividends............. -- -- -- -- -- -- (1,950) -- -- Preferred stock accretion............. -- -- -- -- -- -- (204) -- -- Issuances of common stock................. -- -- 161,781 2 393 -- -- -- -- Repurchases of common stock................. -- -- (75,000) (1) (179) -- -- -- -- Foreign currency translation adjustment............ -- -- -- -- -- -- -- 444 -- --- ------ ---------- ---- ------- ------- -------- ------- ------- Balance, February 28, 1995................... -- -- 21,011,369 210 63,786 (1,732) (33,343) (1,297) -- Net income............. -- -- -- -- -- -- 2,252 -- -- Preferred stock dividends............. -- -- -- -- -- -- (1,633) -- -- Preferred stock accretion............. -- -- -- -- -- -- (170) -- -- Issuances of common stock................. -- -- 314,422 4 1,167 -- -- -- -- Repurchases of common stock................. -- -- (61,963) (1) (256) -- -- -- -- Foreign currency translation adjustment............ -- -- -- -- -- -- -- (517) -- Other................... -- -- -- -- (43) -- -- -- -- --- ------ ---------- ---- ------- ------- -------- ------- ------- Balance, December 31, 1995................... -- $ -- 21,263,828 $213 $64,654 $(1,732) $(32,894) $(1,814) $ -- === ====== ========== ==== ======= ======= ======== ======= =======
See notes to consolidated financial statements. F-13 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
TEN MONTHS ENDED YEAR ENDED FEBRUARY 28, DECEMBER 31, ------------------------ 1995 1995 1994 ------------ ----------- ----------- OPERATING ACTIVITIES Net income (loss)....................... $ 2,252 $ (1,661) $ (18,497) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization.......... 8,357 9,232 9,559 Provision for losses on contract receivables........................... 601 1,320 2,241 Provision for deferred income taxes.... 1,253 2,500 (714) Earnings less than (in excess of) cash distributions from joint ventures and affiliated companies.................. (1,105) 972 (1,708) Minority interests in net income of subsidiaries.......................... 1,960 -- -- (Gain) loss on sale of investment...... -- (551) 925 Unusual items, net of cash............. (500) -- 7,786 Extraordinary loss on early extinguishment of debt................ -- -- 5,969 Premium paid on reacquisition of senior subordinated notes.................... -- -- (4,250) Changes in operating assets and liabilities, net of acquisitions: Contract receivables, net............. (88,743) (13,014) 26,292 Prepaid expenses and other current assets............................... (3,826) 4,471 4,614 Other assets.......................... (4,953) (1,268) (745) Accounts payable and accrued expenses............................. 78,801 2,218 (10,233) Income taxes payable.................. 157 297 (2,478) Deferred revenue...................... 3,314 2,551 (2,412) Other liabilities..................... (3,625) (5,103) (2,660) Other operating activities............. -- 219 418 -------- ----------- ----------- Net Cash Provided by (Used in) Operating Activities............... (6,057) 2,183 14,107 -------- ----------- ----------- INVESTING ACTIVITIES Investments in subsidiaries and affiliates, net of cash acquired....... (2,010) (622) (2,755) Sales of subsidiaries and subsidiary assets................................. 735 2,600 -- Purchases of fixed assets............... (1,759) (2,426) (1,388) Proceeds from sales of fixed assets..... 1,035 -- -- Other investing activities.............. -- (600) -- -------- ----------- ----------- Net Cash Used in Investing Activities......................... (1,999) (1,048) (4,143) -------- ----------- ----------- FINANCING ACTIVITIES Borrowings under credit facility agreement.............................. 16,000 5,000 10,000 Principal payments on credit facility agreement and other borrowings......... (17,173) (1,172) (47,010) Proceeds from issuance of senior subordinated notes and related warrants............................... -- -- 121,488 Reacquisition of senior subordinated notes and related warrants............. (1,363) -- (31,559) Repurchases of redeemable preferred stock and related warrants............. -- (799) (27,363) Repurchase of preferred stock........... -- -- (4,850) Subsidiary capital contribution from minority interest...................... 500 -- -- Proceeds from issuances of common stock.................................. 406 395 640 Repurchases of common stock............. (257) (180) (3,722) Principal payments from notes receivable related to common stock................ -- -- 993 Preferred stock dividends............... (1,471) (1,950) (5,321) Debt issuance costs..................... -- (149) (6,307) Other financing activities.............. 55 -- 151 -------- ----------- ----------- Net Cash Provided by (Used in) Financing Activities............... (3,303) 1,145 7,140 -------- ----------- ----------- Effect of Exchange Rate Changes on Cash................................... (517) 444 (40) -------- ----------- ----------- Increase (Decrease) in Cash and Cash Equivalents............................ (11,876) 2,724 17,064 Cash and Cash Equivalents, Beginning of Period................................. 28,233 25,509 8,445 -------- ----------- ----------- Cash and Cash Equivalents, End of Period................................. $ 16,357 $ 28,233 $ 25,509 ======== =========== ===========
See notes to consolidated financial statements. F-14 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE A--ORGANIZATION AND NATURE OF OPERATIONS ICF Kaiser International, Inc. (ICF Kaiser or the Company) was formed on October 19, 1987, as a holding company for the ICF Kaiser family of companies developed and acquired. These companies provide engineering, construction, program management, and consulting services primarily to the public and private environmental, infrastructure, industry, and energy markets domestically and internationally. NOTE B--SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation: The consolidated financial statements include all subsidiaries (including Kaiser-Hill Company, LLC, effective July 1, 1995) that are controlled by ICF Kaiser. Certain of ICF Kaiser's subsidiaries are partially owned by outside parties. For financial reporting purposes, the assets, liabilities, results of operations, and cash flows of these subsidiaries are included in ICF Kaiser's consolidated financial statements and the outside parties' interests are reflected as minority interests. Investments in unconsolidated joint ventures and affiliated companies are accounted for using the equity method. The difference between the carrying value of investments accounted for under the equity method and the Company's underlying equity is amortized on a straight-line basis over the lives of the underlying assets. All significant intercompany balances and transactions have been eliminated. Significant Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Change in Fiscal Year: The Company changed from a fiscal year ending February 28 to a fiscal year ending December 31, effective December 31, 1995. As a result, the accompanying financial statements include consolidated operations for the ten months ended December 31, 1995 and for the years ended February 28, 1995 and 1994. Revenue Recognition: Revenue is recorded on cost-type contracts as costs are incurred. Revenue on time-and-materials contracts is recognized to the extent of billable rates times hours delivered plus materials expense incurred. Revenue on long-term, fixed-price contracts is recognized generally using the percentage-of-completion method and, therefore, includes a proportion of expected earnings based on costs incurred to total estimated costs. Foreign Currency Translation: Results of operations for foreign entities are translated using the average exchange rates during the period. Assets and liabilities are translated to U.S. dollars using the exchange rate in effect at the balance sheet date. Resulting translation adjustments are reflected in shareholders' equity as cumulative translation adjustment. Cash Equivalents and Restricted Cash: ICF Kaiser considers all highly liquid financial instruments purchased with original maturities of three months or less to be cash equivalents. Other assets as of December 31, 1995 and February 28, 1995 included $600,000 of restricted cash and short-term investments, which supported a letter of credit for one of ICF Kaiser's subsidiaries. Fixed Assets: Furniture and equipment are carried at cost, or fair value at acquisition if acquired through a purchase of a business, and are depreciated using the straight-line method over their estimated useful lives ranging from three to ten years. Leasehold improvements are carried at cost and are amortized using the straight-line method over the remaining lease term. F-15 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) Goodwill: Goodwill represents the excess of cost over the fair value of the net assets of acquired businesses and is amortized using the straight-line method over periods ranging from five to 40 years. The Company evaluates the recoverability of goodwill on an annual basis by examining undiscounted operating income. Accumulated amortization was $12,785,000 and $11,148,000 at December 31, 1995 and February 28, 1995, respectively. Income Taxes: The Company provides for deferred income taxes using the liability method on temporary differences between financial reporting and income tax reporting, which primarily relate to reserves for adjustments and allowances. If necessary, management records a valuation allowance for deferred tax assets. The most significant permanent differences between book and taxable income are nondeductible goodwill amortization, minority interest earnings of a consolidated subsidiary, the effect of foreign taxes, and differences between the book and tax basis of businesses sold. Income taxes have not been provided for the undistributed earnings of the Company's foreign subsidiaries, because the Company intends to continue the operations and reinvest the undistributed earnings indefinitely. Undistributed earnings of foreign subsidiaries for which income taxes have not been provided amounted to approximately $5.7 million at December 31, 1995. Net Income (Loss) Per Common Share: Net income (loss) per common share is computed using net income (loss) available for common shareholders, as adjusted under the modified treasury stock method, and the weighted average number of common stock and common stock equivalents outstanding during the periods presented. Common stock equivalents include stock options and warrants and additional shares which will be or may be issued in connection with acquisitions. The adjustments required by the modified treasury stock method and for acquisition-related contingencies were anti-dilutive for all loss periods presented and immaterial to the income period presented. Therefore, the adjustments were excluded from earnings per share computations. Concentrations of Credit Risk: The Company maintains cash balances primarily in overnight Eurodollar deposits, investment-grade commercial paper, bank certificates of deposit, and U.S. government securities. ICF Kaiser grants uncollateralized credit to its customers. Approximately 64% of ICF Kaiser's contract receivables at December 31, 1995 are from the U.S. government (see Note D). When practical and in order to mitigate its credit risk to commercial customers, ICF Kaiser obtains advance funding of costs for industrial construction work. Long-Lived Assets: The Financial Accounting Standards Board (FASB) recently issued Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", effective for financial statements for fiscal years beginning after December 15, 1995. It is the Company's current policy to evaluate all long- lived assets on a periodic basis for asset impairment. Therefore, upon formal adoption of this statement in 1996, management does not expect that there will be a material adverse effect on the Company's financial position or operations. Stock-Based Compensation: The FASB also recently issued Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS No. 123), which encourages companies to adopt a fair value method of accounting for employee stock options and similar equity instruments. The fair value method requires compensation cost to be measured at the grant date based on the value of the award and is recognized over the service period. Alternatively, SFAS No. 123 requires the provision of pro forma disclosures of net income and earnings per share as if the fair value method had been adopted when the fair value method is not reflected in the financial statements. The Company has not yet determined whether it will adopt a fair value method of accounting for stock-based compensation or provide pro forma disclosures. The impact of the adoption of this statement on the financial statements cannot be reasonably estimated at this time. The requirements of SFAS No. 123 are effective for financial statements for fiscal years beginning after December 15, 1995. F-16 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) Reclassifications: Certain reclassifications have been made to the prior period financial statements to conform to the presentation used in the December 31, 1995 financial statements. NOTE C--DIVESTITURES The Company sold a 20% interest in a subsidiary during the year ended February 28, 1995, resulting in a $551,000 pretax gain. During the year ended February 28, 1994, ICF Kaiser sold a portion of its energy engineering business, resulting in a $925,000 pretax loss. NOTE D--CONTRACT RECEIVABLES Contract receivables consist of the following (in thousands):
DECEMBER 31, FEBRUARY 28, 1995 1995 ------------ ------------ U.S. government agencies: Currently due................................ $ 26,162 $ 36,752 Retention.................................... 1,870 2,026 Unbilled..................................... 123,890 34,273 -------- -------- 151,922 73,051 -------- -------- Commercial clients and state and municipal governments: Currently due................................ 64,121 69,317 Retention.................................... 5,361 4,522 Unbilled..................................... 16,270 2,834 -------- -------- 85,752 76,673 -------- -------- 237,674 149,724 Less allowances for uncollectible receivables.. 9,435 9,864 -------- -------- $228,239 $139,860 ======== ========
U.S. government receivables arise from U.S. government prime contracts and subcontracts. The significant increase in the unbilled U.S. government receivables is due primarily to a contract between the U.S. Department of Energy (DOE) and Kaiser-Hill Company, LLC (Kaiser-Hill) to perform services at DOE's Rocky Flats Environmental Technology Site in Colorado. Unbilled receivables result from revenue that has been earned but was not billed as of the end of the period. The unbilled receivables can be invoiced at contractually defined intervals and milestones, as well as upon completion of the contract or the federal government cost audit. Generally, retention is not expected to be realized within one year; consistent with industry practice, these receivables are classified as current. Management anticipates that the remaining unbilled receivables will be substantially billed and collected within one year. F-17 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) NOTE E--JOINT VENTURES AND AFFILIATED COMPANIES ICF Kaiser has ownership interests in certain unconsolidated corporate joint ventures and affiliated companies. The Company's net investments in and advances to these corporate joint ventures and affiliated companies are summarized as follows (in thousands):
OWNERSHIP INTEREST AT DECEMBER 31, DECEMBER 31, FEBRUARY 28, 1995 1995 1995 ------------ ------------ ------------ Gary PCI Ltd. L.P. ................... 50% $ 5,257 $4,315 LIFAC North America................... 50% 1,535 1,914 Other................................. 20% to 50% 3,421 1,793 ------- ------ $10,213 $8,022 ======= ======
Combined summarized financial information of all of ICF Kaiser's corporate joint ventures and affiliated companies is as follows (in thousands):
DECEMBER 31, FEBRUARY 28, FEBRUARY 28, 1995 1995 1994 ------------ ------------ ------------ Current assets........................ $19,082 $15,103 $27,041 Non-current assets.................... 42,400 12,723 6,608 Current liabilities................... 31,703 15,875 19,034 Non-current liabilities............... 446 55 455 Gross revenue......................... 41,262 52,616 51,282 Net income............................ 6,606 8,430 8,908
NOTE F--LONG-TERM DEBT ICF Kaiser's long-term debt is as follows (in thousands):
DECEMBER 31, FEBRUARY 28, 1995 1995 ------------ ------------ 12% senior subordinated notes due 2003........... $123,550 $125,000 Revolving credit facility (interest at 9.0% at December 31, 1995).............................. 5,000 5,000 Other notes, with interest at varying rates, payable in installments through 1998............ 92 1,209 -------- -------- 128,642 131,209 Less unamortized discount on 12% senior subordinated notes.............................. 3,489 3,898 -------- -------- 125,153 127,311 Less current maturities.......................... 5,041 578 -------- -------- Long-term debt................................. $120,112 $126,733 ======== ========
Scheduled maturities of long-term debt outstanding at December 31, 1995, are as follows: $5,041,000 in 1996, $21,000 in 1997, $30,000 in 1998, and $123,550,000 in 2003. On January 11, 1994, ICF Kaiser issued 125,000 Units, each Unit consisting of $1,000 principal amount of the Company's 12% Senior Subordinated Notes due 2003 (12% Notes) and 4.8 warrants, each to purchase one share of the Company's common stock at an exercise price of $5.00 per share. The warrants expire on December 31, 1998, and additional warrants may be issued under certain anti- dilution provisions. Of the net issue price of F-18 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) $121,487,500 ($125,000,000 less a $3,512,500 discount), $900,000 was allocated to the value of the 600,000 warrants and $120,587,500 to the 12% Notes. The net proceeds were used, in part, to retire the Company's 13.5% Senior Subordinated Notes due 1999 (13.5% Notes), to repurchase preferred stock, to repay the outstanding balance on the Company's then-existing revolving credit facility, and to repurchase warrants associated with the 13.5% Notes and preferred stock. The recapitalization resulted in a $6.0 million extraordinary charge (net of $0 tax benefit due to the unanticipated decline in fiscal 1994's fourth-quarter results) for the early extinguishment of debt and a $1.9 million charge to net income available for common shareholders to repurchase the Series 2C Senior Preferred Stock. In November 1995, the Company's insurance subsidiary repurchased 1,450 of the Units for $1.4 million. In March 1996, the interest rate on the 12% Notes was increased by one percent until the Company achieves and maintains a specified level of earnings (see Note I). The Company's obligations under the 12% Notes are subordinate to its obligations under the Company's revolving credit facility. Interest payments are due semiannually. The 12% Notes may not be prepaid at the Company's option prior to December 31, 1998. Subsequent to that date, the Company may prepay the 12% Notes at a premium. In addition, the Company agreed to certain business and financial covenants, including restrictions on indebtedness, dividends, acquisitions, and certain types of investments and asset sales. At December 31, 1995, the fair value of the 12% Notes was approximately $116.4 million. The fair value was computed using an average of recently quoted market prices obtained from financial institutions. Net debt issuance costs of $3.8 million and $4.2 million associated with the 12% Notes are classified as other assets at December 31, 1995 and February 28, 1995, respectively, in the accompanying balance sheets. These costs and the discount on the 12% Notes are being amortized over the life of the notes. The Company has a $60 million revolving credit facility (the Credit Facility) provided by a consortium of banks (the Banks). ICF Kaiser International, Inc. and certain of its subsidiaries, which are guarantors of the Credit Facility, granted the Banks a security interest in their accounts receivable and certain other assets. The Credit Facility limits the payment of cash dividends, requires the maintenance of specified financial ratios, and has a $20 million limitation on cash borrowings. Total available credit is determined from a borrowing base calculation based on accounts receivable. ICF Kaiser and the Banks entered into amendments in 1995 that modified financial ratios and other terms of the Credit Facility. As of December 31, 1995, there were $5.0 million in borrowings outstanding under the Credit Facility, in addition to letters of credit, and the Company had $23.5 million of available credit under the Credit Facility. The Credit Facility contains Eurodollar and alternate base interest rate alternatives with margins dependent upon the Company's financial operating results, and expires on October 31, 1996. The outstanding letters of credit were $7.1 million at December 31, 1995, and issued principally to support performance guarantees under certain contracts. One of the Company's subsidiaries has a $50 million receivables purchase facility to support the working capital requirements of the subsidiary under its contract. The receivables purchase facility requires the subsidiary to maintain a specified tangible net worth and contains certain default provisions for delinquent receivables. Program fees consist of 0.30% per annum of the unused portion of the facility and 0.45% per annum of the used portion of the facility. The receivables purchase facility is non-recourse to ICF Kaiser International, Inc. and expires on June 30, 1998. There are 275,088 common stock warrants that were issued with the 13.5% Notes that remained outstanding following the repurchase of the other warrants in January 1994. The warrants expire on May 15, 1999, and are exercisable at any time for shares of ICF Kaiser Common Stock at $6.87 per share. Additional warrants may be required to be issued under certain anti-dilution provisions. F-19 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) NOTE G--CONTINGENCIES In the course of the Company's normal business activities, various claims or charges have been asserted and litigation commenced against the Company arising from or related to properties, injuries to persons, and breaches of contract, as well as claims related to acquisitions and dispositions. Claimed amounts may not bear any reasonable relationship to the merits of the claim or to a final court award. In the opinion of management, an adequate reserve has been provided for final judgments, if any, in excess of insurance coverage, that might be rendered against the Company in such litigation. The Company may from time to time, either individually or in conjunction with other government contractors operating in similar types of businesses, be involved in U.S. government investigations for alleged violations of procurement or other federal laws and regulations. The Company currently is the subject of a number of U.S. government investigations and is cooperating with the responsible government agencies involved. No charges presently are known to have been filed against the Company by these agencies. Management does not believe that there will be any material adverse effect on the Company's financial position, operations, or cash flows as a result of these investigations. The Company has a substantial number of cost-reimbursement contracts with the U.S. government, the costs of which are subject to audit by the U.S. government. As a result of such audits, the government asserts, from time to time, that certain costs claimed as reimbursable under government contracts either were not allowable or not allocated in accordance with federal procurement regulations. Management believes that the potential effect of disallowed costs, if any, for the periods currently under audit and for periods not yet audited, has been provided for adequately and will not have a material adverse effect on the Company's financial position, operations, or cash flows. F-20 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) NOTE H--INCOME TAXES The components of income (loss) before income taxes and minority interests and the related provision (benefit) for income taxes are as follows (in thousands):
TEN MONTHS ENDED YEAR ENDED FEBRUARY 28, DECEMBER 31, ----------------------- 1995 1995 1994 ------------ ---------- ------------ Income (loss) before income taxes, minority interests, and extraordinary item: Domestic.......................... $ 7,419 $ 1,217 $ (11,894) Foreign........................... (1,116) 22 (983) ------- ---------- ------------ $ 6,303 $ 1,239 $ (12,877) ======= ========== ============ Provision (benefit) for income taxes: Federal: Current........................... $ 171 $ 120 $ -- Deferred.......................... 2,020 2,328 (652) ------- ---------- ------------ 2,191 2,448 (652) ------- ---------- ------------ State: Current........................... 258 100 -- Deferred.......................... 293 172 (62) ------- ---------- ------------ 551 272 (62) ------- ---------- ------------ Foreign: Current........................... 409 180 365 Deferred.......................... (1,060) -- -- ------- ---------- ------------ (651) 180 365 ------- ---------- ------------ $ 2,091 $ 2,900 $ (349) ======= ========== ============
The tax effects of the principal temporary differences and carryforwards that give rise to the Company's deferred tax asset are as follows (in thousands):
DECEMBER 31, FEBRUARY 28, 1995 1995 ------------ ------------ Reserves for adjustments and allowances........... $ 8,984 $ 8,507 Vacation and incentive compensation accruals...... 6,655 5,443 Litigation settlement............................. (2,676) -- Joint ventures.................................... (1,969) (1,610) Net operating loss carryforwards.................. 711 2,247 Tax credit carryforwards.......................... 2,077 1,063 Other............................................. 1,482 1,233 ------- ------- Deferred income tax asset......................... 15,264 16,883 Valuation allowance............................... (3,330) (3,330) ------- ------- Deferred income tax asset, net.................. $11,934 $13,553 ======= =======
Because of the reported losses for the year ended February 28, 1994, a $3.3 million valuation allowance was established in that year for deferred tax assets. Although the level of pretax income has increased F-21 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) substantially since that period (with a corresponding increase in taxable income), the Company has maintained the valuation allowance. At December 31, 1995, the Company had deferred tax assets of $0.7 million related to net operating loss carryforwards, of which $0.5 million expire within the next five years and $0.2 million expire in 2008. Additionally, the Company has deferred tax assets of $2.1 million related to tax credit carryforwards, the majority of which expire in 1998 to 2009. Management believes that the Company's expected levels of pretax earnings, when adjusted for nondeductible expenses such as goodwill amortization, will generate sufficient future taxable income to realize the $11.9 million deferred tax asset (net) within the next five years. The effective income tax (benefit) rate varied from the federal statutory income tax rate because of the following differences:
TEN MONTHS YEAR ENDED ENDED FEBRUARY 28, DECEMBER 31, -------------- 1995 1995 1994 ------------ ------ ------ Statutory tax rate (benefit)................. 34.0% 34.0% (34.0)% ----- ------ ------ Changes in tax rate (benefit) from: Goodwill amortization...................... 11.7 69.9 9.9 Minority interest earnings of a consoli- dated subsidiary.......................... (11.0) -- -- Differences between book and tax basis of businesses sold........................... -- 7.4 7.3 State income taxes......................... 5.8 14.5 (0.3) Foreign taxes (benefit).................... (9.2) 67.8 4.8 Valuation allowance........................ -- -- 9.2 Business meals, entertainment, and dues.... 5.1 30.9 1.4 R&D credits................................ (5.5) -- -- Subsidiary preferred dividends............. -- 1.9 0.1 Adjustment of prior years' accruals........ 2.1 3.8 (2.4) Other...................................... 0.2 3.8 1.3 ----- ------ ------ (0.8) 200.0 31.3 ----- ------ ------ 33.2% 234.0% (2.7)% ===== ====== ======
One of the Company's consolidated subsidiaries, Kaiser-Hill, is a flow- through entity for tax purposes and is partially owned by an outside party. Accordingly, the provision for income taxes in the accompanying financial statements was computed based on the Company's taxable share of Kaiser-Hill's income. The tax rate effect of the outside party's share of income is reflected above as minority interest earnings of a consolidated subsidiary. Kaiser-Hill began operations during the ten months ended December 31, 1995. The tax provision for the year ended February 28, 1995 reflects the deemed dividend from the repatriation of overseas funds to the United States that currently could not be offset by foreign tax credits. For the past several years, the Company has had ongoing negotiations, filings, and litigation with the Internal Revenue Service (IRS) related to settlement of its tax liabilities and the liabilities associated with affiliates of acquired companies. During the year ended February 28, 1995, ICF Kaiser's 1989-1992 tax returns were accepted as filed, resulting in the receipt of refunds from the IRS with interest. An agreement also was reached with the IRS as to the amount of interest owed in connection with previously settled years (1977-1986). The overall impact on pretax earnings for the year ended February 28, 1995 was a reduction of net interest expense of $1.3 million related to interest refunds. F-22 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) NOTE I--PREFERRED STOCK Preferred Stock of the Company is as follows (in thousands):
DECEMBER 31, FEBRUARY 28, 1995 1995 ------------ ------------ Series 2D Senior Preferred Stock, par value $0.01 per share; liquidation value $20,000,000; 200 shares designated, issued, and outstand- ing............................................ $20,000 $20,000 Less unamortized discount, warrant value, and issue costs.................................... (213) (383) ------- ------- Redeemable Preferred Stock.................... $19,787 $19,617 ======= =======
Series 2D Senior Preferred Stock: The Series 2D Senior Preferred Stock (Series 2D Preferred Stock) together with five-year detachable warrants (Series 2D Warrants) were issued in fiscal 1992 for a price of $20,000,000 (less a discount of $100,000). Of the net price of $19,900,000, $400,000 was allocated to the value of the warrants and $19,500,000 was allocated to the value of the stock. The value of the Series 2D Preferred Stock was reduced further by issue costs. Dividends on the Series 2D Preferred Stock are $9,750 per share per annum, cumulative. Each of the shares has a liquidation preference of $100,000 ($20 million in the aggregate). The issue carries voting rights equal to 2,380,952 shares of ICF Kaiser Common Stock. The Series 2D Preferred Stock may be redeemed at ICF Kaiser's option at 106.25% of the original price and is subject to mandatory redemption at liquidation value on January 13, 1997. Because of technical limitations on the payment of dividends contained in the Indenture governing the Company's 12% Notes (see Note F), the Company did not pay the November 30, 1995 and February 29, 1996 accrued dividends in the aggregate amount of $975,000. Dividends in arrears at December 31, 1995 were $487,500. If dividends are in arrears in excess of 100 days or redemption does not occur in January 1997, the holder of the Series 2D Preferred Stock will have the exclusive right to elect two additional directors and to prohibit or limit the Company from taking certain specified extraordinary actions without the holder's consent. In March 1996, the Company and the holders of the 12% Notes amended the Indenture to permit payment of all accrued but unpaid dividends (which were then paid) and all future dividends. As consideration for this amendment, the interest rate on the 12% Notes was increased by one percent from March 1996 until the Company achieves and maintains a specified level of earnings. The Series 2D Warrants expire in November 1997 and may be exercised for 2,680,952 shares of ICF Kaiser Common Stock at an exercise price of $6.90 per share. In lieu of exercising the warrants, the holder may, at the holder's option, require the Company to pay it cash or issue shares of ICF Kaiser's Common Stock equal to the difference between the current market price of the Company's common stock and 90% of the warrants' current exercise price. In the event that the Company cannot make a cash payment to the holder of the warrants without violating certain covenants contained in the Company's agreements relating to certain indebtedness, the Company will make such payment in common stock. Additional warrants may be issued under certain anti- dilution provisions. Junior Preferred Stock: The Company has authorized 200 shares of Series 1 Junior Convertible Preferred Stock, par value $0.01 per share, with a liquidation value of $20,000,000 and 500,000 shares of Series 4 Junior Preferred Stock, par value $0.01 per share, with a liquidation value of $500,000. There were no shares issued or outstanding on either series as of December 31, 1995 and February 28, 1995. F-23 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) NOTE J--COMMON STOCK Notes Receivable Related to Common Stock: Notes receivable related to ICF Kaiser Common Stock pertain to promissory notes from certain current and former members of senior management in accordance with their compensation agreements collateralized by shares of ICF Kaiser Common Stock. Shareholder Rights Plan: The Shareholder Rights Plan (Rights Plan) is designed to provide the Board of Directors (the Board) with the ability to negotiate with a person or group that might, in the future, make an unsolicited attempt to acquire control of ICF Kaiser, whether through the accumulation of shares in the open market or through a tender offer that does not offer an adequate price. The Rights Plan provides for one Right (Right) for each outstanding share of ICF Kaiser Common Stock. Each Right entitles the holder to purchase 1/100 of a share of Series 4 Junior Preferred Stock at a purchase price of $50. The Rights generally may cause substantial dilution to a person or group that attempts to acquire the Company on terms not approved by the Board. The Rights should not interfere with any merger or other business combination approved by the Board because the Board may, at its option, following the acquisition by any person or group of 20% of the outstanding shares of ICF Kaiser Common Stock, redeem the Rights upon payment of the redemption price of $0.01 per Right. The Rights are not triggered by the acquisition of beneficial ownership of more than 20% of ICF Kaiser Common Stock by the initial holder of the Series 2D Preferred Stock. Unless redeemed earlier by the Board, unexercised Rights expire on January 13, 2002. Other: At December 31, 1995, ICF Kaiser was obligated to issue 396,167 shares of the Company's common stock pursuant to an agreement with a former employee. Accordingly, this liability has been recognized in the accompanying financial statements. The shares were issued in March 1996. 275,000 of these shares are being held by the Company pursuant to a pledge agreement as security for an amount receivable from the former employee. NOTE K--LEASES Future minimum payments on noncancelable operating leases for office space and on other noncancelable operating leases with initial or remaining terms in excess of one year are as follows on December 31, 1995 (in thousands): 1996......................................................... $ 24,066 1997......................................................... 19,949 1998......................................................... 17,366 1999......................................................... 15,701 2000......................................................... 12,586 Thereafter..................................................... 20,312 -------- $109,980 ========
The total rental expense for all operating leases was $24,950,000, $31,176,000, and $30,833,000 for the ten months ended December 31, 1995 and the years ended February 28, 1995 and 1994, respectively. Sublease rental income was $3,189,000, $3,944,000, and $2,225,000, for the ten months ended December 31, 1995 and the years ended February 28, 1995 and 1994, respectively. Minimum future sublease rentals to be received under noncancelable subleases during 1996 are approximately $1,967,000. F-24 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) NOTE L--STOCK OPTIONS The ICF Kaiser Stock Incentive Plan provides for the issuance of options, stock appreciation rights, restricted shares, and restricted stock units of up to an aggregate of 6,000,000 shares of ICF Kaiser Common Stock. Awards are made to employees of ICF Kaiser at the discretion of the Compensation Committee of the Board. The plan provides that the option price is not to be less than the fair market value on the date of grant. Stock option activity under this plan and other options granted for the periods indicated is as follows:
SHARES OPTION PRICE --------- --------------- Balance, March 1, 1993........................... 1,946,000 $5.99 to $17.00 Granted........................................ 390,000 $4.17 to $ 6.79 Canceled....................................... (10,000) $8.25 to $12.83 Expired........................................ (30,000) $5.04 to $12.83 --------- Balance, February 28, 1994....................... 2,296,000 $4.17 to $17.00 Granted........................................ 824,000 $2.34 to $ 4.41 Canceled....................................... (453,000) $2.64 to $16.23 Expired........................................ (250,000) $4.41 to $16.23 --------- Balance, February 28, 1995....................... 2,417,000 $2.34 to $17.00 Granted........................................ 678,000 $3.50 to $ 4.42 Canceled....................................... (257,000) $8.25 Expired........................................ (382,000) $2.64 to $16.23 Exercised...................................... (4,000) $2.64 to $ 2.68 --------- Balance, December 31, 1995....................... 2,452,000 $2.34 to $17.00 ========= Exercisable at December 31, 1995................. 1,090,000 $2.34 to $17.00 =========
At December 31, 1995, 1,985,835 shares were available for the granting of options. There were 242,000 exercisable options outstanding at an option price below the fair market value of ICF Kaiser Common Stock at December 31, 1995. In March 1995, the Company canceled 257,000 options granted to employees at an exercise price of $8.25 and granted 86,000 options to them at an exercise price of $4.09. NOTE M--EMPLOYEE BENEFIT PLANS ICF Kaiser and certain of its subsidiaries sponsor a number of benefit plans covering substantially all employees who meet minimum length of service requirements. These plans include the ICF Kaiser International, Inc. Retirement Plan (Retirement Plan), a defined-contribution profit sharing plan that provides for contributions by the Company based on a percentage of covered compensation; the ICF Kaiser International, Inc. Section 401(k) Plan (401(k) Plan), a cash or deferred-compensation arrangement that allows employees to defer portions of their salary, subject to certain limitations; and the ICF Kaiser International, Inc. Employee Stock Ownership Plan (ESOP) under which the Company made contributions based on a percentage of covered compensation. Effective March 1, 1993, the Company made contributions equal to 20% of the first 4% of employee contributions to the 401(k) Plan and 2% of covered compensation to the ESOP. Effective March 1, 1994, the Company increased its matching contribution to the 401(k) Plan to 50% of the first 4% of employee contributions and discontinued contributions to the ESOP. Total expense for these plans for the ten months ended December 31, 1995 and the years ended February 28, 1995 and 1994 was $5,711,000, $6,466,000, and $8,041,000, respectively. As of December 31, 1995, the Retirement Plan, 401(k) Plan, and ESOP owned 1,036,437, 175,937, and 2,104,240 shares, respectively, of ICF Kaiser Common Stock. F-25 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) Certain of the Company's employees are covered by union-sponsored, collectively bargained, multi-employer pension plans. Contributions and costs are determined in accordance with the provisions of negotiated labor contracts or terms of the plans. Pension expense for these plans was $3,676,000, $2,525,000, and $2,150,000 for the ten months ended December 31, 1995 and the years ended February 28, 1995 and 1994, respectively. NOTE N--OTHER POSTRETIREMENT BENEFITS The Company provides certain postretirement benefits to a limited group of retirees. The cost of these benefits is funded when paid and limited to a fixed amount per participant. The Company adopted Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions", as of March 1, 1993, and recorded the transition obligation on the delayed recognition basis. The funded status of the plan is as follows (in thousands):
DECEMBER 31, FEBRUARY 28, 1995 1995 ------------ ------------ Accumulated postretirement benefit obligation (APBO)......................................... $ 7,843 $ 9,537 Unamortized transition obligation............... (11,427) (12,257) Unrecognized net gain........................... 5,554 4,121 -------- -------- Accrued postretirement benefit cost............. $ 1,970 $ 1,401 ======== ========
The net periodic postretirement benefit cost consists of the following (in thousands):
TEN MONTHS YEAR ENDED ENDED FEBRUARY 28, DECEMBER 31, ------------- 1995 1995 1994 ------------ ------ ------ Interest cost..................................... $ 541 $ 920 $ 938 Amortization of transition obligation............. 830 980 981 Amortization of unrecognized net gain............. (214) -- -- ------ ------ ------ Net periodic postretirement benefit cost........ $1,157 $1,900 $1,919 ====== ====== ======
All service cost related to the participants' benefits was included in the transition obligation. The discount rate at both December 31, 1995 and February 28, 1995 was 7%. The 1995 health care cost trend rate is 5%, effective until 2008 when the cost will be in excess of the Company's maximum obligation. If the trend rate was increased by 1% for each year, the APBO as of December 31, 1995 would increase by approximately 3%. Due to changes in assumptions made, including reductions in premiums paid by the Company, the APBO was reduced by approximately $1.6 million during the ten months ended December 31, 1995. These reductions in the APBO will be amortized over the average remaining life expectancy of the plan's participants. F-26 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) NOTE O--BUSINESS SEGMENT, MAJOR CUSTOMERS, AND FOREIGN OPERATIONS Business Segment: ICF Kaiser operates predominantly in one industry segment in which it provides engineering, construction, program management, and consulting services. Major Customers: Gross revenue from major customers is as follows (in thousands):
TEN MONTHS ENDED YEAR ENDED FEBRUARY 28, DECEMBER 31, ----------------------- 1995 1995 1994 ------------ ----------- ----------- U.S. Department of Energy.............. $623,149 $ 517,478 $ 312,889 U.S. Environmental Protection Agency... 55,527 62,783 63,109 Other U.S. government agencies......... 41,182 44,969 49,105 -------- ----------- ----------- Total U.S. government................ $719,858 $ 625,230 $ 425,103 ======== =========== ===========
Foreign Operations: Gross revenue and operating income from foreign operations and foreign assets of all consolidated subsidiaries and branches were as follows (in thousands):
TEN MONTHS ENDED YEAR ENDED FEBRUARY 28, DECEMBER 31, ------------------------ 1995 1995 1994 ------------ ----------- ----------- Foreign gross revenue: Europe............................. $ 14,237 $ 16,758 $ 11,600 Pacific............................ 28,002 35,189 21,997 Other.............................. 1,189 2,122 2,793 -------- ----------- ----------- 43,428 54,069 36,390 Domestic gross revenue............... 873,316 807,449 615,267 -------- ----------- ----------- Total gross revenue.............. $916,744 $ 861,518 $ 651,657 ======== =========== =========== Foreign operating income (loss): Europe............................. $ 1,426 $ 2,600 $ 1,742 Pacific............................ 2,511 (350) (1,899) Other.............................. 20 (44) (255) -------- ----------- ----------- 3,957 2,206 (412) Domestic operating income (loss)..... 13,548 11,482 (4,818) -------- ----------- ----------- Total operating income (loss).... $ 17,505 $ 13,688 $ (5,230) ======== =========== =========== Foreign assets: Europe............................. $ 12,905 $ 9,950 $ 6,410 Pacific............................ 11,024 14,813 14,626 Other.............................. 137 182 14 -------- ----------- ----------- 24,066 24,945 21,050 Domestic assets...................... 345,451 256,477 260,148 -------- ----------- ----------- Total assets..................... $369,517 $ 281,422 $ 281,198 ======== =========== ===========
F-27 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) NOTE P--UNUSUAL ITEMS During the ten months ended December 31, 1995, the Company recorded $0.5 million in additional income (net), consisting of the following unusual items: income in settlement of litigation against the IRS, associated with an affiliate of an acquired company, net of an accrual for related expenses ($6.8 million); a charge to accrue the net settlement cost and legal expenses of other litigation ($4.6 million); a charge to accrue for severance for the termination of 110 employees in the engineering and international groups ($1.0 million); and a charge to accrue for consolidation of office space ($0.7 million). As a part of management's continuing efforts to identify areas in which costs can be reduced, the Company has chosen to terminate a group of underutilized employees and consolidate office space. Management expects that all actions associated with the termination of employees and office space consolidation will be completed by December 31, 1996. During the year ended February 28, 1994, the Company completed a corporate reorganization, performed a comprehensive review of its key business lines and its cost structure, and designed and implemented action plans intended to return the Company to long-term profitability. As a result, the Company recorded an $8.7 million pretax charge to cover the cost of downsizing the work force ($2.5 million), consolidating office space and renegotiating significant leases ($5.1 million), and restructuring certain international operations ($1.1 million). All actions have been completed, and there is no further liability outstanding as of December 31, 1995 associated with this plan. NOTE Q--SUPPLEMENTAL CASH FLOW INFORMATION Supplemental cash flow information is as follows (in thousands):
TEN MONTHS ENDED YEAR ENDED FEBRUARY 28, DECEMBER 31, ------------------------ 1995 1995 1994 ------------ ----------- ----------- Cash payments for interest.......... $7,898 $ 14,961 $ 10,565 Cash payments (refunds) for income taxes.............................. 1,306 (1,026) (106) Non-cash transactions: Issuance of common stock in connection with an acquisition... 765 -- -- Decrease of ESOP guaranteed bank loan............................. -- -- (5,000) Sale of investment................ -- 735 2,600
F-28 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) NOTE R--SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED) Quarterly financial information for full fiscal quarters for the ten months ended December 31, 1995 and the year ended February 28, 1995 is presented in the following tables (in thousands, except per share amounts): Ten Months Ended December 31, 1995:
THIRD SECOND FIRST QUARTER QUARTER QUARTER -------- -------- -------- Gross revenue...................... $319,870 $268,274 $192,983 Service revenue.................... $147,391 $117,645 $105,498 Operating income................... $ 5,815 $ 5,497 $ 3,762 Net income......................... $ 896 $ 575 $ 163 Primary and fully diluted net income (loss) per common share.... $ 0.02 $ 0.00 $ (0.02) Market price per share: High............................. $ 4.75 $ 4.63 $ 5.00 Low.............................. $ 3.25 $ 3.75 $ 3.75 Year Ended February 28, 1995: FOURTH THIRD SECOND FIRST QUARTER QUARTER QUARTER QUARTER -------- -------- -------- -------- Gross revenue...................... $206,154 $235,912 $208,961 $210,491 Service revenue.................... $111,372 $125,345 $109,919 $113,150 Operating income................... $ 3,234 $ 2,962 $ 3,273 $ 4,219 Net income (loss).................. $ (943) $ (323) $ (613) $ 218 Primary and fully diluted net income (loss) per common share.... $ (0.07) $ (0.04) $ (0.05) $ (0.02) Market price per share: High............................. $ 4.38 $ 4.13 $ 2.63 $ 3.88 Low.............................. $ 2.63 $ 2.38 $ 2.00 $ 2.25
At February 29, 1996 there were 21,398,053 shares of common stock outstanding held by 1,356 holders of record. F-29 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) NOTE S--COMPARATIVE STATEMENT OF OPERATIONS INFORMATION (UNAUDITED) Unaudited operating results for the ten months ended December 31, 1994 are as follows (in thousands): GROSS REVENUE................................................. $ 732,370 Subcontract and direct material costs....................... (343,369) Equity in income of joint ventures and affiliated companies.................................................. 2,995 --------- SERVICE REVENUE............................................... 391,996 OPERATING EXPENSES Direct cost of services and overhead........................ 337,120 Administrative and general.................................. 34,292 Depreciation and amortization............................... 7,688 --------- OPERATING INCOME.............................................. 12,896 OTHER INCOME (EXPENSE) Gain on sale of investment.................................. 551 Interest income............................................. 1,492 Interest expense............................................ (12,138) --------- INCOME BEFORE INCOME TAXES.................................... 2,801 Income tax provision........................................ 2,962 --------- NET LOSS...................................................... $ (161) =========
NOTE T--GUARANTOR SUBSIDIARIES In connection with the registration of 12% Senior Notes due 2003, Series B (Exchange Notes), the Company is required to provide financial information for four wholly owned subsidiaries of ICF Kaiser International, Inc. (Subsidiary Guarantors). The Subsidiary Guarantors unconditionally guarantee the payment of the principal, premium, if any, and interest on the Company's $15 million of 12% Senior Notes due 2003, Series A issued in December 1996 (Series A Notes) and the Exchange Notes. The Company is offering to exchange the Exchange Notes for the Series A Notes. The Subsidiary Guarantors are Cygna Consulting Engineers and Project Management, Inc., ICF Kaiser Government Programs, Inc., PCI Operating Company, Inc., and Systems Applications International, Inc. Presented below is condensed consolidating financial information for ICF Kaiser International, Inc. (Parent Company), the Subsidiary Guarantors, and the non-guarantor subsidiaries as of and for the ten months ended December 31, 1995, and the years ended February 28, 1995 and 1994. Investments in subsidiaries have been presented using the equity method of accounting. ICF Kaiser International, Inc. does not have a formal tax sharing arrangement with its subsidiaries and has allocated taxes to its subsidiaries based on the Company's effective tax rate. In the Company's opinion, separate financial statements for Subsidiary Guarantors would not provide additional information that is material to investors. Therefore, the Subsidiary Guarantors are combined in the presentation below. F-30 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) ICF KAISER INTERNATIONAL, INC. CONDENSED CONSOLIDATING BALANCE SHEET DECEMBER 31, 1995 (IN THOUSANDS)
ICF KAISER PARENT SUBSIDIARY NON-GUARANTOR INTERNATIONAL, INC. COMPANY GUARANTORS SUBSIDIARIES ELIMINATIONS CONSOLIDATED -------- ---------- ------------- ------------ ------------------- ASSETS Current Assets Cash and cash equivalents.......... $ 4,128 $ 1,015 $ 12,578 $ (1,364) $ 16,357 Contract receivables, net.................. (2,970) 75,407 155,802 -- 228,239 Intercompany receivables, net..... 145,228 (8,516) (136,712) -- -- Prepaid expenses and other current assets............... 5,093 4,092 12,942 (1,216) 20,911 Deferred income taxes................ 12,169 -- (235) -- 11,934 -------- ------- --------- -------- -------- Total Current Assets............. 163,648 71,998 44,375 (2,580) 277,441 -------- ------- --------- -------- -------- Fixed Assets Furniture, equipment, and leasehold improvements......... 2,957 1,507 38,445 -- 42,909 Less depreciation and amortization......... (2,555) (788) (30,026) -- (33,369) -------- ------- --------- -------- -------- 402 719 8,419 -- 9,540 -------- ------- --------- -------- -------- Other Assets Goodwill, net......... -- -- 49,259 -- 49,259 Investments in and advances to affiliates........... 45,592 1 10,782 (46,162) 10,213 Due from officers and employees............ 294 188 571 -- 1,053 Other................. 5,520 3,624 12,867 -- 22,011 -------- ------- --------- -------- -------- 51,406 3,813 73,479 (46,162) 82,536 -------- ------- --------- -------- -------- $215,456 $76,530 $ 126,273 $(48,742) $369,517 ======== ======= ========= ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Current portion of long-term debt....... $ 5,000 $ 4 $ 37 $ -- $ 5,041 Accounts payable and other accrued expenses............. 16,250 47,127 42,776 (1,130) 105,023 Accrued salaries and employee benefits.... 10,053 24,505 18,502 -- 53,060 Accrued interest...... 7,500 -- -- (86) 7,414 Income taxes payable.. (1,729) -- 2,530 -- 801 Deferred revenue...... 15 212 14,100 -- 14,327 Other................. 3,779 38 3,369 -- 7,186 -------- ------- --------- -------- -------- Total Current Liabilities........ 40,868 71,886 81,314 (1,216) 192,852 -------- ------- --------- -------- -------- Long-term Liabilities Long-term debt, less current portion...... 121,470 -- 51 (1,409) 120,112 Other................. 3,090 -- 2,616 -- 5,706 -------- ------- --------- -------- -------- 124,560 -- 2,667 (1,409) 125,818 -------- ------- --------- -------- -------- Minority Interests in Subsidiaries........... -- 2,539 94 -- 2,633 Redeemable Preferred Stock.................. 19,787 -- -- -- 19,787 Common Stock............ 213 108 165 (273) 213 Additional Paid-in Capital................ 64,654 -- 43,225 (43,225) 64,654 Notes Receivable Related to Common Stock........ (1,732) -- -- -- (1,732) Retained Earnings (Deficit).............. (32,894) 1,997 622 (2,619) (32,894) Cumulative Translation Adjustment............. -- -- (1,814) -- (1,814) -------- ------- --------- -------- -------- $215,456 $76,530 $ 126,273 $(48,742) $369,517 ======== ======= ========= ======== ========
F-31 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) ICF KAISER INTERNATIONAL, INC. CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS TEN MONTHS ENDED DECEMBER 31, 1995 (IN THOUSANDS)
NON- ICF KAISER PARENT SUBSIDIARY GUARANTOR INTERNATIONAL, INC. COMPANY GUARANTORS SUBSIDIARIES ELIMINATIONS CONSOLIDATED ------- ---------- ------------ ------------ ------------------- Gross Revenue $ 1,539 $ 285,037 $ 630,168 $ -- $ 916,744 Subcontract and direct material costs....... (1,037) (189,607) (303,327) -- (493,971) Equity in income of joint ventures and affiliated companies and subsidiaries..... 754 -- 3,358 (989) 3,123 ------- --------- --------- ----- --------- Service Revenue......... 1,256 95,430 330,199 (989) 425,896 Operating Expenses Operating expenses.... (2,502) 90,502 312,589 (55) 400,534 Depreciation and amortization......... 1,349 850 6,158 -- 8,357 Usual items, net...... 1,700 -- (2,200) -- (500) ------- --------- --------- ----- --------- Operating Income........ 709 4,078 13,652 (934) 17,505 Interest income....... 488 269 1,319 (23) 2,053 Interest expense...... 1,147 (475) (13,950) 23 (13,255) ------- --------- --------- ----- --------- Income Before Income Taxes and Minority Interests.............. 2,344 3,872 1,021 (934) 6,303 Income tax provision.. (92) (556) (1,443) -- (2,091) ------- --------- --------- ----- --------- Income (Loss) Before Minority Interests..... 2,252 3,316 (422) (934) 4,212 Minority interests in net (income) loss of subsidiaries......... -- (2,039) 79 -- (1,960) ------- --------- --------- ----- --------- Net Income (Loss)....... 2,252 1,277 (343) (934) 2,252 Preferred stock dividends and accretion............ 1,803 -- -- -- 1,803 ------- --------- --------- ----- --------- Net Income (Loss) Available for Common Shareholders........... $ 449 $ 1,277 $ (343) $(934) $ 449 ======= ========= ========= ===== =========
F-32 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) ICF KAISER INTERNATIONAL, INC. CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS TEN MONTHS ENDED DECEMBER 31, 1995 (IN THOUSANDS)
NON- ICF KAISER PARENT SUBSIDIARY GUARANTOR INTERNATIONAL, INC. COMPANY GUARANTORS SUBSIDIARIES ELIMINATIONS CONSOLIDATED ------- ---------- ------------ ------------ ------------------- Net Cash Provided by (Used in) Operating Activities............. $(6,297) $ 655 $ 949 $(1,364) $(6,057) ------- ------ ------- ------- ------- INVESTING ACTIVITIES Investments in subsidiaries and affiliates, net of cash acquired............... (1,000) -- (1,010) -- (2,010) Sale of subsidiaries and subsidiary assets...... -- -- 735 -- 735 Purchases of fixed assets................. (92) (148) (1,519) -- (1,759) Proceeds from sale of fixed assets........... -- -- 1,035 -- 1,035 ------- ------ ------- ------- ------- Net Cash Used in Investing Activities......... (1,092) (148) (759) -- (1,999) ------- ------ ------- ------- ------- FINANCING ACTIVITIES Borrowings under credit facility agreement..... 16,000 -- -- -- 16,000 Principal payments on credit facility and other borrowings....... (16,000) -- (1,173) -- (17,173) Reacquisition of senior subordinated notes and related warrants....... -- -- (1,363) -- (1,363) Subsidiary capital contribution from minority interest...... -- 500 -- -- 500 Proceeds from issuance of common stock........ 406 -- -- -- 406 Repurchases of common stock.................. (257) -- -- -- (257) Preferred stock dividends.............. (1,471) -- -- -- (1,471) Other financing activities............. -- -- 55 -- 55 ------- ------ ------- ------- ------- Net Cash Provided by (Used in) Financing Activities......... (1,322) 500 (2,481) -- (3,303) ------- ------ ------- ------- ------- Effect of Exchange Rate Changes on Cash........ -- -- (517) -- (517) ------- ------ ------- ------- ------- Increase (Decrease) in Cash and Cash Equivalents............ (8,711) 1,007 (2,808) (1,364) (11,876) Cash and Cash Equivalents at Beginning of Period.... 12,839 8 15,386 -- 28,233 ------- ------ ------- ------- ------- Cash and Cash Equivalents at End of Period................. $ 4,128 $1,015 $12,578 $(1,364) $16,357 ======= ====== ======= ======= =======
F-33 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) ICF KAISER INTERNATIONAL, INC. CONDENSED CONSOLIDATING BALANCE SHEET FEBRUARY 28, 1995 (IN THOUSANDS)
ICF KAISER PARENT SUBSIDIARY NON-GUARANTOR INTERNATIONAL, INC. COMPANY GUARANTORS SUBSIDIARIES ELIMINATIONS CONSOLIDATED -------- ---------- ------------- ------------ ------------------- ASSETS Current Assets Cash and cash equivalents.......... $ 12,839 $ 8 $ 15,386 $ -- $ 28,233 Contract receivables, net.................. (3,331) 4,593 138,598 -- 139,860 Intercompany receivables, net..... 133,776 (3,856) (129,920) -- -- Prepaid expenses and other current assets............... 5,349 137 6,058 (672) 10,872 Deferred income taxes................ 13,788 -- (235) -- 13,553 -------- ------ -------- -------- -------- Total Current Assets............. 162,421 882 29,887 (672) 192,518 -------- ------ -------- -------- -------- Fixed Assets Furniture, equipment, and leasehold improvements......... 2,865 1,359 38,333 -- 42,557 Less depreciation and amortization......... (2,196) (441) (27,011) -- (29,648) -------- ------ -------- -------- -------- 669 918 11,322 -- 12,909 -------- ------ -------- -------- -------- Other Assets Goodwill, net......... -- -- 47,945 -- 47,945 Investments in and advances to affiliates........... 42,797 -- 8,848 (43,623) 8,022 Due from officers and employees............ 262 -- 1,564 -- 1,826 Other................. 5,766 83 12,353 -- 18,202 -------- ------ -------- -------- -------- 48,825 83 70,710 (43,623) 75,995 -------- ------ -------- -------- -------- $211,915 $1,883 $111,919 $(44,295) $281,422 ======== ====== ======== ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Current portion of long-term debt....... $ -- $ 4 $ 574 $ -- $ 578 Accounts payable and other accrued expenses............. 17,766 494 29,223 (672) 46,811 Accrued salaries and employee benefits.... 7,255 280 23,014 -- 30,549 Accrued interest...... 2,528 -- -- -- 2,528 Income taxes payable.. 42 -- 602 -- 644 Deferred revenue...... -- 256 10,757 -- 11,013 Other................. 5,934 21 2,800 -- 8,755 -------- ------ -------- -------- -------- Total Current Liabilities........ 33,525 1,055 66,970 (672) 100,878 -------- ------ -------- -------- -------- Long-term Liabilities Long-term debt, less current portion...... 126,102 -- 631 -- 126,733 Other................. 3,750 -- 2,647 -- 6,397 -------- ------ -------- -------- -------- 129,852 -- 3,278 -- 133,130 -------- ------ -------- -------- -------- Minority Interests in Subsidiaries........... -- -- 173 -- 173 Redeemable Preferred Stock.................. 19,617 -- -- -- 19,617 Common Stock............ 210 108 159 (267) 210 Additional Paid-in Capital................ 63,786 -- 41,674 (41,674) 63,786 Notes Receivable Related to Common Stock........ (1,732) -- -- -- (1,732) Retained Earnings (Deficit).............. (33,343) 720 962 (1,682) (33,343) Cumulative Translation Adjustment............. -- -- (1,297) -- (1,297) -------- ------ -------- -------- -------- $211,915 $1,883 $111,919 (44,295) $281,422 ======== ====== ======== ======== ========
F-34 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) ICF KAISER INTERNATIONAL, INC. CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS YEAR ENDED FEBRUARY 28, 1995 (IN THOUSANDS)
NON- ICF KAISER PARENT SUBSIDIARY GUARANTOR INTERNATIONAL, INC. COMPANY GUARANTORS SUBSIDIARIES ELIMINATIONS CONSOLIDATED ------- ---------- ------------ ------------ ------------------- Gross Revenue........... $ 1,293 $10,220 $851,586 $(1,581) $861,518 Subcontract and direct material costs....... (711) (4,463) (400,645) -- (405,819) Equity in income of joint ventures and affiliated companies and subsidiaries..... (3,168) -- 4,753 2,502 4,087 ------- ------- -------- ------- -------- Service Revenue......... (2,586) 5,757 455,694 921 459,786 Operating Expenses Operating expenses.... (18,357) 4,381 452,423 (1,581) 436,866 Depreciation and amortization......... 1,616 324 7,292 -- 9,232 ------- ------- -------- ------- -------- Operating Income (Loss)................. 14,155 1,052 (4,021) 2,502 13,688 Gain on sale of investment........... -- -- 551 -- 551 Interest income....... 954 11 971 (137) 1,799 Interest expense...... (14,683) -- (253) 137 (14,799) ------- ------- -------- ------- -------- Income (Loss) Before Income Taxes........... 426 1,063 (2,752) 2,502 1,239 Income tax provision.. (2,087) (397) (416) -- (2,900) ------- ------- -------- ------- -------- Net Income (Loss)....... (1,661) 666 (3,168) 2,502 (1,661) Preferred stock dividends and accretion............ 2,154 -- -- -- 2,154 ------- ------- -------- ------- -------- Net Income (Loss) Available for Common Shareholders........... $(3,815) $ 666 $ (3,168) $ 2,502 $ (3,815) ======= ======= ======== ======= ========
F-35 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) ICF KAISER INTERNATIONAL, INC. CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS YEAR ENDED FEBRUARY 28, 1995 (IN THOUSANDS)
NON- ICF KAISER PARENT SUBSIDIARY GUARANTOR INTERNATIONAL, INC. COMPANY GUARANTORS SUBSIDIARIES CONSOLIDATED ------- ---------- ------------ ------------------- Net Cash Provided by (Used in) Operating Activities.............. $(3,942) $ 990 $ 5,135 $ 2,183 ------- ----- ------- ------- INVESTING ACTIVITIES Investments in subsidiaries and affiliates, net of cash acquired................ -- -- (622) (622) Sale of subsidiaries and subsidiary assets....... -- -- 2,600 2,600 Purchases of fixed assets.................. (13) (992) (1,421) (2,426) Other investing activities.............. (600) -- -- (600) ------- ----- ------- ------- Net Cash Provided by (Used in) Investing Activities............ (613) (992) 557 (1,048) ------- ----- ------- ------- FINANCING ACTIVITIES Borrowings under credit facility agreement...... 5,000 -- -- 5,000 Principal payments on other borrowings........ -- -- (1,172) (1,172) Repurchases of redeemable preferred stock and related warrants........ -- -- (799) (799) Proceeds from issuances of common stock......... 395 -- -- 395 Repurchases of common stock................... (180) -- -- (180) Preferred stock dividends............... (1,950) -- -- (1,950) Debt issuance costs...... (149) -- -- (149) ------- ----- ------- ------- Net Cash Provided by (Used in) Financing Activities............ 3,116 -- (1,971) 1,145 ------- ----- ------- ------- Effect of Exchange Rate Changes on Cash......... -- -- 444 444 ------- ----- ------- ------- Increase (Decrease) in Cash and Cash Equivalents............. (1,439) (2) 4,165 2,724 Cash and Cash Equivalents at Beginning of Period.. 14,278 10 11,221 25,509 ------- ----- ------- ------- Cash and Cash Equivalents at End of Period........ $12,839 $ 8 $15,386 $28,233 ======= ===== ======= =======
F-36 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) ICF KAISER INTERNATIONAL, INC. CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS YEAR ENDED FEBRUARY 28, 1994 (IN THOUSANDS)
NON- ICF KAISER PARENT SUBSIDIARY GUARANTOR INTERNATIONAL, INC. COMPANY GUARANTORS SUBSIDIARIES ELIMINATIONS CONSOLIDATED -------- ---------- ------------ ------------ ------------------- Gross Revenue $ 804 $18,337 $633,940 $(1,424) $651,657 Subcontract and direct material costs....... (443) (4,850) (266,876) -- (272,169) Equity in income of joint ventures and affiliated companies and subsidiaries..... (16,834) -- 328 19,726 3,220 -------- ------- -------- ------- -------- Service Revenue......... (16,473) 13,487 367,392 18,302 382,708 Operating Expenses Operating expenses.... (17,630) 16,776 371,948 (1,424) 369,670 Depreciation and amortization......... 1,770 207 7,582 -- 9,559 Usual items, net...... 6,580 -- 2,129 -- 8,709 -------- ------- -------- ------- -------- Operating Loss.......... (7,193) (3,496) (14,267) 19,726 (5,230) Loss on sale of investment........... -- -- (925) -- (925) Interest income....... 843 6 641 -- 1,490 Interest expense...... (7995) (28) (189) -- (8,212) -------- ------- -------- ------- -------- Loss Before Income Taxes and Extraordinary Item................... (14,345) (3,518) (14,740) 19,726 (12,877) Income tax (provision) benefit.............. 1,817 626 (2,094) -- 349 -------- ------- -------- ------- -------- Net Loss Before Extraordinary Item..... (12,528) (2,892) (16,834) 19,726 (12,528) Extraordinary loss on early extinguishment of debt.............. (5,969) -- -- -- (5,969) -------- ------- -------- ------- -------- Net Loss................ (18,497) (2,892) (16,834) 19,726 (18,497) Preferred stock dividends and accretion............ 4,896 -- -- -- 4,896 Redemption of redeemable preferred stock................ 1,929 -- -- -- 1,929 -------- ------- -------- ------- -------- Net Loss Available for Common Shareholders.... $(25,322) $(2,892) $(16,834) $19,726 $(25,322) ======== ======= ======== ======= ========
F-37 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) ICF KAISER INTERNATIONAL, INC. CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS YEAR ENDED FEBRUARY 28, 1994 (IN THOUSANDS)
NON- ICF KAISER PARENT SUBSIDIARY GUARANTOR INTERNATIONAL, INC. COMPANY GUARANTORS SUBSIDIARIES CONSOLIDATED -------- ---------- ------------ ------------------- Net Cash Provided by Operating Activities... $ 3,057 $ 16 $11,034 $ 14,107 -------- ---- ------- -------- INVESTING ACTIVITIES Investments in subsidiaries and affiliates, net of cash acquired............... -- -- (2,755) (2,755) Purchases of fixed assets................. (553) (15) (820) (1,388) -------- ---- ------- -------- Net Cash Used in Investing Activities......... (553) (15) (3,575) (4,143) -------- ---- ------- -------- FINANCING ACTIVITIES Borrowings under credit facility agreement..... 10,000 -- -- 10,000 Principal payments on credit facility and other borrowings....... (45,070) -- (1,940) (47,010) Proceeds from issuance of senior subordinated notes and related warrants............... 121,488 -- -- 121,488 Reacquisition of senior subordinated notes and related warrants....... (31,559) -- -- (31,559) Repurchases of redeemable preferred stock and related warrants............... (26,564) -- (799) (27,363) Repurchase of preferred stock.................. (4,850) -- -- (4,850) Proceeds from issuances of common stock........ 640 -- -- 640 Repurchases of common stock.................. (3,722) -- -- (3,722) Principal payments from notes receivable related to common stock.................. 993 -- -- 993 Preferred stock dividends.............. (5,321) -- -- (5,321) Debt issuance costs..... (6,307) (6,307) Other financing activities............. 151 -- -- 151 -------- ---- ------- -------- Net Cash Provided by (Used in) Financing Activities......... 9,879 -- (2,739) 7,140 -------- ---- ------- -------- Effect of Exchange Rate Changes on Cash........ -- -- (40) (40) -------- ---- ------- -------- Increase in Cash and Cash Equivalents....... 12,383 1 4,680 17,064 Cash and Cash Equivalents at Beginning of Period.... 1,895 9 6,541 8,445 -------- ---- ------- -------- Cash and Cash Equivalents at End of Period................. $ 14,278 $ 10 $11,221 $ 25,509 ======== ==== ======= ========
F-38 ================================================================================ NO DEALER, SALESMAN, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMA- TION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS EXCHANGE OFFER CONTAINED HEREIN OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE INITIAL PURCHASER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECU- RITY OTHER THAN THOSE TO WHICH IT RELATES NOR DOES IT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIV- ERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUM- STANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE OTHER INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF. --------------- TABLE OF CONTENTS
PAGE ---- Prospectus Summary....................................................... 1 Risk Factors............................................................. 7 Use of Proceeds.......................................................... 13 The Exchange Offer....................................................... 14 Capitalization........................................................... 22 Selected Consolidated Financial Data..................................... 23 Unaudited Pro Forma Consolidated Financial Statements.................... 24 Management's Discussion and Analysis of Financial Condition and Results of Operations........................................................... 29 Business................................................................. 39 Management............................................................... 52 Executive Compensation................................................... 57 Security Ownership....................................................... 62 Description of the Credit Facility....................................... 64 Description of $125 Million of 12% Senior Subordinated Notes due 2003.... 66 Description of the Notes................................................. 67 Certain Federal Income Tax Considerations................................ 87 Old Notes Registration Rights; Additional Interest....................... 90 Old Notes Transfer Restrictions.......................................... 92 Book Entry; Delivery and Form............................................ 95 Plan of Distribution..................................................... 96 Legal Matters............................................................ 97 Experts.................................................................. 97 Index to Consolidated Financial Statements............................... F-1
================================================================================ ================================================================================ --------------------------- PROSPECTUS --------------------------- [LOGO OF IFC KAISER APPEARS HERE] OFFER TO EXCHANGE $1,000 PRINCIPAL AMOUNT OF ITS 12% SENIOR SUBORDINATED NOTES DUE 2003, SERIES B WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT FOR EACH $1,000 PRINCIPAL AMOUNT OF ITS OUTSTANDING 12% SENIOR SUBORDINATED NOTES DUE 2003, SERIES A The Exchange Agent for the Exchange Offer is: Bankers Trust Company By Facsimile: (212) 250-6961 or (212) 250-6392 Confirmation by Telephone: (800) 735-7777 By Mail: Bankers Trust Company Corporate Trust and Agency Group Reorganization Department P.O. Box 1458, Church Street Station New York, NY 10008-1458 By Hand/Overnight Delivery: Bankers Trust Company Corporate Trust and Agency Group Receipt & Delivery Window 123 Washington Street, 1st Floor New York, New York 10006 , 1997 ================================================================================ PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION The following table sets forth the expenses payable by the Registrants with respect to the offering described in this Registration Statement, all of which expenses, except for the Commission registration fee, are estimates: Securities and Exchange Commission registration fee........... $ 4,568.18 Legal fees and expenses....................................... 50,000.00 Printing and engraving fees and expenses...................... 50,000.00 Accounting fees and expenses.................................. 10,000.00 Blue Sky fees and expenses.................................... 10,000.00 Exchange Agent fees and expenses.............................. 1,000.00 Miscellaneous expenses........................................ 5,000.00 ----------- Total..................................................... $130,568.18 ===========
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS Under the Delaware General Corporation Law ("Delaware Law"), a corporation may indemnify any person who was or is a party or is threatened to be made a party to an action by reason of the person's past or present service as a director, officer, employee, or agent of the corporation or of the person's past or present service, at the corporation's request, as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise. Under the Delaware Law, a corporation may indemnify such persons against expenses (including attorneys' fees), judgments, fines, and amounts paid in settlement that are actually and reasonably incurred by that person in connection with such action. The Delaware Law provides, however, that such person must have acted in good faith and in a manner that such person reasonably believed to be in (or not opposed to) the corporation's best interests. In respect of any criminal action or proceeding, an indemnifiable person must have no reasonable cause to believe such conduct to be unlawful. In addition, the Delaware Law permits no indemnification in any action by or in the right of the corporation where such person has been adjudged liable to the corporation, unless, and only to the extent that, a court determines that such person fairly and reasonably is entitled to indemnity for costs the court deems proper in spite of liability adjudication. The sections of the Company's Restated Certificate of Incorporation and Amended and Restated By-laws, and of the Certificates of Incorporation and By- laws of each of the Subsidiary Guarantors incorporated in the state of Delaware, relating to indemnification of directors and officers provide for mandatory indemnification of directors and officers on generally the same terms as permitted by the Delaware Law. The California General Corporation Law provides for the indemnification of directors and officers in terms sufficiently broad to indemnify directors of Cygna Consulting Engineers and Project Management, Inc. ("Cygna") under certain circumstances from liabilities (including reimbursement for expenses incurred) arising under the Securities Act. Cygna's Bylaws provide for the indemnification of directors and officers against monetary damages to the fullest extent permissible under California law. ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES On March 21, 1995, in connection with the termination of the employment of Mr. John G. Balch from the employ of a subsidiary of the Registrant, the Registrant agreed to issue 396,167 shares of Common Stock to Mr. Balch; all of the 396,167 shares were issued on November 15, 1995. All of the shares are restricted and legended against transfer. The issuance of the shares was effected without registration, in reliance upon the exemption available under Section 4(2) of the Securities Act. The shares subsequently were registered for resale (No. 33-64655). II-1 On July 28, 1995, in connection with the acquisition of EDA Incorporated, the Registrant issued an aggregate of 722,500 shares of Common Stock to a total of five former shareholders of such company, each of whom gave an investment representation with respect to the Registrant's shares acquired by him. All of the shares are restricted and legended against transfer. The issuance of the shares was effected without registration, in reliance upon the exemption available under Section 4(2) of the Securities Act. The shares subsequently were registered for resale (No. 33-64655). On January 31, 1996, in connection with the acquisition of the assets of The IPC Company, the Registrant issued an aggregate of 100,000 shares of Common Stock to The IPC Company which indicated an intent subsequently to distribute all of the 100,000 shares to five of its shareholders. The IPC Company and the five IPC shareholders each gave an investment representation with respect to the Registrant's shares acquired by it or him. All of the shares are restricted and legended against transfer. The issuance of the shares was effected without registration, in reliance upon the exemption available under Section 4(2) of the Securities Act. The shares subsequently were registered for resale (No. 33-64655). On July 1, 1996, in connection with the acquisition of Georgia A. Wilson & Associates, Inc., the Registrant issued an aggregate of 454,545 shares of Common Stock to a total of three former shareholders of such company, each of whom gave an investment representation with respect to the Registrant's shares acquired by her or him. All of the shares are restricted and legended against transfer. The issuance of the shares was effected without registration, in reliance upon the exemption available under Section 4(2) of the Securities Act. These shares subsequently were registered for resale (No. 333-16937). On December 23, 1996, the Company sold 15,000 Units consisting of $15,000,000 aggregate principal amount of its 12% Senior Notes due 2003, Series A, and Warrants to purchase 105,000 shares of the Company's Common Stock. The Units were sold to BT Securities Corporation, as Initial Purchaser, pursuant to a Purchase Agreement, dated December 19, 1996. The aggregate offering price for the Units was $14,700,000, and the aggregate Initial Purchaser's Discount was $499,500. The issuance of the Units was effected without registration, in reliance upon the exemption available under Section 4(2) of the Securities Act. ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES The following exhibits and financial statement schedule are filed as part of this Registration Statement. (A) EXHIBITS Exhibit No. 3--Articles of Incorporation and By-laws 3(a) Restated Certificate of Incorporation of ICF Kaiser International, Inc. (restated through June 26, 1993) (Incorporated by reference to Exhibit No. 3(a) to Quarterly Report on Form 10-Q (Registrant No. 1-12248) for the second quarter of fiscal 1994 filed with the Commission on October 15, 1993) 3(b) Amended and Restated By-laws of ICF Kaiser International, Inc. (as amended through June 23, 1995) (Incorporated by reference to Exhibit No. 3(b) to Quarterly Report on Form 10-Q Registrant No. 1-12248 for the second quarter of fiscal 1995 filed with the Commission on October 13, 1995) 3(c) Articles of Incorporation of Cygna Consulting Engineers and Project Management, Inc. 3(d) By-laws of Cygna Consulting Engineers and Project Management, Inc. 3(e) Certificate of Incorporation of ICF Kaiser Government Programs, Inc. 3(f) By-laws of ICF Kaiser Government Programs, Inc. 3(g) Certificate of Incorporation of PCI Operating Company, Inc. 3(h) By-laws of PCI Operating Company, Inc. 3(i) Certificate of Incorporation of Systems Applications International, Inc. 3(j) By-laws of Systems Applications International, Inc. Exhibit No. 4--Instruments Defining the Rights of Security Holders, including Indentures 4(a) Indenture dated as of January 11, 1994, between ICF Kaiser International, Inc. and The Bank of New York, as Trustee (Incorporated by reference to Exhibit No. 4(a) to Quarterly Report on Form 10-Q
II-2 Registrant No. 1-12248 for the third quarter of fiscal 1994 filed with the Commission on January 14, 1994) 1. First Supplemental Indenture dated as of February 17, 1995. (Incorporated by reference to Exhibit No. 4(a)(1) to Annual Report on Form 10-K Registrant No. 1-12248 for fiscal year 1995 filed with the Commission on May 23, 1995) 2. Second Supplemental Indenture dated September 1, 1995 (Incorporated by reference to Exhibit No. 4(a) (2) to Registration Statement on Form S-1 Registration No. 33-64655 filed with the Commission on November 30, 1995) 3. Third Supplemental Indenture dated October 20, 1995 (Incorporated by reference to Exhibit No. 4(a)(3) to Registration Statement on Form S-1 Registration No. 33-64655 filed with the Commission on November 30, 1995) 4. Fourth Supplemental Indenture dated as of March 8, 1996 (Incorporated by reference to Exhibit No. 4 (a) (4) to Transition Report on Form 10-K Registrant No. 1-12248 for the transition period from March 1, 1995 to December 31, 1995 filed with the Commission on March 29, 1996) 5. Fifth Supplemental Indenture dated as of June 24, 1996 (Incorporated by reference to Exhibit No. 4(a)(5) to Registration Statement on Form S-1 Registration No. 333-16937 filed with the Commission on November 27, 1996) 4(b) Form of 12% Senior Subordinated Note due 2003 (Incorporated by reference to Exhibit No. 4(b) to Quarterly Report on Form 10-Q Registrant No. 1-12248 for the third quarter of fiscal 1994 filed with the Commission on January 14, 1994) 4(c) Form of Common Stock Purchase Warrant expiring May 15, 1999 (as amended and restated through January 11, 1994) (Incorporated by reference to Exhibit No. 4(e) to Quarterly Report on Form 10-Q Registrant No. 1-12248 for the third quarter of fiscal 1994 filed with the Commission on January 14, 1994) 4(d) Rights Agreement, dated as of January 13, 1992, between ICF Kaiser International, Inc. and Office of the Secretary, ICF Kaiser International, Inc. as Rights Agent, including 1. Form of Certificate of Designations of Series 4 Junior Preferred Stock 2. Form of Rights Certificate 3. Summary of Rights to Purchase Preferred Stock (Incorporated by reference to Exhibit No. 4(h) to Quarterly Report on Form 10-Q Registrant No. 0-18025 for the third quarter of fiscal 1992 filed with the Commission on January 14, 1992) 4(e) Warrant Agreement dated as of January 11, 1994, between ICF Kaiser International, Inc. and The Bank of New York, as Warrant Agent (Incorporated by reference to Exhibit No. 4(c) to Quarterly Report on Form 10-Q Registrant No. 1-12248 for the third quarter of fiscal 1994 filed with the Commission on January 14, 1994) 4(f) Form of Warrant expiring December 31, 1998 issued under Warrant Agreement dated as of January 11, 1994 (Incorporated by reference to Exhibit No. 4(d) to Quarterly Report on Form 10-Q Registrant No. 1-12248 for the third quarter of fiscal 1994 filed with the Commission on January 14, 1994) 4(g) Indenture dated as of December 23, 1996, between ICF Kaiser International, Inc. and The Bank of New York, as Trustee, including Guarantees, dated December 23, 1996, by each of the Subsidiary Guarantors 4(h) Form of 12% Senior Note due 2003, Series A 4(i) Form of 12% Senior Note due 2003, Series B 4(j) Warrant Agreement dated as of December 23, 1996, between ICF Kaiser International, Inc. and The Bank of New York, as Warrant Agent 4(k) Form of Warrant expiring December 31, 1999 issued under Warrant Agreement dated as of December 23, 1996 4(l) Registration Rights Agreement dated as of December 23, 1996 between ICF Kaiser International, Inc. and BT Securities Corporation, as Initial Purchaser
II-3 Exhibit No. 5 -- Opinion and Consent of Paul Weeks, II Exhibit No. 8 -- Opinion of Crowell & Moring LLP as to tax matters Exhibit No. 10 -- Material Contracts 10(a) Credit Agreement dated as of May 6, 1996, with CoreStates N.A., as agent (Incorporated by reference to Exhibit No. 10(r) to Quarterly Report on Form 10-Q Registrant No. 1-12248 for the second quarter of fiscal 1996 filed with the Commission on August 14, 1996) 1. Amendment No. 1 to Credit Agreement dated as of December 17, 1996 10(b) ICF Kaiser International, Inc. Employee Stock Ownership Plan (as amended and restated as of March 1, 1993) (and further amended with respect to name change only as of June 26, 1993) (Incorporated by reference to Exhibit No. 10(c) to Quarterly Report on Form 10-Q Registrant No. 1-12248 for the second quarter of fiscal 1994 filed with the Commission on October 15, 1993) 1. Amendment No. 1 dated April 24, 1995 (Incorporated by reference to Exhibit No. 10(l)(1) to Annual Report on Form 10-K Registrant No. 1- 12248 for fiscal 1995 filed with the Commission on May 23, 1995) 2. Amendment No. 2 dated December 15, 1995 (Incorporated by reference to Exhibit No. 10(b)(2) to Transition Report on Form 10-K Registrant No. 1-12248 for the transition period from March 1, 1995 to December 31, 1995 filed with the Commission on March 29, 1996) 3. Amendment No. 3 dated December 13, 1996 10(c) Trust Agreement with Vanguard Fiduciary Trust Company dated as of August 31, 1995, for ICF Kaiser International Employee Stock Ownership Plan (Incorporated by reference to Exhibit No. 10(c) to Registration Statement on Form S-1 Registrant No. 33-64655 filed with the Commission on November 30, 1995) 10(d) ICF Kaiser International, Inc. Retirement Plan (as amended and restated as of March 1, 1993) (and further amended with respect to name change only as of June 26, 1993) (Incorporated by reference to Exhibit No. 10(d) to Quarterly Report on Form 10-Q Registrant No. 1- 12248 for the second quarter of fiscal 1994 filed with the Commission on October 15, 1993) 1. Amendment No. 1 dated April 24, 1995 (Incorporated by reference to Exhibit No. 10(d)(1) to Annual Report on Form 10-K Registrant No. 1- 12248 filed with the Commission on May 23, 1995.) 2. Amendment No. 2 dated December 15, 1995 (Incorporated by reference to Exhibit No. 10(d)(2) to Transition Report on Form 10-K Registrant No. 1-12248 for the transition period from March 1, 1995 to December 31, 1995 filed with the Commission on March 29, 1996) 3. Amendment No. 3 dated December 13, 1996 10(e) Trust Agreement with Vanguard Fiduciary Trust Company dated as of August 31, 1995, for ICF Kaiser International, Inc. Retirement Plan (Incorporated by reference to Exhibit No. 10(e) to Registration Statement on Form S-1 (Registrant No. 33-64655) filed with the Commission on November 30, 1995) 10(f) Lease Agreement between HMCE Associates (as Landlord) and ICF Kaiser Incorporated (as Tenant), dated January 30, 1987, for the lease of the Registrant's headquarters in Fairfax, Virginia (Incorporated by reference to Exhibit No. 10(a) to Registration Statement on Form S-1 (No. 33-31473) filed with the Commission on October 6, 1989) 1. First Amendment entered into August 31, 1987 (Incorporated by reference to Exhibit No. 10(a) to Registration Statement on Form S-1 (No. 33-31473) filed with the Commission on October 6, 1989) 2. Second Amendment entered into September 23, 1987 (Incorporated by reference to Exhibit No. 10(a) to Registration Statement on Form S-1 (No. 33-31473) filed with the Commission on October 6, 1989) 3. Third Amendment entered into as of February 12, 1990 (Incorporated by reference to Exhibit No. 10(a) to Annual Report on Form 10-K Registrant No. 0-18025 filed with the Commission on April 25, 1990)
II-4 10(g) Lease Agreement between HMCE Associates Limited Partnership (as Landlord) and American Capital and Research Corporation (as Tenant), dated April 27, 1988, for the lease of space in the building adjacent to the Registrant's headquarters in Fairfax, Virginia (Incorporated by reference to Exhibit No. 10(b) to Registration Statement on Form S-1 (No. 33-31473) filed with the Commission on October 6, 1989) 1. First Amendment entered into July 29, 1988. (Incorporated by reference to Exhibit No. 10(b) to Annual Report on Form 10-K (Registrant No. 0-18025) filed with the Commission on April 25, 1990) 2. Second Amendment entered into as of February 12, 1990 (Incorporated by reference to Exhibit No. 10(b) to Annual Report on Form 10-K Registrant No. 0-18025 filed with the Commission on April 25, 1990) 3. Third Amendment entered into as of December 22, 1992 (Incorporated by reference to Exhibit No. 10(h)(3) to Annual Report on Form 10-K Registrant No. 1-12248 for the fiscal year ended February 28, 1993 filed with the Commission on May 21, 1993) 10(h) Amended and Restated Lease Agreement by and between Kaiser Engineers, Inc. and 1800 Harrison Limited Partnership, dated as of July 1, 1988, for the lease of the Registrant's offices in Oakland, California (Incorporated by reference to Exhibit No. 10(c) to Registration Statement on Form S-1 (No. 33-31576) filed with the Commission on October 13, 1989) 1. First Amendment made as of March 27, 1991 (Incorporated by reference to Exhibit No. 10(a)(1) to Quarterly Report on Form 10-Q (Registrant No. 0-18025) for the first quarter of fiscal 1993 filed with the Commission on July 10, 1992) 2. Second Amendment made as of June 1992 (Incorporated by reference to Exhibit No. 10(a)(2) to Quarterly Report on Form 10-Q (Registrant No. 0-18025) for the first quarter of fiscal 1993 filed with the Commission on July 10, 1992) 3. Third Amendment made as of April 27, 1993 (Incorporated by reference to Exhibit No. 10(i)(3) to Annual Report on Form 10-K (Registrant No. 1-12248) for the fiscal year ended February 28, 1993 filed with the Commission on May 21, 1993) 10(i) Guaranty provided by American Capital and Research Corporation to 1800 Harrison Limited Partnership, dated as of March 27, 1991, and First Amendment thereto dated as of June 1992, guaranteeing the performance of Kaiser Engineers, Inc. under an Amended and Restated Lease Agreement by and between Kaiser Engineers, Inc. and the California Public Employee's Retirement System, dated as of July 1, 1988, for the lease of the Registrant's offices in Oakland, California (Incorporated by reference to Exhibit No. 10(b) to Quarterly Report on Form 10-Q Registrant No. 0-18025 for the first quarter of fiscal 1993 filed with the Commission on July 10, 1992) 10(j) ICF Kaiser International, Inc. Stock Incentive Plan (as amended and restated through March 1, 1996) (Incorporated by reference to Exhibit No. 10(j) to Registration Statement on Form S-1 Registration No. 333-16937 filed with the Commission on November 27, 1996) 10(l) Purchase Order dated March 8, 1995 (WHC-380393, Mod. 1) issued by Westinghouse Hanford Company to ICF Kaiser Hanford Company (DOE Reference No. DE-AC06-87RL1930) (Incorporated by reference to Exhibit No. 10(m) to Annual Report on Form 10-K Registrant No. 1-12248 for fiscal year 1995 filed with the Commission on May 23, 1995) 10(m) Assignment Agreement between the U.S. Department of Energy, Kaiser Engineers Hanford Company, and Westinghouse Hanford Company, with an effective date of October 1, 1993 (Contract No. DE-A06-93RL12359) (Incorporated by reference to Exhibit No. 10(a) to Quarterly Report on Form 10-Q Registrant No. 1-12248 for the second quarter of fiscal 1994 filed with the Commission on October 15, 1993) 1. Modification No. 1 dated October 25, 1993 (Incorporated by reference to Exhibit No. 10(n)(1) to Annual Report on Form 10-K Registrant No. 1-12248 filed with the Commission on May 25, 1994).
II-5 10(n) Hanford Termination Notice effective October 1, 1996, from the U.S. Department of Energy. 10(o) Massachusetts Water Resources Authority Agreement with ICF Kaiser Engineers, Inc. through its wholly owned subsidiary of ICF Kaiser Engineers of Massachusetts, Inc. for construction management services for Boston Harbor Project--Deer Island Related Facilities, Contract No. 5622 (June 1990) (Incorporated by reference to Exhibit No. 10(h) to Quarterly Report on Form 10-Q Registrant No. 0-18025 for the second quarter of fiscal 1991 filed with the Commission on October 12, 1990) (Amendment Nos. 1-3 incorporated by reference to Exhibit No. 10(n)(1-3) to Annual Report on Form 10-K Registrant No. 0-18025 for the fiscal year ended February 28, 1993 filed with the Commission on May 21, 1993). 1. Amendment No. 4 and Amendment No. 4A each dated December 2, 1993 [IN ACCORDANCE WITH RULE 202 OF REGULATION S-T, THIS EXHIBIT NO. 10(n)(1) to Annual Report on Form 10-K Registrant No. 1-12248 for fiscal 1994 FILED IN PAPER ON MAY 20, 1994, ON FORM SE PURSUANT TO A CONTINUING HARDSHIP EXEMPTION is incorporated herein by reference thereto] 2. Amendment No. 5 dated December 6, 1994 [IN ACCORDANCE WITH RULE 202 OF REGULATION S-T, THIS EXHIBIT NO. 10(n)(2) to Annual Report on Form 10-K Registrant No. 1-12248 for fiscal 1995 FILED IN PAPER ON MAY 23, 1995, ON FORM SE PURSUANT TO A CONTINUING HARDSHIP EXEMPTION is incorporated herein by reference thereto] 3. Amendment No. 6 to the Agreement with the Massachusetts Water Resources Authority for Construction Management Services (January 1996) (Amendment No. 6 incorporated by reference to Exhibit No. 10(n)(3) to Quarterly Report on Form 10-Q Registrant No. 1-12248 for the fiscal quarter ended March 31, 1996 filed with the Commission on May 15, 1996). 10(p) Contract (#DE-AC3495RF00825) between Kaiser-Hill Company, LLC, a subsidiary of the Corporation, and the U.S. Department of Energy dated as of April 4, 1995. [IN ACCORDANCE WITH RULE 202 OF REGULATION S-T, THIS EXHIBIT NO. 10(o) WAS FILED IN PAPER ON MAY 23, 1995, ON FORM SE PURSUANT TO A CONTINUING HARDSHIP EXEMPTION is incorporated herein by reference thereto] 1. Modifications to Contract #DE-AC3495RF00825. (Incorporated by reference to Exhibit No. 10(p)(1) to Registration Statement on Form S-1 Registration No. 333-16937 filed with the Commission on November 27, 1996) 10(q) ICF Kaiser International, Inc. Section 401(k) Plan (as amended and restated as of March 1, 1993) (and further amended with respect to name change only as of June 26, 1993) (Incorporated by reference to Exhibit No. 10(f) to Quarterly Report on Form 10-Q Registrant No. 1- 12248 (Registrant No. 1-12248) for the second quarter of fiscal 1994 filed with the Commission on October 15, 1993) 1. Amendment No. 1 dated April 24, 1995 (Incorporated by reference to Exhibit No. 10(p)(1) to Annual Report on Form 10-K Registrant No. 1- 12248 for fiscal 1995 filed with the Commission on May 23, 1995). 2. Amendment No. 2 dated December 15, 1995 (Incorporated by reference to Exhibit No. 10(p)(2) to Transition Report on Form 10-K Registrant No. 1-12248 for the transition period from March 1, 1995 to December 31, 1995 filed with the Commission on March 29, 1996). 3. Amendment No. 3 dated December 13, 1996 10(r) Trust Agreement with Vanguard Fiduciary Trust Company dated as of March 1, 1989, for the ICF Kaiser International, Inc. Section 401(k) Plan (Incorporated by reference to Exhibit No. 28(b) to Registration Statement on Form S-8 (Registration No. 33-51460) filed with the Commission on August 31, 1992). Exhibit No. 10--Material Contracts (management contracts, compensatory plans, or arrangements.) 10(aa) Employment Agreement with James O. Edwards dated as of December 31, 1994 (Incorporated by reference to Exhibit No. 10 (bb) to Annual Report on Form 10-K for fiscal 1995 Registrant No. 1-12248 filed with the Commission on May 23, 1995).
II-6 10(bb) ICF Kaiser International, Inc. Corporate Incentive Compensation Plan: Annual Incentive Plan (dated as of September 29, 1993) (Incorporated by reference to Exhibit No. 10(aa) to Quarterly Report on Form 10-Q Registrant No. 1-12248 for the second quarter of fiscal 1994 filed with the Commission on October 15, 1993). 10(cc) ICF Kaiser International, Inc. Non-employee Director Stock Option Plan (as amended and restated as of June 26, 1993) (Incorporated by reference to Exhibit No. 10(bb) to Quarterly Report on Form 10-Q (Registrant No. 1-12248) for the second quarter of fiscal 1994 filed with the Commission on October 15, 1993). 10(dd) Agreement with Alvin S. Rapp, Executive Vice President of the Registrant, dated November 1, 1993 (Incorporated by reference to Exhibit No. 10(ll) to Amendment No. 1 to Registration Statement on Form S-1 (No. 33-70986) filed with the Commission on November 22, 1993). 10(ee) Employment Agreement with Marc Tipermas, Executive Vice President of the Registrant, effective as of March 1, 1994 (Incorporated by reference to Exhibit No. 10(ll) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on May 25, 1994). 10(ff) Employment Agreement with Stephen W. Kahane, Executive Vice President of the Registrant, effective as of March 1, 1994 (Incorporated by reference to Exhibit No. 10(mm) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on May 25, 1994). 10(gg) ICF Kaiser International, Inc. Senior Executive Officers Severance Plan as approved by the Compensation Committee of the Board of Directors on April 4, 1994, and adopted by the Board of Directors on May 5, 1994 (Incorporated by reference to Exhibit No. 10(nn) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on May 25, 1994). 10(hh) Employment Agreement with Michael K. Goldman, Executive Vice President of the Registrant, effective as of February 28, 1994. (Incorporated by reference to Exhibit No. 10(jj) to Annual Report on Form 10-K Registrant No. 1-12248 for fiscal 1995 filed with the Commission on May 23, 1995). 10(ii) Employment Agreement dated May 17, 1993, and February 1, 1995, with Richard K. Nason, Executive Vice President and Chief Financial Officer of the Registrant (Incorporated by reference to Exhibit No. 10(ii) to Transition Report on Form 10-K Registrant No. 1-12248 for the transition period from March 1, 1995 to December 31, 1995 filed with the Commission on March 29, 1996). 10(jj) ICF Kaiser International, Inc. Stock Incentive Plan (as amended and restated through March 1, 1996) (Incorporated by reference to Exhibit No. 10(j) to Registration Statement on Form S-1 Registration No. 333- 16937 filed with the Commissionon November 27, 1996) Exhibit No. 11--Computation of Primary and Fully Diluted Earnings Per Share (Incorporated by reference to Exhibit No. 11 to (a) Transition Report on Form 10-K Registrant No. 1-12248 for the transition period from March 1, 1995 to December 31, 1995, filed with the Commission on March 29, 1996, and (b) Quarterly Report on Form 10-Q Registrant No. 1-12248 for the third quarter ended September 30, 1996 filed with the Commission on November 14, 1996). Exhibit No. 12--Statement re Computation of Ratio of Earnings to Fixed Changes Exhibit No. 21--Consolidated Subsidiaries of the Registrant as of December 31, 1996 Exhibit No. 23--Consents 23(a) Consent of Coopers & Lybrand L.L.P. 23(b) Consent of Paul Weeks, II, is contained in Exhibit No. 5 23(c) Consent of Crowell & Moring LLP is contained in Exhibit No. 8 Exhibit No. 24--Powers of Attorney (see pages II-10 through II-16).
II-7 Exhibit No. 25--Statement of Eligibility and Qualification on Form T-1 under the Trust Indenture Act of 1939 of The Bank of New York, as Trustee of the Indenture relating to the 12% Senior Notes due 2003, Series B Exhibit No. 99--Additional Exhibits 99(a) Letter of Transmittal 99(b) Notice of Guaranteed Delivery 99(c) Letter to Securities Dealers, Commercial Banks, Trust Companies and Other Nominees 99(d) Letter to Clients 99(e) Guidelines for Certification of Taxpayer Identification Number on Form W-9
(B) FINANCIAL STATEMENT SCHEDULE The following Supplemental Schedule Relating to the Consolidated Financial Statements of ICF Kaiser International, Inc. and Subsidiaries for each of the ten months ended December 31, 1995 and for the two years in the period ended February 28, 1995. a. Schedule II: Valuation and qualifying accounts ................... S-1
All Schedules except the one listed above have been omitted because they are not applicable or not required or because the required information is included elsewhere in the financial statements in this filing. ITEM 17. UNDERTAKINGS The undersigned Registrant hereby undertakes: (a)(l) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include a prospectus required by section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or event arising after the effective date of the registration statement (or the most recent post- effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (h) That insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers, and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that II-8 a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer, or controlling person of the Registrant in the successful defense of any action, suit, or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-9 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE COUNTY OF FAIRFAX, THE COMMONWEALTH OF VIRGINIA, ON THIS 31ST DAY OF DECEMBER, 1996. ICF Kaiser International, Inc. (Registrant) Date: December 31, 1996 By /s/ James O. Edwards ---------------------------------- JAMES O. EDWARDS, CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER POWER OF ATTORNEY Each of the undersigned hereby appoints James O. Edwards, Marc Tipermas, Richard K. Nason, Paul Weeks, II, and Cynthia L. Hathaway, and each of them severally, his or her true and lawful attorneys to execute (in the name of and on behalf of and as attorneys for the undersigned) this Registration Statement and any and all amendments to this Registration Statement, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission. PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED. (1) Principal executive officer Date: December 31, 1996 By /s/ James O. Edwards ---------------------------------- JAMES O. EDWARDS, CHAIRMAN AND CHIEF EXECUTIVE OFFICER (2) Principal financial and accounting officer Date: December 31, 1996 By /s/ Richard K. Nason ---------------------------------- RICHARD K. NASON, EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER II-10 POWER OF ATTORNEY EACH OF THE UNDERSIGNED HEREBY APPOINTS JAMES O. EDWARDS, MARC TIPERMAS, RICHARD K. NASON, PAUL WEEKS, II, AND CYNTHIA L. HATHAWAY, AND EACH OF THEM SEVERALLY, HIS OR HER TRUE AND LAWFUL ATTORNEYS TO EXECUTE (IN THE NAME OF AND ON BEHALF OF AND AS ATTORNEYS FOR THE UNDERSIGNED) THIS REGISTRATION STATEMENT AND ANY AND ALL AMENDMENTS TO THIS REGISTRATION STATEMENT, AND TO FILE THE SAME, WITH ALL EXHIBITS THERETO AND OTHER DOCUMENTS IN CONNECTION THEREWITH, WITH THE SECURITIES AND EXCHANGE COMMISSION. (3) The Board of Directors Date: December 31, 1996 By /s/ Tony Coelho ---------------------------------- TONY COELHO, DIRECTOR Date: December 31, 1996 By /s/ James O. Edwards ---------------------------------- JAMES O. EDWARDS, DIRECTOR Date: December 31, 1996 By /s/ Maynard H. Jackson ---------------------------------- MAYNARD H. JACKSON, DIRECTOR Date: December 31, 1996 By /s/ Thomas C. Jorling ---------------------------------- THOMAS C. JORLING, DIRECTOR Date: December 31, 1996 By /s/ Frederic V. Malek ---------------------------------- FREDERIC V. MALEK, DIRECTOR Date: December 31, 1996 By /s/ Rebecca P. Mark ---------------------------------- REBECCA P. MARK, DIRECTOR Date: December 31, 1996 By /s/ Richard K. Nason ---------------------------------- RICHARD K. NASON, DIRECTOR Date: December 31, 1996 By /s/ Robert W. Page, Sr. ---------------------------------- ROBERT W. PAGE, SR., DIRECTOR Date: December 31, 1996 By /s/ Marc Tipermas ---------------------------------- MARC TIPERMAS, DIRECTOR II-11 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE COUNTY OF FAIRFAX, THE COMMONWEALTH OF VIRGINIA, ON THIS 31ST DAY OF DECEMBER, 1996. Cygna Consulting Engineers and Project Management, Inc. (Registrant) Date: December 31, 1996 By /s/ Michael K. Goldman ---------------------------------- MICHAEL K. GOLDMAN PRESIDENT POWER OF ATTORNEY EACH OF THE UNDERSIGNED HEREBY APPOINTS JAMES O. EDWARDS, MARC TIPERMAS, RICHARD K. NASON, PAUL WEEKS, II, AND CYNTHIA L. HATHAWAY, AND EACH OF THEM SEVERALLY, HIS OR HER TRUE AND LAWFUL ATTORNEYS TO EXECUTE (IN THE NAME OF AND ON BEHALF OF AND AS ATTORNEYS FOR THE UNDERSIGNED) THIS REGISTRATION STATEMENT AND ANY AND ALL AMENDMENTS TO THIS REGISTRATION STATEMENT, AND TO FILE THE SAME, WITH ALL EXHIBITS THERETO AND OTHER DOCUMENTS IN CONNECTION THEREWITH, WITH THE SECURITIES AND EXCHANGE COMMISSION. PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED. (1) Principal executive officer Date: December 31, 1996 By /s/ Michael K. Goldman ---------------------------------- MICHAEL K. GOLDMAN, PRESIDENT (2) Principal financial and accounting officer Date: December 31, 1996 By /s/ Richard K. Nason ---------------------------------- RICHARD K. NASON, TREASURER POWER OF ATTORNEY EACH OF THE UNDERSIGNED HEREBY APPOINTS JAMES O. EDWARDS, MARC TIPERMAS, RICHARD K. NASON, PAUL WEEKS, II, AND CYNTHIA L. HATHAWAY, AND EACH OF THEM SEVERALLY, HIS OR HER TRUE AND LAWFUL ATTORNEYS TO EXECUTE (IN THE NAME OF AND ON BEHALF OF AND AS ATTORNEYS FOR THE UNDERSIGNED) THIS REGISTRATION STATEMENT AND ANY AND ALL AMENDMENTS TO THIS REGISTRATION STATEMENT, AND TO FILE THE SAME, WITH ALL EXHIBITS THERETO AND OTHER DOCUMENTS IN CONNECTION THEREWITH, WITH THE SECURITIES AND EXCHANGE COMMISSION. (3) The Board of Directors Date: December 31, 1996 By /s/ Michael K. Goldman ---------------------------------- MICHAEL K. GOLDMAN SOLE DIRECTOR II-12 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE COUNTY OF FAIRFAX, THE COMMONWEALTH OF VIRGINIA, ON THIS 31ST DAY OF DECEMBER, 1996. ICF Kaiser Government Programs, Inc. (Registrant) Date: December 31, 1996 By /s/ James O. Edwards ---------------------------------- JAMES O. EDWARDS PRESIDENT POWER OF ATTORNEY Each of the undersigned hereby appoints James O. Edwards, Marc Tipermas, Richard K. Nason, Paul Weeks, II, and Cynthia L. Hathaway, and each of them severally, his or her true and lawful attorneys to execute (in the name of and on behalf of and as attorneys for the undersigned) this Registration Statement and any and all amendments to this Registration Statement, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission. PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED. (1) Principal executive officer Date: December 31, 1996 By /s/ James O. Edwards ---------------------------------- JAMES O. EDWARDS PRESIDENT (2) Principal financial and accounting officer Date: December 31, 1996 By /s/ Richard K. Nason ---------------------------------- RICHARD K. NASON TREASURER II-13 POWER OF ATTORNEY Each of the undersigned hereby appoints James O. Edwards, Marc Tipermas, Richard K. Nason, Paul Weeks, II, and Cynthia L. Hathaway, and each of them severally, his or her true and lawful attorneys to execute (in the name of and on behalf of and as attorneys for the undersigned) this Registration Statement and any and all amendments to this Registration Statement, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission. (3) The Board of Directors Date: December 31, 1996 By /s/ James O. Edwards ---------------------------------- JAMES O. EDWARDS DIRECTOR Date: December 31, 1996 By /s/ Marc Tipermas ---------------------------------- MARC TIPERMAS DIRECTOR Date: December 31, 1996 By /s/ Kenneth A. Schweers ---------------------------------- KENNETH A. SCHWEERS DIRECTOR II-14 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE COUNTY OF FAIRFAX, THE COMMONWEALTH OF VIRGINIA, ON THIS 31ST DAY OF DECEMBER, 1996. PCI Operating Company, Inc. (Registrant) Date: December 31, 1996 By /s/ Michael K. Goldman ---------------------------------- MICHAEL K. GOLDMAN CHIEF EXECUTIVE OFFICER POWER OF ATTORNEY Each of the undersigned hereby appoints James O. Edwards, Marc Tipermas, Richard K. Nason, Paul Weeks, II, and Cynthia L. Hathaway, and each of them severally, his or her true and lawful attorneys to execute (in the name of and on behalf of and as attorneys for the undersigned) this Registration Statement and any and all amendments to this Registration Statement, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission. PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED. (1) Principal executive officer Date: December 31, 1996 By /s/ Michael K. Goldman ---------------------------------- MICHAEL K. GOLDMAN CHIEF EXECUTIVE OFFICER (2) Principal financial and accounting officer Date: December 31, 1996 By /s/ Richard K. Nason ---------------------------------- RICHARD K. NASON TREASURER POWER OF ATTORNEY Each of the undersigned hereby appoints James O. Edwards, Marc Tipermas, Richard K. Nason, Paul Weeks, II, and Cynthia L. Hathaway, and each of them severally, his or her true and lawful attorneys to execute (in the name of and on behalf of and as attorneys for the undersigned) this Registration Statement and any and all amendments to this Registration Statement, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission. (3) The Board of Directors Date: December 31, 1996 By /s/ Michael K. Goldman ---------------------------------- MICHAEL K. GOLDMAN SOLE DIRECTOR II-15 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE COUNTY OF FAIRFAX, THE COMMONWEALTH OF VIRGINIA, ON THIS 31ST DAY OF DECEMBER, 1996. Systems Applications International, Inc. (Registrant) Date: December 31, 1996 By /s/ Michael K. Goldman ---------------------------------- MICHAEL K. GOLDMAN CHIEF EXECUTIVE OFFICER POWER OF ATTORNEY Each of the undersigned hereby appoints James O. Edwards, Marc Tipermas, Richard K. Nason, Paul Weeks, II, and Cynthia L. Hathaway, and each of them severally, his or her true and lawful attorneys to execute (in the name of and on behalf of and as attorneys for the undersigned) this Registration Statement and any and all amendments to this Registration Statement, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission. PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED. (1) Principal executive officer Date: December 31, 1996 By /s/ Michael K. Goldman ---------------------------------- MICHAEL K. GOLDMAN, CHIEF EXECUTIVE OFFICER (2) Principal financial and accounting officer Date: December 31, 1996 By /s/ Cheryl R. Aratoon ---------------------------------- CHERYL R. ARATOON, SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER POWER OF ATTORNEY Each of the undersigned hereby appoints James O. Edwards, Marc Tipermas, Richard K. Nason, Paul Weeks, II, and Cynthia L. Hathaway, and each of them severally, his or her true and lawful attorneys to execute (in the name of and on behalf of and as attorneys for the undersigned) this Registration Statement and any and all amendments to this Registration Statement, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission. (3) The Board of Directors Date: December 31, 1996 By /s/ Michael K. Goldman ---------------------------------- MICHAEL K. GOLDMAN SOLE DIRECTOR II-16 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES (in thousands)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E - ---------------------------------------------------------------------------------------------------------------------- Additions ------------------------ Balance at Charged to Balance at beginning costs and end of Description of period expenses Other Deductions period - ---------------------------------------------------------------------------------------------------------------------- Ten months ended December 31, 1995: Deducted from asset account Allowance for doubtful accounts $9,864 $601 $62 (4) $1,092 (1) $9,435 Deducted from asset account and included in other liabilities Provision for future losses on contracts 843 1,119 545 (5) 233 (3) 2,274 -------------------------------------------------------------------------- $10,707 $1,720 $607 $1,325 $11,709 ========================================================================== Year ended February 28, 1995: Deducted from asset account Allowance for doubtful accounts $10,197 $1,406 -- $1,739 (1) $9,864 Deducted from asset account and included in other liabilities Provision for future losses on contracts 179 664 -- -- 843 -------------------------------------------------------------------------- $10,376 $2,070 -- $1,739 $10,707 ========================================================================== Year ended February 28, 1994: Deducted from asset account Allowance for doubtful accounts $8,977 $2,509 -- $1,289 (2) $10,197 Included in other liabilities Provision for future losses on contracts 464 -- -- 285 (3) 179 -------------------------------------------------------------------------- $9,441 $2,509 -- $1,574 $10,376 ==========================================================================
(1) Reflects amounts written of against the allowance and related accounts receivable accounts and settlement of doubtful accounts. (2) Reflects amounts written off against the allowance and related accounts receivable accounts. (3) Reflects losses charged against the provision for contract losses. (4) Reflects net allowance for doubtful accounts from the purchase of a subsidiary. (5) Reflects provision for future contract losses provided for in connection with the purchase of a subsidiary. S-1 EXHIBIT INDEX
EXHIBIT DESCRIPTION ------- ----------- Exhibit No. 3--Articles of Incorporation and By-laws 3(a) Restated Certificate of Incorporation of ICF Kaiser International, Inc. (restated through June 26, 1993) (Incorporated by reference to Exhibit No. 3(a) to Quarterly Report on Form 10-Q (Registrant No. 1-12248) for the second quarter of fiscal 1994 filed with the Commission on October 15, 1993) 3(b) Amended and Restated By-laws of ICF Kaiser International, Inc. (as amended through June 23, 1995) (Incorporated by reference to Exhibit No. 3(b) to Quarterly Report on Form 10-Q Registrant No. 1-12248 for the second quarter of fiscal 1995 filed with the Commission on October 13, 1995) 3(c) Articles of Incorporation of Cygna Consulting Engineers and Project Management, Inc. 3(d) By-laws of Cygna Consulting Engineers and Project Management, Inc. 3(e) Certificate of Incorporation of ICF Kaiser Government Programs, Inc. 3(f) By-laws of ICF Kaiser Government Programs, Inc. 3(g) Certificate of Incorporation of PCI Operating Company, Inc. 3(h) By-laws of PCI Operating Company, Inc. 3(i) Certificate of Incorporation of Systems Applications International, Inc. 3(j) By-laws of Systems Applications International, Inc. Exhibit No. 4--Instruments Defining the Rights of Security Holders, including Indentures 4(a) Indenture dated as of January 11, 1994, between ICF Kaiser International, Inc. and The Bank of New York, as Trustee (Incorporated by reference to Exhibit No. 4(a) to Quarterly Report on Form 10-Q Registrant No. 1-12248 for the third quarter of fiscal 1994 filed with the Commission on January 14, 1994) 1. First Supplemental Indenture dated as of February 17, 1995. (Incorporated by reference to Exhibit No. 4(a)(1) to Annual Report on Form 10-K Registrant No. 1-12248 for fiscal year 1995 filed with the Commission on May 23, 1995) 2. Second Supplemental Indenture dated September 1, 1995 (Incorporated by reference to Exhibit No. 4(a) (2) to Registration Statement on Form S- 1 Registration No. 33-64655 filed with the Commission on November 30, 1995) 3. Third Supplemental Indenture dated October 20, 1995 (Incorporated by reference to Exhibit No. 4(a)(3) to Registration Statement on Form S-1 Registration No. 33-64655 filed with the Commission on November 30, 1995) 4. Fourth Supplemental Indenture dated as of March 8, 1996 (Incorporated by reference to Exhibit No. 4 (a) (4) to Transition Report on Form 10- K Registrant No. 1-12248 for the transition period from March 1, 1995 to December 31, 1995 filed with the Commission on March 29, 1996) 5. Fifth Supplemental Indenture dated as of June 24, 1996 (Incorporated by reference to Exhibit No. 4(a)(5) to Registration Statement on Form S-1 Registration No. 333-16937 filed with the Commission on November 27, 1996) 4(b) Form of 12% Senior Subordinated Note due 2003 (Incorporated by reference to Exhibit No. 4(b) to Quarterly Report on Form 10-Q Registrant No. 1-12248 for the third quarter of fiscal 1994 filed with the Commission on January 14, 1994) 4(c) Form of Common Stock Purchase Warrant expiring May 15, 1999 (as amended and restated through January 11, 1994) (Incorporated by reference to Exhibit No. 4(e) to Quarterly Report on Form 10-Q Registrant No. 1-12248 for the third quarter of fiscal 1994 filed with the Commission on January 14, 1994)
EXHIBIT DESCRIPTION ------- ----------- 4(d) Rights Agreement, dated as of January 13, 1992, between ICF Kaiser International, Inc. and Office of the Secretary, ICF Kaiser International, Inc. as Rights Agent, including 1. Form of Certificate of Designations of Series 4 Junior Preferred Stock 2. Form of Rights Certificate 3. Summary of Rights to Purchase Preferred Stock (Incorporated by reference to Exhibit No. 4(h) to Quarterly Report on Form 10-Q Registrant No. 0-18025 for the third quarter of fiscal 1992 filed with the Commission on January 14, 1992) 4(e) Warrant Agreement dated as of January 11, 1994, between ICF Kaiser International, Inc. and The Bank of New York, as Warrant Agent (Incorporated by reference to Exhibit No. 4(c) to Quarterly Report on Form 10-Q Registrant No. 1-12248 for the third quarter of fiscal 1994 filed with the Commission on January 14, 1994) 4(f) Form of Warrant expiring December 31, 1998 issued under Warrant Agreement dated as of January 11, 1994 (Incorporated by reference to Exhibit No. 4(d) to Quarterly Report on Form 10-Q Registrant No. 1- 12248 for the third quarter of fiscal 1994 filed with the Commission on January 14, 1994) 4(g) Indenture dated as of December 23, 1996, between ICF Kaiser International, Inc. and The Bank of New York, as Trustee, including Guarantees, dated December 23, 1996, by each of the Subsidiary Guarantors 4(h) Form of 12% Senior Note due 2003, Series A 4(i) Form of 12% Senior Note due 2003, Series B 4(j) Warrant Agreement dated as of December 23, 1996, between ICF Kaiser International, Inc. and The Bank of New York, as Warrant Agent 4(k) Form of Warrant expiring December 31, 1999 issued under Warrant Agreement dated as of December 23, 1996 4(l) Registration Rights Agreement dated as of December 23, 1996 between ICF Kaiser International, Inc. and BT Securities Corporation, as Initial Purchaser Exhibit No. 5 -- Opinion and Consent of Paul Weeks, II Exhibit No. 8 -- Opinion of Crowell & Moring LLP as to tax matters Exhibit No. 10 -- Material Contracts 10(a) Credit Agreement dated as of May 6, 1996, with CoreStates N.A., as agent (Incorporated by reference to Exhibit No. 10(r) to Quarterly Report on Form 10-Q Registrant No. 1-12248 for the second quarter of fiscal 1996 filed with the Commission on August 14, 1996) 1. Amendment No. 1 to Credit Agreement dated as of December 17, 1996 10(b) ICF Kaiser International, Inc. Employee Stock Ownership Plan (as amended and restated as of March 1, 1993) (and further amended with respect to name change only as of June 26, 1993) (Incorporated by reference to Exhibit No. 10(c) to Quarterly Report on Form 10-Q Registrant No. 1-12248 for the second quarter of fiscal 1994 filed with the Commission on October 15, 1993) 1. Amendment No. 1 dated April 24, 1995 (Incorporated by reference to Exhibit No. 10(l)(1) to Annual Report on Form 10-K Registrant No. 1- 12248 for fiscal 1995 filed with the Commission on May 23, 1995) 2. Amendment No. 2 dated December 15, 1995 (Incorporated by reference to Exhibit No. 10(b)(2) to Transition Report on Form 10-K Registrant No. 1-12248 for the transition period from March 1, 1995 to December 31, 1995 filed with the Commission on March 29, 1996) 3. Amendment No. 3 dated December 13, 1996 10(c) Trust Agreement with Vanguard Fiduciary Trust Company dated as of August 31, 1995, for ICF Kaiser International Employee Stock Ownership Plan (Incorporated by reference to Exhibit No. 10(c) to Registration Statement on Form S-1 Registrant No. 33-64655 filed with the Commission on November 30, 1995)
EXHIBIT DESCRIPTION ------- ----------- 10(d) ICF Kaiser International, Inc. Retirement Plan (as amended and restated as of March 1, 1993) (and further amended with respect to name change only as of June 26, 1993) (Incorporated by reference to Exhibit No. 10(d) to Quarterly Report on Form 10-Q Registrant No. 1- 12248 for the second quarter of fiscal 1994 filed with the Commission on October 15, 1993) 1. Amendment No. 1 dated April 24, 1995 (Incorporated by reference to Exhibit No. 10(d)(1) to Annual Report on Form 10-K Registrant No. 1- 12248 filed with the Commission on May 23, 1995.) 2. Amendment No. 2 dated December 15, 1995 (Incorporated by reference to Exhibit No. 10(d)(2) to Transition Report on Form 10-K Registrant No. 1-12248 for the transition period from March 1, 1995 to December 31, 1995 filed with the Commission on March 29, 1996) 3. Amendment No. 3 dated December 13, 1996 10(e) Trust Agreement with Vanguard Fiduciary Trust Company dated as of August 31, 1995, for ICF Kaiser International, Inc. Retirement Plan (Incorporated by reference to Exhibit No. 10(e) to Registration Statement on Form S-1 (Registrant No. 33-64655) filed with the Commission on November 30, 1995) 10(f) Lease Agreement between HMCE Associates (as Landlord) and ICF Kaiser Incorporated (as Tenant), dated January 30, 1987, for the lease of the Registrant's headquarters in Fairfax, Virginia (Incorporated by reference to Exhibit No. 10(a) to Registration Statement on Form S-1 (No. 33-31473) filed with the Commission on October 6, 1989) 1. First Amendment entered into August 31, 1987 (Incorporated by reference to Exhibit No. 10(a) to Registration Statement on Form S-1 (No. 33-31473) filed with the Commission on October 6, 1989) 2. Second Amendment entered into September 23, 1987 (Incorporated by reference to Exhibit No. 10(a) to Registration Statement on Form S-1 (No. 33-31473) filed with the Commission on October 6, 1989) 3. Third Amendment entered into as of February 12, 1990 (Incorporated by reference to Exhibit No. 10(a) to Annual Report on Form 10-K Registrant No. 0-18025 filed with the Commission on April 25, 1990) 10(g) Lease Agreement between HMCE Associates Limited Partnership (as Landlord) and American Capital and Research Corporation (as Tenant), dated April 27, 1988, for the lease of space in the building adjacent to the Registrant's headquarters in Fairfax, Virginia (Incorporated by reference to Exhibit No. 10(b) to Registration Statement on Form S-1 (No. 33-31473) filed with the Commission on October 6, 1989) 1. First Amendment entered into July 29, 1988. (Incorporated by reference to Exhibit No. 10(b) to Annual Report on Form 10-K (Registrant No. 0- 18025) filed with the Commission on April 25, 1990) 2. Second Amendment entered into as of February 12, 1990 (Incorporated by reference to Exhibit No. 10(b) to Annual Report on Form 10-K Registrant No. 0-18025 filed with the Commission on April 25, 1990) 3. Third Amendment entered into as of December 22, 1992 (Incorporated by reference to Exhibit No. 10(h)(3) to Annual Report on Form 10-K Registrant No. 1-12248 for the fiscal year ended February 28, 1993 filed with the Commission on May 21, 1993) 10(h) Amended and Restated Lease Agreement by and between Kaiser Engineers, Inc. and 1800 Harrison Limited Partnership, dated as of July 1, 1988, for the lease of the Registrant's offices in Oakland, California (Incorporated by reference to Exhibit No. 10(c) to Registration Statement on Form S-1 (No. 33-31576) filed with the Commission on October 13, 1989) 1. First Amendment made as of March 27, 1991 (Incorporated by reference to Exhibit No. 10(a)(1) to Quarterly Report on Form 10-Q (Registrant No. 0-18025) for the first quarter of fiscal 1993 filed with the Commission on July 10, 1992) 2. Second Amendment made as of June 1992 (Incorporated by reference to Exhibit No. 10(a)(2) to Quarterly Report on Form 10-Q (Registrant No. 0-18025) for the first quarter of fiscal 1993 filed with the Commission on July 10, 1992) 3. Third Amendment made as of April 27, 1993 (Incorporated by reference to Exhibit No. 10(i)(3) to Annual Report on Form 10-K (Registrant No. 1-12248) for the fiscal year ended February 28, 1993 filed with the Commission on May 21, 1993)
EXHIBIT DESCRIPTION ------- ----------- 10(i) Guaranty provided by American Capital and Research Corporation to 1800 Harrison Limited Partnership, dated as of March 27, 1991, and First Amendment thereto dated as of June 1992, guaranteeing the performance of Kaiser Engineers, Inc. under an Amended and Restated Lease Agreement by and between Kaiser Engineers, Inc. and the California Public Employee's Retirement System, dated as of July 1, 1988, for the lease of the Registrant's offices in Oakland, California (Incorporated by reference to Exhibit No. 10(b) to Quarterly Report on Form 10-Q Registrant No. 0-18025 for the first quarter of fiscal 1993 filed with the Commission on July 10, 1992) 10(j) ICF Kaiser International, Inc. Stock Incentive Plan (as amended and restated through March 1, 1996) (Incorporated by reference to Exhibit No. 10(j) to Registration Statement on Form S-1 Registration No. 333- 16937 filed with the Commission on November 27, 1996) 10(l) Purchase Order dated March 8, 1995 (WHC-380393, Mod. 1) issued by Westinghouse Hanford Company to ICF Kaiser Hanford Company (DOE Reference No. DE-AC06-87RL1930) (Incorporated by reference to Exhibit No. 10(m) to Annual Report on Form 10-K Registrant No. 1-12248 for fiscal year 1995 filed with the Commission on May 23, 1995) 10(m) Assignment Agreement between the U.S. Department of Energy, Kaiser Engineers Hanford Company, and Westinghouse Hanford Company, with an effective date of October 1, 1993 (Contract No. DE-A06-93RL12359) (Incorporated by reference to Exhibit No. 10(a) to Quarterly Report on Form 10-Q Registrant No. 1-12248 for the second quarter of fiscal 1994 filed with the Commission on October 15, 1993) 1. Modification No. 1 dated October 25, 1993 (Incorporated by reference to Exhibit No. 10(n)(1) to Annual Report on Form 10-K Registrant No. 1-12248 filed with the Commission on May 25, 1994). 10(n) Hanford Termination Notice effective October 1, 1996, from the U.S. Department of Energy. 10(o) Massachusetts Water Resources Authority Agreement with ICF Kaiser Engineers, Inc. through its wholly owned subsidiary of ICF Kaiser Engineers of Massachusetts, Inc. for construction management services for Boston Harbor Project--Deer Island Related Facilities, Contract No. 5622 (June 1990) (Incorporated by reference to Exhibit No. 10(h) to Quarterly Report on Form 10-Q Registrant No. 0-18025 for the second quarter of fiscal 1991 filed with the Commission on October 12, 1990) (Amendment Nos. 1-3 incorporated by reference to Exhibit No. 10(n)(1- 3) to Annual Report on Form 10-K Registrant No. 0-18025 for the fiscal year ended February 28, 1993 filed with the Commission on May 21, 1993). 1. Amendment No. 4 and Amendment No. 4A each dated December 2, 1993 [IN ACCORDANCE WITH RULE 202 OF REGULATION S-T, THIS EXHIBIT NO. 10(n)(1) to Annual Report on Form 10-K Registrant No. 1-12248 for fiscal 1994 FILED IN PAPER ON MAY 20, 1994, ON FORM SE PURSUANT TO A CONTINUING HARDSHIP EXEMPTION is incorporated herein by reference thereto] 2. Amendment No. 5 dated December 6, 1994 [IN ACCORDANCE WITH RULE 202 OF REGULATION S-T, THIS EXHIBIT NO. 10(n)(2) to Annual Report on Form 10- K Registrant No. 1-12248 for fiscal 1995 FILED IN PAPER ON MAY 23, 1995, ON FORM SE PURSUANT TO A CONTINUING HARDSHIP EXEMPTION is incorporated herein by reference thereto] 3. Amendment No. 6 to the Agreement with the Massachusetts Water Resources Authority for Construction Management Services (January 1996) (Amendment No. 6 incorporated by reference to Exhibit No. 10(n)(3) to Quarterly Report on Form 10-Q Registrant No. 1-12248 for the fiscal quarter ended March 31, 1996 filed with the Commission on May 15, 1996). 10(p) Contract (#DE-AC3495RF00825) between Kaiser-Hill Company, LLC, a subsidiary of the Corporation, and the U.S. Department of Energy dated as of April 4, 1995. [IN ACCORDANCE WITH RULE 202 OF REGULATION S-T, THIS EXHIBIT NO. 10(o) WAS FILED IN PAPER ON MAY 23, 1995, ON FORM SE PURSUANT TO A CONTINUING HARDSHIP EXEMPTION is incorporated herein by reference thereto]
EXHIBIT DESCRIPTION ------- ----------- 1. Modifications to Contract #DE-AC3495RF00825. (Incorporated by reference to Exhibit No. 10(p)(1) to Registration Statement on Form S- 1 Registration No. 333-16937 filed with the Commission on November 27, 1996) 10(q) ICF Kaiser International, Inc. Section 401(k) Plan (as amended and restated as of March 1, 1993) (and further amended with respect to name change only as of June 26, 1993) (Incorporated by reference to Exhibit No. 10(f) to Quarterly Report on Form 10-Q Registrant No. 1- 12248 (Registrant No. 1-12248) for the second quarter of fiscal 1994 filed with the Commission on October 15, 1993) 1. Amendment No. 1 dated April 24, 1995 (Incorporated by reference to Exhibit No. 10(p)(1) to Annual Report on Form 10-K Registrant No. 1- 12248 for fiscal 1995 filed with the Commission on May 23, 1995). 2. Amendment No. 2 dated December 15, 1995 (Incorporated by reference to Exhibit No. 10(p)(2) to Transition Report on Form 10-K Registrant No. 1-12248 for the transition period from March 1, 1995 to December 31, 1995 filed with the Commission on March 29, 1996). 3. Amendment No. 3 dated December 13, 1996 10(r) Trust Agreement with Vanguard Fiduciary Trust Company dated as of March 1, 1989, for the ICF Kaiser International, Inc. Section 401(k) Plan (Incorporated by reference to Exhibit No. 28(b) to Registration Statement on Form S-8 (Registration No. 33-51460) filed with the Commission on August 31, 1992). Exhibit No. 10--Material Contracts (management contracts, compensatory plans, or arrangements.) 10(aa) Employment Agreement with James O. Edwards dated as of December 31, 1994 (Incorporated by reference to Exhibit No. 10 (bb) to Annual Report on Form 10-K for fiscal 1995 Registrant No. 1-12248 filed with the Commission on May 23, 1995). 10(bb) ICF Kaiser International, Inc. Corporate Incentive Compensation Plan: Annual Incentive Plan (dated as of September 29, 1993) (Incorporated by reference to Exhibit No. 10(aa) to Quarterly Report on Form 10-Q Registrant No. 1-12248 for the second quarter of fiscal 1994 filed with the Commission on October 15, 1993). 10(cc) ICF Kaiser International, Inc. Non-employee Director Stock Option Plan (as amended and restated as of June 26, 1993) (Incorporated by reference to Exhibit No. 10(bb) to Quarterly Report on Form 10-Q (Registrant No. 1-12248) for the second quarter of fiscal 1994 filed with the Commission on October 15, 1993). 10(dd) Agreement with Alvin S. Rapp, Executive Vice President of the Registrant, dated November 1, 1993 (Incorporated by reference to Exhibit No. 10(ll) to Amendment No. 1 to Registration Statement on Form S-1 (No. 33-70986) filed with the Commission on November 22, 1993). 10(ee) Employment Agreement with Marc Tipermas, Executive Vice President of the Registrant, effective as of March 1, 1994 (Incorporated by reference to Exhibit No. 10(ll) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on May 25, 1994). 10(ff) Employment Agreement with Stephen W. Kahane, Executive Vice President of the Registrant, effective as of March 1, 1994 (Incorporated by reference to Exhibit No. 10(mm) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on May 25, 1994). 10(gg) ICF Kaiser International, Inc. Senior Executive Officers Severance Plan as approved by the Compensation Committee of the Board of Directors on April 4, 1994, and adopted by the Board of Directors on May 5, 1994 (Incorporated by reference to Exhibit No. 10(nn) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on May 25, 1994). 10(hh) Employment Agreement with Michael K. Goldman, Executive Vice President of the Registrant, effective as of February 28, 1994. (Incorporated by reference to Exhibit No. 10(jj) to Annual Report on Form 10-K Registrant No. 1-12248 for fiscal 1995 filed with the Commission on May 23, 1995).
EXHIBIT DESCRIPTION ------- ----------- 10(ii) Employment Agreement dated May 17, 1993, and February 1, 1995, with Richard K. Nason, Executive Vice President and Chief Financial Officer of the Registrant (Incorporated by reference to Exhibit No. 10(ii) to Transition Report on Form 10-K Registrant No. 1-12248 for the transition period from March 1, 1995 to December 31, 1995 filed with the Commission on March 29, 1996). 10(jj) ICF Kaiser International, Inc. Stock Incentive Plan (as amended and restated through March 1, 1996) (Incorporated by reference to Exhibit No. 10(j) to Registration Statement on Form S-1 Registration No. 333- 16937 filed with the Commissionon November 27, 1996) Exhibit No. 11--Computation of Primary and Fully Diluted Earnings Per Share (Incorporated by reference to Exhibit No. 11 to (a) Transition Report on Form 10-K Registrant No. 1-12248 for the transition period from March 1, 1995 to December 31, 1995, filed with the Commission on March 29, 1996, and (b) Quarterly Report on Form 10- Q Registrant No. 1-12248 for the third quarter ended September 30, 1996 filed with the Commission on November 14, 1996). Exhibit No. 12--Statement re Computation of Ratio of Earnings to Fixed Changes Exhibit No. 21--Consolidated Subsidiaries of the Registrant as of December 31, 1996 Exhibit No. 23--Consents 23(a) Consent of Coopers & Lybrand L.L.P. 23(b) Consent of Paul Weeks, II, is contained in Exhibit No. 5 23(c) Consent of Crowell & Moring LLP is contained in Exhibit No. 8 Exhibit No. 24--Powers of Attorney (see pages II-10 through II-16). Exhibit No. 25--Statement of Eligibility and Qualification on Form T-1 under the Trust Indenture Act of 1939 of The Bank of New York, as Trustee of the Indenture relating to the 12% Senior Notes due 2003, Series B Exhibit No. 99--Additional Exhibits 99(a) Letter of Transmittal 99(b) Notice of Guaranteed Delivery 99(c) Letter to Securities Dealers, Commercial Banks, Trust Companies and Other Nominees 99(d) Letter to Clients 99(e) Guidelines for Certification of Taxpayer Identification Number on Form W-9
EX-3.C 2 EXHIBIT 3(C) Exhibit 3(c) FILED In the office of the Secretary of State of the State of California July 25, 1979 RESTATED ARTICLES OF INCORPORATION OF EARTHQUAKE ENGINEERING SYSTEMS INC. BEN K. KACYRA and SANFORD TANDOWSKY certify that: 1. They are the duly elected and acting President and Secretary, respectively, of said corporation. 2. The Articles of Incorporation of this corporation are amended and restated to read as follows: ARTICLE I The name of this corporation is EARTHQUAKE ENGINEERING SYSTEMS, INC. ARTICLE II The purpose of this corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of California other than the banking business, the trust company business or the practice of a profession permitted to be incorporated by the California Corporations Code. ARTICLE III This corporation elects to be governed by all the provisions of the General Corporation Law effective January 1, 1997 not otherwise applicable to it under Chapter 23 thereof. ARTICLE IV This corporation is authorized to issue only one class of shares of stock; and the total number of shares which this corporation is authorized to issue is Seven Hundred Fifty Thousand (750,000). Upon the amendment of this Article IV to read as hereinabove set forth, each outstanding share of capital stock is divided into ten (10) shares of capital stock. 3. The foregoing amendment and restatement of Articles of Incorporation has been duly approved by the Board of Directors of said corporation. 4. The foregoing amendment and restatement of Articles of Incorporation has been duly approved by the required vote of the shareholders in accordance with (S)902 of the Corporations Code. The total number of outstanding shares of the corporation is 10,750. The number of shares voting in favor of the amendment equaled or exceeded the vote required. The percentage vote required was more than 50%. /s/ Ben K. Kacyra ------------------ Ben K. Kacyra, President /s/ Sanford Tandowsky --------------------- Sanford Tandowsky, Secretary The undersigned declare under penalty of perjury that the matters set forth in the foregoing certificate are true of their own knowledge. Executed at San Francisco, California, on June 13, 1979. /s/ Ben K. Kacyra ----------------- Ben K. Kacyra /s/ Sanford Tandowsky ---------------------- Sanford Tandowsky A235567 FILED In the office of the Secretary of State of the State of California July 13, 1981 CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION OF EARTHQUAKE ENGINEERING SYSTEMS, INC. BEN K. KACRYA and SANFORD TANDOWSKY certify that: 1. They are the Chairman of the Board and the Secretary, respectively, of EARTHQUAKE ENGINEERING SYSTEMS INC., a California corporation. 2. Article I of the Articles of Incorporation of this corporation is amended to read as follows: "The name of this corporation is CYGNA ENERGY SERVICES." 3. The foregoing amendment of Articles of Incorporation has been duly approved by the Board of Directors. 4. The foregoing amendment of Articles of Incorporation has been duly approved by the required vote of the shareholder in accordance with Section 902 of the Corporations Code. The total number of outstanding shares of the corporation is 107,500. The number of shares voting in favor of the amendment equaled or exceeded the vote required. The percentage vote required was more than 50%. /s/ Ben K. Kacyra ----------------- Ben K. Kacyra Chairman of the Board /s/ Sanford Tandowsky --------------------- Sanford Tandowsky Secretary The undersigned declare under penalty of perjury that the matters set forth in the foregoing Certificate are true of their own knowledge. Executed at San Francisco, California, on July 10, 1981. /s/ Ben K. Kacyra ----------------- Ben K. Kacyra /s/ Sanford Tandowsky --------------------- Sanford Tandowsky CONSENT ------- CYGNA DEVELOPMENT, a California corporation, does hereby consent to the change in the corporate name of EARTHQUAKE ENGINEERING SYSTEMS INC., a California corporation, to CYGNA ENERGY SERVICES. Dated: July 10, 1981. CYGNA DEVELOPMENT By /s/ Ben K. Kacyra ------------------------ Ben K. Kacyra, President A313484 FILED In the office of the Secretary of State of the State of California March 20, 1986 CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION OF CYGNA ENERGY SERVICES RICHARD J. STUART and SANFORD TANDOWSKY certify that: 1. They are the President and the Secretary, respectively, of CYGNA ENERGY SERVICES, a California corporation. 2. Article IV of the Articles of Incorporation of this corporation is amended to read as follows: "This corporation is authorized to issue only one class of shares of stock; and the total number of shares which this corporation is authorized to issue is Two Hundred Fifteen (215). "Upon the amendment of this Article IV to read as hereinabove set forth, each outstanding share of capital stock is converted into .002 shares of capital stock." 3. The foregoing amendment of Articles of Incorporation has been duly approved by the Board of Directors. 4. The foregoing amendment of Articles of Incorporation has been duly approved by the required vote of the Shareholder in accordance with Section 903 of the Corporations Code. The total number of outstanding shares of the corporation is 107,500. The number of shares voting in favor of the amendment equaled or exceeded the vote required. The percentage vote required was more than 50%. We further declare under penalty of perjury under the laws of the State of California that the matters set forth in this Certificate are true and correct of our own knowledge. Dated: February 10, 1986. /s/ Richard J. Stuart ---------------------------- Richard J. Stuart, President /s/ Sanford Tandowsky ---------------------------- Sanford Tandowsky, Secretary A440208 FILED In the office of the Secretary of State of the State of California December 8, 1993 AGREEMENT OF MERGER This Agreement of Merger (Agreement) is entered into between CYGNA ENERGY SERVICES (Survivor), a California Corporation, and CYGNA PROJECT MANAGEMENT (Disappearing), a California Corporation, the constituent corporations in this merger. A. The issued and outstanding stock of Disappearing consists of 10,000 common shares. B. The issued and outstanding stock of Survivor consists of 10,000 common shares. C. Survivor owns 100 percent of the issued and outstanding shares of Disappearing. Survivor and Disappearing agree that Survivor and Disappearing shall, on the effective date of the merger stated in this Agreement, be merged into a single corporation, Survivor, and that the terms and conditions of the merger are as stated in this Agreement. On the effective date of the merger, the separate existence of Disappearing shall cease, and Survivor, as the surviving corporation, shall succeed, without other transfer, to all the rights and property of Disappearing, and shall be subject to all the debts and liabilities of Disappearing, in the same manner as if Survivor itself had incurred them. The Articles of Incorporation of Survivor in effect on the effective date of the merger shall continue in effect until altered or amended as provided by the Agreements or by law. The bylaws of Survivor shall not be altered by this Agreement. The Officers and Board of Directors of Survivor shall not be altered by this Agreement. The shares of Survivor outstanding on the effective date shall not be changed or converted as a result of the merger, but shall remain outstanding as shares of Survivor. The outstanding shares of Disappearing shall be cancelled, and no shares of Survivor shall be issued in exchange for them. An executed counterpart of this Agreement of Merger and Officers' certificates of each of the constituent corporations shall be filed in the office of the California Secretary of State. The merger shall become effective on the date of that filing. IN WITNESS WHEREOF, Survivor and Disappearing, as duly authorized by their respective Boards of Directors, have caused this Agreement of Merger to be executed this 23rd day of November, 1993. CYGNA ENERGY SERVICES By: /s/ --------------------------- (Title) Vice President By: /s/ --------------------------- (Title) Asst. Secretary CYGNA PROJECT MANAGEMENT By: /s/ --------------------------- (Title) President By: /s/ --------------------------- (Title) Asst. Secretary OFFICERS' CERTIFICATE OF MERGER FOR CYGNA PROJECT MANAGEMENT We, the undersigned, do certify that: 1. We are, and at all times herein mentioned, were the duly elected or appointed and qualified President and Assistant Secretary of CYGNA PROJECT MANAGEMENT, herein called "said corporation," a corporation duly organized and existing under the laws of the State of California; 2. On November 23, 1993, the Board of Directors of said corporation approved the attached merger agreement in the form attached. 3. The total number of outstanding shares of each class of said corporation entitled to vote on the merger described in the Agreement of Merger hereto attached is: 10,000 COMMON SHARES 4. The merger agreement was entitled to be and was approved by the Board of Directors of said corporation alone under the provisions of Section 1201 of the California Corporations Code because shareholder of said corporation immediately prior to the merger shall own, immediately after the merger, equity securities other than warrant or right to subscribe or purchase equity securities of the surviving corporation possessing more than five-sixths of the voting power of the surviving corporation, to wit: The shareholders of said corporation immediately before the merger will immediately after the merger own 215 outstanding voting shares of the surviving corporation. We declare under penalty of perjury that the foregoing is true and correct of our own knowledge. Executed at Alameda County, California, on December 6, 1993. /s/ George D. O'Brien --------------------- George D. O'Brien, President /s/ Richard E. Bonitz --------------------- Richard E. Bonitz, Asst. Secretary OFFICERS' CERTIFICATE OF MERGER FOR CYGNA ENERGY SERVICES We, the undersigned, do certify that: 1. We are, and at all times herein mentioned, were the duly elected or appointed and qualified Chief Financial Officer and Assistant Secretary of CYGNA ENERGY SERVICES, herein called "said corporation, " a corporation duly organized and existing under the laws of the State of California. 2. On November 23, 1993, the Board of Directors of said corporation approved the attached merger agreement in the form attached. 3. The total number of outstanding shares of each class of said corporation entitled to vote on the merger described in the Agreement of Merger hereto attached is: 215 COMMON SHARES 4. The shareholder vote was unanimous. We declare under penalty of perjury that the foregoing is true and correct of our own knowledge. Executed at Alameda County, California, on December 6, 1993. /s/ John Brusher ---------------- John Brusher, Chief Financial Officer /s/ Richard E. Bonitz --------------------- Richard E. Bonitz, Asst. Secretary A440209 FILED In the office of the Secretary of State of the State of California December 8, 1993 AGREEMENT OF MERGER This Agreement of Merger (Agreement) is entered into between CYGNA ENERGY SERVICES (Survivor), a California Corporation, and CYGNA CONSULTING ENGINEERS (Disappearing), a California Corporation, the constituent corporations in this merger. A. The issued and outstanding stock of Disappearing consists of 10,000 common shares. B. The issued and outstanding stock of Survivor consists of 215 common shares. C. CYGNA GROUP, INC. (Parent) is a Delaware Corporation that owns 100 percent of the issued and outstanding shares of both Disappearing and Survivor. Survivor and Disappearing agree that Survivor and Disappearing shall, on the effective date of the merger stated in this Agreement, be merged into a single corporation, Survivor, and that the terms and conditions of the merger are as stated in this Agreement. On the effective date of the merger, the separate existence of Disappearing shall cease, and Survivor, as the surviving corporation, shall succeed, without other transfer, to all the rights and property of Disappearing, and shall be subject to all the debts and liabilities of Disappearing, in the same manner as if Survivor itself had incurred them. The Articles of Incorporation of Survivor in effect on the effective date of the merger shall continue in effect until altered or amended as provided by this Agreement or by law. The bylaws of Survivor shall not be altered by this Agreement. The Officers and Board of Directors of Survivor shall not be altered by this Agreement. The shares of Survivor outstanding on the effective date shall not be changed or converted as a result of the merger, but shall remain outstanding as shares of Survivor. The outstanding shares of Disappearing shall be cancelled, and no shares of Survivor shall be issued in exchange for them. An executed counterpart of this Agreement of Merger and Officers' certificates of each of the constituent corporations shall be filed in the office of the California Secretary of State. The merger shall become effective on the date of that filing. IN WITNESS WHEREOF, Survivor and Disappearing, as duly authorized by their respective Boards of Directors, have caused this Agreement of Merger to be executed this 23rd day of November, 1993. CYGNA ENERGY SERVICES CYGNA CONSULTING ENGINEERS By: /s/ By: /s/ --------------------- --------------------- (Title) (Title) By: /s/ By: /s/ --------------------- --------------------- (Title) (Title) CYGNA GROUP, INC. hereby consents to the above Agreement of Merger: CYGNA GROUP, INC. By: /s/ --------------------- (Title) By: /s/ --------------------- (Title) OFFICERS' CERTIFICATE OF MERGER FOR CYGNA ENERGY SERVICES We, the undersigned, do certify that: 1. We are, and at all times herein mentioned, were the duly elected or appointed and qualified Chief Financial Officer and Assistant Secretary of CYGNA ENERGY SERVICES, herein called "said corporation," a corporation duly organized and existing under the laws of the State of California. 2. On November 23, 1993, the Board of Directors of said corporation approved the attached merger agreement in the form attached. 3. The total number of outstanding shares of each class of said corporation entitled to vote on the merger described in the Agreement of Merger hereto attached is: 215 COMMON SHARES 4. The merger agreement was entitled to be and was approved by the Board of Directors of said corporation alone under the provisions of Section 1201 of the California Corporations Code because shareholder of said corporation immediately prior to the merger shall own, immediately after the merger, equity securities other than warrant or right to subscribe or purchase equity securities of the surviving corporation possessing more than five-sixths of the voting power of the surviving corporation, to wit: The shareholders of said corporation immediately before the merger will immediately after the merger own 215 of the 215 outstanding voting shares of the surviving corporation. We declare under penalty of perjury that the foregoing is true and correct of our own knowledge. Executed at Alameda County, California, on December 6, 1993. /s/ John Brusher ---------------- John Brusher, Chief Financial Officer /s/ Richard E. Bonitz --------------------- Richard E. Bonitz, Asst. Secretary OFFICERS' CERTIFICATE OF MERGER FOR CYGNA CONSULTING ENGINEERS We, the undersigned, do certify that: 1. We are, and at all times herein mentioned, were the duly elected or appointed and qualified President and Assistant Secretary of CYGNA CONSULTING SERVICES, herein called "said corporation," a corporation duly organized and existing under the laws of the State of California; 2. On November 23, 1993, the Board of Directors of said corporation approved the attached merger agreement in the form attached. 3. The total number of outstanding shares of each class of said corporation entitled to vote on the merger described in the Agreement of Merger hereto attached is: 10,000 COMMON SHARES 4. The Shareholder vote was unanimous. We declare under penalty of perjury that the foregoing is true and correct of our own knowledge. Executed at Alameda County, California, on December 6, 1993. /s/ George D. O'Brien --------------------- George D. O'Brien, President /s/ Richard E. Bonitz --------------------- Richard E. Bonitz, Asst. Secretary A442238 FILED in the office of the Secretary of State of the State of California February 3, 1994 CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION OF CYGNA ENERGY SERVICES STEPHEN W. KAHANE and RICHARD E. BONITZ certify that: 1. They are the president and assistant secretary, respectively, of Cygna Energy Services, a California corporation. 2. The following amendment to the articles of Incorporation of the corporation has been duly approved by the board of directors of the corporation. Article I of the Articles of Incorporation of this corporation is amended to read as follows: "The name of this corporation is CYGNA CONSULTING ENGINEERS AND PROJECT MANAGEMENT, INC. 3. The amendment was duly approved by the required vote of shareholders in accordance with section 902 of the California Corporations Code. The total number of outstanding shares entitled to vote with respect to the amendment was 215, the favorable vote of a majority of such shares is required to approve the amendment, and the number of such shares voting in favor of the amendment equaled or exceeded the required vote. /s/ Stephen W. Kahane --------------------- Stephen W. Kahane, President /s/ Richard E. Bonitz --------------------- Richard E. Bonitz, Assistant Secretary The undersigned declare under penalty of perjury that the matters set forth in the foregoing certificate are true of their own knowledge. Executed at Oakland, California, on February 1, 1994. /s/ Stephen W. Kahane --------------------- Stephen W. Kahane /s/ Richard E. Bonitz --------------------- Richard E. Bonitz CERTIFICATE OF OWNERSHIP MICHAEL K. GOLDMAN AND PAUL WEEKS, II, DO HEREBY CERTIFY: FIRST: That they are the Senior Vice President and Secretary, respectively, of Cygna Consulting Engineers and Project Management, Inc., a California corporation (the "Corporation"). SECOND: That the Corporation owns all of the issued and outstanding shares of capital stock of Cygna Energy Services Michigan, Inc., a Michigan corporation. THIRD: That the board of directors of this Corporation duly adopted the following resolutions: RESOLVED, that the Corporation merge into itself its wholly owned subsidiary, Cygna Energy Services Michigan, Inc., a Michigan corporation, and assume all of said subsidiary's liabilities and obligations (the "Merger"), pursuant to an Agreement and Plan of Merger (the "Merger Agreement"), attached as Exhibit A hereto; and FURTHER RESOLVED, that the Merger Agreement and the transactions contemplated thereby be, and they hereby are, authorized, adopted, ratified, and approved as of the Effective Date of the Merger (as set forth in Section 1.02 of the Merger Agreement); and FURTHER RESOLVED, that immediately following the Merger the separate existence of Cygna Energy Services Michigan, Inc. shall terminate and the Corporation shall be the surviving corporation; and FURTHER RESOLVED, that the President, any Senior Vice President, any Vice President, the Treasurer, the Assistant Treasurer, the Secretary, and the Assistant Secretary of the corporation (each such person an "Authorized Officer" and collectively, the "Authorized Officers") in their capacities as officers of the Corporation and without further act or resolution of the Board, be, and each of them, with full power to act without the others, hereby is, authorized, in the name and on behalf of the Corporation, (i) to execute and deliver the Merger Agreement, substantially in the form attached hereto as Exhibit A, with such changes as any of them me deem necessary or appropriate (as conclusively presumed from his or her taking such action); (ii) to make, execute and acknowledge a Certificate of Ownership and Merger setting forth a copy of these Resolutions to merge Cygna Energy Services Michigan, Inc. with and into the Corporation; (iii) to execute and deliver the Certificate of Ownership and Merger and any and all amendments, agreements, understandings, letters, certificates, schedules, notices, government filings, documents (including, but not limited to, any and all federal, state, local, international, administrative agency or like body filings) and an and all other items they may deem necessary or appropriate (as conclusively presumed from his or her taking such action) in connection with or to effect the Merger Agreement, these Resolutions and the transactions contemplated therein, (Iv) to file a Certificate of Ownership and Merger in the office of the Secretary of State of the States of California and Michigan, and (v) to take any and all additional steps any of they may deem necessary or appropriate (as conclusively presumed from his or her taking such action) to effect the merger and the related transactions contemplated thereby; and FURTHER RESOLVED, that pursuant to the immediately preceding Resolutions, if any form or forms of Resolutions are suggested and/or required by any government agency or instrumentality (including, without limitation, federal, state, local and foreign government agencies and instrumentalities) with which the Corporation has, or proposes to have, business arrangements, than such form or forms of resolutions are, upon the filing of such form or forms of resolutions with this Consent of the Board of Directors, hereby are adopted in iisdem termimis, as Resolutions of this Board, and the proper officers of the - ------ --------- Corporation are, and each of them hereby is, authorized, for and in the name of the Corporation, to complete such resolution, affix the seal of the Corporation thereto, and to file a copy of such Resolutions with this Consent of the Board of Directors. We further declare under penalty of perjury under the laws of the State of California that the matters set forth in this certificate are true and correct of our own knowledge. By: /s/ Michael K. Goldman ---------------------- Michael K. Goldman, Senior Vice President By: /s/ Paul Weeks, II ------------------ Paul Weeks, II, Secretary EX-3.D 3 EXHIBIT 3(D) Exhibit 3(d) RESTATED BYLAWS FOR THE REGULATION OF CYGNA CONSULTING ENGINEERS AND PROJECT MANAGEMENT, INC. (as of October 4, 1995) ARTICLE I --------- Offices ------- Section 1. Principal Executive Office. The principal executive office of --------- --------- ------ the corporation designated in these bylaws is located at: 141 Battery Street San Francisco, California 94111 If no principal executive office is specified above, the Board of Directors shall fix the location of the principal executive office of the corporation at any place within or without the State of California. If the principal executive office is located outside this state and the corporation has one or more business offices in this state, the Board of Directors shall fix and designate a principal business office in the State of California. The Board of Directors is hereby granted full power and authority to fix or change the location of the principal executive and business offices without amendment to these bylaws. Section 2. Other Offices. Branch or subordinate offices may at any time ----- ------- be established by the Board of Directors at any place or places where the corporation is qualified to do business. I-1 ARTICLE II ---------- Meetings of Shareholders ------------------------ Section 1. Place of Meetings. All annual and other meetings of ----- -- -------- shareholders shall be held either at the principal executive office of the corporation or at any other place within or without the State of California which may be designated either by the Board of Directors pursuant to authority hereinafter granted to the Board, or by the written consent of all shareholders entitled to vote thereat, given either before or after the meeting and filed with the secretary of the corporation. Section 2. Annual Meetings. The annual meetings of stockholders, at ------ -------- which Directors shall be elected, shall be held on the first Wednesday following the first Tuesday in October of each year, at 2:30 p.m. of said day; provided, however that should said day fall upon a legal holiday, then any such annual meeting of stockholders shall be held at the same time and place on the next day thereafter ensuing which is not a legal holiday. At each annual meeting the stockholders shall elect a Board of Directors and transact such other business as may properly be brought before the meeting." Section 3. Special Meetings. Special meetings of the shareholders, ------- -------- for any purpose or purposes whatsoever, may be called at any time by the president or by the Board of Directors, or by one or more shareholders holding not less than one-tenth of the voting power of the corporation. If a special meeting of shareholders is called by any person or persons other than the Board of Directors, the request shall be in writing and given to the chairman of the Board, the president, any vice president, or the secretary of the corporation. The officer receiving the request shall cause notice to be promptly given shareholders entitled to vote, that a meeting will be held at the time requested by the person or persons calling the meeting, not less than thirty-five (35) nor more than sixty (60) days after the receipt of the request. If the notice is not given within twenty (20) days after receipt of the request, the person or persons requesting the meeting may give the notice. Nothing II-1 contained in this paragraph of this Section 3 shall be construed as limiting, fixing or affecting the time when a meeting of shareholders called by action of the Board of Directors may be held. Notices of or requests for special meetings shall be given in accordance with the provisions of Section 4 and 5 of this Article II. Section 4. Notice of Shareholders' Meetings. All notices of meetings ------ -- ------------- -------- of shareholders shall be sent or otherwise given in accordance with Section 5 of this Article II not less than ten (10) nor more than sixty (60) days before the date of the meeting. The notice shall specify the place, date and hour of the meeting and (i) in the case of a special meeting, the general nature of the business to be transacted, or (ii) in the case of the annual meeting, those matters which the Board of Directors, at the time of giving the notice, intends to present for action by the shareholders. The notice of any meeting at which directors are to be elected shall include the name of any nominee or nominees who, at the time of the notice, management intends to present for election. If action is proposed to be taken at any meeting for approval of (i) a contract or transaction in which a director has a direct or indirect financial interest, pursuant to Section 310 of the Corporations Code of California; (ii) an amendment of the articles of incorporation, pursuant to Section 902 of that Code; (iii) a reorganization of the corporation, pursuant to Section 1201 of that Code; (iv) a voluntary dissolution of the corporation, pursuant to Section 1900 of that Code; or (v) a distribution in dissolution other than in accordance with the rights of outstanding preferred shares, pursuant to Section 2007 of that Code, the notice shall also state the general nature of that proposal. II-2 Section 5. Manner of Giving Notice: ------ -- ------ ------ Affidavit of Notice. Except in special cases where other --------- -- ------ express provision is made by statute, notice or request of any meeting of shareholders shall be given either personally or by first-class mail or telegraphic or other written communication, charges prepaid. Notice to a shareholder shall be addressed to the shareholder at the address of that shareholder appearing on the books of the corporation or given by the shareholder to the corporation for the purpose of notice. If no such address appears on the corporation's books or is given, notice shall be deemed to have been given if sent to that shareholder by first-class mail or telegraphic or other written communication to the corporation's principal executive office, or if published at least once in a newspaper of general circulation in the county where that office is located. Notice shall be deemed to have been given at the time when delivered personally or deposited in the mail or sent by telegram or other means of written communication. If any notice addressed to a shareholder at the address of that shareholder appearing on the books of the corporation is returned to the corporation by the United States Postal Service marked to indicate that the United States Postal Service is unable to deliver the notice to the shareholder at that address, all future notices or reports shall be deemed to have been duly given without further mailing if these shall be available to the shareholder on written demand of the shareholder at the principal executive office of the corporation for a period of one year from the date of the giving of the notice. An affidavit of the mailing or other means of giving any notice of any shareholders' meeting may be executed by the secretary, assistant secretary, or any transfer agent of the corporation giving the notice, and shall be filed and maintained in the minute book of the corporation. II-3 Section 6. Adjourned Meetings and Notice Thereof. Any shareholders' --------- -------- --- ------ ------- meeting, annual or special, whether or not a quorum is present, may be adjourned from time to time by the vote of a majority of the shares represented at the meeting, either present in person or by proxy. In the absence of a quorum no other business may be transacted at such meeting, except as stated in Section 8 of this Article II. When any meeting of shareholders, either annual or special, is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place are announced at a meeting at which the adjournment is taken, unless a new record date for the adjourned meeting is fixed, or unless the adjournment is for more than forty-five (45) days from the date set for the original meeting, in which case the Board of Directors shall set a new record date. Notice of any such adjourned meeting shall be given to each shareholder of record entitled to vote at the adjourned meeting in accordance with the provisions of Sections 4 and 5 of this Article II. At any adjourned meeting the corporation may transact any business which might have been transacted at the original meeting. Section 7. Voting. The shareholders entitled to notice of any meeting or ------ to vote at any such meeting shall be only persons in whose name shares stand on the stock records of the corporation on the record date determined in accordance with Section 11 of this Article II. Voting shall in all cases be subject to the provisions of Chapter 7 of the California General Corporation Law and to the following provisions: (a) Subject to clause (g), shares held by an administrator, executor, guardian, conservator or custodian may be voted by such holder either in person or by proxy, without a transfer of II-4 such shares into the holder's name; and the shares held by a trustee may only be voted by the trustee, either in person or by proxy, if the shares are standing in the name of the trustee. (b) Shares standing in the name of a receiver may be voted by such receiver; and shares held by or under the control of a receiver may be voted by such receiver without the transfer thereof into the receiver's name if authority to do so is contained in the order of the court by which such receiver was appointed. (c) Subject to the provisions of Section 705 of the Corporations Code of California, and except where otherwise agreed in writing between the parties, a shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledges, and thereafter the pledges shall be entitled to vote the shares so transferred. (d) Shares standing in the name of a minor may be voted and the corporation may treat all rights incident thereto as exercisable by the minor, in person or by proxy, whether or not the corporation has notice, actual or constructive, of the nonage, unless a guardian of the minor's property has been appointed and written notice of such appointment given to the corporation. (e) Shares standing in the name of another corporation, domestic or foreign, may be voted by such officer, agent or proxy holder as the bylaws of such other corporation may prescribe or, in the absence of such provision, as the board of directors of such other corporation may determine or, in the absence of such determination, by the chairman of the board, president or any vice president of such other corporation, or by any other person authorized to do so by the board, president or any vice president of such other corporation. Shares which are purported to be voted or any proxy purported to be executed in the name of a corporation (whether or not any title of the person signing is indicated) shall be presumed to be voted or the proxy executed in accordance with the provisions of this subdivision, unless the contrary is shown. II-5 (f) Shares of the corporation owned by its subsidiary shall not be entitled to vote on any matter. (g) Shares held by the corporation in a fiduciary capacity, and shares of the corporation held in a fiduciary capacity by any subsidiary, shall not be entitled to vote on any matter, except to the extent that the settlor or beneficial owner possesses and exercises a right to vote or to give the corporation binding instructions as to how to vote such shares. (h) If shares stand of record in the names of two or more persons, whether fiduciaries, members of a partnership, joint tenants, tenants in common, husband and wife as community property, tenants by the entirety, voting trustees, persons entitled to vote under a shareholder voting agreement or otherwise, or if two or more persons (including proxy holders) have the same fiduciary relationship respecting the same shares, unless the secretary of the corporation is given written notice to the contrary and is furnished with a copy of the instrument or order appointing them or creating the relationship wherein it is so provided, their acts with respect to voting shall have the following effect: (i) If only one votes, such act binds all; (ii) If more than one vote, the act of the majority so voting binds all; (iii) If more than one vote, but the vote is evenly split on any particular matter, each faction may vote the securities in question proportionately. If the instrument so filed or the registration of the shares shows that any such tenancy is held in unequal interests, a majority or even split for the purpose of this section shall be a majority or even split in interest. The shareholders' vote may be by voice vote or by ballot; provided, however, that any election for directors must be by ballot if demanded by any shareholder before the voting has begun. On any matter other than elections of directors, any shareholder may vote part of the shares in favor of the proposal and refrain from voting the remaining shares or vote them against the proposal, but, if the shareholder fails to specify the number of shares which the shareholder is voting II-6 affirmatively, it will be conclusively presumed that the shareholder's approving vote is with respect to all shares that the shareholder is entitled to vote. If a quorum is present, the affirmative vote of the majority of the shares represented at the meeting and entitled to vote on any matter (other than the election of directors) shall be the act of the shareholders, unless the vote of a greater number or voting by classes is required by California General Corporation Law or by the articles of incorporation. At a shareholders' meeting at which directors are to be elected, no shareholder shall be entitled to cumulate votes (i.e., cast for any one or more candidates a number of votes greater than the number of the shareholder's shares) unless the candidates' names have been placed in nomination prior to commencement of the voting and a shareholder has given notice prior to commencement of the voting of the shareholder's intention to cumulate votes. If any shareholder has given such a notice, then every shareholder entitled to vote may cumulate votes for candidates in nomination and give one candidate a number of votes equal to the number of directors to be elected multiplied by the number of votes to which that shareholder's shares are entitled, or distribute the shareholder's votes on the same principle among any or all of the candidates, as the shareholder thinks fit. The candidates receiving the highest number of votes, up to the number of directors to be elected, shall be elected. Section 8. Quorum. The presence in person or by proxy of persons entitled ------ to vote a majority of the voting shares at any meeting shall constitute a quorum for the transaction of business. The shareholders present at a duly called or held meeting at which a quorum is present may continue to do business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum, if any action taken (other than adjournment) is approved by at least a majority of the shares required to constitute a quorum. Section 9. Waiver of Notice; Consent of Absentees. The transaction of any ------ -- ------ ------- -- --------- meeting of shareholders, either annual or special, however called and noticed, shall be as valid as though had a meeting duly held after regular call and notice, if a quorum be present either in person or by proxy, and if, II-7 either before or after the meeting, each of the shareholders entitled to vote, not present in person or by proxy, signs a written waiver of notice, or a consent to the holding of such meeting, or an approval of the minutes thereof. All such waivers, consents or approvals shall be filed with the corporate records or made a part of the minutes of the meeting. Neither the business to be transacted at nor the purpose of any regular or special meeting of shareholders need be specified in any written waiver of notice except that if action is taken or proposed to be taken for approval of any of those matters specified in the second paragraph of Section 4 of this Article II, the waiver of notice or consent shall State the general nature of the proposal. Attendance by a person at a meeting shall also constitute a waiver of notice of that meeting, except when the person objects, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Attendance at a meeting is not a waiver of any right to object to the consideration of matters required by law to be included in the notice of the meeting but not so included if that objection is expressly made at the meeting. Section 10. Shareholder Action By Written Consent Without A Meeting. ----------- ------ -- ------- ------- ------- - ------- Any action which may be taken at any annual or special meeting of shareholders may be taken without a meeting and without prior notice, if a consent in writing, setting forth the action so taken, is signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take that action at a meeting at which all shares entitled to vote on that action were present and voted. In the case of election of directors, such a consent shall be effective only if signed by the holders of all outstanding shares entitled to vote for the election of directors; provided, however, that a director may be elected at any time to fill a vacancy on the Board of Directors that has not been filled by the directors, by the written consent of the holders of a majority of the outstanding shares entitled to vote for the election of directors. All such consents shall be filed with the secretary of the corporation and shall be maintained in the corporate records. Any shareholder giving a written consent, or the shareholder's proxy holders, or a transferee of the II-8 shares or a personal representative of the shareholder or their respective proxy holders, may revoke the consent by a writing received by the secretary of the corporation before written consents of the number of shares required to authorize the proposed action have been filed with the secretary. If the consents of all shareholders entitled to vote have not been solicited in writing, and if the unanimous written consent of all such shareholders shall not have been received, the secretary of the corporation shall give prompt notice of the corporate action approved by the shareholders without a meeting. This notice shall be given in the manner specified in Section 5 of this Article II. In the case of approval of a matter listed in the second paragraph of Section 4 of this Article II (except with respect to voluntary dissolution), the notice shall be given at least ten (10) days before the consummation of any action authorized by that approval. Section 11. Record Date for Shareholder Notice, Voting and Giving ------ ---- --- ----------- ------ ------ --- ------ Consents. For purposes of determining the shareholders -------- entitled to notice of any meeting or to vote or entitled to give consent to corporate action without a meeting, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty (60) days nor less than ten (10) days before the date of any such meeting nor more than sixty (60) days before any such action without a meeting, and in this event only shareholders of record on the date so fixed are entitled to notice and to vote or to give consents, as the case may be, notwithstanding any transfer of any shares on the books of the corporation after the record date, except as otherwise provided in the California General Corporation Law. If the Board of Directors does not so fix a record date: (a) The record date for determining shareholders entitled to notice of or to vote at a meeting of shareholders shall be at the close of business on the business day next preceding the day on which notice is given or, if notice is waived, at the close of business on the business day next preceding the day on which the meeting is held. (b) The record date for determining shareholders entitled to give consent to corporate action in writing without a meeting, II-9 (i) when no prior action by the Board has been taken, shall be the day on which the first written consent is given; or (ii) when prior action of the Board has been taken, shall be at the close of business on the day on which the Board adopts the resolution relating to that action, or the sixtieth (60th) day before the date of such other action, whichever is later. A determination of shareholders of record entitled to notice of or to vote at a meeting of shareholders shall apply to any adjournment of the meeting unless the Board of Directors fixes a new record date for the adjourned meeting, but the Board of Directors shall fix a new record date if the meeting is adjourned for more than forty-five (45) days from the date set for the original meeting. Shareholders on the record date are entitled to notice and to vote or to receive the dividend, distribution or allotment of rights or to exercise the rights, as the case may be, notwithstanding any transfer of any shares on the books of the corporation after the record date, except as otherwise provided in the articles of incorporation or by agreement. Section 12. Voting by Proxy. Every person entitled to vote for directors or ------ -- ----- on any other matter shall have the right to do so either in person or by one or more agents authorized by a written proxy signed by the person and filed with the secretary of the corporation. A proxy shall be deemed signed if the shareholder's name is placed on the proxy (whether by manual signature, typewriting, telegraphic transmission, or otherwise) by the shareholder or the shareholder's attorney in fact. A validly executed proxy which does not state that it is irrevocable shall continue in full force and effect unless (i) revoked by the person executing it, before the vote pursuant to that proxy, by a writing delivered to the corporation stating that the proxy is revoked, or by a subsequent proxy executed by, or attendance at the meeting and voting in person by, the person executing the proxy, or (ii) written notice of the death or incapacity of the maker of that proxy is received by the corporation before the vote pursuant to that proxy is counted, provided, however, that no proxy shall be valid after the expiration of eleven (11) months from the date of the proxy, unless otherwise provided in the proxy. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provision of Sections 705 (a) and 705 (f) of the Corporations Code of California. II-10 Section 13. Form of Proxies or Written Consent for ---- -- ------- -- ------- ------- --- Corporations Having 100 or More Shareholders. ------------ ------ --- -- ---- ------------ (a) If the corporation has outstanding shares held of record by one hundred (100) or more persons but is not subject to the reporting requirements of the Securities Exchange Act of 1934, any proxy or form of written consent distributed to ten (10) or more shareholders must afford the person voting an opportunity to specify a choice among approval, disapproval, or abstention as to each matter or group of related matters, other than elections of directors or officers. (b) For the purpose of determining whether the corporation has outstanding shares held of record by one hundred (100) or more persons, shares shall be deemed to be "held of record" by each person who is identified as the owner of such shares on the record of shareholders maintained by or on behalf of the corporation, in accordance with Section 605 of the California Corporations Code. Section 14. Inspectors of Election. Before any meeting of shareholders, ---------- -- -------- the Board of Directors may appoint any persons other than nominees for office to act as inspectors of election at the meeting or its adjournment. If no inspectors of election are so appointed, the chairman of the meeting may, and on the request of any shareholder or a shareholder's proxy shall, appoint inspectors of election at the meeting. The number of inspectors shall be either one (1) or three (3). If inspectors are appointed at a meeting on the request of one or more shareholders or proxies, the holders of a majority of shares or their proxies present at the meeting shall determine whether one (1) or three (3) inspectors are to be appointed. If any person appointed as inspector fails to appear or fails or refuses to act, the chairman of the meeting may, and upon the request of any shareholder or a shareholder's proxy shall, appoint a person to fill that vacancy. These inspectors shall: (a) Determine the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum, and the authenticity, validity and effect of proxies; II-11 (b) Receive votes, ballots or consents; (c) Hear and determine all challenges and questions in any way arising in connection with the right to vote; (d) Count and tabulate all votes or consents; (e) Determine when the polls shall close; (f) Determine the result; and (g) Do any other acts that may be proper to conduct the election or vote with fairness to all shareholders. II-12 ARTICLE III ----------- Directors --------- Section 1. Powers. Subject to limitations of the articles of ------ incorporation, the bylaws, and the General Corporation Law of California as to action which shall be authorized or approved by the shareholders, and subject to the duties of directors as prescribed by the bylaws, all corporate powers shall be exercised by or under the authority of, and the business and affairs of the corporation shall be controlled by, the Board of Directors. Without prejudice to such general powers, but subject to the same limitations, it is hereby expressly declared that the directors shall have the following powers to: (a) Select and remove all the other officers, agents and employees of the corporation, prescribe such powers and duties for them as may not be inconsistent with law, articles of incorporation or the bylaws, fix their compensation, and require from them security for faithful service. (b) Conduct, manage and control the affairs and business of the corporation, and make such rules and regulations therefor not inconsistent with law, or with the articles of incorporation or the bylaws, as they may deem best. (c) Fix or change the location of the principal executive office, principal business office or other offices of the corporation as provided in Sections 1 and 2 of Article I; designate any place within or without the State of California for the holding of any shareholders' meeting or meetings; adopt, make and use a corporate seal, prescribe the forms of certificates of stock, and alter the form of such seal and such certificates from time to time as in their judgment they may deem best, provided such seal and such certificates shall at all times comply with the provisions of law. (d) Authorize the issue of shares of stock of the corporation from time to time, upon such terms as may be lawful, in consideration of money paid, labor done or services actually rendered, debts or securities cancelled, or tangible or intangible property actually received, or as a dividend, upon a stock split or reverse stock split, reclassification, conversion, or exchange of outstanding shares into shares of another class or other change affecting outstanding shares. III-1 (e) Borrow money and incur indebtedness for the purposes of the corporation, and cause to be executed and delivered therefor, in the corporate name, promissory notes, bonds, debentures, deeds of trust, mortgages, pledges, hypothecations or other evidences of debt and securities therefor. (f) Appoint an executive committee and other committees, and delegate to the executive committee any of the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, except the power to declare dividends and to adopt, amend or repeal bylaws. The executive committee shall be composed of two or more directors. Section 2. Number and Qualification of Directors. The Number of Directors ------------------------------------- shall be not less than one or more than ten. The definite number of directors may be changed, or an indefinite number of directors may be provided, by amendment duly adopted by the Board of Directors or the shareholders, to these bylaws or to the articles of incorporation; provided, however, that if the number of directors is set forth in the articles of incorporation, the number may be changed only by an amendment to the articles of incorporation. Prior to the issuance of shares by the corporation, the amendment may be adopted by the Board of Directors. After the issuance of shares, the amendment must be approved by the vote or written consent of holders of a majority of the outstanding shares entitled to vote; provided however, that an amendment reducing the number of directors to a number less than five (5) cannot be adopted if the votes cast against its adoption at a meeting, or the shares not consenting in the case of action by written consent, are equal to more than 16 2/3% of the outstanding shares entitled to vote. Section 3. Election and Term of Office, Removal of Directors. The ------------------------------------------------- directors shall be elected at each annual meeting of shareholders, but if any such annual meeting is not held, or the directors are not elected thereat, the directors may be elected at any special meeting of shareholders held for that purpose. Except as provided below in the case of removal of a director, all directors shall hold office until the expiration of the term for which elected and until their respective successors have been elected and qualified. III-2 The holders of a majority of the outstanding shares of stock entitled to vote may, at any time, peremptorily terminate the term of office of all or any of the directors by vote at a meeting called for such purpose or by a written statement filed with the secretary of the corporation or, in his absence, with any other officer. Such removal shall be effective immediately even if successors are not elected simultaneously, and the vacancies on the Board of Directors resulting therefrom shall be filled only the shareholders. No director may be removed (unless the entire Board is removed) when the votes cast against removal, or not consenting in writing to such removal, would be sufficient to elect such director if voted cumulatively at an election at which the same total number of votes were cast (or, if such action is taken by written consent, all shares entitled to vote were voted) and the entire number of directors authorized at the time of the directors's most recent election were then being elected. Votes sufficient to elect such director shall occur when the shares that are voted against his removal exceed the quotient arrived at by dividing the total number of outstanding shares entitled to vote by one plus the authorized number of directors. When by the provisions of the articles of incorporation the holders of the shares of any class or series, voting as a class or series, are entitled to elect one or more directors, any director so elected may be removed only by the applicable vote of the holders of the shares of that class or series. No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of such director's term of office. A director may be removed from office by the superior court of the proper county at the suit (to which the corporation is made a party) of shareholders holding at least 10 percent of the number of outstanding shares of any class, in case of fraudulent or dishonest acts or gross abuse of authority or discretion with reference to the corporation and may be barred from reelection for a period prescribed by the court. Section 4. Vacancies. Vacancies in the Board of Directors may be filled --------- by a majority of the remaining directors, though less than a quorum, or by a sole remaining director, except that a vacancy created by the removal of a III-3 director by the vote or written consent of the shareholders or by court order may be filled only by the vote of a majority of the shares entitled to vote represented at a duly held meeting at which a quorum is present, or by the written consent of holders of a majority of the outstanding shares entitled to vote. Each director so elected shall hold office until the next annual meeting of the shareholders and until a successor has been elected and qualified. A vacancy or vacancies in the Board of Directors shall be deemed to exist in the event of the death, resignation, or removal of any director, or if the Board of Directors by resolution declares vacant the office of a director who has been declared of unsound mind by an order of court or convicted of a felony, or if the authorized number of directors is increased, or if the shareholders fail, at any meeting of shareholders at which any director or directors are elected, to elect the number of directors to be voted for at that meeting. The shareholders may elect a director or directors at any time to fill any vacancy or vacancies not filled by the directors, but any such election by written consent shall require the consent of a majority of the outstanding shares entitled to vote. Any director may resign effective on giving written notice to the chairman of the Board, the president, the secretary, or the Board of Directors, unless the notice specifies a later time for that resignation to become effective. If the resignation of a director is effective at a future time, the Board of Directors may elect a successor to take office when the resignation becomes effective. If, after the filling of any vacancy by the directors, the directors then in office who have been elected by the shareholders shall constitute less than a majority of the directors then in office, any holder or holders of an aggregate of five percent (5%) or more of the total number of shares at the time outstanding having the right to vote for such directors may call a special meeting of shareholders to be held to elect the entire Board of Directors. The term of office of any director shall terminate upon such election of a successor. III-4 Section 5. Place of Meeting. Regular meetings of the Board of Directors ----- -- ------- shall be held at any place within or without the State of California which has been designated from time to time by resolution of the Board or by written consent of all members of the Board. In the absence of such designation regular meetings shall be held at the principal executive office of the corporation. Special meetings of the Board may be held either at a place within or without the State of California so designated or if not stated in the notice or if there is no notice, at the principal executive office. Any meeting, regular or special, may be held by conference telephone or similar communication equipment, so long as all directors participating in the meeting can hear one another, and all such directors shall be deemed to be present in person at the meeting. Section 6. Annual Meeting. Immediately following each annual meeting ------ ------- of shareholders, the Board of Directors shall hold a regular meeting for the purpose of organization, election of officers, and the transaction of other business. Notice of such meeting is hereby dispensed with. Section 7. Other Regular Meetings. Other regular meetings of the Board ----- ------- -------- of Directors shall be held without notice at such times and places as set forth in these bylaws or shall be fixed by duly adopted resolution of the Board; provided, however, should the day of any such regular meeting fall upon a legal holiday, then said meeting shall be held at the same time on the next day thereafter ensuing which is not a legal holiday. Notice of all such regular meetings of the Board of Directors is hereby dispensed with. Section 8. Special Meetings. Special meetings of the Board of Directors ------- -------- for any purpose or purposes shall be called at any time by the president or, if he is absent or unable or refuses to act, by any vice president or by any two directors. Notice of the time and place of special meetings shall be delivered personally or by telephone to each director, or sent to each director by first-class mail or by other form of written communication, charges prepaid, addressed to him III-5 at his address as it is shown upon the records of the corporation, or if it is not so shown upon the records of the corporation or is not readily ascertainable, at the place in which the meetings of the directors are regularly held. In case such notice is mailed or telegraphed, it shall be deposited in the United States mail or delivered to the telegraph company in the place in which the principal executive office of the corporation is located at least four (4) days prior to the time of the holding of the meeting. In case such notice is delivered personally as above provided, or by telephone or telegram, it shall be so delivered at least forty-eight (48) hours prior to the time of the holding of the meeting. Such mailing, telegraphing or delivery as above provided shall be due, legal and personal notice to such director. Any oral notice given personally or by telephone may be communicated either to the director or to a person at the office of the director who the person giving notice has reason to believe will promptly communicate it to the director. The notice need not specify the purpose of the meeting nor the place if the meeting is to be held at the principal executive office of the corporation. Section 9. Action Without Meeting. Any action required or permitted to ------ ------- ------- be taken by the Board of Directors at a regular or special meeting pursuant to these bylaws or Division 1 of Title 1 of the Corporation Code of California may be taken without a meeting if all members of the Board shall individually or collectively consent in writing to such action. Such written consent or consents shall be filed with the minutes of the proceedings of the Board. Section 10. Notice of Adjournment. Notice of the time and place of holding ------ -- ----------- an adjourned meeting need not be given, unless the meeting is adjourned for more than twenty-four (24) hours, in which case notice of the time and place shall be given before the time of the adjourned meeting, in the manner specified in Section 8 of this Article III, to the directors who were not present at the time of the adjournment. Section 11. Waiver of Notice. The transactions of any meeting of the Board ------ -- ------ of Directors, however called and noticed or whenever held, shall be as valid as though had at a meeting duly held after regular call and notice, if a quorum be present, and if, either before or after the meeting, each of the directors not present signs a written waiver of notice, or a consent to holding such meeting, or an approval of the minutes thereof. The waiver of notice or consent III-6 need not specify the purpose of the meeting. All such waivers, consents, or approvals shall be filed with the corporate records or made a part of the minutes of the meeting. Notice of a meeting shall also be deemed given to any director who attends the meeting without protesting before or at its commencement, the lack of notice to that director. Section 12. Quorum. A majority of the authorized number of directors ------ shall constitute a quorum for the transaction of business, except to adjourn as provided in Section 13 of this Article III, or except as provided in the articles of incorporation. Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present shall be regarded as the act of the Board of Directors, subject to the provisions of Section 310 of the Corporations Code of California (as to approval of contracts or transactions in which a director has a direct or indirect material financial interest), Section 311 of that Code (as to appointment of committees), and Section 317(e) of that Code (as to indemnification of directors). A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for that meeting. Section 13. Adjournment. A quorum of the directors may adjourn any ----------- directors' meeting to meet again at a stated day and hour; provided, however, that in the absence of a quorum, a majority of the directors present at any directors' meeting, either regular or special, may adjourn, from time to time until the time fixed for the next regular meeting of the Board. Section 14. Fees and Compensation of Directors. Directors and members of ---- --- ------------ -- --------- committees may receive such compensation, if any, for their services, and such reimbursement of expenses, as may be fixed or determined by resolution of the Board of Directors. This Section 14 shall not be construed to preclude any director from serving the corporation in any other capacity as an officer, agent, employee, or otherwise, and receiving compensation for those services. Section 15. Committees of Directors; Procedure. The Board of Directors ---------- -- ---------- --------- may, by resolution adopted by a majority of III-7 the authorized number of directors, designate one or more committees, each consisting of two or more directors, to serve at the pleasure of the Board. The Board may designate one or more directors as alternate members of any committee, who may replace any absent member at any meeting of the committee. Any committee, to the extent provided in the resolution of the Board, shall have all the authority of the Board, except with respect to: (a) the approval of any action which, under the General Corporation Law of California, also requires shareholders' approval or approval of the outstanding shares; (b) the filling of vacancies in the Board of Directors or in any committee; (c) the fixing of compensation of the directors for serving on the Board or on any committee; (d) the amendment or repeal of bylaws or the adoption of new bylaws; (e) the amendment or repeal of any resolution of the Board of Directors which by its express terms is not so amendable or repealable; (f) a distribution to the shareholders of the corporation, except at a rate or in a periodic amount or within a price range determined by the Board of Directors; or (g) the appointment of any other committees of the Board of Directors or the members of these committees. Meetings and actions of committees shall be governed by, held and taken in accordance with, the provisions of Article III of these bylaws, Sections 5 (place of meetings), 7 (regular meetings), 8 (special meetings and notice), 9 (action without meeting), 10 (notice of adjournment), 11 (waiver of notice), 12 (quorum), and 13 (adjournment), with such changes in the context of those bylaws as are necessary to substitute the committee and its members for the Board of Directors and its members, except that the time of regular meetings of committees may be determined either by resolution of the Board of Directors or by resolution of the committee; special meetings of committees may also be called by resolution of the Board of Directors; and notice of special meetings of committees shall also be given to all alternate members, who shall have the right to attend all meetings of the committee. The Board of Directors may adopt rules for the government of any committee not inconsistent with the provisions of these bylaws. III-8 ARTICLE IV ---------- Officers -------- Section 1. Officers. The officers of the corporation shall be a -------- president, a secretary, and a chief financial officer. The corporation may also have, at the discretion of the Board of Directors, a chairman of the Board, one or more vice presidents, one or more assistant secretaries, a treasurer, one or more assistant financial officers or treasurers, and such other officers as may be appointed in accordance with the provisions of Section 3 of this Article IV. One person may hold two or more offices. Section 2. Election. The officers of the corporation, except such -------- officers as may be appointed in accordance with the provisions of Section 3 or Section 5 of this article, shall be chosen by the Board of Directors, and each shall serve at the pleasure of the Board, subject to the rights, if any, of an officer under any contract of employment. Section 3. Subordinate Officers, Etc. The Board of Directors may appoint ----------- --------- --- such other officers as the business of the corporation may require, each of whom shall hold office for such period, have such authority and perform such duties as are provided in the bylaws, or as the Board of Directors may from time to time determine. Section 4. Removal and Resignation. Subject to the right, if any, of an ------- --- ----------- officer under any contract of employment, any officer may be removed, either with or without cause, by the Board of Directors at the time in office, at any regular or special meeting of the Board, or, except in case of an officer chosen by the Board of Directors, by any officer upon whom such power of removal may be conferred by the Board of Directors. Any officer may resign at any time by giving written notice to the Board of Directors or to the president, or to the secretary of the corporation. Any such resignation shall take effect at the date of the receipt of such notice or at any later time specified therein and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Any resignation is without prejudice to the right, if any, of the corporation under any contract to which the officer is a party. IV-1 Section 5. Vacancies. A vacancy in any office because of death, --------- resignation, removal, disqualification or any other cause shall be filled in the manner prescribed in the bylaws for regular appointments to such office. Section 6. Chairman of the Board. The Chairman of the Board shall be the --------------------- chief executive officer of the corporation, shall preside at all meetings of the Directors at which he is present, and shall perform such other duties as may from time to time be assigned to him by the Board of Directors. Section 7. President. The President shall be the chief operating officer --------- of the corporation and shall have the general powers and duties of supervision and management of the corporation. The President shall also perform such other duties as may from time to time be assigned to him by the Board of Directors. Section 8. Vice Presidents. In the absence or disability of the --------------- president, the vice presidents in order of their rank as fixed by the Board of Directors, or if not ranked, the vice president designated by the Board of Directors, shall perform all the duties of the president, and when so acting shall have all the powers of, and be subject to all the restrictions upon, the president. The vice presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the Board of Directors or the bylaws, and the president or the chairman of the Board. IV-2 Section 9. Secretary. The secretary of the corporation shall keep, or --------- cause to be kept, a book of minutes at the principle office or such other place as the Board of Directors may order, of all meetings of directors and shareholders, with the time and place of holding, whether regular or special, and if special, how authorized, the notice thereof given, the names of those present at directors' meetings, the number of shares present or represented at shareholders' meetings and the proceedings thereof. The secretary shall keep, or cause to be kept, at the principal office or at the office of the corporation's transfer agent, a record of shareholders or a duplicate record of shareholders, showing the names of all shareholders and their addresses; the number and classes of shares held by each; the number and date of certificates issued for the same; and the number and date of cancellation of every certificate surrendered for cancellation. The secretary shall give, or cause to be given, notice of all meetings of the shareholders and of the Board of Directors required by these bylaws or by law to be given, and he shall keep the seal of the corporation in safe custody, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or these bylaws. Section 10. Chief Financial Officer. The chief financial officer shall be ----- --------- ------- one person. The chief financial officer shall keep and maintain, or cause to be kept and maintained, adequate and correct accounts of the properties and business transactions of the corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, retained earnings and shares. The books of account shall at all reasonable times be open to inspection by any director. The chief financial officer shall deposit all moneys and other valuables in the name and to the credit of the corporation with such depositaries as may be designated by the Board of Directors. He shall disburse the funds of the corporation as may be ordered by the Board of Directors, shall render to the president and directors, whenever they request it, an account of all of his transactions as chief financial officer and of the financial condition of the corporation, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or these bylaws. IV-3 ARTICLE V --------- Indemnification of Directors, Officers, --------------------------------------- Employees and Other Agents -------------------------- Section 1. Indemnification of Agents Other than Fiduciaries of an --------------- -- ------ ----- ---- ----------- -- -- Employee Benefit Plan. -------- ------- ---- The corporation shall, to the maximum extent permitted by the California Corporations Code, indemnify each of its agents against expenses, costs, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with any proceeding arising by reason of the fact any such person is or was an agent of the corporation. For purposes of this Section 1, an "agent" of the corporation includes any person who is or was a director, officer, employee or other agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or other agent of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, or was a director, officer, employee or agent of a corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation. This Section 1 shall not apply to any person acting in a fiduciary capacity with respect to an employee benefit plan. Section 2. Indemnification of Directors, Officers and Employees who --------------- -- --------- -------- --- --------- --- are Fiduciaries of Employee Benefit Plans. The corporation --- ----------- -- -------- ------- ----- shall, to the maximum extent permitted by law, indemnify and hold harmless each of its directors, officers and employees who, at the direction or request of the corporation, act in a fiduciary capacity with respect to any of the employee benefit plans covering the corporation's employees which is sponsored by the corporation, by an employer organization, or by an employee organization, from all liability, expenses, costs, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with any proceeding arising by reason of the fact any such person is or was acting in such capacity, except where such liability, etc., arises from a willful breach of fiduciary duty. The persons enumerated in this Section 2 shall be considered "agents" for purposes of Section 3 of this Article V. V-1 Section 3. Definitions; Advances; Insurance. ----------- -------- --------- For purposes of this Article V, "proceeding" means any threatened, pending or completed action or proceeding, whether civil, criminal, administrative or investigative; and "expenses" and "costs" include, without limitation, attorneys' fees and any other expenses or costs of establishing a right to indemnification under this Article V. Expenses and costs incurred in defending any such proceeding may be advanced by this corporation before the final disposition of the proceeding on receipt of an undertaking by or on behalf of the agent to repay the amount of the advance unless it shall be determined ultimately that the agent is entitled to be indemnified as authorized in this Article V. Upon and in the event of a determination by the Board of Directors of this corporation to purchase and maintain insurance on behalf of any such agent, this corporation shall purchase and maintain insurance on behalf of the agent of the corporation against any liability asserted against or incurred by the agent in such capacity or arising out of the agent's status as such, whether or not this corporation would have the power to indemnify the agent against the liability under the provisions of this Article V. Section 4. Scope of Indemnification. Nothing contained in this ----- -- --------------- Article V shall affect any right to indemnification to which persons other than directors, officers and employees of this corporation or any subsidiary hereof may be entitled by contract or otherwise. This Article V does not apply to any proceeding against any trustee, investment manager or other fiduciary of an employee benefit plan in that person's capacity as such, who is not a director, officer or employee of the corporation, even though that person may also be an agent of the corporation as defined in this Article V. Nothing contained in this Article V shall limit any right to indemnification to which such a trustee, investment manager or other fiduciary may be entitled by contract or otherwise, which shall be enforceable to the extent permitted by applicable law other than this Article V. V-2 ARTICLE VI ---------- Records and Reports ------------------- Section 1. Maintenance and Inspection of Share Register. The ----------- --- ---------- -- ----- -------- corporation shall keep at its principal executive office, or at the office of its transfer agent or registrar, if either be appointed and as determined by resolution of the Board of Directors, a record of its shareholders, giving the names and addresses of all shareholders and the number and class of shares held by each shareholder. A shareholder or shareholders of the corporation holding at least five percent (5%) in the aggregate of the outstanding voting shares of the corporation may (i) inspect and copy the records of shareholders' names and addresses and shareholdings during usual business hours on five (5) days prior written demand on the corporation, and (ii) obtain from the transfer agent of the corporation, on written demand and on the tender of such transfer agent's usual charges for such list, a list of shareholders' names and addresses, who are entitled to vote for the election of directors, and their shareholdings, as of the most recent record date for which that list has been compiled or as of a date specified by the shareholder after the date of demand. This list shall be made available to any such shareholder by the transfer agent on or before the later of five (5) days after the demand is received or the date specified in the demand as the date as of which the list is compiled. The record of shareholders shall also be open to inspection on the written demand of any shareholder or holder of a voting trust certificate, at any time during usual business hours, for a purpose reasonably related to the holder's interests as a shareholder or as the holder of a voting trust certificate. Any inspection and copying under this Section 1 may be made in person or by an agent or attorney of the shareholder or holder of a voting trust certificate making the demand. Section 2. Maintenance and Inspection of Bylaws. The corporation shall ----------- --- ---------- -- ------ keep at its principal executive office, or if its principal executive office is not in the State of California, at its principal business office in this state, the original or a copy of the bylaws as amended to date, which shall be open to inspection by the shareholders at all reasonable times during office hours. If the principal executive office of the corporation is outside the State of California and the corporation has no principal business office in this state, the secretary shall, upon the written request of any shareholder, furnish to that shareholder a copy of the bylaws as amended to date. VI-1 Section 3. Maintenance and Inspection of Other Corporate Records. ----------- --- ---------- -- ----- --------- ------- The accounting books and records and minutes of proceedings of the shareholders and the Board of Directors and any committee or committees of the Board of Directors shall be kept at such place or places designated by the Board of Directors, or, in the absence of such designation, at the principal executive office of the corporation. The minutes shall be kept in written form, and the accounting books and records shall be kept either in written form or in any other form capable of being converted into written form. The minutes and accounting books and records shall be open to inspection upon the written demand of any shareholder or holder of a voting trust certificate, at any reasonable time during usual business hours, for a purpose reasonably related to the holder's interests as a shareholder or as the holder of a voting trust certificate. The inspection may be made in person or by an agent or attorney, and shall include the right to copy and make extracts. These rights of inspection shall extend to the records of each subsidiary corporation of the corporation. Section 4. Inspection by Directors. Every director shall have the ---------- -- --------- absolute right at any reasonable time to inspect all books, records, and documents of every kind and the physical properties of the corporation and each of its subsidiary corporations. This inspection by a director may be made in person or by an agent or attorney and the right of inspection includes the right to copy and make extracts of documents. Section 5. Annual Report to Shareholders. If the corporation ------ ------ -- ------------ has one hundred (100) or more shareholders (determined as provided in paragraph (b) of Section 13 of Article II) the Board of Directors shall cause an annual report to be sent to the shareholders not later than one hundred twenty (120) days after the close of the fiscal year adopted by the corporation. This report shall be sent at least fifteen (15) days before the annual meeting of shareholders to be held during the next fiscal year and in the manner specified in Section 5 of Article II of these bylaws for giving notice to shareholders of the corporation. The annual report shall contain a balance sheet as of the end of the fiscal year and an income statement and statement of changes in financial position for the fiscal year, accompanied by any report of independent accountants or, if there is no such report, the certificate of an authorized officer of the corporation that the statements were prepared without audit from the books and records of the corporation. The annual report is expressly dispensed with where the corporation has less than one hundred (100) shareholders. VI-2 Section 6. Financial Statements. A copy of any annual financial --------- ---------- statement and any income statement of the corporation for each quarterly period of each fiscal year, and any accompanying balance sheet of the corporation as of the end of each such period, that has been prepared by the corporation shall be kept on file in the principal executive office of the corporation for twelve (12) months, and each such statement shall be exhibited at all reasonable times to any shareholder demanding an examination of any such statement or a copy shall be mailed to any such shareholder. If a shareholder or shareholders holding at least five (5%) percent of the outstanding shares of any class of stock of the corporation makes a written request to the corporation for an income statement of the corporation for the three-month, six-month or nine-month period of the then current fiscal year ended more than thirty (30) days before the date of the request, and a balance sheet of the corporation as of the end of that period, the chief financial officer shall cause that statement to be prepared, if not already prepared, and shall deliver personally or mail that statement or statements to the person making the request within thirty (30) days after the receipt of the request. If the corporation has not sent to the shareholders its annual report for the last fiscal year, if that report is so required hereunder, this report shall likewise be delivered or mailed to the shareholder or shareholders within thirty (30) days after the request. The corporation shall also, on the written request of any shareholder, mail to the shareholder a copy of the last annual, semi-annual, or quarterly income statement which it has prepared, and a balance sheet as of the end of that period. The quarterly income statements and balance sheets referred to in this section shall be accompanied by the report, if any, of any independent accountants engaged by the corporation or the certificate of an authorized officer of the corporation that the financial statements were prepared without audit from the books and records of the corporation. Section 7. Annual Statement of General Information. ------ --------- -- ------- ----------- The corporation shall, during the applicable period in each year, file with the Secretary of State of the State of California, on the prescribed form, a statement setting forth the authorized number of directors, the names and complete business or residence addresses of all incumbent directors, the names and complete business or residence addresses of the chief executive officer, secretary, and chief financial officer, the street address of its principal executive office or principal business office in this state, and the general type VI-3 of business constituting the principal business activity of the corporation, together with a designation of the agent of the corporation for the purpose of service of process, all in compliance with Section 1502 of the Corporation Code of California. VI-4 ARTICLE VII ----------- General Corporate and Miscellaneous Matters ------------------------------------------- Section 1. Record Date for Purposes Other Than Notice and Voting. For ------ ---- --- -------- ----- ---- ------ --- ------ purposes of determining the shareholders entitled to receive payment of any dividend or other distribution or allotment of any rights or entitled to exercise any rights in respect of any other lawful action (other than action by shareholders by written consent without a meeting), the Board of Directors may fix, in advance, a record date, which shall not be more than sixty (60) days before any such action, and in that case only shareholders of record on the date so fixed are entitled to receive the dividend, distribution, or allotment of rights or to exercise the rights, as the case may be, notwithstanding any transfer of any shares on the books of the corporation after the record date so fixed, except as otherwise provided in the California General Corporation Law. If the Board of Directors does not so fix a record date, the record date for determining shareholders for any such purpose shall be at the close of business on the day on which the Board adopts the applicable resolution or the sixtieth (60th) day before the date of that action, whichever is later. Section 2. Checks, Drafts, Evidences of Indebtedness. All checks, ------ ------ --------- -- ------------ drafts, or other orders for payment of money, notes, or other evidences of indebtedness, issued in the name of or payable to the corporation, shall be signed or endorsed by such person or persons and in such manner as, from time to time, shall be determined by resolution of the Board of Directors. Section 3. Corporate Contracts and Instruments; How Executed. The --------- --------- --- ----------- --- -------- Board of Directors, except as otherwise provided in these bylaws, may authorize any officer or officers, agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the corporation, and this authority may be general or confined to specific instances; and, unless so authorized or ratified by the Board of Directors or within the agency power of an officer, no officer, agent, or employee shall have any power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount. VII-1 Section 3.A. Engineering Activities, State of Washington. All ----------- ---------- ----- -- ---------- engineering decisions pertaining to any project or engineering activities in the State of Washington shall be made by an engineer, as designated by resolution of the Board of Directors, in responsible charge or other responsible engineering under his direction or supervision. Section 4. Certificates for Shares. A certificate or certificates ------------ --- ------ for shares of the capital stock of the corporation shall be issued to each shareholder when any of these shares are fully paid, and the Board of Directors may authorize the issuance of certificates for shares as partly paid provided that these certificates shall state the amount of the consideration to be paid for them and the amount paid. All certificates shall be signed in the name of the corporation by the chairman of the Board (or the vice chairman thereof) or the president (or a vice president) and by the chief financial officer or an assistant treasurer or the secretary or any assistant secretary, certifying the number of shares and the class or series of shares owned by the shareholders. Any or all of the signatures on the certificate may be facsimile. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed on a certificate shall have ceased to be that officer, transfer agent, or registrar before that certificate is issued, it may be issued by the corporation with the same effect as if that person were an officer, transfer agent, or registrar at the date of issue. If the shares of the corporation are classified or if any class of shares has two or more series, there shall appear on the certificate one of the following: (a) a statement of the rights, preferences, privileges and restrictions granted to or imposed upon each class or series of shares authorized to be issued and upon the holders thereof; (b) a summary of such rights preferences, privileges and restrictions with reference to the provisions of the articles of incorporation and any certificates of determination establishing the same; (c) a statement setting forth the office or agency of the corporation from which shareholders may obtain, upon request and without charge, a copy of the statement referred to in (a) above. There shall also appear on the certificate the statements required by all of the following clauses to the extent applicable; (1) the fact that the shares are subject to restrictions upon VII-2 transfer; (2) if the shares are assessable or are not fully paid, a statement that they are assessable or, on partly paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon; (3) the fact that the shares are subject to a close corporation voting agreement or an irrevocable proxy or restrictions upon voting rights contractually imposed by the corporation; (4) the fact that the shares are redeemable; and (5) the fact that the shares are convertible and the period for conversion. Section 5. Lost Certificates. Except as provided in this Section 5, ---- ------------ no new certificates for shares shall be issued to replace an old certificate unless the latter is surrendered to the corporation and cancelled at the same time. The Board of Directors may, in case any share certificate or certificate for any other security is lost, stolen, or destroyed, authorize the issuance of a replacement certificate on such terms and conditions as the Board may require, including provision for indemnification of the corporation secured by a bond or other adequate security sufficient to protect the corporation against any claim that may be made against it, including expense or liability, on account of the alleged loss, theft, or destruction of the certificate or the issuance of the replacement certificate. Section 6. Representation of Shares of Other Corporations. The -------------- -- ------ -- ----- ------------ chairman of the Board, the president, or any vice president, or any other person authorized by resolution of the Board of Directors or by any of the foregoing designated officers, is authorized to vote on behalf of the corporation any and all shares of any other corporation or corporations foreign or domestic, standing in the name of the corporation. The authority granted to these officers to vote or represent on behalf of the corporation or corporations may be exercised by any of these officers in person or by any person authorized to do so by a proxy duly executed by these officers. Section 7. Construction and Definitions. Unless the context requires ------------ --- ----------- otherwise, the general provisions, rule of construction, and definitions in the California General Corporation Law shall govern the construction of these bylaws. Without limiting the generality of this provision, VII-3 the singular number includes the plural, the plural number includes the singular, and the term "person" includes both a corporation and a natural person. Section 8. Corporate Seal. If a corporate seal is adopted and unless its --------- ---- form is otherwise determined or changed by the Board of Directors, it shall consist of a circular die bearing the name of the corporation and the state and date of its incorporation. If and when authorized by the Board of Directors, a duplicate of the corporate seal may be kept and used by such officer or person as the Board of Directors may designate. Failure to affix the corporate seal does not affect the validity of any instrument of the corporation. Section 9. Amendment of Bylaws by Shareholders. New bylaws may be adopted --------- -- ------ -- ------------ or these bylaws may be amended or repealed by the vote or written consent of holders of a majority of the outstanding shares entitled to vote; provided, however, that if the articles of incorporation of the corporation set forth the number of authorized directors of the corporation, the authorized number of directors may be changed only by an amendment of the articles of incorporation. Section 10. Amendment of Bylaws by Directors. Subject to the rights of --------- -- ------ -- --------- the shareholders as provided in Section 9 of this Article VII, bylaws, other than a bylaw or an amendment of a bylaw changing the authorized number of directors, may be adopted, amended, or repealed by the Board of Directors. VII-4 EX-3.E 4 EXHIBIT 3(E) Exhibit No. 3(e) CERTIFICATE OF INCORPORATION OF ICF KAISER GOVERNMENT PROGRAMS, INC. Section 1.01. Name. The name of the Corporation is ICF Kaiser Government Programs, Inc. Section 2.01. Registered Office and Agent. The registered office of the Corporation in the State of Delaware is located in the County of New Castle, at 1013 Centre Road, Wilmington 19805. Its registered agent at such address is Corporation Service Company. Section 3.01. Purposes. The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. Section 4.01. Authorized Shares. The total number of shares of capital stock which the Corporation shall have authority to issue is one thousand (1,000) shares of Common Stock having a par value of one dollar ($1.00) per share. Section 5.01. Incorporator. The name and mailing address of the incorporator is Paul Weeks, II, 9300 Lee Highway, Fairfax, Virginia 22031-1207. Section 5.02. Duration. The Corporation is to have perpetual existence. Section 6.01. Limitation of Liability. (a) No person shall be liable to the Corporation for any loss or damage suffered by it on account of any action taken or omitted to be taken by him or her as a director or officer of the Corporation, if such person (i) in good faith exercised or used the same degree of diligence, care and skill as an ordinarily prudent person would have exercised or used under similar circumstances, or (ii) took, or omitted to take, such action in good faith reliance upon advice of counsel for the Corporation, or upon books of account or reports made to the Corporation by any of its officers or by an independent certified public accountant, or by an appraiser selected with reasonable care by the Board of Directors or by any committee designated by the Board of Directors, or in good faith reliance upon other records of the Corporation. (b) No director of the Corporation shall be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, provided that the foregoing shall not eliminate or limit the liability of a director (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit. Section 7.01. Ratification by Stockholders. Any contract, transaction or act of the Corporation, the Board of Directors, or a committee of the Board of Directors which shall be approved or ratified by a majority of a quorum of the stockholders entitled to vote at any meeting or, without a meeting, by the written consent of the holders of a majority of the stock entitled to vote shall be as valid and binding as though approved or ratified by every stockholder of the Corporation; but any failure of the stockholders to approve or ratify such contract, transaction or act, when and if submitted, shall not be deemed in any way to invalidate the same or to deprive the Corporation, its directors or officers, of their right to proceed with such contract, transaction or act. Certificate of Incorporation of ICF Kaiser Government Programs, Inc. Page 2 Section 8.01. Indemnification of Directors and Officers for Actions, Suits, or Proceedings Other Than By or In the Right of the Corporation. To the full extent permitted by law, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation), by reason of the fact that he or she is or was or has agreed to become a director or officer of the Corporation or is or was serving or has agreed to serve at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise (including employee benefit plans), or by reason of any action alleged to have been taken or omitted in such capacity, against costs, charges, expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her on his or her behalf in connection with any threatened, pending or completed action, suit or proceeding and any appeal therefrom, including but not limited to liability and expenses incurred on account of profits realized by him or her in the purchase or sale of securities of the Corporation, if and only if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful; the termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his or her conduct was unlawful. Section 8.02. Indemnification of Directors and Officers for Actions or Suits By or In the Right of the Corporation. To the full extent permitted by law, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he or she is or was or has agreed to become a director or officer of the Corporation or is or was serving or has agreed to serve at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise (including employee benefit plans), or by reason of any action alleged to have been taken or omitted in such capacity, against costs, charges and expenses (including attorneys' fees) actually and reasonably incurred by him or her on his or her behalf in connection with the defense or settlement of any threatened, pending or completed action or suit and any appeal therefrom, or the defense or settlement of any claim, issue or matter, if and only if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of such liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such costs, charges and expenses which the Court of Chancery or such other court shall deem proper. Section 8.03. Indemnification of Others for Actions, Suits, or Proceedings Other Than By or In the Right of the Corporation. To the full extent permitted by law, the Corporation, in the sole discretion of the Board of Directors of the Corporation, may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation), by reason of the fact that he or she is or was or has agreed to become an employee, agent or contractor of the Corporation, or is or was serving or Certificate of Incorporation of ICF Kaiser Government Programs, Inc. Page 3 has agreed to serve at the request of the Corporation as a director, officer, employee, agent or contractor of another corporation, partnership, joint venture, trust or other enterprise (including employee benefit plans), or by reason of any action alleged to have been taken or omitted in such capacity, against costs, charges, expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her or on his or her behalf in connection with any threatened, pending or completed action, suit or proceeding and any appeal therefrom, including but not limited to liability and expenses incurred on account of profits realized by him or her in the purchase or sale of securities of the Corporation, if and only if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful; the termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. Section 8.04. Indemnification of Others for Actions or Suits By or In the Right of the Corporation. To the full extent permitted by law, the Corporation, in the sole discretion of the Board of Directors of the Corporation, may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he or she is or was or has agreed to become an employee, agent or contractor of the Corporation, or is or was serving or has agreed to serve at the request of the Corporation as a director, officer, employee, agent or contractor of another corporation, partnership, joint venture, trust or other enterprise (including employee benefit plans), or by reason of any action alleged to have been taken or omitted in such capacity, against costs, charges and expenses (including attorneys' fees) actually and reasonably incurred by him or her or on his or her behalf in connection with the defense or settlement of any threatened, pending or completed action or suit and any appeal therefrom, or the defense or settlement of any claim, issue or matter, if and only if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of such liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such costs, charges and expenses which the Court of Chancery or such other court shall deem proper. Section 8.05. Indemnification for Costs, Charges and Expenses of Successful Party. Notwithstanding the other provisions of this Certificate, to the extent that a director or officer of the Corporation or other person indemnified under Sections 9.01 through 9.04, herein, has been successful on the merits or otherwise, including, without limitation, the dismissal of an action without prejudice, in defense of any action, suit or proceeding referred to above, or in defense of any claim, issue or matter therein, he or she shall be indemnified against all costs, charges and expenses (including attorneys' fees) actually and reasonably incurred by him or her or on his or her behalf in connection therewith. Section 8.06. Determination of Right to Indemnification. Unless otherwise ordered by a court, any indemnification under Sections 9.01 through 9.04, herein, shall be paid by the Corporation unless a determination is made (i) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (ii) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by Certificate of Incorporation of ICF Kaiser Government Programs, Inc. Page 4 independent legal counsel in a written opinion, or (iii) by the stockholders, that indemnification of an individual entitled to indemnification under Sections 9.01 through 9.04, herein, is not proper in the circumstances because he or she has not met the applicable standard of conduct set forth in Sections 9.01 through 9.04, herein. Section 8.07. Advance Payment of Costs, Charges and Expenses. To the full extent permitted by law, the Corporation shall, upon request, pay costs, charges and expenses (including attorneys' fees) incurred by a person entitled to indemnification pursuant to Sections 9.01 and 9.02, herein, and, if applicable, pursuant to Sections 9.03 and 9.04, herein, in defending a civil or criminal action, suit or proceeding in advance of the final disposition of such action, suit or proceeding; provided, however, that the payment of such costs, charges and expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer) in advance of the final disposition of such action, suit or proceeding shall be made only upon receipt of an undertaking by or on behalf of the director or officer to repay all amounts so advanced in the event that it shall ultimately be determined that such director or officer is not entitled to be indemnified by the Corporation as authorized in this certificate; such costs, charges and expenses incurred by other employees, agents and contractors may be so paid upon such terms and conditions, if any, as the Board of Directors deems appropriate. Section 8.08. Procedure for Indemnification. Any indemnification or advance of costs, charges and expenses provided for in Sections 9.01 through 9.07, herein, shall be made promptly, and in any event within sixty days, upon the written request of the person entitled to indemnification; the right to indemnification or advances as granted by this Certificate shall be enforceable by a director or officer or other person indemnified hereunder in any court of competent jurisdiction. If the Corporation denies such request, in whole or in part, or if no disposition thereof is made within sixty days, such person's costs, charges and expenses incurred in connection with successfully establishing his right to indemnification, in whole or in part, in any such action shall also be indemnified by the Corporation; it shall be a defense to any such action (other than an action brought to enforce a claim for the advance of costs, charges and expenses pursuant to Section 9.07, herein, where the required undertaking, if any, has been received by the Corporation) that the claimant has not met the standard of conduct set forth in Sections 9.01 through 9.04, herein. Neither the failure of the Corporation (including its Board of Directors, its independent legal counsel, and its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in Sections 9.01 through 9.04, herein, nor the fact that there has been an actual determination by the Corporation (including its Board of Directors, its independent legal counsel, and its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct. Section 8.09. Authorization of Corporation Officers. The proper officers of the Corporation are, and each of them acting without the other is, authorized to take any action, for and in the name of the Corporation, which the officer deems necessary or appropriate (as conclusively presumed from the taking of such action) to carry out and effect the foregoing Sections 9.01 through 9.08. Section 8.10. Other Rights; Continuation of Right to Indemnification. The indemnification and advancement of expenses provided by this Certificate shall not be deemed exclusive of any other rights to which a person seeking indemnification or advancement of expenses may be entitled under any law (present or future, common or statutory), by-law, agreement, vote of stockholders or Certificate of Incorporation of ICF Kaiser Government Programs, Inc. Page 5 disinterested directors or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding office or while employed by or acting as an agent for the Corporation, and shall continue as to a person who has ceased to serve in the capacity making him or her eligible for indemnification, and shall inure to the benefit of the estate, heirs, executors and administrators of such person; all rights to indemnification under this Certificate shall be deemed to be a contract between the Corporation and each director and officer of the Corporation and, as applicable, any other person indemnified hereunder who serves or served in such capacity at any time while this Certificate as well as the relevant provisions of the Delaware General Corporation Law or any other applicable laws are or were in effect; any repeal or modification hereof or of such provisions of such law shall not in any way diminish any rights to indemnification of such director or officer or other person entitled to indemnification or the obligations of the Corporation arising hereunder. Section 8.11. Savings Clause. If this Certificate or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each director and officer, and may indemnify any other person entitled to indemnification, as to costs, charges and expenses (including attorneys' fees), judgments, fines and amounts paid in settlement with respect to any action, suit or proceeding, whether civil, criminal, administrative or investigative, including an action by or in the right of the Corporation, to the full extent permitted by any applicable portion of this Certificate that shall not have been invalidated and to the full extent permitted by applicable law. To the full extent permitted by law, the Corporation may enter into and perform agreements with persons, including, without limitation, present and former officers, directors and employees of the Corporation and of companies acquired by or merged with the Corporation, obligating the Corporation, among other things, to provide indemnification and advancement of costs, charges and expenses to such persons in addition to any indemnification or advancement which may be available to such person under Sections 9.01 through 9.10 of this Certificate. Section 8.12. Insurance. The Board of Directors may cause the Corporation to purchase and maintain insurance on behalf of any person who is or was or has agreed to become a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director or officer of another corporation, or as its representative in a partnership, joint venture, trust or other enterprise (including employee benefit plans), against any liability asserted against such person and incurred in any such capacity or arising out of such status, whether or not the Corporation would have the power to indemnify such person. Section 8.13. Adoption of By-laws. The Board of Directors may from time to time adopt By-laws with respect to indemnification and may amend such By-laws to provide at all times the fullest indemnification permitted by the General Corporation Law of the State of Delaware. Section 9.01. Settlement of Debts. Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them and/or between this Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this Corporation under the provisions of Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this Corporation under the provisions of Section 279 of Title 8 of the Delaware Code, order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three fourths in value of the creditors Certificate of Incorporation of ICF Kaiser Government Programs, Inc. Page 6 or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this Corporation as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this Corporation, as the case may be, and also on this Corporation. Section 10.01. Elections of Directors. Elections of directors need not be by written ballot unless the By-laws of the Corporation shall so provide. Section 11.01. Stockholders Meetings, Records. Stockholders meetings may be held within or without the State of Delaware, as the By-laws may provide. The books of the Corporation may be kept (subject to any provision in the General Corporation Law of the State of Delaware) outside of the State of Delaware at such place or places as may be designated from time to time by the Board of Directors (or duly authorized committee of the Board of Directors) or in the By-laws of the Corporation. Section 12.01. By-laws. The Board of Directors (or a duly authorized committee of the Board of Directors) of the Corporation shall have the power to make and, except as may be expressly stated in the By-laws, to alter and repeal its By-laws. Section 13.01. Amendment of Certificate of Incorporation. The Corporation reserves the right to amend, alter, change or repeal any provision contained in this certificate, in the manner now or hereafter prescribed by the General Corporation Law of Delaware, and all rights conferred upon stockholders herein are granted subject to this reservation. IN WITNESS WHEREOF the undersigned, being the incorporator hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this certificate hereby declaring and certifying that this is my act and deed and the facts herein stated are true, and accordingly have hereto set my signature this 11th day of October 1994. /s/ Paul Weeks, II Paul Weeks, II EX-3.F 5 EXHIBIT 3(F) Exhibit No. 3(f) BY-LAWS OF ICF KAISER GOVERNMENT PROGRAMS, INC. ARTICLE I Offices Section 1.01. Registered Office in Delaware. The registered office shall be in Wilmington, Delaware. The name of the registered agent of the Corporation at such location is Corporation Service Company. Section 1.02. Principal Office. The Board of Directors is granted full power and authority to fix and thereafter change the location of the principal office of the Corporation at any location within the United States. Section 1.03. Other Offices. The Corporation may have such other offices either within or without the State of Delaware as the Board of Directors may from time to time determine. ARTICLE II Meetings of Stockholders Section 2.01. Time and Place of Meeting. Annual meetings of the stockholders for the purpose of electing directors, making reports of the affairs of the Corporation and transacting such other business as may properly come before the meeting shall be held at such place, within or without the State of Delaware, on such date and at such time as the Board of Directors shall each year fix, which date shall be within thirteen months subsequent to the later of the date of incorporation or the last annual meeting of stockholders. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be fixed by the Board of Directors and stated in the notice of meeting. If no other place is fixed by the Board of Directors, meetings of stockholders shall be held at the principal executive office of the Corporation. Failure to hold the annual meeting at the designated time shall not work a forfeiture or dissolution of the Corporation. Section 2.02. Notice of Meeting. Written notice of meetings of stockholders, stating the place, date and hour thereof, and in the case of a special meeting, the purpose or purposes for which the meeting is being called, shall be given not less than ten nor more than sixty days before the date of the meeting to each stockholder entitled to vote thereat. Section 2.03. Qualified Voters. The officer who has charge of the stock ledger of the Corporation shall prepare, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder for any purpose germane to the meeting during ordinary business hours for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or if not so specified, at the place where the meeting is to be held. The list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present and entitled to vote. BY-LAWS OF ICF KAISER GOVERNMENT PROGRAMS, INC. Page 2 Section 2.04. Special Meetings. Special meetings of the stockholders may be called by the Board of Directors or by the President or by a writing signed by stockholders owning a majority in amount of the entire capital stock of the Corporation issued and outstanding and entitled to vote at such meeting. Such call shall state the purpose or purposes of the proposed meeting. The Secretary shall give notice of such meeting to the stockholders entitled to vote thereat, in accordance with such call. Section 2.05. Business at Special Meetings. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 2.06. Quorum. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the Certificate of Incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time without notice other than announcement at the meeting (if the adjournment is not for more than thirty days and a new record date for the determination of stockholders entitled to vote is not fixed), until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. Section 2.07. Vote Required. When a quorum is present at any meeting, the vote of the holders of a majority of the shares of stock having voting power voting, in person or by proxy, on a question shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes, the Certificate of Incorporation or these By-laws a different vote is required, in which case such express provision shall govern and control the decision of such question. Section 2.08. Proxies. Each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date unless the proxy provides for a longer period. No proxy or power of attorney to vote shall be used to vote at a meeting of the stockholders unless it shall have been filed with the Secretary of the meeting when required by the inspectors of election. All questions regarding the qualification of voters, the validity of proxies and the acceptance or rejection of votes shall be decided by two inspectors of election who shall be appointed by the Board of Directors, or if not so appointed, then by the presiding officer of the meeting. Section 2.09. Presiding Officer. The President of the Corporation shall preside over all meetings of stockholders. Section 2.10. Consent. Whenever the vote of stockholders at a meeting thereof is required or permitted to be taken in connection with any corporate action by any provisions of the statutes, the By-laws or the Certificate of Incorporation, the meeting and vote may be dispensed with if the number of stockholders who would have been entitled to vote upon the action if such meeting were held, having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting, shall consent in writing to such corporate action being taken. Prompt BY-LAWS OF ICF KAISER GOVERNMENT PROGRAMS, INC. Page 3 notice shall be given by the Secretary to all stockholders of the taking of corporate action without a meeting by less than unanimous written consent. ARTICLE III Directors Section 3.01. Number and Election. The number of directors which shall constitute the whole Board shall be no less than one (1) or more than ten (10). By amendment of this By-law, the number may be increased or decreased from time to time by the Board of Directors or stockholders within the limits permitted by law, but no decrease in the number of directors shall change the term of any director in office at the time thereof. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 3.02, and each director shall hold office until his successor is elected and accepts office unless he earlier resigns or is removed. Directors need not be stockholders. A director may resign at any time upon written notice to the Corporation or orally at any meeting of the directors or stockholders. Section 3.02. Removal and Vacancies. A director may be removed with or without cause by a majority vote of the holders of the outstanding shares entitled to vote. [Subject to any Stockholder's Agreement] Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and accept office, unless sooner displaced. Section 3.03. Management, The business of the Corporation shall be managed by its Board of Directors, which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these By-laws directed or required to be exercised or done by the stockholders. Section 3.04. Place of Meetings. The Board of Directors of the Corporation may hold meetings, both regular and special, either within or without the State of Delaware. Meetings may be held by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at such meeting. Section 3.05. Annual Meeting. The first meeting of each newly elected Board of Directors shall be held immediately following the adjournment of the annual meeting of stockholders and at the place thereof. No notice of such meeting shall be necessary to the directors in order legally to constitute the meeting, provided a quorum is present. In the event such meeting is not so held, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors. Section 3.06. Notice for Regular Meetings. Regular meetings of the Board of Directors may be held without notice at such time and at such place as shall from time to time be determined by the Board of Directors. Section 3.07. Special Meetings. Special meetings of the Board of Directors may be called by a majority of the Board of Directors or the President and shall be held on notice by letter mailed or delivered for transmission not later than on the third day immediately preceding the day of such BY-LAWS OF ICF KAISER GOVERNMENT PROGRAMS, INC. Page 4 meeting, or by written notice delivered or received not later than the day immediately preceding the day of such meeting. Neither the business to be transacted at, nor the purpose of, any special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting. Section 3.08. Quorum. At meetings of the Board of Directors, a majority of the full number of directors shall constitute a quorum for the transaction of business, and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 3.09. Chairman of the Board. At its first meeting after each annual meeting of stockholders, the Board of Directors shall elect from among its members a Chairman. The Board of Directors may also choose a Vice Chairman from among its members. The Chairman shall preside at all meetings of the Board of Directors, and shall perform such other duties as the Board may prescribe. The Chairman may participate and act in any meeting of the Board of Directors as a director. The Vice Chairman, if any, shall act under the direction of the Chairman and in the absence or disability of the Chairman shall perform the duties and exercise the powers of the Chairman. The Chairman and the Vice Chairman, if any, (i) shall hold their respective offices at the pleasure of the Board of Directors, and (ii) may be removed with or without cause at any time by the Board of Directors. Any vacancy occurring in the office of the Chairman or Vice Chairman by death, resignation, removal or otherwise shall be filled by the Board of Directors. Section 3.10. Committees. The Board of Directors may, by resolution adopted by a majority of the whole Board, designate one or more committees of the Board of Directors, each committee to consist of one or more of the directors of the Corporation, which, to the extent provided in the resolution, may have and exercise any or all the powers of the Board of Directors in the management of the business and affairs of the Corporation including, but not limited to, the power and authority of the Board of Directors: (i) to authorize the seal of the Corporation to be affixed to all papers; (ii) to declare a dividend; (iii) to authorize the issuance of stock; (iv) to adopt a certificate of ownership and merger pursuant to Section 253, of Title 8, Delaware Code; and (v) to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the Board of Directors as provided in Section 151(a) of Title 8, Delaware Code, fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the Corporation or the conversion into, or the exchange of such shares for shares of any other class or classes or any other series of the same of any other class or classes of stock of the Corporation. Such committee or committees shall have such name or names as may be determined from time to time by the Board of Directors. The member or members of any such committee present at any meeting and not disqualified from voting may, whether or not they constitute a quorum, unanimously appoint another member of the Board of Directors to act at the meeting in the place of any absent or disqualified member. At meetings of such committees, a majority of the members or alternate members at any meeting at which there is a quorum shall be the act of the committee. Section 3.11. Committee Minutes. The committees shall keep regular minutes of their proceedings and report the same to the Board of Directors. BY-LAWS OF ICF KAISER GOVERNMENT PROGRAMS, INC. Page 5 Section 3.12. Consent. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if a written consent thereto is signed by all members of the Board of Directors or of such committee, as the case may be, and such written consent is filed with the minutes of proceedings of the Board or committee. Section 3.13. Compensation. The directors may be paid their expenses of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as director. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of committees of the Board of Directors may be allowed like reimbursement and compensation for attending committee meetings. ARTICLE IV Notices Section 4.01. Notice. Notices to directors and stockholders mailed to them at their addresses appearing on the books of the Corporation shall be deemed to be given at the time when deposited in the United States mail, postage prepaid. An affidavit of the Secretary or an Assistant Secretary or of the transfer agent of the Corporation that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. Section 4.02. Waiver. Whenever any notice is required to be given under the provisions of the statute, the Certificate of Incorporation or of these By-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. Neither the business to be transacted at, nor the purposes of, any meeting need be specified in such waiver. Attendance at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. ARTICLE V Officers Section 5.01. Election. The officers of the Corporation shall be chosen by the Board of Directors at its first meeting after each annual meeting of stockholders and shall be a President, a Secretary and a Treasurer. The Board of Directors may also choose one or more Vice Presidents and one or more Assistant Secretaries and Assistant Treasurers. Two or more offices may be held by the same person. Section 5.02. Other Officers. The Board of Directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors. Section 5.03. Salaries. The salaries of all officers of the Corporation shall be fixed by or under the direction of the Board of Directors. Section 5.04. Vacancies. The officers of the Corporation shall hold office at the pleasure of the Board of Directors. Any officer may be removed with or without cause at any time by the Board BY-LAWS OF ICF KAISER GOVERNMENT PROGRAMS, INC. Page 6 of Directors. Each officer shall hold his office until his successor is elected and qualified or until his earlier resignation or removal. The Board of Directors may fill any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise. Section 5.05. President. The President shall serve as Chief Executive Officer of the Corporation, shall have general and active management of the business of the Corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. He shall execute on behalf of the Corporation, and may affix or cause the seal to be affixed to, all instruments requiring such execution except to the extent the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the Corporation. He shall perform such additional duties and have such additional powers as the Board of Directors may from time to time prescribe. Section 5.06. Vice Presidents. The Vice Presidents shall act under the direction of the President and in the absence or disability of the President shall perform the duties and exercise the powers of the President. They shall perform such other duties and have such other powers as the President or the Board of Directors may from time to time prescribe. The Board of Directors may designate one or more Executive Vice Presidents or may otherwise specify the order of seniority of the Vice Presidents. The duties and powers of the President shall descend to the Vice Presidents in such specified order of seniority. Section 5.07. Secretary. The Secretary shall act under the direction of the President. Subject to the direction of the President, he shall attend all meetings of the Board of Directors and all meetings of the stockholders and record the proceedings in a book to be kept for that purpose. He shall perform like duties for committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the President or the Board of Directors. He shall keep in safe custody the seal of the Corporation and, when authorized by the President or the Board of Directors, cause it to be affixed to any instrument requiring it. Section 5.08. Assistant Secretaries. The Assistant Secretaries shall act under the direction of the President. In the order of their seniority, unless otherwise determined by the President or the Board of Directors, they shall, in the absence or disability of the Secretary, perform the duties and exercise the powers of the Secretary. They shall perform such other duties and have such other powers as the President or the Board of Directors may from time to time prescribe. Section 5.09. Treasurer. The Treasurer shall act under the direction of the President. Subject to the direction of the President he shall have custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. He shall disburse the funds of the Corporation as may be ordered by the President or the Board of Directors, taking proper vouchers for such disbursements, and shall render to the President and the Board of Directors at its regular meetings, or when the Board of Directors so requires, an account of all his transactions as Treasurer and of the financial condition of the Corporation. He may affix or cause to be affixed the seal of the Corporation to documents so requiring. Section 5.10. Assistant Treasurers. The Assistant Treasurers in the order of their seniority, unless otherwise determined by the President or the Board of Directors, shall, in the absence or disability BY-LAWS OF ICF KAISER GOVERNMENT PROGRAMS, INC. Page 7 of the Treasurer, perform the duties and exercise the powers of the Treasurer. They shall perform such other duties and have such other powers as the President or the Board of Directors may from time to time prescribe. ARTICLE VI Certificates of Stock Section 6.01. Certificate. Every holder of stock in the Corporation shall be entitled to have a certificate signed by the Chairman or Vice-Chairman of the Board of Directors, or the President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation, certifying the number of shares owned by him in the Corporation. Every such certificate shall contain a statement of the restrictions provided in Section 4 of this Article. Section 6.02. Facsimile Signature. Any or all the signatures on the certificate may be facsimiles. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, such certificate may be issued with the same effect as though the person had not ceased to be such officer, transfer agent or registrar. The seal of the Corporation or a facsimile thereof may, but need not, be affixed to certificates of stock. Section 6.03. Lost Certificates. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed. Section 6.04. Transfer. Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, the Corporation shall issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books, provided, however, the Corporation shall have no obligation to issue new certificates, cancel old certificates or record transactions unless and until it is satisfied that (i) all provisions of the Certificate of Incorporation, these By-laws and any legends on the certificate regarding transfer of shares and restrictions on such transfers have been complied with, and (ii) all other applicable restrictions, including restrictions imposed by law, including federal and state securities law, and by any stockholders agreement to which the Corporation is a party, have been complied with. Section 6.05. Record Date. The Board of Directors may fix in advance a date, not more than sixty days nor less than ten days preceding the date of any meeting of stockholders, or not more than sixty days before the date for the payment of any dividend, or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, or a date in connection with obtaining a consent, as a record date for the determination of the stockholders entitled to notice of, and to vote at, any such meeting and any adjournment thereof, or entitled to BY-LAWS OF ICF KAISER GOVERNMENT PROGRAMS, INC. Page 8 receive payment of any such dividend, or to any such allotment of rights, or to exercise the rights in respect of any such change, conversion or exchange of capital stock, or to give such consent, and in such case such stockholders and only such stockholders as shall be stockholders of record on the date so fixed shall be entitled to such notice of, and to vote at, such meeting and any adjournment thereof, or to receive payment of such dividend, or to receive such allotment of rights, or to exercise such rights, or to give such consent, as the case may be notwithstanding any transfer of any stock on the books of the Corporation after any such record date fixed as aforesaid. Section 6.06. Recognition of Ownership. The Corporation shall be entitled to recognize the person registered on its books as the owner of shares to be the exclusive owner for all purposes including voting and dividends, and the Corporation shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VII Miscellaneous Section 7.01. Reserves. There may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors may from time to time, in its absolute discretion, think proper, as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for the purchase of additional property, or for such other purpose as the directors shall think conducive to the interest of the Corporation, and the Board of Directors may modify or abolish any such reserve. Section 7.02. Checks, Demands and Notes. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. Section 7.03. Fiscal Year. The fiscal year of the Corporation shall be as fixed by the Board of Directors. Section 7.04. Seal. The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any manner reproduced. ARTICLE VIII Indemnification Section 8.01. Indemnification of Directors and Officers for Actions, Suits, or Proceedings Other Than By Or In The Right of the Corporation. To the full extent permitted by law, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was or has agreed to become a director or officer of the Corporation or is or was serving or has agreed to serve at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise (including employee benefit plans) or by reason of any action alleged to have been taken or omitted in such capacity against costs, charges, expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and BY-LAWS OF ICF KAISER GOVERNMENT PROGRAMS, INC. Page 9 reasonably incurred by him or on his behalf in connection with any threatened, pending or completed action, suit or proceeding and any appeal therefrom including but not limited to liability and expenses incurred on account of profits realized by him in the purchase or sale of securities of the Corporation, if and only if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful; the termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. Section 8.02. Indemnification of Directors and Officers for Actions or Suits By Or In The Right of the Corporation. To the full extent permitted by law, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was or has agreed to become a director or officer of the Corporation, or is or was serving or has agreed to serve at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise (including employee benefit plans), or by reason of any action alleged to have been taken or omitted in such capacity, against costs, charges and expenses (including attorneys' fees) actually and reasonably incurred by him or on his behalf in connection with the defense or settlement of any threatened, pending or completed action or suit and any appeal therefrom, or the defense or settlement of any claim, issue or matter, if and only if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of such liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such costs, charges and expenses which the Court of Chancery or such other court shall deem proper. Section 8.03. Indemnification of Others for Actions, Suits, or Proceedings Other Than By Or In The Right of the Corporation. To the full extent permitted by law, the Corporation, in the sole discretion of the Board of Directors of the Corporation, may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation), by reason of the fact that he is or was or has agreed to become an employee, agent or contractor of the Corporation, or is or was serving or has agreed to serve at the request of the Corporation as a director, officer, employee, agent or contractor of another corporation, partnership, joint venture, trust or other enterprise (including employee benefit plans), or by reason of any action alleged to have been taken or omitted in such capacity, against costs, charges, expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with any threatened, pending or completed action, suit or proceeding and any appeal therefrom, including but not limited to liability and expenses incurred on account of profits realized by him in the purchase or sale of securities of the Corporation, if and only if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any BY-LAWS OF ICF KAISER GOVERNMENT PROGRAMS, INC. Page 10 criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful; the termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. Section 8.04. Indemnification of Others for Actions or Suits By Or In The Right of the Corporation. To the full extent permitted by law, the Corporation, in the sole discretion of the Board of Directors of the Corporation, may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was or has agreed to become an employee, agent or contractor of the Corporation, or is or was serving or has agreed to serve at the request of the Corporation as a director, officer, employee, agent or contractor of another corporation, partnership, joint venture, trust or other enterprise (including employee benefit plans), or by reason of any action alleged to have been taken or omitted in such capacity, against costs, charges and expenses (including attorneys' fees) actually and reasonably incurred by him or on his behalf in connection with the defense or settlement of any threatened, pending or completed action or suit and any appeal therefrom, or the defense or settlement of any claim, issue or matter, if and only if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of such liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such costs, charges and expenses which the Court of Chancery or such other court shall deem proper. Section 8.05. Indemnification for Costs, Charges and Expenses of Successful Party. Notwithstanding the other provisions of these By-laws, to the extent that a director or officer of the Corporation or other person indemnified under Sections 8.01 through 8.04, herein, has been successful on the merits or otherwise, including, without limitation, the dismissal of an action without prejudice, in defense of any action, suit or proceeding referred to above, or in defense of any claim, issue or matter therein, he shall be indemnified against all costs, charges and expenses (including attorneys' fees) actually and reasonably incurred by him or on his behalf in connection therewith. Section 8.06. Determination of Right to Indemnification. Unless otherwise ordered by a court, any indemnification under Sections 8.01 through 8.04, herein, shall be paid by the Corporation unless a determination is made (i) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (ii) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (iii) by the stockholders, that indemnification of an individual entitled to indemnification under Sections 8.01 through 8.04, herein, is not proper in the circumstances because he has not met the applicable standard of conduct set forth in Sections 8.01 through 8.04, herein. Section 8.07. Advance Payment of Costs, Charges and Expenses. To the full extent permitted by law, the Corporation shall, upon request, pay costs, charges and expenses (including attorneys' fees) BY-LAWS OF ICF KAISER GOVERNMENT PROGRAMS, INC. Page 11 incurred by a person entitled to indemnification pursuant to Sections 8.01 and 8.02, herein, and, if applicable, pursuant to Sections 8.03 and 8.04, herein, in defending a civil or criminal action, suit or proceeding in advance of the final disposition of such action, suit or proceeding; provided, however, that the payment of such costs, charges and expenses incurred by a director or officer in his capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer) in advance of the final disposition of such action, suit or proceeding shall be made only upon receipt of an undertaking by or on behalf of the director or officer to repay all amounts so advanced in the event that it shall ultimately be determined that such director or officer is not entitled to be indemnified by the Corporation as authorized in these By-laws; such costs, charges and expenses incurred by other employees, agents and contractors may be so paid upon such terms and conditions, if any, as the Board of Directors deems appropriate. Section 8.08. Procedure for Indemnification. Any indemnification or advance of costs, charges and expenses provided for in Sections 8.01 through 8.07, herein, shall be made promptly, and in any event within sixty (60) days, upon the written request of the person entitled to indemnification; the right to indemnification or advances as granted by these By-laws shall be enforceable by a director or officer or other person indemnified hereunder in any court of competent jurisdiction. If the Corporation denies such request, in whole or in part, or if no disposition thereof is made within sixty (60) days, such person's costs, charges and expenses incurred in connection with successfully establishing his right to indemnification, in whole or in part, in any such action shall also be indemnified by the Corporation; it shall be a defense to any such action (other than an action brought to enforce a claim for the advance of costs, charges and expenses pursuant to Section 8.07, herein, where the required undertaking, if any, has been received by the Corporation) that the claimant has not met the standard of conduct set forth in Sections 8.01 through 8.04, herein, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, its independent legal counsel, and its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he has met the applicable standard of conduct set forth in Sections 8.01 through 8.04, herein, nor the fact that there has been an actual determination by the Corporation (including its Board of Directors, its independent legal counsel, and its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct. Section 8.09. Authorization of Corporation Officers. The proper officers of the Corporation are, and each of them acting without the other is, authorized to take any action, for and in the name of the Corporation, which he deems necessary or appropriate (as conclusively presumed from the taking of such action) to carry out and effect the foregoing Sections 8.01 through 8.08. Section 8.10. Other Rights; Continuation of Right to Indemnification. The indemnification and advancement of expenses provided by these By-laws shall not be deemed exclusive of any other rights to which a person seeking indemnification or advancement of expenses may be entitled under any law (present or future, common or statutory), by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding office or while employed by or acting as agent for the Corporation, and shall continue as to a person who has ceased to serve in the capacity making him eligible for indemnification, and shall inure to the benefit of the estate, heirs, executors and administrators of such person; all rights to indemnification under these By- laws shall be deemed to be a contract BY-LAWS OF ICF KAISER GOVERNMENT PROGRAMS, INC. Page 12 between the Corporation and each director and officer of the Corporation and, as applicable, any other person indemnified hereunder who serves or served in such capacity at any time while these By-laws as well as the relevant provisions of the Delaware General Corporation Law or any other applicable laws are or were in effect; any repeal or modification hereof or of such provisions of such law shall not in any way diminish any rights to indemnification of such director or officer or other person entitled to indemnification or the obligations of the Corporation arising hereunder. Section 8.11. Savings Clause. If Sections 8.01 through 8.10 of these By-laws or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each director and officer, and may indemnify any other person entitled to indemnification, as to costs, charges and expenses (including attorneys' fees), judgments, fines and amounts paid in settlement with respect to any action, suit or proceeding, whether civil, criminal, administrative or investigative, including an action by or in the right of the Corporation, to the full extent permitted by any applicable portion of these By-laws that shall not have been invalidated and to the full extent permitted by applicable law. To the full extent permitted by law, the Corporation may enter into and perform agreements with persons, including, without limitation, present and former officers, directors and employees of the Corporation and of companies acquired by or merged with the Corporation, obligating the Corporation, among other things, to provide indemnification and advancement of costs, charges and expenses to such persons in addition to any indemnification or advancement which may be available to such person under Sections 8.01 through 8.10 of these By-laws. Section 8.12. Insurance. The Board of Directors may cause the Corporation to purchase and maintain insurance on behalf of any person who is or was or has agreed to become a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director or officer of another corporation, or as its representative in a partnership, joint venture, trust or other enterprise (including employee benefit plans) against any liability asserted against such person and incurred in any such capacity or arising out of such status, whether or not the Corporation would have the power to indemnify such person. Section 8.13. Amendment of By-laws. The Board of Directors may from time to time adopt further By-laws with respect to indemnification and may amend these and such By-laws to provide at all times the fullest indemnification permitted by the General Corporation Law of the State of Delaware. ARTICLE IX Amendments Section 9.01. Amendment by Stockholders. These By-laws may be amended by a majority vote of all the stock issued and outstanding and entitled to vote at any annual or special meeting of the stockholders, provided notice of intention to amend shall have been contained in the notice of the meeting. Section 9.02. Amendment by Board of Directors. The Board of Directors by a majority vote of the whole Board at any meeting may amend these By-laws, including By-laws adopted by the stockholders, but the stockholders may from time to time specify particular provisions of the By-laws which shall not be amended by the Board of Directors. EX-3.G 6 EXHIBIT 3(G) Exhibit 3(g) STATE OF DELAWARE OFFICE OF THE SECRETARY OF STATE -------------------------------------------- I, MICHAEL HARKINS, SECRETARY OF STATE OF THE STATE OF DELAWARE DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF INCORPORATION OF ICF KAISER ENGINEERS OPERATING CO., INC. FILED IN THIS OFFICE ON THE FIRST DAY OF APRIL, A.D. 1991, AT 9 O'CLOCK A.M. * * * * * * * * * * * * * * * * * * /s/ Michael Harkins ------------------------------------------ Michael Harkins, Secretary of State AUTHENTICATION: *3006397 DATE: 04/03/1991 CERTIFICATE OF INCORPORATION OF ICF Kaiser Engineering Operating Co., Inc. Section 1.01. Name. - ------------ ---- The name of the Corporation is ICF Kaiser Engineers Operating Co., Inc. Section 2.01. Registered Office and Agent. - ------------ --------------------------- The registered office of the Corporation in the State of Delaware is located in the County of New Castle, at 1013 Centre Road, Wilmington 19085. Its registered agent at such address is Corporation Service Company. Section 3.01. Purposes. - ------------ -------- The purpose of the Corporation is to engage in (i) the construction, development, maintenance, operation and management of, and otherwise deal, with that certain pulverized coal injection plant to be located and constructed at that certain steel complex in Gary, Indiana, currently owned and operated by USX Corporation; (ii) any lawful act or activity related or incidental to the foregoing for which corporations may be organized under the General Corporation Law of Delaware; and (iii) no purposes other than those specified in (i) or (ii). Section 4.01. Authorized Shares. - ------------ ----------------- The total number of shares of capital stock which the Corporation shall have authority to issue is One Thousand (1,000) shares of Common Stock having a par value of One Cent ($0.01) per share. Section 5.01 Incorporator. - ------------ ------------ The name and mailing address of the incorporator is Colin W. Craik, Crowell & Moring, 1001 Pennsylvania Avenue, N.W., Washington, D.C. 20004-2595. The powers of the incorporator shall terminate upon the filing of the Certificate of Incorporation. Section 5.02. Duration. - ------------ -------- The Corporation is to have perpetual existence. Section 6.01 Initial Board of Directors. - ------------ -------------------------- -2- The name and mailing address of the person who is to serve as the sole director of the Corporation until the first annual meeting of stockholders or until his successors are elected and qualify is: Paul Weeks, II 9300 Lee Highway Fairfax, VA 22031 Section 7.01. Limitation of Liability. - ------------ ----------------------- (a) No person shall be liable to the Corporation for any loss or damage suffered by it on account of any action taken or omitted to be taken by him or her as a director or officer of the Corporation, if such person (i) in good faith exercised or used the same degree of diligence, care and skill as an ordinarily prudent person would have exercised or used under similar circumstances, or (ii) took, or omitted to take, such action in good faith reliance upon advice of counsel for the Corporation, or upon books of account or reports made to the Corporation by any of its officers or by an independent certified public accountant, or by an appraiser selected with reasonable care by the Board of Directors or by any committee designated by the Board of Directors, or in good faith reliance upon other records of the Corporation. (b) No director of the Corporation shall be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, provided that the foregoing shall not eliminate or limit the liability of a director (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit. Section 8.01. Ratification by Stockholders. - ------------ ---------------------------- Any contract, transaction or act of the Corporation, the Board of Directors, or a committee of the Board of Directors which shall be approved or ratified by a majority of a quorum of the stockholders entitled to vote at any meeting or, without a meeting, by the written consent of the holders of a majority of the stock entitled to vote shall be as valid and binding as though approved or ratified by every stockholder of the Corporation; but any failure of the stockholders to approve or ratify such contract, transaction or act, when and if submitted, shall not be deemed in any way to invalidate the same or to deprive the Corporation, its directors or officers, of their right to proceed with such contract, transaction or act. Section 9.01. Indemnification of Directors and Officers for Actions, - ------------ ------------------------------------------------------ Suits, or Proceedings Other Than By or In the Right of the ---------------------------------------------------------- Corporation. ----------- To the full extent permitted by law, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit -3- or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation), by reason of the fact that he or she is or was or has agreed to become a director or officer of the Corporation or is or was serving or has agreed to serve at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise (including employee benefit plans), or by reason of any action alleged to have been taken or omitted in such capacity, against costs, charges, expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her on his or her behalf in connection with any threatened, pending or completed action, suit or proceeding and any appeal therefrom, including but not limited to liability and expenses incurred on account of profits realized by him or her in the purchase or sale of securities of the Corporation, if and only if he or -------------- she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful; the termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or --------------- its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his or her conduct was unlawful. Section 9.02 Indemnification of Directors and Officers for Action or - ------------ ------------------------------------------------------- Suits By or In the Right of the Corporation. ------------------------------------------- To the full extent permitted by law, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he or she is or was or has agreed to become a director or officer of the Corporation or is or was serving or has agreed to serve at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise (including employee benefit plans), or by reason of any action alleged to have been taken or omitted in such capacity, against costs, charges and expenses (including attorneys' fees) actually and reasonably incurred by him or her on his or her behalf in connection with the defense or settlement of any threatened, pending or completed action or suit and any appeal therefrom, or the defense or settlement of any claim, issue or matter, if and only if he or she -------------- acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation except that no indemnification shall be made in respect of any claim issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of such liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such costs, charges and expenses which the Court of Chancery or such other court shall deem proper. -4- Section 9.03 Indemnification of Others for Actions, Suits or Proceedings - ------------ ----------------------------------------------------------- Other Than By or In the Right of the Corporation ------------------------------------------------ To the full extent permitted by law, the Corporation, in the sole discretion of the Board of Directors of the Corporation, may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation), by reason of the fact that he or she is or was or has agreed to become an employee, agent or contractor of the Corporation, or is or was serving or has agreed to serve at the request of the Corporation as a director, officer, employee, agent or contractor of another corporation, partnership, joint venture, trust or other enterprise (including employee benefit plans), or by reason of any action alleged to have been taken or omitted in such capacity, against costs, charges, expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her or on his or her behalf in connection with any threatened, pending or completed action, suit or proceeding and any appeal therefrom, including but not limited to liability and expenses incurred on account of profits realized by him or her in the purchase or sale of securities of the Corporation, if and only if he or she acted in good -------------- faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful; the termination of any action, suit or proceeding by judgment, order settlement, conviction, or upon a pleas of nolo contendere or its equivalent shall not, of ---- ---------- itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. Section 9.04 Indemnification of Others for Actions or Suits By or In - ------------ ------------------------------------------------------- the Right of the Corporation. ---------------------------- To the full extent permitted by law, the Corporation, in the sole discretion of the Board of Directors of the Corporation, may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he or she is or was or has agreed to become an employee, agent or contractor of the Corporation, or is or was serving or has agreed to serve at the request of the Corporation as a director, officer, employee, agent or contractor of another corporation, partnership, joint venture, trust or other enterprise (including employee benefit plans), or by reasons of any action alleged to have been taken or omitted in such capacity, against costs, charges and expenses (including attorneys' fees) actually and reasonably incurred by him or her or on his or her behalf in connection with the defense or settlement of any threatened, pending or completed action or suit and any appeal therefrom, or the defense or settlement of any claim, issue or matter, if and only if he or she acted in good -------------- faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless -5- and only to the extent that the Court of Chancery of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of such liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such costs, charges and expenses which the Court of Chancery or such other court shall deem proper. Section 9.05. Indemnification for Costs, Charges and Expenses of - ------------ -------------------------------------------------- Successful Party. ---------------- Notwithstanding the other provisions of this Certificate, to the extent that a director or officer of the Corporation or other person indemnified under Section 9.01 through 9.04, herein, has been successful on the merits or otherwise, including, without limitation, the dismissal of an action without prejudice, in defense of any action, suit or proceeding referred to above, or in defense of any claim, issue or matter therein, he or she shall be indemnified against all costs, charges and expenses (including attorneys' fees) actually and reasonably incurred by him or her or on his or her behalf in connection therewith. Section 9.06. Determination of Right to Indemnification. - ------------ ----------------------------------------- Unless otherwise ordered by a court, any indemnification under Section 9.01 through 9.04, herein, shall be paid by the Corporation unless a determination is made (i) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (ii) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (iii) by the stockholders, that indemnification of an individual entitled to indemnification under Section 9.01 through 9.04, herein, is not proper in the circumstances because he or she has not met the applicable standard of conduct set forth in Section 9.01 through 9.04, herein. Section 9.07. Advance Payment of Costs, Charges and Expenses. - ------------ ---------------------------------------------- To the full extent permitted by law, the Corporation shall, upon request, pay costs, charges and expenses (including attorneys' fees) incurred by a person entitled to indemnification pursuant to Sections 9.01 and 9.02, herein, and, if applicable, pursuant to Sections 9.03 and 9.04, herein, in defending a civil or criminal action, suit or proceeding in advance of the final disposition of such action, suit or proceeding; provided, however, that the payment of such costs, -------- ------- charges and expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer) in advance of the final disposition of such action, suit or proceeding shall be made only upon receipt of an undertaking by or on behalf of the director or officer to repay all amounts so advanced in the event that it shall ultimately be determined that such director or officer is not entitled to be indemnified by the Corporation as authorized in this certificate; such costs, charges and expenses is incurred by other employees, agents and contractors may be so paid upon such terms and conditions, if any, as the Board of Directors deems appropriate. -6- Section 9.08. Procedure of Indemnification. - ------------ ---------------------------- Any indemnification or advance of costs, charges and expenses provided for in Sections 9.01 through 9.07, herein, shall be made promptly, and in any event within sixty days, upon the written request of the person entitled to indemnification; the right to indemnification or advances as granted by this Certificate shall be enforceable by a director or officer or other person indemnified hereunder in any court of competent jurisdiction. If the Corporation denies such request, in whole or in part, or if no disposition thereof is made within sixty days, such person's costs, charges and expenses incurred in connection with successfully establishing his right to indemnification, in whole or in part, in any such action shall also be indemnified by the Corporation; it shall be a defense to any such action (other than an action brought to enforce a claim for the advance of costs, charges and expenses pursuant to Section 9.07, herein, where the required undertaking, if any, has been received by the Corporation) that the claimant has not met the standard of conduct set forth in Section 9.01 through 9.04, herein. Neither the failure of the Corporation (including its Board of Directors, its independent legal counsel, and its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in Sections 9.01 through 9.04, herein, nor the fact that there has been an actual determination by the Corporation (including its Board of Directors, its independent legal counsel, and its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct. Section 9.09. Authorization of Corporation Officers. - ------------ ------------------------------------- The proper officers of the Corporation are, and each of them acting without the other is, authorized to take any action, for and in the name of the Corporation, which the officer deems necessary or appropriate (as conclusively presumed from the taking of such action) to carry out and effect the foregoing Sections 9.01 through 9.08. Section 9.10. Other Rights; Continuation of Right to Indemnification. - ------------ ------------------------------------------------------ The indemnification and advancement of expenses provided by this Certificate shall not be deemed exclusive of any other rights which a person seeking indemnification nor advancement of expenses may be entitled under any law (present or future, common or statutory), by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding office or while employed by or acting as an agent for the Corporation, and shall continue as to a person who has ceased to serve in the capacity making him or her eligible for indemnification, and shall inure to the benefit of the estate, heirs, executors and administrators of such person; all rights to indemnification under this Certificate shall be deemed to be a contract between the Corporation and each director and officer of the Corporation and, as applicable, any other person indemnified hereunder who serves or served in such capacity at any time while this Certificate as well as the relevant provisions of the Delaware General Corporation Law or any other -7- applicable laws are or were in effect; any repeal or modification hereof or of such provisions of such law shall not in any way diminish any rights to indemnification of such director or officer or other person entitled to indemnification or the obligations of the Corporation arising hereunder. Section 9.11. Savings Clause. - ------------ -------------- If this Certificate or any portion hereof shall be invalidated on any ground by a court of competent jurisdiction, then the Corporation shall nevertheless indemnify each director and officer, and may indemnify any other person entitled to indemnification, as to costs, charges and expenses (including attorneys' fees), judgments, fines and amounts paid in settlement with respect to any action, suit or proceeding, whether civil, criminal, administrative or investigative, including an action by or in the right of the Corporation, to the full extent permitted by any applicable portion of this Certificate that shall not have been invalidated and to the full extent permitted by applicable law. To the full extent permitted by law, the Corporation may enter into and perform agreements with persons, including, without limitation, present and former officers, directors and employees of the Corporation and of companies acquired by or merged with the Corporation, obligating the Corporation, among other things, to provide indemnification and advancement of costs, charges and expenses to such persons in addition to any indemnification or advancement which may be available to such person under Sections 9.01 through 9.10 of the Certificate. Section 9.12. Insurance. - ------------ --------- The Board of Directors may cause the Corporation to purchase and maintain insurance on behalf of any person who is or was or has agreed to become a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director or was serving at the request of the Corporation as a director or officer of another corporation, or as its representative in a partnership, joint venture, trust or other enterprise (including employee benefit plans), against any liability asserted against such person and incurred in any such capacity or arising out of such status, whether or not the Corporation would have the power to indemnify such person. Section 9.13. Adoption of By-laws. - ------------ ------------------- The Board of Directors may from time to time adopt By-laws with respect to indemnification and may amend such By-laws to provide at all times the fullest indemnification permitted by the General Corporation Law of the State of Delaware. Section 10.01. Settlement of Debts. - ------------- ------------------- Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them and/or between this Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this Corporation or of any creditor or stockholder thereof or on the application -8- of any receiver or receivers appointed for this Corporation under the provisions of Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this Corporation under the provisions of Section 279 of Title 8 of the Delaware Code, order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this Corporation as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this Corporation, as the case may be, and also on this Corporation. Section 11.01. Elections of Directors. - ------------- ---------------------- Elections of directors need not be by written ballot unless the By-laws of the corporation shall so provide. Section 12.01. Stockholders Meetings, Records. - ------------- ------------------------------ Stockholders meetings may be held within or without the State of Delaware, as the By-laws may provide. The books of the Corporation may be kept (subject to any provision in the General Corporation Law of the State of Delaware) outside of the State of Delaware at such place or places as may be designated from time to time by the Board of Directors (or duly authorized committee of the Board of Directors) or in the By-laws of the Corporation. Section 13.01. By-laws. - ------------- ------- The Board of Directors (or a duly authorized committee of the Board of Directors) of the Corporation shall have the power to make and, except as may be expressly stated in the By-laws, to alter and repeal its By-laws. -9- Section 14.01 Amendment of Certificate of Incorporation. - ------------- ----------------------------------------- The Corporation reserves the right to amend, alter, change or repeal any provision contained in this certificate, in the manner now or hereafter prescribed by the General Corporation Law of Delaware, and all rights conferred upon stockholders herein are granted subject to this reservation. IN WITNESS WHEREOF the undersigned, being the incorporator hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, does make this certificate hereby declaring and certifying that this is my act and deed and the facts herein stated are true, and accordingly have hereto set my signature this 28th day of March 1991. /s/ Colin W. Craik ----------------------------------------- Colin W. Craik -10- District of Columbia: BE IT REMEMBERED that on March 28, 1991, personally came before me, a Notary Public for the District of Columbia, Colin W. Craik, the subscriber to the foregoing Certificate of Incorporation, known to me personally to be such, and acknowledged the said Certificate to be his act and deed and that the facts therein stated are truly set forth. Given under my hand and seal of office the day and year aforesaid. [Seal] /s/ Anne S. Parke -------------------------------- Notary Public My Commission Expires June 14, 1992 -11- STATE OF DELAWARE OFFICE OF THE SECRETARY OF STATE -------------------------------------------------- I, MICHAEL RATCHFORD, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT OF "ICF KAISER ENGINEERS OPERATING CO., INC." FILED IN THIS OFFICE ON THE FIFTH DAY OF MAY, A.D. 1992, AT 9 O'CLOCK A.M. * * * * * * * * * * * * * * * * * * /s/ Michael Ratchford ----------------------------------------------- Michael Ratchford, Secretary of State AUTHENTICATION: *3441317 DATE: 05/07/92 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF ICF KAISER ENGINEERS OPERATING CO., Inc. ICF Kaiser Engineers Operating Co., Inc., a corporation organized and existing under the General Corporation Law of Delaware (the "Corporation"), hereby does certify: FIRST: That the Board of Directors of the Corporation, by the written consent of all of its members, filed with minutes of the Board, adopted a resolution proposing and declaring advisable the following amendment of the Certificate of Incorporation of the Corporation: RESOLVED, that the Certificate of Incorporation of the Corporation be amended by deleting Section 1.01 in its entirety and inserting in its place the following new language: Section 1.01. Name. The name of the Corporation is PCI Operating ------------ ---- Company. SECOND: That in lieu of a meeting and vote of the stockholders, the sole stockholder of the Corporation has given written consent to said amendment in accordance with the provisions of Section 228 of the General Corporation Law of the State of Delaware. THIRD: That the aforesaid amendment was duly adopted in accordance with the applicable provisions of Section 242 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, ICF Kaiser Engineers Operating Co., Inc. has caused this Certificate to be signed by Kenneth A. Schweers, its President, and attested by Paul Weeks, II, its Secretary, this 5th day of May, 1992. ICF Kaiser Engineers Operating, Co., Inc. (now: PCI Operating Company) SEAL By: /s/ Kenneth A. Schweers ------------------------------------ Kenneth A. Schweers, President Attest: By: /s/ Paul Weeks, II ----------------------------------------- Paul Weeks, II, Secretary -13- STATE OF DELAWARE OFFICE OF THE SECRETARY OF STATE ------------------------------------------------ I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT OF "PCI OPERATING COMPANY" FILED IN THIS OFFICE ON THE TWENTY-SIXTH DAY OF MARCH, A.D. 1993, AT 9 O'CLOCK A.M. A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO NEW CASTLE COUNTY RECORDER OF DEEDS FOR RECORDING. * * * * * * * * * * * * * * * * * * /s/ William T. Quillen ----------------------------------------------- William T. Quillen, Secretary of State AUTHENTICATION: *3840267 DATE: 03/30/1993 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF PCI OPERATING COMPANY PCI Operating Company, a corporation organized and existing under the General Corporation Law of Delaware (the "Corporation"), hereby does certify: FIRST: That the Board of Directors of the Corporation, by the written consent of all of its members, filed with minutes of the Board, adopted a resolution proposing and declaring advisable the following amendment of the Certificate of Incorporation of the Corporation: RESOLVED, that the Certificate of Incorporation of the Corporation be amended by deleting Section 1.01 in its entirety and inserting in its place the following new language: Section 1.01 Name. The name of the Corporation is PCI Operating Company, ------------ ---- Inc. SECOND: That in lieu of a meeting and vote of the stockholders, the sole stockholder of the Corporation has given written consent to said amendment in accordance with the provisions of Section 228 of the General Corporation Law of the State of Delaware. THIRD: That the aforesaid amendment was duly adopted in accordance with the applicable provisions of Section 242 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, PCI Operating Company has caused this Certificate to be signed by Kenneth A. Schweers, its President, and attested by Paul Weeks, II, its Secretary, this 24th day of March, 1993. PCI Operating Company (now: PCI Operating Company, Inc.) SEAL By: /s/ Kenneth A. Schweers ------------------------------------ Kenneth A. Schweers, President Attest: By: /s/ Paul Weeks, II -------------------------------------------- Paul Weeks, II, Secretary -15- EX-3.H 7 EXHIBIT 3(H) Exhibit 3(h) BY-LAWS OF PCI Operating Company, Inc. ARTICLE I --------- Offices Section 1.01. Registered Office in Delaware. The registered office shall be in - ------------ ----------------------------- Wilmington, Delaware. The name of the registered agent of the Corporation at such location is Corporation Service Company. Section 1.02. Principal Office. The Board of Directors is granted full power - ------------ ---------------- and authority to fix and thereafter change the location of the principal office of the Corporation at any location within the United States. Section 1.03. Other Offices. The Corporation may have such other offices - ------------ ------------- either within or without the State of Delaware as the Board of Directors may from time to time determine. ARTICLE II ---------- Meetings of Stockholders Section 2.01. Time and Place of Meeting. Annual meetings of the stockholders - ------------ ------------------------- for the purpose of electing directors, making reports of the affairs of the Corporation and transacting such other business as may properly come before the meeting shall be held at such place, within or without the State of Delaware, on such date and at such time as the Board of Directors shall have each year fix, which date shall be within thirteen months subsequent to the later of the date of incorporation or the last annual meeting of stockholders. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be fixed by the Board of Directors and stated in the notice of meeting. If no other place is fixed by the Board of Directors, meetings of stockholders shall be held at the principal executive office of the Corporation. Failure to hold the annual meeting of the designated time shall not work a forfeiture or dissolution of the Corporation. Section 2.02. Notice of Meeting. Written notice of meetings of stockholders, - ------------ ----------------- stating the place, date and hour thereof, and in the case of a special meeting, the purpose or purposes for which the meeting is being called, shall be given not less than ten nor more than sixty days before the date of the meeting to each stockholder entitled to vote thereat. Section 2.03. Qualified Voters. The officer who has charge of the stock ledger - ------------ ---------------- of the Corporation shall prepare, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder for any purpose germane to the meeting during ordinary business hours for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place proxy, shall have power to adjourn the meeting from time to time without notice other than announcement at the meeting (if the adjournment is not for more than thirty days and a new record date for the determination of stockholders entitled to vote is not fixed), until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. Section 2.07. Vote Required. When a quorum is present at any meeting, the vote - ------------ ------------- of the holders of a majority of the shares of stock having voting power voting, in person or by proxy, on a question shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes, the Certificate of Incorporation or these By-laws a different vote is required, in which case such express provision shall govern and control the decision of such question. Section 2.08. Proxies. Each stockholder shall at every meeting of the - ------------ ------- stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date unless the proxy provides for a longer period. No proxy or power of attorney to vote shall be used to vote at a meeting of the stockholders unless it shall have been filed with the Secretary of the meeting when required by the inspectors of election. All questions regarding the qualification of voters, the validity of proxies and the acceptance or rejection of votes shall be decided by two inspectors of election who shall be appointed by the Board of Directors, or if not so appointed, then by the presiding officer of the meeting. Section 2.09. Presiding Officer. The President of the Corporation shall - ------------ ----------------- preside over all meetings of stockholders. Section 2.10. Consent. Whenever the vote of stockholders at a meeting thereof - ------------ ------- is required or permitted to be taken in connection with any corporate action by any provisions of the statutes, the By-laws or the Certificate of Incorporation, the meeting and vote may be dispensed with if the number of stockholders who would have been entitled to vote upon the action if such meeting were held, having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting, shall consent in writing to such corporate action being taken. Prompt notice shall be given by the Secretary to all stockholders of the taking of corporate action without meeting by less than unanimous written consent. - 2 - ARTICLE III ----------- Directors Section 3.01. Number and Election. The number of directors which shall - ------------ ------------------- constitute the whole Board shall be no less than one and no more than ten. By amendment of this By-law, the number may be increased or decreased from time to time by the Board of Directors or stockholders within the limits permitted by law, but no decrease in the number of directors shall change the term of any director in office at the time thereof. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 3.02, and each director shall hold office until his successor is elected and accepts office unless he earlier resigns or is removed. Directors need not be stockholders. A director may resign at any time upon written notice to the Corporation or orally at any meeting of the directors or stockholders. Section 3.02. Removal and Vacancies. A director may be removed with or without - ------------ --------------------- cause by a majority vote of the holders of the outstanding shares entitled to vote. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and accept office, unless sooner displaced. Section 3.03. Management. The business of the Corporation shall be managed by - ------------ ---------- its Board of Directors, which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these By-laws directed or required to be exercised or done by the stockholders. Section 3.04. Place of Meetings. The Board of Directors of the Corporation - ------------ ------------------ may hold meetings, both regular and special, either within or without the State of Delaware. Meetings may be held by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at such meeting. Section 3.05. Annual Meeting. The first meeting of each newly elected Board of - ------------ -------------- Directors shall be held immediately following the adjournment of the annual meeting of stockholders and at the place thereof. No notice of such meeting shall be necessary to the directors in order legally to constitute the meeting, provided a quorum is present. In the event such meeting is not so held, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors. Section 3.06. Notice for Regular Meetings. Regular meetings of the Board of - ------------ --------------------------- Directors may be held without notice at such time and at such place as shall from time to time be determined by the Board of Directors. - 3 - Section 3.07. Special Meetings. Special meetings of the Board of Directors may - ------------ ---------------- be called by a majority of the Board of Directors or the President and shall be held on notice by letter mailed or delivered for transmission not later than on the third day immediately preceding the day of such meeting, or by written notice delivered or received not later than the day immediately preceding the day of such meeting. Neither the business to be transacted at, nor the purpose of, any special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting. Section 3.08. Quorum. At meetings of the Board of Directors, a majority of the - ------------ ------ full number of directors shall constitute a quorum for the transaction of business, and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 3.09. Chairman of the Board. At its first meeting after each annual - ------------ --------------------- meeting of stockholders, the Board of Directors shall elect from among its members of a Chairman. The Board of Directors may also choose a Vice Chairman from among its members. The Chairman shall preside at all meetings of the Board of Directors, and shall perform such other duties as the Board may prescribe. The Chairman may participate and act in any meeting of the Board of Directors as a director. The Vice Chairman, if any, shall act under the direction of the Chairman and in the absence or disability of the Chairman shall perform the duties and exercise the powers of the Chairman. The Chairman and the Vice Chairman, if any, (i) shall hold their respective offices at the pleasure of the Board of Directors, and (ii) may be removed with or without cause at any time by the Board of Directors. Any vacancy occurring in the office of the Chairman or Vice Chairman by death, resignation, removal or otherwise shall be filled by the Board of Directors. Section 3.10. Committees. The Board of Directors may, by resolution adopted by - ------------ ---------- a majority of the whole Board, designate one or more committees of the Board of Directors, each committee to consist of one or more of the directors of the Corporation, which, to the extent provided in the resolution, may have and exercise any or all the powers of the Board of Directors in the management of the business and affairs of the Corporation including, but not limited to, the power and authority of the Board of Directors: (i) to authorize the seal of the Corporation to be affixed to all papers; (ii) to declare a dividend; (iii) to authorize the issuance of stock; (iv) to adopt a certificate of ownership and merger pursuant to Section 253, of Title 8, Delaware Code; and (v) to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the Board of Directors as provided in Section 151(a) of Title 8, Delaware Code, fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the Corporation or the conversion into, or the exchange of such shares for shares of any other class or classes or any other series of the same of any other class or classes of stock of the Corporation. Such committee or committees shall have such name or names as may be determined from time to time by the Board of Directors. The member or members of any such committee present at any - 4 - meeting and not disqualified from voting may, whether or not they constitute a quorum, unanimously appoint another member of the Board of Directors to act at the meeting in the place of any absent or disqualified member. At meetings of such committees, a majority of the members or alternate members at any meeting at which there is a quorum shall be the act of the committee. Section 3.11. Committee Minutes. The committees shall keep regular minutes of - ------------ ----------------- their proceedings and report the same to the Board of Directors. Section 3.12. Consent. Any action required or permitted to be taken at any - ------------ ------- meeting of the Board of Directors or of any committee thereof may be taken without a meeting if a written consent thereto is signed by all members of the Board of Directors or of such committee, as the case may be, and such written consent is filed with the minutes of proceedings of the Board or committee. Section 3.13. Compensation. The directors may be paid their expenses of - ------------ ------------ attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as director. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of committees of the Board of Directors may be allowed like reimbursement and compensation for attending committee meetings. ARTICLE IV ---------- Notices Section 4.01. Notice. Notices to directors and stockholders mailed to them at - ------------ ------ their addresses appearing on the books of the Corporation shall be deemed to be given at the time when deposited in the United States mail, postage prepaid. An affidavit of the Secretary or an Assistant Secretary or of the transfer agent of the Corporation that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. ----- ----- Section 4.02. Waiver. Whenever any notice is required to be given under the - ------------ ------ provisions of the statute, the Certificate of Incorporation or of these By-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. Neither the business to be transacted at, nor the purposes of, any meeting need be specified in such waiver. Attendance at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. - 5 - ARTICLE V --------- Officers Section 5.01. Election. The officers of the Corporation shall be chosen by the - ------------ -------- Board of Directors at its first meeting after each annual meeting of stockholders and shall be a President, a Secretary and a Treasurer. The Board of Directors may also choose one or more Vice Presidents and one or more Assistant Secretaries and Assistant Treasurers. Two or more offices may be held by the same person. Section 5.02. Other Officers. The Board of Directors may appoint such other - ------------ -------------- officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors. Section 5.03. Salaries. The salaries of all officers of the Corporation shall - ------------- -------- be fixed by or under the direction of the Board of Directors. Section 5.04. Vacancies. The officers of the Corporation shall hold office at - ------------ --------- the pleasure of the Board of Directors. Any officer may be removed with or without cause at any time by the Board of Directors. Each officer shall hold his office until his successor is elected and qualified or until his earlier resignation or removal. The Board of Directors may fill any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise. Section 5.05. President. The President shall serve as Chief Executive Officer - ------------ --------- of the Corporation, shall have general and active management of the business of the Corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. He shall execute on behalf of the Corporation, and may affix or cause the seal to be affixed to, all instruments requiring such execution except to the extent the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the Corporation. He shall perform such additional duties and have such additional powers as the Board of Directors may from time to time prescribe. Section 5.06. Vice Presidents. The Vice Presidents shall act under the - ------------ --------------- direction of the President and in the absence or disability of the President shall perform the duties and exercise the powers of the President. They shall perform such other duties and have such other powers as the President or the Board of Directors may from time to time prescribe. The Board of Directors may designate one or more Executive Vice Presidents or may otherwise specify the order of seniority of the Vice Presidents. The duties and powers of the President shall descend to the Vice Presidents in such specified order of seniority. Section 5.07. Secretary. The Secretary shall act under the direction of the - ------------ --------- President. Subject to the direction of the President, he shall attend all meetings of the Board of Directors and all meetings of the stockholders and record the proceedings in a book to be kept for that purpose. - 6 - He shall perform like duties for committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the President or the Board of Directors. He shall keep in safe custody the seal of the Corporation and, when authorized by the President or the Board of Directors, cause it to be affixed to any instrument requiring it. Section 5.08. Assistant Secretaries. The Assistant Secretaries shall act under - ------------ --------------------- the direction of the President. In the order of their seniority, unless otherwise determined by the President or the Board of Directors, they shall, in the absence or disability of the Secretary, perform the duties and exercise the powers of the Secretary. They shall perform such other duties and have such other powers as the President or the Board of Directors may from time to time prescribe. Section 5.09. Treasurer. The Treasurer shall act under the direction of the - ------------ --------- President. Subject to the direction of the President he shall have custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. He shall disburse the funds of the Corporation as may be ordered by the President or the Board of Directors, taking proper vouchers for such disbursements, and shall render to the President and the Board of Directors at its regular meetings, or when the Board of Directors so requires, an account of all his transactions as Treasurer and of the financial condition of the Corporation. He may affix or cause to be affixed the seal of the Corporation to documents so requiring. Section 5.10. Assistant Treasurers. The Assistant Treasurers in the order of - ------------ -------------------- their seniority, unless otherwise determined by the President or the Board of Directors, shall, in the absence or disability of the Treasurer, perform the duties and exercise the powers of the Treasurer. They shall perform such other duties and have such other powers as the President or the Board of Directors may from time to time prescribe. ARTICLE VI ---------- Certificates of Stock Section 6.01. Certificate. Every holder of stock in the Corporation shall be - ------------ ----------- entitled to have a certificate signed by the Chairman or Vice-Chairman of the Board of Directors, or the President or a Vice-Chairman of the Board of Directors, or the President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation, certifying the number of shares owned by him in the Corporation. Every such certificate shall contain a statement of the restrictions provided in Section 4 of this Article. Section 6.02. Facsimile Signature. Any or all the signatures on the - ------------ ------------------- certificate may be facsimiles. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall cease to be such officer, transfer agent or register before such certificate is issued, such certificate may be issued with the same effect as - 7 - though the person had not ceased to be such officer, transfer agent or registrar. The seal of the Corporation or a facsimile thereof may, but need not, be affixed to certificates of stock. Section 6.03. Lost Certificates. The Board of Directors may direct a new - ------------ ----------------- certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed. Section 6.04. Transfer. Upon surrender to the Corporation or the transfer - ------------ -------- agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, the Corporation shall issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books, provided, however, the Corporation shall have no obligation to issue new certificates, cancel old certificates or record transactions unless and until it is satisfied that (i) all provisions of the Certificate of Incorporation, these By-laws and any legends on the certificate regarding transfer of shares and restrictions on such transfers have been complied with, and (ii) all other applicable restrictions, including restrictions imposed by law, including federal and state securities law, and by any stockholders agreement to which the Corporation is a party, have been complied with. Section 6.05. Record Date. The Board of Directors may fix in advance a date, - ------------ ----------- not more than sixty days nor less than ten days preceding the date of any meeting of stockholders, or not more than sixty days before the date for the payment of any dividend, or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, or a date in connection with obtaining a consent, as a record date for the determination of the stockholders entitled to notice of, and to vote at, any such meeting and any adjournment thereof, or entitled to receive payment of any such dividend, or to any such allotment of rights, or to exercise the rights in respect of any such change, conversion or exchange of capital stock, or to give such consent, and in such case such stockholders and only such stockholders as shall be stockholders of record on the date so fixed shall be entitled to such notice of, and to vote at, such meeting and any adjournment thereof, or to receive payment of such dividend, or to receive such allotment of rights, or to exercise such rights, or to give such consent, as the case may be notwithstanding any transfer of any stock on the books of the Corporation after any such record date fixed as aforesaid. Section 6.06. Recognition of Ownership. The Corporation shall be entitled to - ------------ ------------------------ recognize the person registered on its books as the owner of shares to be the exclusive owner for all purposes including voting and dividends, and the Corporation shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, - 8 - whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VII ----------- Miscellaneous Section 7.01. Reserves. There may be set aside out of any funds of the - ------------ -------- Corporation available for dividends such sums or sums as the Board of Directors may from time to time, in its absolute discretion, think proper, as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for the purchase of additional property, or for such other purpose as the directors shall think conducive to the interest of the Corporation, and the Board of Directors may modify or abolish any such reserve. Section 7.02. Checks, Demands and Notes. All checks or demands for money and - ------------ ------------------------- notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. Section 7.03. Fiscal Year. The fiscal year of the Corporation shall be March 1 - ------------ ----------- through the end of February. Section 7.04. Seal. The corporate seal shall have inscribed thereon the name - ------------ ---- of the Corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any manner reproduced. ARTICLE VIII ------------ Indemnification Section 8.01. Indemnification of Directors and Officers for Actions, Suits, or - ------------ ---------------------------------------------------------------- Proceedings Other Than By Or In The Right of the Corporation. To the full - ------------------------------------------------------------ extent permitted by law, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was or has agreed to become a director or officer of the Corporation or is or was serving or has agreed to serve at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise (including employee benefit plans) or by reason of any action alleged to have been taken or omitted in such capacity against costs, charges, expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with any threatened, pending or completed action, suit or proceeding and any appeal therefrom including but not limited to liability and expenses incurred on account of profits realized by him in the purchase or sale of securities of the Corporation, if and only if he acted -------------- - 9 - in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful; the termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent shall not, of ---- ---------- itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. Section 8.01. Indemnification of Directors and Officers for Actions or Suits By - ------------ ----------------------------------------------------------------- Or In The Right of the Corporation. To the full extent permitted by law, the - ---------------------------------- Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was or has agreed to become a director or officer of the Corporation, or is or was serving or has agreed to serve at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise (including employee benefit plans), or by reason of any action alleged to have been taken or omitted in such capacity, against costs, charges and expenses (including attorneys' fees) actually and reasonably incurred by him or on his behalf in connection with the defense or settlement of any threatened, pending or completed action or suit and any appeal therefrom, or the defense or settlement of any claim, issue or matter, if and ------ only if he acted in good faith and in a manner he reasonably believed to be in - ------- or not opposed to the best interests of the Corporation except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of such liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such costs, charges and expenses which the Court of Chancery or such other court shall deem proper. Section 8.03. Indemnification of Others for Actions, Suits, or Proceedings - ------------ ------------------------------------------------------------ Other Than By Or In The Right of the Corporation. To the full extent permitted - ------------------------------------------------ by law, the Corporation, in the sole discretion of the Board of Directors of the Corporation, may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation), by reason of the fact that he is or was or has agreed to become an employee, agent or contractor of the Corporation, or is or was serving or has agreed to serve at the request of the Corporation as a director, officer, employee, agent or contractor of another corporation, partnership, joint venture, trust or other enterprise (including employee benefit plans), or by reason of any action alleged to have been taken or omitted in such capacity, against costs, charges, expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with any threatened, pending or completed action, suit or proceeding and any appeal therefrom, including but not limited to liability and expenses incurred on account of profits realized by him in the purchase or sale of securities of the Corporation, if and only if he acted in good faith and in a -------------- - 10 - manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful; the termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a ---- ---------- presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. Section 8.04. Indemnification of Others for Actions or Suits By Or In The Right - ------------ ----------------------------------------------------------------- of the Corporation. To the full extent permitted by law, the Corporation, in - ------------------ the sole discretion of the Board of Directors of the Corporation, may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was or has agreed to become an employee, agent or contractor of the Corporation, or is or was serving or has agreed to serve at the request of the Corporation as a director, officer, employee, agent or contractor of another corporation, partnership, joint venture, trust or other enterprise (including employee benefit plans), or by reason of any action alleged to have been taken or omitted in such capacity, against costs, charges and expenses (including attorneys' fees) actually and reasonably incurred by him or on his behalf in connection with the defense or settlement of any threatened, pending or completed action or suit and any appeal therefrom, or the defense or settlement of any claim, issue or matter, if and only if he acted in good faith and in a -------------- manner he reasonably believed to be in or not opposed to the best interests of the Corporation except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of such liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such costs, charges and expenses which the Court of Chancery or such other court shall deem proper. Section 8.05. Indemnification for Costs, Charges and Expenses of Successful - ------------ -------------------------------------------------------------- Party. Notwithstanding the other provisions of these By-laws, to the extent - ----- that a director or officer of the Corporation or other person indemnified under Sections 8.01 through 8.04, herein, has been successful on the merits or otherwise, including, without limitation, the dismissal of an action without prejudice, in defense of any action, suit or proceeding referred to above, or in defense of any claim, issue or matter therein, he shall be indemnified against all costs, charges and expenses (including attorneys' fees) actually and reasonably incurred by him on or on his behalf in connection therewith. Section 8.06. Determination of Right to Indemnification. Unless otherwise - ------------ ----------------------------------------- ordered by a court, any indemnification under Sections 8.01 through 8.04, herein, shall be paid by the Corporation unless a determination is made (i) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (ii) of such - 11 - a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (iii) by the stockholders, that indemnification of an individual entitled to indemnification under Sections 8.01 through 8.04, herein, is not proper in the circumstances because he has not met the applicable standard of conduct set forth in Sections 8.01 through 8.04, herein. Section 8.07. Advance Payment of Costs, Charges and Expenses. To the full - ------------ ---------------------------------------------- extent permitted by law, the Corporation shall, upon request, pay costs, charges and expenses (including attorneys' fees) incurred by a person entitled to indemnification pursuant to Sections 8.01 and 8.02, herein, and, if applicable, pursuant to Sections 8.03 and 8.04, herein, and in defending a civil or criminal action, suit or proceeding in advance of the final disposition of such action, suit or proceeding; provided, however, that the payment of such costs, charges -------- ------- and expenses incurred by a director or officer in his capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer) in advance of the final disposition of such action, suit or proceeding shall be made only upon receipt of an undertaking by or on behalf of the director or officer to repay all amounts so advanced in the event that it shall ultimately be determined that such director or officer is not entitled to be indemnified by the Corporation as authorized in these By-laws; such costs, charges and expenses incurred by other employees, agents and contractors may be so paid upon such terms and conditions, if any, as the Board of Directors deems appropriate. Section 8.08. Procedure for Indemnification. Any indemnification or advance of - ------------ ----------------------------- costs, charges and expenses provided for in Sections 8.01 through 8.07, herein, shall be made promptly, and in any event within sixty (60) days, upon the written request of the person entitled to indemnification; the right to indemnification or advances as granted by these By-laws shall be enforceable by a director or officer or other person indemnified hereunder in any court of competent jurisdiction. If the Corporation denies such request, in whole or in part, or if no disposition thereof is made within sixty (60) days, such person's costs, charges and expenses incurred in connection with successfully establishing his right to indemnification, in whole or in part, in any such action shall also be indemnified by the Corporation; it shall be a defense to any such action (other than action brought to enforce a claim for the advance of costs, charges and expenses pursuant to Section 8.07, herein, where the required undertaking, if any, has been received by the Corporation) that the claimant has not met the standard of conduct set forth in Sections 8.01 through 8.04, herein, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors; its independent legal counsel, and its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he has met the applicable standard of conduct set forth in Sections 8.01 through 8.04, herein, nor the fact that there has been an actual determination by the Corporation (including its Board of Directors, its independent legal counsel, and its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct. - 12 - Section 8.09. Authorization of Corporation Officers. The proper officers of - ------------ ------------------------------------- the Corporation are, and each of them acting without the other is, authorized to take any action, for and in the name of the Corporation, which he deems necessary or appropriate (as conclusively presumed from the taking of such action) to carry out and effect the foregoing Sections 8.01 through 8.08. Section 8.10. Other Rights; Continuation of Right to Indemnification. The - ------------ ------------------------------------------------------ indemnification and advancement of expenses provided by these By-laws shall not be deemed exclusive of any other rights to which a person seeking indemnification or advancement of expenses may be entitled under any law (present or future, common or statutory), by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding office or while employed by or acting as agent for the Corporation, and shall continue as to a person who has ceased to serve in the capacity making him eligible for indemnification, and shall inure to the benefit of the estate, heirs, executors and administrators of such person; all rights to indemnification under these By- laws shall be deemed to be a contract between the Corporation and each director and officer of the Corporation and, as applicable, any other person indemnified hereunder who serves or served in such capacity at any time while these By-laws as well as the relevant provisions of the Delaware General Corporation Law or any other applicable laws are or were in effect; any repeal or modification hereof or of such provisions of such law shall not in any way diminish any rights to indemnification of such director or officer or other person entitled to indemnification or the obligations of the Corporation arising hereunder. Section 8.11. Savings Clause. If Sections 8.01 through 8.10 of these By-laws - ------------ -------------- or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each director and officer, and may indemnify any other person entitled to indemnification, as to costs, charges and expenses (including attorneys' fees), judgments, fines and amounts paid in settlement with respect to any action, suit or proceeding, whether civil, criminal, administrative or investigative, including an action by or in the right of the Corporation, to the full extent permitted by any applicable portion of these By-laws that shall not have been invalidated and to the full extent permitted by applicable law. To the full extent permitted by law, the Corporation may enter into and perform agreements with persons, including, without limitation, present and former officers, directors and employees of the Corporation and of companies acquired by or merged with the Corporation, obligating the Corporation, among other things, to provide indemnification and advancement of costs, charges and expenses to such persons in addition to any indemnification or advancement which may be available to such person under Sections 8.01 through 8.10 of these By-laws. Section 8.12. Insurance. The Board of Directors may cause the Corporation to - ------------ --------- purchase and maintain insurance on behalf of any person who is or was or has agreed to become a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director or officer of another corporation, or as its representative in a partnership, joint venture, trust or other enterprise (including employee benefit plans) against any liability asserted against such person and incurred in any such capacity or arising out of such status, whether or not the Corporation would have the power to indemnify such person. - 13 - Section 8.13. Amendment of By-laws. The Board of Directors may from time to - ------------ -------------------- time adopt further By-laws with respect to indemnification and may amend these and such By-laws to provide at all times the fullest indemnification permitted by the General Corporation Law of the State of Delaware. ARTICLE IX ---------- Amendments Section 9.01. Amendment by Stockholders. These By-laws may be amended by a - ------------ ------------------------- majority vote of all the stock issued and outstanding and entitled to vote at any annual or special meeting of the stockholders, provided notice of intention to amend shall have been contained in the notice of the meeting. Section 9.02. Amendment by Board of Directors. The Board of Directors by a - ------------ ------------------------------- majority vote of the whole Board at any meeting may amend these By-laws, including By-laws adopted by the stockholders, but the stockholders may from time to time specify particular provisions of the By-laws which shall not be amended by the Board of Directors - 14 - EX-3.I 8 EXHIBIT 3(I) Exhibit 3(i) CERTIFICATE OF INCORPORATION OF SYSTEMS APPLICATIONS INTERNATIONAL, INC. Section 1.01. Name. - ------------ ---- The name of the Corporation is Systems Applications International, Inc. Section 2.01. Registered Office and Agent. - ------------ --------------------------- The registered office of the Corporation in the State of Delaware is located in the County of New Castle, at 1013 Centre Road, Wilmington 19805. Its registered agent at such address is Corporation Service Company. Section 3.01. Purposes. - ------------ -------- The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. Section 4.01. Authorized Shares. - ------------ ----------------- The total number of shares of capital stock which the Corporation shall have authority to issue is one hundred (100) shares of Common Stock having a par value of one dollar ($1.00) per share. Section 5.01. Incorporator. - ------------ ------------ The name and mailing address of the incorporator is Richard E. Bonitz, 1800 Harrison Street, Oakland, California, 94612. Section 5.02. Duration. The Corporation is to have perpetual existence. - ------------ -------- Section 6.01. Limitation of Liability. - ------------ ----------------------- (a) No person shall be liable to the Corporation for any loss or damage suffered by it on account of any action taken or omitted to be taken by him or her as a director or officer of the Corporation, if such person (i) in good faith exercised or used the same degree of diligence, care and skill as an ordinarily prudent person would have exercised or used under similar circumstances, or (ii) took, or omitted to take, such action in good faith reliance upon advice of counsel for the Corporation, or upon books of account or reports made to the Corporation by any of its officers or by an independent certified public accountant, or by an appraiser selected with reasonable care by the Board of Directors or by any committee designated by the Board of Directors, or in good faith reliance upon other records of the Corporation. (b) No director of the Corporation shall be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, provided that the foregoing shall not eliminate or limit the liability of a director (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit. Section 7.01. Ratification by Stockholders. - ------------ ---------------------------- Any contract, transaction or act of the Corporation, the Board of Directors, or a committee of the Board of Directors which shall be approved or ratified by a majority of a quorum of the stockholders entitled to vote at any meeting or, without a meeting, by the written consent of the holders of a majority of the stock entitled to vote shall be as valid and binding as though approved or ratified by every stockholder of the Corporation; but any failure of the stockholders to approve or ratify such contract, transaction or act, when and if submitted, shall not be deemed in any way to invalidate the same or to deprive the Corporation, its directors or officers, of their right to proceed with such contract, transaction or act. Certificate of Incorporation of Systems Applications International, Inc. Page 2 Section 8.01. Indemnification of Directors and Officers for Actions, Suits, or - ------------ ---------------------------------------------------------------- Proceedings Other Than By or In the Right of the Corporation. ------------------------------------------------------------- To the full extent permitted by law, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation), by reason of the fact that he or she is or was or has agreed to become a director or officer of the Corporation or is or was serving or has agreed to serve at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise (including employee benefit plans), or by reason of any action alleged to have been taken or omitted in such capacity, against costs, charges, expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her on his or her behalf in connection with any threatened, pending or completed action, suit or proceeding and any appeal therefrom, including but not limited to liability and expenses incurred on account of profits realized by him or her in the purchase or sale of securities of the Corporation, if and only if he or she acted in good faith and -------------- in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful; the termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent ---- ---------- shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his or her conduct was unlawful. Section 8.02. Indemnification of Directors and Officers for Actions or Suits By - ------------ --------------------------------------------- ------------------- or In the Right of the Corporation. ---------------------------------- To the full extent permitted by law, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he or she is or was or has agreed to become a director or officer of the Corporation or is or was serving or has agreed to serve at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise (including employee benefit plans), or by reason of any action alleged to have been taken or omitted in such capacity, against costs, charges and expenses (including attorneys' fees) actually and reasonably incurred by him or her on his or her behalf in connection with the defense or settlement of any threatened, pending or completed action or suit and any appeal therefrom, or the defense or settlement of any claim, issue or matter, if and only if he or she -------------- acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of such liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such costs, charges and expenses which the Court of Chancery or such other court shall deem proper. Section 8.03. Indemnification of Others for Actions, Suits, or Proceedings - ------------ ------------------------------------------------ ----------- Other Than By or In the Right of the Corporation. ------------------------------------------------ To the full extent permitted by law, the Corporation, in the sole discretion of the Board of Directors of the Corporation, may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation), by reason of the fact that he or she is or was or has agreed to become an employee, agent or contractor of the Corporation, or is or was serving or has agreed to serve at the request of the Corporation as a director, officer, employee, agent or contractor of another corporation, partnership, joint venture, trust or other enterprise (including employee benefit plans), or by reason of any action alleged to have been taken or omitted in such capacity, against costs, charges, expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her or on his or her behalf in connection with any threatened, pending or completed action, suit or proceeding and any appeal therefrom, including but not limited to liability and expenses incurred on account of profits realized by him or her in the purchase or sale of securities of the Corporation, if and only ----------- Certificate of Incorporation of Systems Applications International, Inc. Page 3 if he or she acted in good faith and in a manner he or she reasonably believed - -- to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful; the termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or ---- ---------- its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. Section 8.04. Indemnification of Others for Actions or Suits By or In the Right - ------------ ----------------------------------------------------------------- of the Corporation. ------------------ To the full extent permitted by law, the Corporation, in the sole discretion of the Board of Directors of the Corporation, may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he or she is or was or has agreed to become an employee, agent or contractor of the Corporation, or is or was serving or has agreed to serve at the request of the Corporation as a director, officer, employee, agent or contractor of another corporation, partnership, joint venture, trust or other enterprise (including employee benefit plans), or by reason of any action alleged to have been taken or omitted in such capacity, against costs, charges and expenses (including attorneys' fees) actually and reasonably incurred by him or her or on his or her behalf in connection with the defense or settlement of any threatened, pending or completed action or suit and any appeal therefrom, or the defense or settlement of any claim, issue or matter, if and only if he or she acted in good faith and ----------- in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of such liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such costs, charges and expenses which the Court of Chancery or such other court shall deem proper. Section 8.05. Indemnification for Costs, Charges and Expenses of Successful - ------------ -------------------------------------------------- ---------- Party. ----- Notwithstanding the other provisions of this Certificate, to the extent that a director or officer of the Corporation or other person indemnified under Sections 9.01 through 9.04, herein, has been successful on the merits or otherwise, including, without limitation, the dismissal of an action without prejudice, in defense of any action, suit or proceeding referred to above, or in defense of any claim, issue or matter therein, he or she shall be indemnified against all costs, charges and expenses (including attorneys' fees) actually and reasonably incurred by him or her or on his or her behalf in connection therewith. Section 8.06. Determination of Right to Indemnification. - ------------ ----------------------------------------- Unless otherwise ordered by a court, any indemnification under Sections 9.01 through 9.04, herein, shall be paid by the Corporation unless a determination is made (i) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (ii) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (iii) by the stockholders, that indemnification of an individual entitled to indemnification under Sections 9.01 through 9.04, herein, is not proper in the circumstances because he or she has not met the applicable standard of conduct set forth in Sections 9.01 through 9.04, herein. Section 8.07. Advance Payment of Costs, Charges and Expenses. - ------------ ---------------------------------------------- To the full extent permitted by law, the Corporation shall, upon request, pay costs, charges and expenses (including attorneys' fees) incurred by a person entitled to indemnification pursuant to Sections 9.01 and 9.02, herein, and, if applicable, pursuant to Sections 9.03 and 9.04, herein, in defending a civil or criminal action, suit or proceeding in advance of the final disposition of such action, suit or proceeding; provided, however, that the payment of such costs, -------- ------- charges and expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer) in advance of the final Certificate of Incorporation of Systems Applications International, Inc. Page 4 disposition of such action, suit or proceeding shall be made only upon receipt of an undertaking by or on behalf of the director or officer to repay all amounts so advanced in the event that it shall ultimately be determined that such director or officer is not entitled to be indemnified by the Corporation as authorized in this certificate; such costs, charges and expenses incurred by other employees, agents and contractors may be so paid upon such terms and conditions, if any, as the Board of Directors deems appropriate. Section 8.08. Procedure for Indemnification. - ------------ ----------------------------- Any indemnification or advance of costs, charges and expenses provided for in Sections 9.01 through 9.07, herein, shall be made promptly, and in any event within sixty days, upon the written request of the person entitled to indemnification; the right to indemnification or advances as granted by this Certificate shall be enforceable by a director or officer or other person indemnified hereunder in any court of competent jurisdiction. If the Corporation denies such request, in whole or in part, or if no disposition thereof is made within sixty days, such person's costs, charges and expenses incurred in connection with successfully establishing his right to indemnification, in whole or in part, in any such action shall also be indemnified by the Corporation; it shall be a defense to any such action (other than an action brought to enforce a claim for the advance of costs, charges and expenses pursuant to Section 9.07, herein, where the required undertaking, if any, has been received by the Corporation) that the claimant has not met the standard of conduct set forth in Sections 9.01 through 9.04, herein. Neither the failure of the Corporation (including its Board of Directors, its independent legal counsel, and its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in Sections 9.01 through 9.04, herein, nor the fact that there has been an actual determination by the Corporation (including its Board of Directors, its independent legal counsel, and its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct. Section 8.09. Authorization of Corporation Officers. - ------------ ------------------------------------- The proper officers of the Corporation are, and each of them acting without the other is, authorized to take any action, for and in the name of the Corporation, which the officer deems necessary or appropriate (as conclusively presumed from the taking of such action) to carry out and effect the foregoing Sections 9.01 through 9.08. Section 8.10. Other Rights; Continuation of Right to Indemnification. - ------------ ------------------------------------------------------ The indemnification and advancement of expenses provided by this Certificate shall not be deemed exclusive of any other rights to which a person seeking indemnification or advancement of expenses may be entitled under any law (present or future, common or statutory), by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding office or while employed by or acting as an agent for the Corporation, and shall continue as to a person who has ceased to serve in the capacity making him or her eligible for indemnification, and shall inure to the benefit of the estate, heirs, executors and administrators of such person; all rights to indemnification under this Certificate shall be deemed to be a contract between the Corporation and each director and officer of the Corporation and, as applicable, any other person indemnified hereunder who serves or served in such capacity at any time while this Certificate as well as the relevant provisions of the Delaware General Corporation Law or any other applicable laws are or were in effect; any repeal or modification hereof or of such provisions of such law shall not in any way diminish any rights to indemnification of such director or officer or other person entitled to indemnification or the obligations of the Corporation arising hereunder. Section 8.11. Savings Clause. - ------------ -------------- If this Certificate or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each director and officer, and may indemnify any other person entitled to indemnification, as to costs, charges and expenses (including attorneys' fees), judgments, fines and amounts paid in settlement with respect to any action, suit or proceeding, whether civil, criminal, administrative or investigative, Certificate of Incorporation of Systems Applications International, Inc. Page 5 including an action by or in the right of the Corporation, to the full extent permitted by any applicable portion of this Certificate that shall not have been invalidated and to the full extent permitted by applicable law. To the full extent permitted by law, the Corporation may enter into and perform agreements with persons, including, without limitation, present and former officers, directors and employees of the Corporation and of companies acquired by or merged with the Corporation, obligating the Corporation, among other things, to provide indemnification and advancement of costs, charges and expenses to such persons in addition to any indemnification or advancement which may be available to such person under Sections 9.01 through 9.10 of this Certificate. Section 8.12. Insurance. - ------------ --------- The Board of Directors may cause the Corporation to purchase and maintain insurance on behalf of any person who is or was or has agreed to become a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director or officer of another corporation, or as its representative in a partnership, joint venture, trust or other enterprise (including employee benefit plans), against any liability asserted against such person and incurred in any such capacity or arising out of such status, whether or not the Corporation would have the power to indemnify such person. Section 8.13. Adoption of By-laws. - ------------ ------------------- The Board of Directors may from time to time adopt By-laws with respect to indemnification and may amend such By-laws to provide at all times the fullest indemnification permitted by the General Corporation Law of the State of Delaware. Section 9.01. Settlement of Debts. - ------------ ------------------- Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them and/or between this Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this Corporation under the provisions of Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this Corporation under the provisions of Section 279 of Title 8 of the Delaware Code, order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this Corporation as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this Corporation, as the case may be, and also on this Corporation. Section 10.01. Elections of Directors. - ------------- ---------------------- Elections of directors need not be by written ballot unless the By-laws of the Corporation shall so provide. Section 11.01. Stockholders Meetings, Records. - ------------- ------------------------------ Stockholders meetings may be held within or without the State of Delaware, as the By-laws may provide. The books of the Corporation may be kept (subject to any provision in the General Corporation Law of the State of Delaware) outside of the State of Delaware at such place or places as may be designated from time to time by the Board of Directors (or duly authorized committee of the Board of Directors) or in the By-laws of the Corporation. Certificate of Incorporation of Systems Applications International, Inc. Page 6 Section 12.01. By-laws. - ------------- ------- The Board of Directors (or a duly authorized committee of the Board of Directors) of the Corporation shall have the power to make and, except as may be expressly stated in the By-laws, to alter and repeal its By-laws. Section 13.01. Amendment of Certificate of Incorporation. - ------------- ----------------------------------------- The Corporation reserves the right to amend, alter, change or repeal any provision contained in this certificate, in the manner now or hereafter prescribed by the General Corporation Law of Delaware, and all rights conferred upon stockholders herein are granted subject to this reservation. IN WITNESS WHEREOF the undersigned, being the incorporator hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this certificate hereby declaring and certifying that this is my act and deed and the facts herein stated are true, and accordingly have hereto set my signature this 3rd day of August 1995. /s/ Richard E. Bonitz ----------------------------- Richard E. Bonitz EX-3.J 9 EXHIBIT 3(J) Exhibit No. 3(j) BY-LAWS OF SYSTEMS APPLICATIONS INTERNATIONAL, INC. ARTICLE I --------- OFFICES ------- Section l. Principal Office. The Principal office of the Corporation is ---------- ----------------- hereby fixed and located at 9300 Lee Highway in the city of Fairfax, State of Virginia. Section 2. Other Offices. The Corporation shall also have a principal ---------- -------------- executive office at 1800 Harrison Street, in the City of Oakland, County of Alameda, State of California and other offices may at any time be established by the Board of Directors at and place where the Corporation is qualified to do business. ARTICLE II ---------- MEETINGS OF STOCKHOLDERS ------------------------ Section l. Place of Meetings. All annual meetings of stock-holders shall ---------- ------------------ be held at the office of the Corporation in the City of Oakland, County of Alameda, State of California or at any other place which may be designated either by the Board of Directors, pursuant to authority hereinafter granted to said Board or by written consent of all stockholders entitled to vote thereat, given either before or after the meeting and filed with the Secretary of the Corporation. Section 2. Annual Meetings. The annual meeting of stockholders shall be ---------- ---------------- held on the first Wednesday following the first Tuesday in October of each year at 2:30 in the afternoon of said day or at such other time as the stockholders may agree; provided, however, that should said day fall upon a legal holiday any year, then the annual meeting of stockholders for such year shall be held at the same time and place on the next day of such year thereafter ensuing which is not a legal holiday. Not less than ten (10) nor more than sixty (60) days' advance written notice of the actual date of each such annual meeting shall be given to each stockholder entitled to vote thereat in the same manner as is provided in Section 3 of this Article II for the giving of written notice of special meetings of stockholders. Section 3. Special Meetings. Special meetings of stockholders, for any ---------- ----------------- purpose or purposes, unless otherwise prescribed by statute, may be called by the President, and shall be called by the President or Secretary at the request in writing of a majority of the Board of Directors, or at the request in writing of stockholders owning not less than one fifth (1/5) of the entire capital stock of the Corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Except in special cases where other express provision is made by statute, written notice of such special meetings shall be given to each stockholder entitled to vote, either personally or by sending a copy of the notice through the mail or by telegraph, charges prepaid, to his address appearing on the books of the Corporation or supplied by him to the Corporation for the purpose of notice. If a stockholder supplies no address, notice shall be deemed to have been given him if mailed to he place where the principal office of the Corporation is situated, or published at least once in some newspaper of general circulation in the county of said principal office. All such notices shall be sent to each stockholder entitled thereto not less than ten (10) nor more than sixty (60) days before each special meeting and shall specify the place, the day and the hour of such meeting, and the general nature of the business to be transacted. Section 4. Adjourned Meetings and Notice Thereof. Any stockholders' ---------- -------------------------------------- meeting, annual or special, whether or not a quorum is present, may be adjourned from time to time by the vote of a majority of the shares, the holders of which are either present in person or represented by proxy thereat, but in the absence of a quorum no other business may be transacted at any such meeting. When any stockholders meeting, either annual or special, is adjourned for thirty (30) days or more, notice of the adjourned meeting shall be given as in the case of an original meeting. Save as aforesaid, it shall not be necessary to give any notice of an adjourned meeting or of the business to be transacted at an adjourned meeting, other than by announcement at the meeting at which such adjournment is taken. Section 5. Entry of Notice. Whenever any stockholder entitled to vote has ---------- ---------------- been absent from any meeting of stockholders, whether annual or special, an entry in the minutes to the effect that notice has been duly given shall be conclusive and incontrovertible evidence that due notice of such meeting was given to such stockholders, as required by law and by the By-Laws of the Corporation. Section 6. Voting. At all meetings of stockholders every stockholder ---------- ------- entitled to vote shall have the right to vote in person or by proxy the number of shares standing in his own name on the stock records of the Corporation. Such vote may be viva voce or by ballot; provided, however, that all elections for Directors must be by ballot upon demand made by a stockholder at any election and before the voting begins. Every stockholder entitled to vote at any election of Directors shall have the right to cumulate his votes and give one candidate a number of votes equal to the number of Directors to be elected multiplied by the number of votes to which his shares are entitled, or to distribute his votes on the same principal among as many candidates as he shall think fit. The candidates receiving the highest number of votes up to the number of Directors to be elected shall be elected. Section 7. Quorum. The presence in person or by proxy of the holders of a ---------- ------- majority of the shares entitled to vote at any meeting shall constitute a quorum for the transaction of business. The stockholders present at a duly called or held meeting at which a quorum is present may continue to do business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum. Section 8. Consent of Absentees. The transactions of any meetings of ---------- --------------------- stockholders, either annual or special, however called and noticed, shall be as valid as if transacted at a meeting duly held after regular call and notice, if a quorum be present either in person or by proxy, and if, either before or after the meeting, each of the stockholders entitled to vote, not present in person or by proxy, sign a written waiver of notice, or a consent to the holding of such meeting, or an approval of the minutes thereof. All such waivers, consents, or approvals shall be filed with the corporate records or made a part of the minutes of the meeting. Section 9. Action Without Meeting. Any action, except election of ---------- ----------------------- Directors, which under the provisions of the General Corporation Law of Delaware may be taken at a meeting of the stockholders, may be taken without a meeting if authorized by the written consent of stockholders holding at least a majority of the voting power; provided, if any greater proportion of voting power is required for such action at a meeting, then such greater proportion of written consents shall be required. Section 10. Proxies. Every person entitled to vote or execute consents --------------------- shall have the right to do so either in person or by an agent or agents authorized by a written proxy executed by such person or his duly authorized agent and filed with the Secretary of the Corporation; provided that no such proxy shall be valid after the expiration of eleven (11) months from the date of its execution, unless the stockholder executing it specifies therein the length of time for which such proxy is to continue in force, which is in no case to exceed seven (7) years from the date of its execution. ARTICLE III ----------- DIRECTORS --------- Section l. Powers. Subject to limitations of the Certificate of ---------- ------- Incorporation, of the By-Laws, and of the Corporation Laws of the State of Delaware as to action to be authorized or approved by the stockholders, and subject to the duties of Directors as prescribed by the By-Laws, all corporate powers shall be exercised by or under the authority of, and the business and affairs of the Corporation shall be controlled by, the Board of Directors. Without prejudice to such general powers, but subject to the same limitation, it is hereby expressly declared that the Directors shall have the following powers, to wit: First - To select and remove all the other officers, agents and employees of the Corporation, prescribe such powers and duties for them as may not be inconsistent with law, with the Certificate of Incorporation or the By-Laws fix their compensation, and require from them security for faithful service, and to appoint committees, with such authority, not inconsistent with law, as may be set forth in the resolution or resolutions establishing the same. Second - To conduct, manage and control and affairs and business of the Corporation, and to make such rules and regulations therefore not inconsistent with law, with the Certificate of Incorporation or the ByLaws, as they may deem best. Third - To provide for the establishment of one or more offices within or without the State of Delaware, and to change such office or offices from one location to another as provided for in Article I, Section 2, hereof, and by the laws of the State of Delaware, and as the business of the Corporation may require; to designate any place within or without the State of Delaware for the holding of any stockholder's or Directors' meeting or meetings; and to adopt, make and use a corporate seal, and to prescribe the forms of Certificates of stock, and to alter the form of such seal and of such certificates from time to time, in their judgement they may deem best, provided such seal and such certificates shall at all times comply with the provisions of law. Fourth - To authorize the issue of shares of stock of the Corporation from time to time, upon such terms as may be lawful, in consideration of money paid, labor done, or services actually rendered, debts or securities cancelled, or tangible or intangible property actually received or in the case of shares issued as a dividend, against amounts transferred from surplus to stated capital. Fifth - Borrow money and incur indebtedness for the Corporation, and to cause to be executed and delivered thereof, in the corporate name, promissory notes, bonds, debentures, deeds of trust, mortgages, pledges, hypothecations or other evidences of debt and securities therefor. Section 2. Number and Qualifications of Directors. The Board of Directors ---------- --------------------------------------- shall consist of not less than one (1) or more than seven (7) the exact number to be established by resolution of the board of directors and approved by the shareholders. Directors need not be stockholders. Section 3. Election and Term of Office. The Directors shall be elected at ---------- ---------------------------- each annual meeting of stockholders, but if any such annual meeting is not held, or the Directors are not elected thereat, the Directors may be elected at any special meeting of stockholders held for that purpose. All Directors shall hold office until their respective successors are elected. Section 4. Removal of Directors. Any Director may be removed from office ---------- --------------------- by the vote or written consent of stockholders owning a majority of the outstanding shares entitled to voting power. Section 5. Vacancies. Vacancies in the Board of Directors may be filled ---------- ---------- by the stockholders or by a majority of the remaining Directors, though less than a quorum, or by a sole remaining Director, and each Director so elected shall hold office until his successor is elected in accordance with Section 3 above. A vacancy or vacancies shall be deemed to exist in case of the death, resignation or removal of any Director, or if the authorized number of Directors shall be increased, or in case the stockholders fail at any time to elect the full number of authorized stockholders. The stockholders may at any time elect Directors to fill the vacancies not filled by the Directors, and may elect additional Directors at any meeting of the stockholders at which an Amendment of the By-Laws is voted authorizing an increase in the number of Directors. If any Director tenders his resignation to the Board of Directors, the Board shall have the power to elect a success to the office at such time as the resignation shall become effective. No reduction of the number of directors shall have the effect or removing any Director prior to the expiration of his term of office. Section 6. Place of Meeting. All meetings of the Board of Directors ----------------------------- shall be held at the principal office of the Corporation, or any other place within or without the State of Delaware designated at any time by resolution of the Board or specified in the notice of the meeting or waiver thereof. Section 7. Organization Meeting. Immediately following each annual ---------- --------------------- meeting of stockholders, the Board of Directors may hold a regular meeting for the purpose of organization, election of officers, and the transaction of other business. Notice of such meetings is hereby dispensed with. Section 8. Other Regular Meetings. Other regular meetings of the Board of ---------- ----------------------- Directors shall be held without call at such times as shall from time to time be determined by the Board of Directors. Notice of all such regular meetings of the Board of Directors is hereby dispensed with. Section 9. Special Meetings. Special meetings of the Board of Directors ---------- ----------------- for any purpose or purposes may be called at any time by the President or if he is absent or unable to, or refuses to act, by any Vice President or by any two Directors. Notice of the time and place of meetings shall be delivered personally to the Directors or given by telephone or by telegraph at least 48 hours prior to the time of the holding of the meeting, or if mailed shall be mailed at least 4 days prior to the meeting date. If notice is given by letter or by telegram, it shall be sent charges prepaid, addressed to him at this address as it is shown upon the records of the Corporation, or it if is not so shown on such records or is not readily ascertainable, at the place in which the meetings of the Directors are regularly held. Such mailing, telegraphing, telephoning or delivery as above provided shall be due, legal and personal notice to such Director. Section 10. Adjournment. A majority of the Directors present, whether ----------- ------------ or not a quorum is present, may adjourn any meeting to another time and place. If a meeting is adjourned for more than 24 hours, notice of the adjourned meeting shall be given as in the case of an original meeting. Section 11. Entry of Notice. Whenever any Director has been absent from ----------- ---------------- any special meeting of the Board of Directors, an entry in the minutes to the effect that notice has been duly given shall be conclusive and incontrovertible evidence that due notice of such special meeting was given to such Director, as required by law and the By-Laws of the Corporation. Section 12. Waiver of Notice. The transactions of any meeting of the ----------- ----------------- Board of Directors, whoever called and noticed or wherever held, shall be as valid as though had at a meeting duly held after regular call and notice, if a quorum be present, and if, either before or after the meeting, each of the Directors not present sign a written waiver of notice or a consent to holding such meeting or an approval of the minutes thereof. All such waivers, consents or approvals shall be filed with the corporate records or made a part of the minutes of the meeting. Section 13. Quorum and Voting Requirements. At all meetings of the Board ----------- ------------------------------- a majority of the authorized number of Directors shall be necessary and sufficient to constitute a quorum for the transaction of business, except to adjourn as hereinafter provided. Every act or decision done or made by a majority of the Directors present at a meeting duly held at which a quorum is present shall be regarded as the act of the Board of Directors. Any action of a majority of the authorized number of Directors, although not at a regularly called meeting, and the record thereof, if assented to in writing by all the other members of the Board, shall always be as valid and effective in all respects as if passed by the Board in regular meeting. Section 14. Fees and Compensation. Directors shall receive such ----------- ---------------------- compensation for their services as Directors as shall be determined form time to time by resolution of the Board of Directors. Any Director may serve the Corporation in any other capacity as an officer, agent, employee or otherwise and receive compensation therefor. Section 15. Chairman of the Board. The Directors may should they choose ----------- ---------------------- to do so, elect from among their members a chairman of the Board to preside over meetings of the Board of Directors. Said position of Chairman of the Board shall not be considered an office of the Corporation under Article IV of the By- Laws of this Corporation. Section 16. Committees. There shall be an executive committee of the ----------- ----------- Board of Directors, consisting of three members and there may be other committees of the Board of Directors. Such committees shall be designated by resolution or resolutions passed by a majority of the whole Board, and shall serve at the pleasure of the Board. Such committees shall have such authority as may be provided in a resolution or resolutions adopted by a majority of the Board; provided, however, that the Board of Directors shall retain such rights and privileges as are reserved exclusively to it by law. The executive committee's authority shall include the exercise of all powers and duties of the Board of Directors, while it is not in session, with respect to leases, loans from stockholders, establishment of branch offices, donations, investment of corporate funds and salaries of corporate personnel. ARTICLE IV ---------- OFFICERS -------- Section l. Officers. The officers of the Corporation shall be a ---------- --------- President, a Vice President, a Secretary, and a Treasurer. The Corporation may also have at the discretion of the Board of Directors one or more Executive Vice Presidents, one or more additional Vice Presidents, one or more Assistant Secretaries, one or more Assistant Treasurers, and such other officers as may be appointed in accordance with provisions of Section 3 of this Article. Officers need not be Directors. Any person may hold two or more offices. Section 2. Election. The officers of the Corporation, except such ---------- --------- officers as may be appointed in accordance with the provisions of Section 3 or Section 5 of this Article, shall be chosen annually by the Board of Directors, and each shall hold his office until he shall resign or shall be removed or otherwise disqualified to serve, or his successor shall be elected and qualified. Section 3. Subordinate Officers Etc. The Board of Directors may appoint ---------- ------------------------- such other officers as the business of the Corporation may require, each of whom shall hold office for such period, have such authority, and perform such duties as are provided in the By-Laws or as the Board of Directors may from time to time determine. Section 4. Removal and Resignation. Any officer may be removed, either ---------- ------------------------ without or with cause, by a majority of the Directors at the time in office, at any regular or special meeting of the Board, or by any officer upon whom power of removal may be conferred by the Board of Directors. Any officer may resign at any time by giving written notice to the Board of Directors or to the President, or to the Secretary of the Corporation. Any such resignation shall take effect at the date of the receipt of such notice or at any later time specified therein; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 5. Vacancies. A vacancy in any office because of death, ---------- ---------- resignation, removal, disqualification or any other cause, shall be filled by the Board of Directors in the manner prescribed in Section 2 of this Article or an any regular or special meeting of the Board of Directors. Section 6. President. Subject to the control of the Board of Directors, ---------- ---------- the President shall have the general powers and duties of management usually vested in the office of President of the Corporation as well as such other powers and duties as may be prescribed by the Board of directors or the By-Laws. The President shall preside at all meetings of the stockholders and in the absence of the Chairman of the Board he shall preside at all meetings of the Board of Directors. Section 7. Vice President. In the absence or disability of the President, ---------- --------------- the Vice President in order of their rank fixed by the Board of Directors, or if not ranked, the Vice President designated by the Board of Directors, shall perform all the duties of the President, and when so acting shall have all the powers of, and be subject to all restrictions upon, the President. The Vice Presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the Board of Directors or the By-Laws. Section 8. Secretary. The Secretary shall keep, or cause to be kept, a ---------- ---------- book of minutes at the principal office or such other place as the Board of Directors may order, of all meetings of Directors and stockholders, with the time and place of holding, whether regular or special, and if special, how authorized, the notice thereof given, the names of those present at the Directors' meetings, the number of shares present of represented at stockholders meetings and the proceedings thereof. The Secretary shall keep, or cause to be kept, at the principal executive office or at the office of the Corporation's Transfer Agent, a share register, or a duplicate share register, showing the names of the stockholders and their addresses; the number of classes of shares held by each, the number and date of certificates issued for the same, and the number and date of cancellation of every certificate surrendered for cancellation. The Secretary shall give, or cause to be given, notice of all the meetings of the stockholders and of the Board of Directors required by the By-Laws or by law to be given, and he shall keep the seal of the Corporation in safe custody, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or by the By-Laws. Section 9. Treasurer. The Treasurer shall deposit all moneys and other ---------- ---------- valuables in the name and to credit of the Corporation with such depositories as may be designated by the Board of Directors. He shall disburse the funds of the Corporation as may be ordered by the Board of Directors, shall render to the Chairman of the Board, the President and Directors, whenever they request it, an account of all of his transactions as Treasurer and of the financial condition of the Corporation, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or the By-Laws. ARTICLE V --------- MISCELLANEOUS ------------- Section 1. Record Date and Closing Stock Books. The Board of Directors ---------- ------------------------------------ may fix a time, in the future, not exceeding forty (40) days preceding the date of any meeting of stockholders, and not exceeding thirty (30) days preceding the date fixed for the payment of any dividend of distribution, or for the allotment of rights, or when any change or conversion or exchange of shares shall go into effect, as a record date for the determination of the stockholders entitled to notice of an to vote at such a meeting, or entitled to receive any such dividend or distribution, or any such allotment of rights, or to exercise the right in respect to any such change, conversion or exchange or shares, and in such case only stockholders of record on the date so fixed shall be entitled to notice of and to vote at such meeting, or to receive such dividend, distribution or allotment of rights, or to exercise such rights, as the case may be notwithstanding any transfer of any shares of stock on the books of the Corporation after any record date fixed as aforesaid. The board of Directors may close the books of the Corporation against transfers during the whole, or any part, of any such period, except that in the event of the declaration of dividends the stock transfer books of the Corporation shall not be closed but the Board of Directors shall fix a record date, as hereinabove provided, as of which the Transfer Agent of the Corporation will take record of all stockholders entitled to such dividend. Section 2. Inspection of Corporate Records. The share register or ---------- -------------------------------- duplicate share register shall be open to inspection upon the written demand of any stockholder or the holder of a voting trust certificate, at any reasonable time, and for a purpose reasonably related to his interests as a stockholder, and shall be exhibited at any time when required by the demand of ten percent (10%) of the shares represented at any stockholders' meeting. Such inspection may be made in person or by an agent or attorney, and shall include the right to make extracts. Demand of inspection other than at a stockholders' meeting and shall be made in writing upon the President, Secretary or an Assistant Secretary of the Corporation. Every such demand, unless granted, shall be referred by such officer to the Board of Directors. Section 3. Checks, Drafts, Etc. All checks, drafts or other orders for ---------- -------------------- payment of money, notes or other evidences of indebtedness, issued in the name of or payable to the Corporation, shall be signed or endorsed by such person or persons and in such manner as from time to time, shall be determined by resolution of the Board of Directors. The Board of Directors may by resolution, confer power on the Treasurer, or any other officer, to open bank accounts with any bank for and in the name of the Corporation and may confer authority on such Treasurer or other officer to designate, from time to time, the officer or officers, or person or persons, who shall be authorized to withdraw money from any account by check or otherwise. Section 4. Fiscal Year. The fiscal year of the Corporation shall end at ---------- ------------ the close of business on December 31 in each year. Section 5. Contracts How Executed. The Board of Directors, except as in ---------- ----------------------- the By-Laws otherwise provided, may authorize any officer or officers, agents or agents, to enter into any contract or execute any instrument in the name of and on behalf of the Corporation and said officer and agents are further authorized to delegate said authority to any employee or agent of the Corporation, and such authority may be general or confined to specific instances; and unless so authorized, no officer, agent or employee shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit to to render it liable for any purpose or to any amount. No contract or other transaction between the Corporation and one or more of its Directors or between the Corporation and any other Corporation, firm or association in which one or more of its Directors are Directors or are financially interested, shall be either void or voidable because such Director or Directors are present at the meeting of the Board of Directors or a committee thereof which authorized or approves such contract or transaction or because his or their votes are counted for such purpose if the circumstances specified in any one of the following subparagraphs shall exist: (a) the fact of common directorship or financial interest is disclosed or known to the Board of Directors or committee and noted in the minutes and the Board of Directors or committee authorizes, approves or ratifies the transaction in good faith by a vote of a majority of those members of such Board or committee who are not interested in the contract or transaction and are not Directors or financially interested in the Corporation, firm or association with which the transaction is made; or (b) the fact of a common directorship or financial interest is disclosed or known to the stockholders and they approve or ratify the contract or transaction in good faith by a majority vote or written consent of stockholders entitled to vote; or (c) the contract or transaction is fir as to the Corporation at the time it is authorized or approved. Common or interested Directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or a committee thereof which authorizes, approves, or ratifies a contract or transaction, and if the votes of the common are interested Directors are not counted at such meeting, then a majority of the disinterested Directors may authorize, approve or ratify a contract or transaction. Section 6. Certificates of Stock. A certificate or certificates for ---------- ---------------------- shares of the capital stock of the Corporation shall be issued to each stockholder when any such shares are fully paid up. All such certificates shall be signed by the President or a Vice President and the Secretary or an Assistant Secretary, or be authenticated by facsimiles of the signatures of the President and Secretary or a facsimile of the signature of the President and the written signature of the Secretary or an Assistant Secretary. Every certificate authenticated by a facsimile or a signature must be countersigned by a transfer agent or transfer clerk, and be registered by an incorporated bank or trust company, either domestic or foreign, as registrar of transfers, before issuance. Certificated for shares may be issued prior to full payment under such restrictions and for such purposes as the Board of Directors or the By-Laws may provide; provided, however, that any such certificate so issued prior to full payment shall state the amount remaining unpaid and the terms of payment thereof. Section 7. Transfer of Stock. Transfer of stock shall be made only upon ---------- ------------------ the proper stock books of the Corporation and must be accompanied by the surrender of the certificate or certificates representing the transferred stock duly endorsed by the holder thereof in person or by his duly authorized attorney or legal representative. Section 8. Representation of Shares Held by Other Corporations. Shares ---------- ---------------------------------------------------- of the Corporation standing in the name of another corporation may be voted or represented and all right incident thereto may be exercised on behalf of such other corporation, by any officer thereof authorized so to do by resolution of its board of directors, or by its executive committee, or by its by-laws, or by any person authorized so to do by proxy or power of attorney duly executed by the president or vice president and secretary or an assistant secretary of such other corporation, or by authority of the board of directors thereof. Section 9. Inspection of By-Laws. The Corporation shall keep in its ---------------------------------- principal executive office for the transaction of business, the original or a copy of the By-Laws as amended or otherwise altered to date, certified by the Secretary, which shall be open to inspection by the stockholders at all reasonable times during office hours. Section 10. Indemnification. Every person heretofore, now or hereafter ----------------------------- serving as a Director, officer or employee of the Corporation, and every person heretofore, now or hereafter serving at the written request of the Corporation (or at its oral request subsequently confirmed in writing), as a director, officer, or employee or another corporation or other business association in which the Corporation owns shares of capital stock or other proprietary interest or of which the Corporation is a creditor shall be indemnified and held harmless by the Corporation from and against any and all loss, cost, liability and expense that may be imposed upon or incurred by him in connection with or resulting from any claim, action, suit, or proceeding, civil or criminal, in which he may become involved as a party or otherwise by reason of his being or having been a director, officer, or employee of the Corporation or other business association in which the Corporation owns shares of capital stock or other proprietary interest or of which the Corporation is a creditor, whether or not he continues to be such at the time such loss, cost, liability or expense shall have been imposed or incurred. As used herein the term "loss, cost, liability and expense" shall include all expenses incurred in the defense of such claim, action, suit or proceeding and amounts of judgements, fines, or penalties levied or rendered against any such person; provided, however, that no such person shall be entitled to indemnity hereunder unless the Board of Directors of the Corporation determine in good faith that such person was action in good faith within what he reasonably believed to be the scope of his employment or authority and for a purpose which he reasonably believed to be in the best interests of the Corporation or its shareholders. Payments authorized hereunder include amounts paid and expenses incurred in settling any such claim, action, suit or proceeding whether actually commenced or threatened. Expenses incurred with respect to any such claim, action suit or proceeding may be advanced by the Corporation prior to the final disposition thereof upon receipt of an undertaking satisfactory in form and amount to the Board of Directors by or on behalf of the recipient to repay such amount unless it is ultimately determined that he is entitled to indemnification. The foregoing right of indemnification shall not be deemed exclusive of any other rights to which any person may be otherwise entitled by contract or as a matter of law. ARTICLE VI ---------- AMENDMENTS ---------- Section l. Adoption, Amendment, or Repeal of By-Laws. By-Laws may be ------------------------------------------------------ adopted, amended or repealed by the vote of stockholders entitled to exercise a majority of the voting power of the Corporation or by a written assent of such stockholders. Subject to the right of stockholders to adopt, or repeal By-Laws, any and all of the By-Laws may be adopted, amended or repealed by the Board of Directors. EX-4.G 10 EXHIBIT 4(G) Exhibit No. 4(g) ICF KAISER INTERNATIONAL, INC., as Issuer and THE BANK OF NEW YORK, as Trustee ------------------ INDENTURE Dated as of December 23, 1996 ------------------ $15,000,000 12% Senior Notes due 2003, Series A and 12% Senior Notes due 2003, Series B TABLE OF CONTENTS ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.01 Definitions............................................ Section 1.02 Other Definitions...................................... Section 1.03 Incorporation by Reference of Trust Indenture Act........................................ Section 1.04 Rules of Construction.................................. ARTICLE 2 THE NOTES Section 2.01 Form and Dating........................................ Section 2.02 Execution and Authentication........................... Section 2.03 Registrar and Paying Agent............................. Section 2.04 Paying Agent to Hold Money in Trust.................... Section 2.05 Registration of Transfer and Exchange.................. Section 2.06 Replacement Notes...................................... Section 2.07 Outstanding Notes...................................... Section 2.08 Treasury Notes......................................... Section 2.09 Temporary Notes........................................ Section 2.10 Cancellation........................................... Section 2.11 Defaulted Interest..................................... Section 2.12 CUSIP Numbers.......................................... Section 2.13 Book-Entry Provisions for Global Notes................. ARTICLE 3 ASSET SALE OFFER Section 3.01 Notices to Trustee..................................... Section 3.02 Notices to Holders..................................... Section 3.03 Deposit of Purchase Price.............................. Section 3.04 Asset Sale Offer....................................... ARTICLE 4 OPTIONAL REDEMPTION Section 4.01 Redemption Date; Redemption Price...................... Section 4.02 Notices to Trustee and Paying Agent.................... Section 4.03 Selection of Notes to be Redeemed...................... Section 4.04 Notice to Holders...................................... Section 4.05 Effect of Notice of Redemption......................... Section 4.06 Deposit of Redemption Price............................ Section 4.07 Notes Redeemed in Part................................. ARTICLE 5 COVENANTS Section 5.01 Payment of Notes....................................... Section 5.02 Maintenance of Office or Agency........................ Section 5.03 Change of Control...................................... Section 5.04 Limitations on Additional Indebtedness................. Section 5.05 Limitations on Subsidiary Debt and Preferred Stock...................................... Section 5.06 Limitations on Restricted Payments..................... Section 5.07 Limitations on Restrictions on Distributions from Subsidiaries...................... Section 5.08 Limitations on Transactions With Affiliates...................................... Section 5.09 Limitations on Asset Sales............................. Section 5.10 Restrictions on Sale of Stock of Subsidiaries......................................... Section 5.11 Limitations on Guarantees.............................. Section 5.12 SEC Reports............................................ Section 5.13 Corporate Existence.................................... Section 5.14 Stay, Extension and Usury Laws......................... Section 5.15 Insurance; Books and Records; Compliance with Law.................................. Section 5.16 Inspection and Confidentiality......................... Section 5.17 Compliance Certificate................................. ARTICLE 6 SUCCESSORS Section 6.01 Limitations on Mergers and Consolidations....................................... Section 6.02 Successor Corporation Substituted...................... ARTICLE 7 DEFAULTS AND REMEDIES Section 7.01 Events of Default...................................... Section 7.02 Acceleration........................................... Section 7.03 Other Remedies......................................... Section 7.04 Waiver of Past Defaults................................ Section 7.05 Control by Majority.................................... Section 7.06 Limitations on Suits................................... Section 7.07 Rights of Holders to Receive Payment................... Section 7.08 Collection Suit by Trustee............................. Section 7.09 Trustee May File Proofs of Claim....................... Section 7.10 Priorities............................................. Section 7.11 Undertaking for Costs.................................. Section 7.12 Restoration of Rights and Remedies..................... ARTICLE 8 TRUSTEE Section 8.01 Duties of Trustee...................................... Section 8.02 Rights of Trustee...................................... Section 8.03 Individual Rights of Trustee........................... Section 8.04 Trustee's Disclaimer................................... Section 8.05 Notice of Defaults..................................... Section 8.06 Compensation and Indemnity............................. Section 8.07 Replacement of Trustee................................. Section 8.08 Successor Trustee by Merger, etc....................... Section 8.09 Eligibility; Disqualification.......................... Section 8.10 Reports by Trustee to Holders.......................... ARTICLE 9 DISCHARGE OF INDENTURE Section 9.01 Termination of Company's Obligations................... Section 9.02 Application of Trust Money............................. Section 9.03 Repayment to Company................................... Section 9.04 Reinstatement.......................................... ARTICLE 10 AMENDMENTS Section 10.01 Without Consent of Holders............................ Section 10.02 With Consent of Holders............................... Section 10.03 Compliance with Trust Indenture Act................... Section 10.04 Revocation and Effect of Consents..................... Section 10.05 Notation on or Exchange of Notes...................... Section 10.06 Trustee to Sign Amendments, etc....................... ARTICLE 11 MISCELLANEOUS Section 11.01 Trust Indenture Act Controls.......................... Section 11.02 Notices............................................... Section 11.03 Certificate and Opinion as to Conditions Precedent........................................... Section 11.04 Statements Required in Certificate or Opinion............................................. Section 11.05 Rules by Trustee and Agents........................... Section 11.06 Legal Holidays........................................ Section 11.07 No Recourse Against Others............................ Section 11.08 Governing Law......................................... Section 11.09 No Adverse Interpretation of Other Agreements.......................................... Section 11.10 Successors............................................ Section 11.11 Severability.......................................... Section 11.12 Counterpart Originals................................. Section 11.13 Trustee as Paying Agent and Registrar................. Section 11.14 Table of Contents, Headings, etc...................... SIGNATURES................................................................ EXHIBIT A FORM OF SERIES A NOTE EXHIBIT B FORM OF SERIES B NOTE EXHIBIT C FORM OF LEGEND FOR GLOBAL NOTE EXHIBIT D TRANSFER CERTIFICATE EXHIBIT E TRANSFEREE CERTIFICATE FOR INSTITUTIONAL ACCREDITED INVESTORS EXHIBIT F FORM OF TRANSFEREE CERTIFICATE FOR REGULATION S TRANSFERS EXHIBIT G FORM OF GUARANTEE EXHIBIT H GUARANTEE OF CYGNA CONSULTING ENGINEERS AND PROJECT MANAGEMENT, INC. EXHIBIT I GUARANTEE OF ICF KAISER GOVERNMENT PROGRAMS, INC. EXHIBIT J GUARANTEE OF PCI OPERATING COMPANY, INC. EXHIBIT K GUARANTEE OF SYSTEMS APPLICATIONS INTERNATIONAL, INC. CROSS-REFERENCE TABLE*
Trust Indenture Indenture Section Act Section ----------------- - --------------- 310(a)(1)...................................................................8.09 (a)(2)...................................................................8.09 (a)(3)...................................................................N.A. (a)(4)...................................................................N.A. (a)(5).....................................................................** (b)........................................................................** (c)......................................................................N.A. 311(a)........................................................................** (b)........................................................................** (c)......................................................................N.A. 312(a)........................................................................** (b)........................................................................** (c)........................................................................** 313(a)......................................................................8.10 (b)(1)...................................................................8.10 (b)(2)...................................................................8.10 (c)......................................................................8.10 (d)......................................................................8.10 314(a)(1)...................................................................5.12 (a)(2).....................................................................** (a)(3).....................................................................** (a)(4)...................................................................5.17 (b)......................................................................N.A. (c)(1)..................................................................11.03 (c)(2)..................................................................11.03 (c)(3)...................................................................N.A. (d)......................................................................N.A. (e).....................................................................11.04 (f)......................................................................N.A. 315(a)...................................................................8.01(2) (b)................................................................8.05,11.02 (c)...................................................................8.01(1) (d)...................................................................8.01(3) (e)......................................................................7.11 316(a)(last sentence).......................................................2.08 (a)(1)(A)................................................................7.05 (a)(1)(B)................................................................7.04 (a)(2)...................................................................N.A. (b)......................................................................7.07 (c).....................................................................10.04 317(a)(1)...................................................................7.08 (a)(2)...................................................................7.09 (b)......................................................................2.04 318(a).....................................................................11.01
N.A. means not applicable. * This Cross-Reference Table is not part of the Indenture. ** Included pursuant to Section 318(c) of the Trust Indenture Act of 1939. INDENTURE dated as of December 23, 1996, between ICF Kaiser International, Inc., a Delaware corporation as issuer (the "Company"), and The Bank of New York, a New York banking corporation (the "Trustee"). The Company has duly authorized the creation of an issue of 12% Senior Notes due 2003, Series A, and 12% Senior Notes due 2003, Series B (together with the Series A Notes, the "Notes"), to be issued in exchange for the 12% Senior Notes due 2003, Series A, pursuant to the Registration Rights Agreement and, to provide therefor, the Company has duly authorized the execution and delivery of this Indenture. All things necessary to make the Notes, when duly issued and executed by the Company and authenticated and delivered hereunder, and the Guarantees of Cygna Consulting Engineers and Project Management, Inc., a California corporation, ICF Kaiser Government Programs, Inc., a Delaware corporation, PCI Operating Company, Inc., a Delaware corporation, and Systems Applications International, Inc., a Delaware corporation, as guarantors of the principal of, premium, if any, and interest on the Notes (each individually, a "Guarantor" and collectively, the "Guarantors"), the valid and binding obligations of the Company and the Guarantors, respectively, and to make this Indenture a valid and binding agreement of the Company, and the Guarantees valid and binding obligations of each of the Guarantors, have been done. Each party agrees as follows for the benefit of the other party and for the equal and ratable benefit of the Holders of the Notes: ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.01 Definitions "Acquired Indebtedness" means: (i) with respect to any Person that becomes a direct or indirect Subsidiary of the Company after the date of this Indenture, Indebtedness of such Person and its Subsidiaries existing at the time such Person becomes a Subsidiary of the Company that was not incurred in connection with, or in contemplation of, such Person becoming a Subsidiary of the Company; and (ii) with respect to the Company or any of its Subsidiaries, any Indebtedness assumed by the Company or any of its Subsidiaries in connection with the acquisition of an asset from another Person that was not incurred by such other Person in connection with, or in contemplation of, such acquisition. "Affiliate" of any Person means any Person (i) which directly or indirectly controls or is controlled by, or is under direct or indirect common control with, the referent Person, (ii) which beneficially owns or holds 10% or more of any class of the Voting Stock of the referent Person or (iii) of which 10% or more of the Voting Stock (or, in the case of a Person which is not a corporation, 10% or more of the equity interest) is beneficially owned or held by the referent Person. For purposes of this definition, control of a Person shall mean 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. Notwithstanding the foregoing, the term "Affiliate" shall not include, with respect to the Company or any Wholly Owned Subsidiary of the Company, (a) any Wholly Owned Subsidiary of the Company or (b) any Subsidiary of the Company that is not a Wholly Owned Subsidiary or any Joint Venture, provided that such Subsidiary or Joint Venture is not under the control of, and does not have any Capital Stock (other than directors' qualifying shares) or Indebtedness owned or held by, any Affiliate of the Company. "Agent" means any Registrar or Paying Agent. "Asset Sale" for any Person means the sale, lease, transfer or other disposition or series of sales, leases, transfers or other dispositions (including without limitation by merger or consolidation, and whether by operation of law or otherwise) of any of that Person's assets (including without limitation the sale or other disposition of Capital Stock of any Subsidiary of such Person, whether by such Person or by such Subsidiary), whether owned on the date of this Indenture or subsequently acquired, excluding, however: (i) any sale, lease, transfer or other disposition between the Company and any of its Wholly Owned Restricted Subsidiaries; (ii) any transfer of assets of the Company or any of its Restricted Subsidiaries that constitutes and is treated as a Designated Investment; (iii) any transfer of assets of the Company or any of its Restricted Subsidiaries that constitutes a Change of Control and that is governed by and effected in accordance with the provisions of Section 5.03 and Article 6; and (iv) any sale, lease, transfer or other disposition, or series of sales, leases, transfers or other dispositions, of assets having a purchase price or transaction value, as the case may be, of $1,000,000 or less, provided that no Default or Event of Default exists at the time of such sale. "Asset Sale Offer" means an Asset Sale Offer as defined in Section 5.09. "Attributable Indebtedness," when used with respect to any Sale and Leaseback Transaction, means, as at the time of determination, the greater of (i) the fair market value of the property subject to such Sale and Leaseback Transaction and (ii) the present value (discounted at a rate equivalent to the Company's then-current weighted average cost of funds for borrowed money as at the time of determination, compounded on a semi-annual basis) of the total obligations of the lessee for rental payments during the remaining term of the lease included in any such Sale and Leaseback Transaction. "Bank Credit Agreement" means the Credit Agreement dated May 6, 1996 among the Company, certain banks and CoreStates Bank, N.A., as agent for the banks, as such agreement has been and may be amended, restated, supplemented or otherwise modified from time to time, and includes any successor bank credit agreement. "Bankruptcy Law" means Title 11, U.S. Code or any similar Federal, state or foreign law for the relief of debtors. "Board of Directors" for any Person means the Board of Directors of such Person or any authorized committee of the Board of Directors of such Person. "Board Resolution" for any Person means a duly adopted resolution of the Board of Directors of such Person. "Business Day" means any day other than a Legal Holiday. "Capital Stock" of any Person means any and all shares, rights to purchase, warrants or options (whether or not currently exercisable), participations or other equivalents of or interests in (however designated) the equity (including without limitation common stock, preferred stock and partnership and joint venture interests) of such Person. "Capitalized Lease Obligations" of any Person means the obligations of such Person to pay rent or other amounts under a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP, and the amount of such obligation shall be the capitalized amount thereof determined in accordance with GAAP. "Cash Equivalents" means: (i) obligations issued or unconditionally guaranteed by the United States of America or any agency thereof or obligations issued by any agency or instrumentality thereof and backed by the full faith and credit of the United States of America; (ii) commercial paper rated the highest grade by Moody's Investors Service, Inc. and Standard & Poor's Corporation and maturing not more than one year from the date of creation thereof; and (iii) readily marketable direct obligations issued by any state of the United States of America or any political subdivision thereof having one of the two highest rating categories obtainable from either Moody's Investors Service, Inc. or Standard & Poor's Corporation. "Change of Control" means any of the following: (i) the sale, lease, conveyance or other disposition of all or substantially all of the Company's assets as an entirety or substantially as an entirety to any Person or "group" (within the meaning of Section 13(d)(3) of the Exchange Act) in one or a series of transactions, provided that a transaction where the holders of all classes of Common Equity of the Company immediately prior to such transaction own, directly or indirectly, more than 50% of the aggregate voting power of all classes of Common Equity of such Person or group immediately after such transactions shall not be a Change of Control; (ii) the acquisition by the Company and any of its Subsidiaries of 50% or more of all classes of Common Equity of the Company in one transaction or a series of related transactions; (iii) the approval by the Company of a Plan of Liquidation of the Company; (iv) any transaction or series of transactions (as a result of a tender offer, merger, consolidation or otherwise) that results in, or that is in connection with, (a) any Person, including a "group" (within the meaning of Section 13(d)(3) of the Exchange Act) that includes such Person, acquiring "beneficial ownership" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% or more of the aggregate voting power of all classes of Common Equity of the Company or any Person that possesses "beneficial ownership" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% or more of the aggregate voting power of all classes of Common Equity of the Company, or (b) less than 50% (measured by the aggregate voting power of all classes) of the Company's Common Equity being registered under Section 12(b) or 12(g) of the Exchange Act; or (v) a majority of the Board of Directors of the Company not being comprised of Continuing Directors. "Common Equity" of any Person means all Capital Stock of such Person that is generally entitled to (i) vote in the election of directors of such Person or (ii) if such Person is not a corporation, vote or otherwise participate in the selection of the governing body, partners, managers or others that will control the management and policies of such Person. "Company" means (i) ICF Kaiser International, Inc., a Delaware corporation, and (ii) subject to the provisions of Article 6, in replacement of or in addition to ICF Kaiser International, Inc., as the case may be, any successor of ICF Kaiser International, Inc. "Company Order" means a written order or request signed in the name of the Company by its Chairman, President or a Vice President, and by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee. "Consolidated Amortization Expense" of any Person for any period means the amortization expense of such Person and its Restricted Subsidiaries for such period (to the extent included in the computation of Consolidated Net Income of such Person), determined on a consolidated basis in accordance with GAAP. "Consolidated Depreciation Expense" of any Person for any period means the depreciation expense of such Person and its Restricted Subsidiaries for such period (to the extent included in the computation of Consolidated Net Income of such Person), determined on a consolidated basis in accordance with GAAP. "Consolidated Fixed Charge Coverage Ratio" of any Person means, with respect to any determination date, the ratio of (i) EBITDA for such Person's prior four full fiscal quarters for which financial results have been reported immediately preceding the determination date to (ii) the aggregate Fixed Charges of such Person for such four fiscal quarters; provided, however, that if any calculation of the Company's Consolidated Fixed Charge Coverage Ratio requires the use of any quarter beginning prior to the date of this Indenture, such calculation shall be made on a pro forma basis, giving effect to the issuance of the Notes and the use of the net proceeds therefrom as if the same had occurred at the beginning of the four-quarter period used to make such calculation; and provided, further, that if any such calculation requires the use of any quarter prior to the date that any Asset Sale was consummated, or that any Indebtedness was incurred, or that any acquisition was effected, by the Company or any of its Restricted Subsidiaries, such calculation shall be made on a pro forma basis, giving effect to each such Asset Sale, incurrence of Indebtedness or acquisition, as the case may be, and the use of any proceeds therefrom, as if the same had occurred at the beginning of the four-quarter period used to make such calculation. "Consolidated Income Tax Expense" means, for any Person for any period, the provision for taxes based on income and profits of such Person and its Restricted Subsidiaries to the extent such income or profits were included in computing Consolidated Net Income of such Person for such period. "Consolidated Net Income" of any Person for any period means the net income (or loss) of such Person and its Restricted Subsidiaries for such period determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded from such net income (to the extent otherwise included therein), without duplication: (i) the net income (or loss) of any Person (other than a Restricted Subsidiary of the referent Person) in which any Person other than the referent Person has an ownership interest, except to the extent that any such income has actually been received by the referent Person or any of its Wholly Owned Restricted Subsidiaries in the form of cash dividends or similar cash distributions during such period; (ii) except to the extent includible in the consolidated net income of the referent Person pursuant to the foregoing clause (i), the net income (or loss) of any Person that accrued prior to the date that (a) such Person becomes a Restricted Subsidiary of the referent Person or is merged into or consolidated with the referent Person or any of its Restricted Subsidiaries or (b) the assets of such Person are acquired by the referent Person or any of its Restricted Subsidiaries; (iii) the net income (or loss) of any Restricted Subsidiary of the referent Person to the extent that the declaration or payment of dividends or similar distributions by such Restricted Subsidiary of that income is not permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary during such period (provided that the amount of loss excluded pursuant to this clause (iii) shall not exceed that amount of net income excluded pursuant to this clause (iii)); (iv) any gain (but not loss, except pursuant to clause (vii) below), together with any related provisions for taxes on any such gain, realized during such period by the referent Person or any of its Restricted Subsidiaries upon (a) the acquisition of any securities, or the extinguishment of any Indebtedness, of the referent Person or any of its Restricted Subsidiaries or (b) any Asset Sale by the referent Person or any of its Restricted Subsidiaries; (v) any extraordinary gain (but not extraordinary loss, except pursuant to clause (vii) below), together with any related provision for taxes on any such extraordinary gain, realized by the referent Person or any of its Restricted Subsidiaries during such period; (vi) in the case of a successor to such Person by consolidation, merger or transfer of its assets, any earnings of the successor prior to such merger, consolidation or transfer of assets; and (vii) in the case of the Company, any extraordinary loss directly related to the repurchase or repayment, substantially concurrently with the sale of the Notes, of (a) the Company's 13.5% Senior Subordinated Notes due 1999 and warrants issued in connection with the issuance of such notes, (b) the Bank Credit Agreement and (c) the Company's Series 2C Senior Preferred Stock and related Series 2C Warrants. "Consolidated Net Tangible Assets" of any Person as of any date means the Consolidated Tangible Assets of such Person and its Restricted Subsidiaries less the total current liabilities of such Person and its Restricted Subsidiaries, on a consolidated basis as of such date. "Consolidated Tangible Assets" of any Person as of any date means the total assets of such Person and its Restricted Subsidiaries (excluding any assets that would be classified as "intangible assets" under GAAP) on a consolidated basis at such date, determined in accordance with GAAP, less all write-ups subsequent to September 30, 1996 in the book value of any asset owned by such Person or any of its Restricted Subsidiaries. "Consolidated Tangible Net Worth" of any Person as of any date means the stockholders' equity (including any preferred stock that is classified as equity under GAAP, other than Disqualified Stock) of such Person and its Restricted Subsidiaries (excluding any equity adjustment for foreign currency translation for any period subsequent to September 30, 1996 and any assets that would be classified as "intangible assets" under GAAP) on a consolidated basis at such date, as determined in accordance with GAAP, less all write-ups subsequent to September 30, 1996 in the book value of any asset owned by such Person or any of its Restricted Subsidiaries. "Continuing Director" of the Company as of any date means a member of the Board of Directors of the Company who (i) was a member of the Board of Directors of the Company on the date of this Indenture or (ii) was nominated for election or elected to the Board of Directors of the Company with the affirmative vote of at least a majority of the directors who were Continuing Directors at the time of such nomination or election. "Corporate Trust Office of the Trustee" means the address of the Trustee specified in Section 11.02 or such other address as the Trustee may give notice to the Company. "Custodian" means any receiver, trustee, assignee, liquidator, sequestrator or similar official under any Bankruptcy Law. "Default" means any event, act or condition that is, or after notice or the passage of time or both would be, an Event of Default. "Depository" means, with respect to the Notes issued in the form of one or more Global Notes, The Depository Trust Company or another Person designated as Depository by the Company, which must be a clearing agency registered under the Exchange Act. "Designated Investments" means Investments made after the date of this Indenture in (i) any Subsidiary of the Company that is not a Wholly Owned Restricted Subsidiary or (ii) any Joint Venture, provided that such Subsidiary or Joint Venture is engaged in one or more Permitted Businesses. "Disqualified Stock" means any Capital Stock that, by its terms, by the terms of any agreement related thereto or by the terms of any security into which it is convertible, puttable or exchangeable, is, or upon the happening of any event or the passage of time would be, required to be redeemed or repurchased by the issuer thereof or any of its Subsidiaries, whether or not at the option of the holder thereof, or matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, in whole or in part, on or prior to the final maturity date of the Notes. "EBITDA" means, with respect to any Person for any period, without duplication, the sum of the amounts for such period of (i) Consolidated Net Income, (ii) Consolidated Income Tax Expense, (iii) Consolidated Amortization Expense (but only to the extent not included in Fixed Charges), (iv) Consolidated Depreciation Expense, (v) Fixed Charges and (vi) all other non- cash items reducing the Consolidated Net Income of such Person and its Restricted Subsidiaries, in each case determined on a consolidated basis in accordance with GAAP (provided, however, that the amounts set forth in clauses (ii) through (vi) shall be included only to the extent such amounts reduce Consolidated Net Income), less the aggregate amount of all non-cash items, determined on a consolidated basis, to the extent such items increase Consolidated Net Income. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Existing Indebtedness" means all of the Indebtedness of the Company and its Restricted Subsidiaries that is outstanding on the date of this Indenture. "Existing Indenture" means the Indenture for the Existing Notes dated January 11, 1994 between the Company and The Bank of New York as Trustee, as such Indenture has been and may be amended, restated, supplemented or otherwise modified from time to time. "Existing Notes" means the $125,000,000 principal amount of 12% Senior Subordinated Notes due 2003 issued pursuant to the Existing Indenture. "Fixed Charges" means, with respect to any Person for any period, the aggregate amount of (i) interest, whether expensed or capitalized, paid, accrued or scheduled to be paid or accrued during such period (except to the extent accrued in a prior period) in respect of all Indebtedness of such Person and its Restricted Subsidiaries (including (a) original issue discount on any Indebtedness and (b) the interest portion of all deferred payment obligations, calculated in accordance with the effective interest method, in each case to the extent attributable to such period) and (ii) dividend requirements on preferred stock of such Person and its Subsidiaries (whether in cash or otherwise), but not including dividends payable solely in shares of Qualified Capital Stock, paid, accrued or scheduled to be paid or accrued during such period (except to the extent accrued in a prior period), and excluding items eliminated in consolidation. For purposes of this definition, (1) interest on a Capitalized Lease Obligation shall be deemed to accrue at the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP, (2) interest on Indebtedness that is determined on a fluctuating basis shall be deemed to have accrued at a fixed rate per annum equal to the rate of interest of such Indebtedness in effect on the last day of the period with respect to which Fixed Charges are being calculated, (3) interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate or other rates, shall be deemed to have been based upon the rate actually chosen, or, if none, then based upon such optional rate chosen as such Person may designate and (4) Fixed Charges shall be increased or reduced by the net cost (including without limitation amortization of discount) or benefit associated with Hedging Obligations attributable to such period. For purposes of clause (ii) above, dividend requirements (other than dividends payable solely in shares of Qualified Capital Stock) shall be increased to an amount representing the pretax earnings that would be required to cover such dividend requirements; accordingly, the increased amount shall be equal to a fraction, the numerator of which is such dividend requirements and the denominator of which is 1 minus the applicable actual combined Federal, state, local and foreign income tax rate of such Person and its Subsidiaries (expressed as a decimal), on a consolidated basis, for the fiscal year immediately preceding the date of the transaction giving rise to the need to calculate Fixed Charges. "Foreign Asset Sale" means any Asset Sale in respect of the Capital Stock or assets of a Foreign Subsidiary. "Foreign Subsidiary" means any Subsidiary of the Company that is organized under the laws of any jurisdiction other than the United States of America, any state thereof or the District of Columbia. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession of the United States, as in effect on January 11, 1994. "Global Note" means a security evidencing all or a portion of the Notes issued to the Depository or its nominee in accordance with Section 2.01 and bearing the legend set forth in Exhibit C. "Guarantee" shall mean any guarantee substantially in the form of Exhibit G to this Indenture executed and delivered by any Restricted Subsidiary pursuant to the provisions of Section 5.11 of the Indenture. "Guarantor" shall mean (i) Cygna Consulting Engineers and Project Management, Inc., ICF Kaiser Government Programs, Inc., PCI Operating Company, Inc., Systems Applications International, Inc., and (ii) each of the Company's Subsidiaries that in the future executes a Guarantee. "Hedging Obligations" of any Person means the obligations of such Person pursuant to any interest rate swap agreement, foreign currency exchange agreement, interest rate collar agreement, option or futures contract or other similar agreement or arrangement relating to interest rates or foreign exchange rates. "Holder" means a Person holding a Note. "Indebtedness" of any Person at any date means, without duplication: (i) all liabilities, contingent or otherwise, of such Person for borrowed money (whether or not the recourse of the lender is to the whole of the assets of such Person or only to a portion thereof); (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments; (iii) all obligations of such Person in respect of letters of credit or other similar instruments (or reimbursement obligations with respect thereto), other than standby letters of credit issued for the benefit of, or surety or performance bonds issued by, such Person in the ordinary course of business to the extent such letters of credit are not drawn upon; (iv) all obligations of such Person with respect to Hedging Obligations; (v) all obligations of such Person to pay the deferred and unpaid purchase price of property or services, except trade payables and accrued expenses incurred by such Person in the ordinary course of business in connection with obtaining goods, materials or services, which payable is not overdue according to industry practice or the original terms of sale unless such payable is being-contested in good faith; (vi) the maximum fixed repurchase price of all Disqualified Stock of such Person; (vii) all Capitalized Lease Obligations of such Person; (viii) all Indebtedness of others secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person, other than a pledge by a Single Purpose Subsidiary of the Capital Stock of an Unrestricted Subsidiary or Joint Venture of such Single Purpose Subsidiary to secure Indebtedness of such Unrestricted Subsidiary or Joint Venture incurred to finance a project constituting one or more Permitted Businesses; (ix) all Indebtedness of others guaranteed by, or otherwise the Liability of, such Person to the extent of such guarantee or Liability; and (x) all Attributable Indebtedness. The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above, the maximum liability of such Person for any such contingent obligations at such date and, in the case of clause (viii), the fair market value of any asset subject to a Lien securing the Indebtedness of others on the date that the Lien attaches. For purposes of the first sentence hereof, the "maximum fixed repurchase price" of any Disqualified Stock that does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Stock as if such Disqualified Stock were purchased on any date on which Indebtedness shall be required to be determined pursuant to this Indenture, and if such price is based upon, or measured by, the fair market value of such Disqualified Stock (or any equity security for which it may be exchanged or converted), such fair market value shall be determined in good faith by the Board of Directors of such Person, which determination shall be evidenced by a Board Resolution. "Indenture" means this Indenture as amended, supplemented or modified from time to time. "Independent Financial Advisor" means an accounting, appraisal or investment banking firm of nationally recognized standing that is, in the reasonable judgment of the Company's Board of Directors, qualified to perform the task for which it has been engaged and disinterested and independent with respect to the Company and its Affiliates. "Initial Purchaser" means BT Securities Corporatio n. "Institutional Accredited Investor" means an institution that is an "accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act. "Interest Payment Date" has the meaning assigned to such term in the Notes. "Investments" of any Person means (i) all investments by such Person in any other Person in the form of loans, advances or capital contributions or similar credit extensions constituting Indebtedness of such Person, and any guarantee of Indebtedness of any other Person, (ii) all purchases (or other acquisitions for consideration) by such Person of Indebtedness, Capital Stock or other securities of any other Person and (iii) all other items that would be classified as investments (including without limitation purchases of assets outside the ordinary course of business) on a balance sheet of such Person prepared in accordance with GAAP; provided, however, that advances to non- executive employees and extensions of trade credit and advances to customers and suppliers and other contractual and trade relationships, requiring repayment within reasonable commercial periods, to the extent made in the ordinary course of business consistent with past practice and in accordance with normal industry practice, shall not be deemed to constitute Investments. "Joint Venture" means (i) a corporation of which less than a majority of the aggregate voting power of all classes of the Common Equity is owned by the Company or its Restricted Subsidiaries and (ii) any entity other than a corporation in which the Company and its Restricted Subsidiaries own less than a majority of the Common Equity of such entity. "Junior Subordinated Indebtedness" of the Company at any date means Indebtedness of the Company which by its terms, or by the terms of any agreement or instrument pursuant to which such Indebtedness is issued, (i) is expressly subordinated in right of payment to the Notes and (ii) provides that no payment of principal of such Indebtedness by way of sinking fund, mandatory redemption, defeasance or otherwise is required to be made by the Company (including without limitation at the option of the holder thereof) at any time prior to the maturity of the Notes. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or other similar encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including without limitation any conditional sale or other title retention agreement, and any lease in the nature thereof, any option or other agreement to sell, and any filing of, or agreement to give, any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction). "Net Proceeds" with respect to any Asset Sale by any Person means the aggregate net proceeds received by such Person from such Asset Sale (including without limitation the amount of cash applied to repay Indebtedness secured by any asset involved in such Asset Sale or otherwise received as consideration for the assumption or incurrence of liabilities incurred in connection with or in anticipation of such Asset Sale) after (i) provision for all income or other taxes measured by or resulting from such Asset Sale or the transfer of the proceeds of such Asset Sale to such Person and (ii) payment of all brokerage commissions and the underwriting and other fees and expenses related to such Asset Sale, whether such proceeds are in cash or property (valued at the fair market value thereof at the time of receipt as determined in good faith by the Board of Directors of such Person, which determination shall be evidenced by a Board Resolution). "Net Reductions in Investments" means the amount of cash and Cash Equivalents, less all fees and expenses incurred or accrued in connection with the realization or collection of such cash and Cash Equivalents, and after giving effect to all taxes payable with respect thereto, received with respect to any Designated Investment, whether from the payment of interest on Indebtedness, dividends, repayments of loans or advances or other transfers of assets from the Person in which such Designated Investment was made, but only to the extent that such cash or Cash Equivalents have been paid to the Company or one or more Wholly Owned Restricted Subsidiaries of the Company in compliance with all applicable laws, rules and regulations and all relevant documents, agreements and instruments. "Non-Recourse Indebtedness" of a Single Purpose Subsidiary means Indebtedness for which (i) the sole legal recourse for collection of principal, premium, if any, and interest on such Indebtedness is against (a) the specific property identified in the instruments evidencing or securing such Indebtedness and such property was acquired with the proceeds of such Indebtedness or such Indebtedness was incurred within 90 days of the acquisition of such property or (b) the Capital Stock of such Single Purpose Subsidiary, provided that such Single Purpose Subsidiary has no assets other than the specific property acquired with the proceeds of such Indebtedness plus a reasonable amount of working capital, (ii) no assets of such Single Purpose Subsidiary, other than those assets identified in clause (i)(a) of this definition, may be realized upon in collection of principal, premium, if any, or interest on such Indebtedness and (iii) neither the Company nor any Restricted Subsidiary of the Company, other than the referent Single Purpose Subsidiary, is directly or indirectly liable to make any payment thereon, has made any guarantee of payment or performance of such Indebtedness or has pledged or granted any lien or encumbrances on any assets as collateral or security with respect thereto, other than the Capital Stock of the referent Single Purpose Subsidiary. "Notes" means the Notes issued under this Indenture. "Officer" means the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, the Treasurer, any Assistant Treasurer, Controller, Secretary or any Vice President of the Company or a Guarantor, or any other authorized representative designated by the Board of Directors of the Company or a Guarantor. "Officers' Certificate" means a certificate signed by two Officers, one of whom must be the Company's Chief Executive Officer, Chief Financial Officer or Controller. "Opinion of Counsel" means a written opinion from legal counsel who is acceptable to the Trustee. The counsel may be an employee of or counsel to the Company or the Trustee. "Paying Agent" means the paying agent as defined in Section 2.03. "Payment Restriction", with respect to a Subsidiary of any Person, means any encumbrance, restriction or limitation, whether by operation of the terms of its charter or by reason of any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation, on the ability of (i) such Subsidiary to (a) pay dividends or make other distributions on its Capital Stock or make payments on any obligation, liability or Indebtedness owed to such Person or any other Subsidiary of such Person, (b) make loans or advances to such Person or any other Subsidiary of such Person or (c) transfer any of its properties or assets to such Person or any other Subsidiary of such Person or (ii) such Person or any other Subsidiary of such Person to receive or retain any such (a) dividends, distributions or payments, (b) loans or advances or (c) transfer of properties or assets. "Permitted Businesses" means the businesses of providing consulting, engineering or construction services to public and private sector clients in the environment, energy, infrastructure and industry markets. "Permitted Investments" means: (i) direct obligations of the United States of America or any agency thereof, or obligations guaranteed by the United States of America or any agency thereof, in each case maturing within 180 days of the date of acquisition thereof; (ii) certificates of deposit or Eurodollar deposits, due within 180 days of the date of acquisition thereof, with a commercial bank which is organized under the laws of the United States of America or any state thereof having capital funds of at least $500,000,000 or more; and (iii) commercial paper given the highest rating by two established national credit rating agencies and maturing not more than 180 days from the date of acquisition thereof. "Person" means any individual, corporation, partnership, joint venture, incorporated or unincorporated association, joint-stock company, trust, unincorporated organization or government or other agency or political subdivision thereof or other entity of any kind. "Physical Notes" shall have the meaning given such term in Section 2.01. "Plan of Liquidation," with respect to any Person, means a plan that provides for, contemplates or the effectuation of which is preceded or accompanied by (whether or not substantially contemporaneously, in phases or otherwise): (i) the sale, lease, conveyance or other disposition of all or substantially all of the assets of such Person otherwise than as an entirety or substantially as an entirety; and (ii) the distribution of all or substantially all of the proceeds of such sale, lease, conveyance or other disposition and all or substantially all of the remaining assets of such Person to Holders of Capital Stock of such Person. "Private Placement Legend" means the legend initially set forth on the Series A Notes in the form set forth on Exhibit A. "Qualified Capital Stock" means Capital Stock that is not Disqualified Stock. "Qualified Institutional Buyer" or "QIB" means a "qualified institutional buyer" as such term is defined in Rule 144A under the Securities Act. "Refinancing Indebtedness" means Indebtedness of the Company or a Restricted Subsidiary of the Company issued in exchange for, or the proceeds from the issuance and sale or disbursement of which are used substantially concurrently to repay, redeem, refund, refinance, discharge or otherwise retire for value, in whole or in part (collectively, "repay"), or constituting an amendment, modification or supplement to or a deferral or renewal of (collectively, an "amendment"), any Indebtedness of the Company or any of its Restricted Subsidiaries existing immediately after the original issuance of the Notes or incurred pursuant to the provisions of Section 5.04 in a principal amount not in excess of the principal amount of the Indebtedness so refinanced; provided that: (i) the Refinancing Indebtedness is the obligation of the same Person, and is subordinated to the Notes, if at all, to the same extent, as the Indebtedness being repaid; (ii) the Refinancing Indebtedness is scheduled to mature either (a) no earlier than the Indebtedness being repaid or (b) after the maturity date of the Notes; and (iii) the portion, if any, of the Refinancing Indebtedness that is scheduled to mature on or prior to the maturity date of the Notes has a Weighted Average Life to Maturity at the time such Refinancing Indebtedness is incurred that is equal to or greater than the Weighted Average Life to Maturity of the portion of the Indebtedness being repaid that is scheduled to mature on or prior to the maturity date of the Notes. "Registrar" means the Registrar as defined in Section 2.03. "Registration Rights Agreement" means the Registration Rights Agreement dated December 23, 1996 between the Company and the Initial Purchaser. "Regulation S " means Regulation S under the Securities Act. "Related Business Investment" means any Investment directly by the Company or one or more of its Wholly Owned Restricted Subsidiaries in any business that is closely related to or complements the business of the Company and its Subsidiaries as such business exists on the date thereof. "Representative" means the indenture trustee or other trustee, agent or representative for an issue of Senior Indebtedness. "Restricted Debt Payment" means any purchase, redemption, defeasance (including without limitation in substance or legal defeasance) or other acquisition or retirement for value, directly or indirectly, by the Company or a Subsidiary of the Company, prior to the scheduled maturity or prior to any scheduled repayment of principal or sinking fund payment, as the case may be, in respect of Indebtedness of the Company that is subordinate in right of payment to the Notes other than a Restricted Debt Payment made with the proceeds of a substantially concurrent sale (other than to a Subsidiary of the Company or an employee stock ownership plan) of the Company's Qualified Capital Stock, provided that all Indebtedness so purchased, redeemed, defeased or otherwise acquired or retired for value promptly is surrendered for cancellation to the trustee for such Indebtedness. "Restricted Investment," with respect to any Person, means any Investment by such Person in any of its Affiliates or in any Person other than a Wholly Owned Restricted Subsidiary other than (i) a Permitted Investment or (ii) an Investment made with the proceeds of a substantially concurrent sale (other than to a Subsidiary of the Company or an employee stock ownership plan) of the Company's Qualified Capital Stock. "Restricted Note" has the meaning set forth for "Restricted Security" in Rule 144(a)(3) under the Securities Act; provided that the Trustee shall be entitled to request and conclusively rely upon an Opinion of Counsel with respect to whether any Note is a Restricted Note. "Restricted Payment" means with respect to any Person: (i) the declaration of any dividend (other than a dividend declared by a Wholly Owned Restricted Subsidiary to holders of its Common Equity) or the making of any other payment or distribution of cash, securities or other property or assets in respect of such Person's Capital Stock, except that a dividend payable solely in Qualified Capital Stock of such Person shall not constitute a Restricted Payment (for purposes of this clause (i), the declaration of any such dividend, or the making of any other such distribution, by any Restricted Subsidiary shall only constitute a Restricted Payment to the extent of the amounts paid or payable to Persons other than the Company or a Wholly Owned Restricted Subsidiary); (ii) any payment on account of the purchase, redemption, retirement or other acquisition for value of such Person's Capital Stock or any other payment or distribution made in respect thereof, either directly or indirectly (other than a payment solely in Qualified Capital Stock); (iii) any Restricted Investment; or (iv) any Restricted Debt Payment. "Restricted Subsidiary" means each of the Subsidiaries of the Company which, as of the determination date, is not an Unrestricted Subsidiary of the Company. "Rule 144A" means Rule 144A under the Securities Act. "Sale and Leaseback Transaction" means with respect to any Person an arrangement with any bank, insurance company or other lender or investor or to which such lender or investor is a party, providing for the leasing by such Person or any of its Subsidiaries of any property or asset of such Person or any of its Subsidiaries which has been or is being sold or transferred by such Person or such Subsidiary to such lender or investor or to any Person to whom funds have been or are to be advanced by such lender or investor on the security of such property or asset. Notwithstanding the foregoing, no transaction exclusively between the Company and any Wholly Owned Restricted Subsidiary shall be deemed to constitute a Sale and Leaseback Transaction. "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended. "Senior Indebtedness" means all Indebtedness of the Company other than Indebtedness that is specifically designated, by the terms of the instrument creating or evidencing the same, as not being senior in right of payment to the Notes. "Series A Notes" means the 12% Senior Notes due 2003, Series A, of the Company issued pursuant to this Indenture. "Series B Notes" means the 12% Senior Notes due 2003, Series B, of the Company to be issued in exchange for the Series A Notes pursuant to the Registration Rights Agreement. "Single Purpose Subsidiary" of any Person means a Subsidiary of such Person which has no Subsidiaries other than Unrestricted Subsidiaries and the activities of which are limited to (i) ownership of all or a portion of the interests in a single project constituting one or more Permitted Businesses, either directly or through the ownership of the Capital Stock of another Person and (ii) the development, engineering, design, project management, construction or operation of such project. "Subsidiary" of any Person means (i) any corporation of which at least a majority of the aggregate voting power of all classes of the Common Equity is owned by such Person directly or through one or more other Subsidiaries of such Person and (ii) any entity other than a corporation in which such Person, directly or indirectly, owns at least a majority of the Common Equity of such entity. "Supplemental Indenture" shall mean any supplemental indenture, in form satisfactory to the Trustee, executed and delivered pursuant to (a) Article 10 of this Indenture or (b) Sections 5.11 or 6.01(a)(A) of this Indenture. "TIA" means the Trust Indenture Act of 1939, as amended, as in effect on the date hereof, except as provided in Section 10.03. "Trustee" means the party named as such above until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder. "Trust Officer" means any officer or assistant officer of the Trustee assigned by the Trustee to administer its corporate trust matters. "Unrestricted Subsidiary" means American Venture Holdings, Inc., a Delaware corporation, American Venture Investments Incorporated, a Delaware corporation, Excell Development Construction, Inc., a Delaware corporation, ICF Kaiser Holdings Unlimited, Inc., a Delaware corporation, ICF Leasing Corporation, Inc., a Delaware corporation, International Systems, Inc., a Colorado corporation, Cygna Consulting Engineers and Project Management, Inc., a California corporation, ICF Kaiser Engineers Eastern Europe, Inc., a Delaware corporation, and ICF Kaiser Netherlands, B.V., a Netherlands corporation, and each of the other Subsidiaries of the Company so designated by a resolution adopted by the Board of Directors of the Company and whose creditors have no direct or indirect recourse (including without limitation recourse with respect to the payment of principal of or interest on Indebtedness of such Subsidiary) to the Company or a Restricted Subsidiary other than a Lien on the Capital Stock of such Unrestricted Subsidiary; provided, however, that (a) no Subsidiary may be an Unrestricted Subsidiary if it owns any Capital Stock of a Restricted Subsidiary and (b) the Board of Directors of the Company will be prohibited after the date of this Indenture from designating as an Unrestricted Subsidiary any Subsidiary existing on the date of this Indenture. The Board of Directors of the Company may designate an Unrestricted Subsidiary to be a Restricted Subsidiary, provided that (i) any such designation shall be deemed to be an incurrence by the Company and its Restricted Subsidiaries of the Indebtedness (if any) of such designated Subsidiary for purposes of the provisions of Section 5.04 as of the date of such designation and (ii) immediately after giving effect to such designation and the incurrence of any such additional Indebtedness, the Company and its Restricted Subsidiaries could incur $1.00 of additional Senior Indebtedness pursuant to the provisions of Section 5.04. Any such designation or redesignation by the Board of Directors shall be evidenced to the Trustee by the filing with the Trustee of a certified copy of the Board Resolution of the Company giving effect to such designation or redesignation and an Officers' Certificate certifying that such designation or redesignation complied with the foregoing conditions and setting forth the underlying calculations of such Officers' Certificate, and upon which certificate the Trustee shall conclusively rely without any investigation whatsoever. "U.S. Government Obligations" means direct obligations of the United States of America for the payment of which the full faith and credit of the United States of America is pledged. "Voting Stock", with respect to any Person, means securities of any class of Capital Stock of such Person entitling the holders thereof (whether at all times or only so long as no senior class of stock has voting power by reason of any contingency) to vote in the election of members of the board of directors of such Person. "Weighted Average Life to Maturity", when applied to any Indebtedness at any date, means the number of years obtained by dividing (i) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payment of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment by (ii) the then outstanding principal amount of such Indebtedness. "Wholly Owned Restricted Subsidiary" of the Company means a Restricted Subsidiary of the Company, of which 100% of the Common Equity (except for directors' qualifying shares or certain minority interests owned by other Persons solely due to local law requirements that there be more than one stockholder, but which interest is not in excess of what is required for such purpose) is owned directly by the Company or through one or more Wholly Owned Restricted Subsidiaries of the Company. "Wholly Owned Subsidiary" of the Company means a Subsidiary of the Company, of which 100% of the Common Equity (except for directors' qualifying shares or certain minority interests owned by other Persons solely due to local law requirements that there be more than one stockholder, but which interest is not in excess of what is required for such purpose) is owned directly by the Company or one or more Wholly Owned Subsidiaries of the Company. Section 1.02 Other Definitions
Term Defined in Section ---- ------------------ "Affiliate Transaction"...........................................5.08(a) "Asset Sale Offer Date"...........................................5.09(b) "Asset Sale Offer Period".........................................3.04(a) "Asset Sale Payment Date".........................................3.04(a) "Change of Control Offer".........................................5.03(a) "Change of Control Payment Date"............................................................5.03(a) "Event of Default"...................................................7.01 "incur"...........................................................5.04(a) "Legal Holiday".....................................................11.06 "Paying Agent".......................................................2.03 "Registrar"..........................................................2.03 "Successor"..........................................................6.01
Section 1.03 Incorporation by Reference of Trust Indenture Act Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. All terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA have the meanings so assigned to them. Section 1.04 Rules of Construction Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (3) "or" is not exclusive; (4) words in the singular include the plural, and in the plural include the singular; and (5) provisions apply to successive events and transactions. ARTICLE 2 THE NOTES Section 2.01 Form and Dating The Series A Notes and the Trustee's certificate of authentication thereof shall be substantially in the form of Exhibit A annexed hereto, which is hereby incorporated in and expressly made a part of this Indenture. The Series B Notes and the Trustee's certificate of authentication thereof shall be substantially in the form of Exhibit B annexed hereto, which is hereby incorporated in and expressly made a part of this Indenture. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage. The Company and the Trustee shall approve any notation, legend or endorsement on the Notes. Each Note shall be dated the date of its authentication. The Notes shall be in denominations of $1,000 and integral multiples thereof. Notes offered and sold in reliance on Rule 144A and to Institutional Accredited Investors shall be issued initially in the form of one or more permanent Global Notes in registered form, substantially in the form set forth in Exhibit A, deposited with the Trustee, as custodian for the Depository, and shall bear the legend set forth on Exhibit C. The aggregate principal amount of any Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for the Depository, as hereinafter provided. Notes offered and sold in offshore transactions in reliance on Regulation S shall be issued in the form of certificated Notes in registered form, substantially in the form set forth in Exhibit A (the "Offshore Physical Notes"). Notes offered and sold in reliance on any other exemption from registration under the Securities Act other than as described in the preceding paragraph shall be issued, and Notes offered and sold in reliance on Rule 144A may be issued, in the form of certificated Notes in registered form in substantially the form set forth in Exhibit A (the "U.S. Physical Notes"). The Offshore Physical Notes and the U.S. Physical Notes are sometimes collectively herein referred to as the "Physical Notes." The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture and to the extent applicable the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. Section 2.02 Execution and Authentication Two Officers shall sign the Notes for the Company by manual or facsimile signature. The Company's seal shall be reproduced on the Notes and may be in facsimile form. If an Officer whose signature is on a Note no longer holds that office at the time the Note is authenticated, the Note nevertheless shall be valid. A Note shall not be valid until authenticated by the manual signature of the Trustee. The signature shall be conclusive evidence that the Note has been authenticated under this Indenture. The Trustee shall authenticate (a) Series A Notes for original issue in the aggregate principal amount not to exceed $15,000,000 and (b) Series B Notes from time to time for issue only in exchange for a like principal amount of Series A Notes, in each case upon the receipt of a Company Order. The aggregate principal amount of Notes outstanding at any time may not exceed $15,000,000, except as provided in Section 2.06. The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Notes. An authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with the Company or an Affiliate. Section 2.03 Registrar and Paying Agent The Company shall maintain an office or agency where Notes may be presented for registration of transfer or for exchange ("Registrar") and an office or agency where Notes may be presented for payment ("Paying Agent"). The Registrar shall keep a register of the Notes and of their transfer and exchange. The Company may appoint one or more co-registrars and one or more additional paying agents. The term "Registrar" includes any co-registrar and the term "Paying Agent" includes any additional paying agent. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company shall notify the Trustee of the name and address of any Agent not a party to this Indenture. If the Company fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such. The Company or any of its Subsidiaries may act as Paying Agent or Registrar. Each Note shall be dated the date of its authentication. Section 2.04 Paying Agent to Hold Money in Trust The Company shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal of, premium, if any, or interest on the Notes, and will notify the Trustee of any default by the Company in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Company or a Subsidiary) shall have no further liability for the money. If the Company or a Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Section 2.05 Registration of Transfer and Exchange (a) Transfer and Exchange of Physical Notes. When Physical Notes --------------------------------------- are presented to the Registrar with a request: (i) to register the transfer of the Physical Notes; or (ii) to exchange such Physical Notes for an equal number of Physical Notes of other authorized denominations, the Registrar shall register the transfer or make the exchange as requested if the requirements under this Indenture as set forth in this Section 2.05 for such transactions are met; provided, however, that the Physical Notes presented or surrendered for registration of transfer or exchange: (A) shall be duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing; and (B) in the case of Physical Notes the offer and sale of which have not been registered under the Securities Act, such Physical Notes shall be accompanied, in the sole discretion of the Company, by the following additional information and documents, as applicable: (I) if such Physical Note is being delivered to the Registrar by a Holder for registration in the name of such Holder, without transfer, a certification from such Holder to that effect (substantially in the form of Exhibit D hereto); or (II) if such Physical Note is being transferred to a Qualified Institutional Buyer in accordance with Rule 144A, a certification to that effect (substantially in the form of Exhibit D hereto); or (III) if such Physical Note is being transferred to an Institutional Accredited Investor, delivery of a certification to that effect (substantially in the form of Exhibit D hereto) and a Transferee Certificate for Institutional Accredited Investors substantially in the form of Exhibit E hereto; or (IV) if such Physical Note is being transferred in reliance on Regulation S, delivery of a certification to that effect (substantially in the form of Exhibit D hereto), a Transferee Certificate for Regulation S Transfers substantially in the form of Exhibit F hereto and an Opinion of Counsel reasonably satisfactory to the Company to the effect that such transfer is in compliance with the Securities Act; or (V) if such Physical Note is being transferred in reliance on Rule 144 under the Securities Act, delivery of a certification to that effect (substantially in the form of Exhibit D hereto) and an Opinion of Counsel reasonably satisfactory to the Company to the effect that such transfer is in compliance with the Securities Act; or (VI) if such Physical Note is being transferred in reliance on another exemption from the registration requirements of the Securities Act, a certification to that effect (substantially in the form of Exhibit D hereto) and an Opinion of Counsel reasonably acceptable to the Company to the effect that such transfer is in compliance with the Securities Act. (b) Restrictions on Exchange of a Physical Note for a Beneficial ------------------------------------------------------------ Interest in a Global Note. A Physical Note may not be exchanged for a beneficial - ------------------------- interest in a Global Note except upon satisfaction of the requirements set forth below. Upon receipt by the Registrar of a Physical Note, duly endorsed or accompanied by appropriate instruments of transfer, in form satisfactory to the Registrar, together with: (i) certification, substantially in the form of Exhibit D hereto, that such Physical Note is being transferred (A) to a Qualified Institutional Buyer, (B) to an Accredited Investor or (C) in an offshore transaction in reliance on Regulation S; and (ii) a Company Order directing the Registrar to make, or to direct the Depository to make, an endorsement on the applicable Global Note to reflect an increase in the aggregate amount of the Notes represented by the Global Note, then the Registrar shall cancel such Physical Note and cause, or direct the Depository to cause, in accordance with the standing instructions and procedures existing between the Depository and the Registrar, the principal amount of Notes represented by the applicable Global Note to be increased accordingly. If no Global Note is then outstanding, the Company shall issue and the Trustee shall, upon a Company Order in accordance with Section 2.02, authenticate such a Global Note in the appropriate principal amount. (c) Transfer and Exchange of Global Notes. The transfer and ------------------------------------- exchange of Global Notes or beneficial interests therein shall be effected through the Depository in accordance with this Indenture (including the restrictions on transfer set forth herein) and the procedures of the Depository therefor. (d) Transfer of a Beneficial Interest in a Global Note for a -------------------------------------------------------- Physical Note. - ------------- (i) Any Person having a beneficial interest in a Global Note may upon request exchange such beneficial interest for a Physical Note. Upon receipt by the Registrar of a Company Order, or such other form of instructions as is customary for the Depository, from the Depository or its nominee on behalf of any Person having a beneficial interest in a Global Note and upon receipt by the Trustee of a written order or such other form of instructions as is customary for the Depository or the Person designated by the Depository as having such a beneficial interest containing registration instructions and, in the case of any such transfer or exchange of a beneficial interest in Notes the offer and sale of which have not been registered under the Securities Act, the following additional information and documents: (A) if such beneficial interest is being transferred to the Person designated by the Depository as being the beneficial owner, a certification from such Person to that effect (substantially in the form of Exhibit D hereto); or (B) if such beneficial interest is being transferred to a Qualified Institutional Buyer in accordance with Rule 144A, a certification to that effect (substantially in the form of Exhibit D hereto); or (C) if such beneficial interest is being transferred to an Institutional Accredited Investor, delivery of a certification to that effect (substantially in the form of Exhibit D hereto) and a Certificate for Institutional Accredited Investors substantially in the form of Exhibit E hereto; or (D) if such beneficial interest is being transferred in reliance on Regulation S, delivery of a certification to that effect (substantially in the form of Exhibit D hereto) and a Transferee Certificate for Regulation S Transfers substantially in the form of Exhibit F hereto and an Opinion of Counsel reasonably satisfactory to the Company to the effect that such transfer is in compliance with the Securities Act; or (E) if such beneficial interest is being transferred in reliance on Rule 144 under the Securities Act, delivery of a certification to that effect (substantially in the form of Exhibit D hereto) and an Opinion of Counsel reasonably satisfactory to the Company to the effect that such transfer is in compliance with the Securities Act; or (F) if such beneficial interest is being transferred in reliance on another exemption from the registration requirements of the Securities Act, a certification to that effect (substantially in the form of Exhibit D hereto) and an Opinion of Counsel reasonably satisfactory to the Company to the effect that such transfer is in compliance with the Securities Act, then the Registrar will cause, in accordance with the standing instructions and procedures existing between the Depository and the Registrar, the aggregate principal amount of the applicable Global Note to be reduced and, following such reduction, the Company will execute and, upon receipt of an authentication order in the form of an Officers' Certificate in accordance with Section 2.02, the Trustee will authenticate and deliver to the transferee a Physical Note. (ii) Notes issued in exchange for a beneficial interest in a Global Note pursuant to this Section 2.05(d) shall be registered in such names and in such authorized denominations as the Depository, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Registrar in writing. The Registrar shall deliver such Physical Notes to the Persons in whose names such Physical Notes are so registered. (e) Restrictions on Transfer and Exchange of Global Notes. ----------------------------------------------------- Notwithstanding any other provisions of this Indenture, a Global Note may not be transferred as a whole except by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository or by the Depository or any such nominee to a successor Depository or a nominee of such successor Depository. (f) Private Placement Legend. Upon the transfer, exchange or ------------------------ replacement of Notes not bearing the Private Placement Legend, the Registrar shall deliver Notes that do not bear the Private Placement Legend. Upon the transfer, exchange or replacement of Notes bearing the private Placement Legend, the Registrar shall deliver only Notes that bear the Private Placement Legend unless, and the Trustee is hereby authorized to deliver Notes without the Private Placement Legend if, (i) there is delivered to the Trustee an Opinion of Counsel reasonably satisfactory to the Company and the Trustee to the effect that neither such legend nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act or (ii) such Note has been sold pursuant to an effective registration statement under the Securities Act. (g) General. By its acceptance of any Note bearing the Private ------- Placement Legend, each Holder of such a Note acknowledges the restrictions on transfer of such Note set forth in this Indenture and in the Private Placement Legend and agrees that it will transfer such Note only as provided in this Indenture. The Registrar shall retain copies of all letters, notices and other written communications received pursuant to Section 2.13 or this Section 2.05. The Company 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 Registrar. No service charge shall be made to a Holder for any registration of transfer or exchange (except as otherwise expressly permitted herein), but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than such transfer tax or similar governmental charge payable upon exchanges pursuant to Section 10.05 or the Registration Rights Agreement). Without the prior consent of the Company, the Registrar is not required (a) to register the transfer or exchange of any Note selected for redemption, (b) to register the transfer or exchange of any Note for a period of 15 days before a selection of Notes to be redeemed or (c) to register the transfer or exchange of a Note between a record date and the next succeeding interest payment date. Section 2.06 Replacement Notes If any mutilated Note is surrendered to the Trustee, or the Company and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Note, the Company shall issue and the Trustee, upon receipt of a Company Order, shall authenticate a replacement Note if the Trustee's requirements are met. The Trustee or the Company may require that the Holder supply an indemnity bond that is sufficient in the judgment of the Trustee and the Company to protect the Company, the Trustee, any Agent or any authenticating agent from any loss which any of them may suffer if a Note is replaced. The Company may charge for its expenses in replacing a Note. Every replacement Note is an additional obligation of the Company. Section 2.07 Outstanding Notes The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation and those described in this Section 2.07 as not outstanding. If a Note is replaced pursuant to Section 2.06, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser. If the principal amount of any Note is considered paid under Section 5.01, it ceases to be outstanding and interest on it ceases to accrue. Except as set forth in Section 2.08, a Note does not cease to be outstanding because the Company or an Affiliate holds the Note. Section 2.08 Treasury Notes In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Company or by any Affiliate of the Company shall be considered as though not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes which the Trustee actually knows are so owned shall be so disregarded. Section 2.09 Temporary Notes Until definitive Notes are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of definitive Notes but may have variations that the Company considers appropriate for temporary Notes. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate definitive Notes in exchange for temporary Notes. Section 2.10 Cancellation The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation. Unless the Company shall direct by a written order signed by two Officers that canceled Notes be returned to it, certification of their destruction shall be delivered to the Company. The Company may not issue new Notes to replace Notes that it has paid or that have been delivered to the Trustee for cancellation, provided, however, that the Trustee shall not be required to destroy Notes. Section 2.11 Defaulted Interest If the Company defaults in a payment of interest on the Notes, it shall pay the defaulted interest in any lawful manner plus, to the extent lawful, any interest payable on the defaulted interest, to the Persons who are Holders on a subsequent special record date, in each case at the rate provided in the Notes and in Section 5.01. The Company, with the consent of the Trustee, shall fix each such special record date and payment date. At least 15 days before the record date, the Company (or the Trustee, in the name of and at the expense of the Company) shall mail to Holders a notice that states the special record date, the related payment date and the amount of such interest to be paid. Section 2.12 CUSIP Numbers The Company in issuing the Notes may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or omission of such numbers. Section 2.13 Book-Entry Provisions for Global Notes (a) The Global Notes initially shall (i) be registered in the name of the Depository or the nominee of such Depository, (ii) be delivered to the Trustee as custodian for such Depository and (iii) bear legends as set forth in Exhibit C. Members of, or participants in, the Depository ("Participants") shall have no rights under this Indenture with respect to any Global Note held on their behalf by the Depository, or the Trustee as its custodian, or under the Global Note, and the Depository may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of the Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depository or impair, as between the Depository and Participants, the operation of customary practices governing the exercise of the rights in a Holder of any Note. (b) Transfers of Global Notes shall be limited to transfers in whole, but not in part, to the Depository, its successors or their respective nominees. Interests of beneficial owners in the Global Notes may be transferred or exchanged for Physical Notes in accordance with the rules and procedures of the Depository and the provisions of Section 2.05. In addition, Physical Notes shall be transferred to all beneficial owners in exchange for their beneficial interests in Global Notes if (i) the Depository notifies the Company that it is unwilling or unable to continue as Depository for any Global Note and a successor Depository is not appointed by the Company within 90 days of such notice or (ii) an Event of Default has occurred and is continuing and the Registrar has received a request from the Depository to issue Physical Notes. (c) In connection with the transfer of Global Notes as an entirety to beneficial owners pursuant to paragraph (b) of this Section 2.13, the Global Notes shall be deemed to be surrendered to the Trustee for cancellation, and the Company shall execute, and the Trustee shall upon receipt of Company Order authenticate and deliver, to each beneficial owner identified by the Depository in exchange for its beneficial interest in the Global Notes, an equal aggregate principal amount of Physical Notes of authorized denominations. (d) Any Physical Notes constituting a Restricted Note delivered in exchange for an interest in a Global Note pursuant to paragraph (b) of this Section 2.13 shall, except as otherwise provided by Section 2.05, bear the Private Placement Legend. (e) The Holder of any Global Note may grant proxies and otherwise authorize any Person, including Participants and Persons that may hold interests through Participants, to take any action which a Holder is entitled to take under this Indenture or the Notes. ARTICLE 3 ASSET SALE OFFER Section 3.01 Notices to Trustee If the Company offers to purchase Notes pursuant to the provisions of Section 3.04, it shall furnish to the Trustee, within five days after an Asset Sale Offer Date, an Officers' Certificate setting forth the Asset Sale Payment Date, the principal amount of Notes the Company is offering to purchase and the purchase price of such Notes, and further setting forth a statement to the effect that (a) the Company has consummated an Asset Sale and (b) the conditions set forth in Section 5.09(a) have been satisfied. Section 3.02 Notices to Holders (a) As provided in Section 3.04, within 15 days after an Asset Sale Offer Date, the Company shall mail a notice by first-class mail to each Holder. (b) The notice shall state: (1) that an Asset Sale Offer is being made pursuant to Section 3.04 and the length of time the Asset Sale Offer will remain open; (2) the purchase price and the Asset Sale Payment Date; (3) the principal amount of Notes the Company is offering to purchase; (4) that any Note not tendered or accepted for payment will continue to accrue interest; (5) that any Note accepted for payment pursuant to the Asset Sale Offer shall cease to accrue interest on the Asset Sale Payment Date; (6) that Holders electing to have a Note purchased pursuant to any Asset Sale Offer will be required to surrender the Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse side of the Note completed, to the Company, a depository if appointed by the Company or a Paying Agent at the address specified in the notice prior to termination of the Asset Sale Offer; (7) that Holders will be entitled to withdraw their election if the Company, depository or Paying Agent, as the case may be, receives, not later than the expiration of the Asset Sale Offer Period, or such longer period as may be required by law, a telegram, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have the Note purchased; (8) that, if the aggregate principal amount of Notes surrendered by Holders exceeds the aggregate principal amount of Notes offered to be purchased, the Company shall select the Notes to be purchased on a pro rata basis or by lot (with such adjustments as may be deemed appropriate by the Company so that only Notes in denominations of $1,000 or integral multiples thereof shall be purchased); (9) that Holders whose Notes are purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered; and (10) the instructions that Holders must follow to tender their Notes. (c) At the Company's written request, the Trustee shall give any notice required in this Section 3.02 in the Company's name and at its expense; provided, however, that the Company shall deliver to the Trustee on or prior to the fifth day following an Asset Sale Offer Date an Officers' Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in this Section 3.02. Section 3.03 Deposit of Purchase Price One Business Day prior to the Asset Sale Payment Date, the Company shall deposit with the Trustee or with the Paying Agent money sufficient to pay the purchase price of, and accrued interest on, all Notes to be purchased on that date. Upon completion of any Asset Sale Offer, the Trustee shall return to the Company any money not required for that purpose. If the Company complies with the preceding paragraph, interest on the Notes or portions thereof purchased pursuant to any Asset Sale Offer will cease to accrue on the Asset Sale Payment Date. If any Note to be purchased shall not be so paid on the Asset Sale Payment Date, because of the failure of the Company to comply with the preceding paragraph, then interest will be paid on the unpaid principal from the Asset Sale Payment Date until such principal is paid and on any interest not paid on such unpaid principal, in each case, at the rate provided in the Notes and in Section 5.01. Section 3.04 Asset Sale Offer (a) Within 15 days after an Asset Sale Offer Date, the Company shall mail (with notice to the Trustee) or shall cause the Trustee to mail (in the Company's name and at its expense) notice of any Asset Sale Offer to each Holder of Notes as set forth in Section 3.02. The Asset Sale Offer shall be deemed to have commenced on the date of such mailing and shall terminate 20 Business Days after its commencement unless a longer offering period is required by law (the "Asset Sale Offer Period"). Promptly after the termination of the Asset Sale Offer Period (the "Asset Sale Payment Date"), the Company shall purchase and mail or deliver payment for, on a pro rata basis or as selected by lot, from Holders tendering their Notes pursuant to an Asset Sale Offer, the amount of Notes required to be purchased pursuant to Section 5.09. If an Asset Sale Payment Date is on or after an interest payment record date and on or before the related Interest Payment Date, accrued interest will be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest will be payable to Holders who tender Notes pursuant to any such Asset Sale Offer. (b) On or before any Asset Sale Payment Date, the Company, to the extent lawful, shall (i) accept for payment (on a pro rata basis or as selected by lot) Notes or portions thereof tendered pursuant to the Asset Sale Offer, (ii) if the Company appoints a depositary or Paying Agent, deposit with such depositary or Paying Agent money sufficient to pay the purchase price of all Notes or portions thereof so accepted, (iii) deliver or cause the depositary or Paying Agent to deliver to the Trustee Notes so accepted and (iv) deliver an Officers' Certificate identifying the Notes or portions thereof accepted for payment by the Company in accordance with the terms of this Section 3.04. The depositary, the Paying Agent or the Company, as the case may be, promptly shall mail or deliver to each tendering Holder an amount equal to the purchase price of the Notes tendered by such Holder and accepted by the Company for purchase and the Trustee promptly shall authenticate and mail or deliver to any such Holder a new Note equal in principal amount to any unpurchased portion of the Note surrendered by such Holder. Any Notes not so accepted promptly shall be mailed or delivered by the Company to the Holder thereof. The Company will publicly announce the results of any Asset Sale Offer on the Asset Sale Payment Date. (d) Any offer to purchase Notes pursuant to this Section 3.04 shall be made pursuant to the provisions of Sections 3.01, 3.02 and 3.03. (e) Any such offer shall be conducted in compliance with applicable tender offer rules, including Section 14(e) of the Exchange Act and Rule 14e-1 thereunder, and any other applicable securities laws or regulations. ARTICLE 4 OPTIONAL REDEMPTION Section 4.01 Redemption Date; Redemption Price The Notes may not be redeemed prior to December 31, 1998, but will be redeemable at the option of the Company, in whole or in part, at any time on or after December 31, 1998, at the following redemption prices (expressed as percentages of principal amount), together with accrued and unpaid interest thereon to the redemption date, if redeemed during the 12-month period beginning December 31: Year Optional Redemption Price ---- ------------------------- 1998 108.0% 1999 106.4 2000 104.8 2001 103.2 2002 101.6 On and after the redemption date, interest will cease to accrue on the Notes or portions thereof called for redemption. Section 4.02 Notices to Trustee and Paying Agent If the Company elects to redeem Notes pursuant to Section 4.01 and Section 5 of the Notes, it shall notify the Trustee and the Paying Agent in writing of the redemption date and the principal amount of Notes to be redeemed. The Company shall give each notice provided for in this Section 4.02 at least 60 days before the redemption date, together with an Officers' Certificate stating that such redemption shall comply with the conditions contained herein and in the Notes. Section 4.03 Selection of Notes to be Redeemed If less than all of the Notes are to be redeemed at any time, the Trustee shall select the Notes to be redeemed in compliance with the requirements of the principal national securities exchange, if any, on which the Notes being redeemed are listed or, if the Notes are not listed on a national securities exchange, on a pro rata basis, by lot or by such other method as the Trustee shall deem fair and appropriate. The Trustee shall make the selection from the Notes outstanding and not previously called for redemption. The Trustee promptly shall notify the Company in writing of such Notes selected for redemption and, in the case of Notes selected for partial redemption, the principal amount to be redeemed. The Trustee may select for redemption portions (equal to $1,000 or any integral multiple thereof) of the principal of Notes that have denominations larger than $1,000. The Notes and portions thereof the Trustee selects shall be in amounts of $1,000 or integral multiples of $1,000. Provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption. Section 4.04 Notice to Holders At least 30 days but not more than 60 days prior to a redemption date, the Company shall mail or cause the mailing of a notice of redemption by first- class mail to each Holder of Notes to be redeemed and the Trustee and Paying Agent. The notice shall identify the Notes, including "CUSIP" number, to be redeemed and shall state: (1) the redemption date; (2) the redemption price and the amount of accrued interest, if any, to be paid; (3) the name and address of the Paying Agent; (4) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price and accrued interest, if any; (5) that, unless the Company defaults in making the redemption payment, interest on Notes called for redemption ceases to accrue on and after the redemption date and the only remaining right of the Holders is to receive payment of the redemption price, together with accrued and unpaid interest thereon to the redemption date, upon surrender to the Trustee or the Paying Agent of the Notes so redeemed; (6) if any Note is being redeemed in part, the portion of the principal amount (equal to $1,000 or any integral multiple thereof) of such Note to be redeemed, and that, on and after the redemption date, upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion thereof shall be issued without charge to the Holder; and (7) if less than all of the Notes are to be redeemed, the identification of the particular Notes (or portion thereof) to be redeemed, as well as the aggregate principal amount of Notes to be redeemed and the aggregate principal amount of Notes estimated to be outstanding after the redemption. At the Company's request, the Trustee shall give the notice of redemption in the Company's name and at the Company's expense. Section 4.05 Effect of Notice of Redemption Once notice of redemption is mailed, Notes called for redemption become due and payable on the redemption date and at the redemption price and shall cease to bear interest from and after the redemption date (unless the Company shall default in the payment of the redemption price or accrued interest). Upon surrender to the Paying Agent, such Notes shall be paid at the redemption price, plus accrued interest to the redemption date but any interest installment with respect to an Interest Payment Date that is on or prior to such redemption date shall be payable on such Interest Payment Date to Holders of record at the close of business on the record date referred to in the Notes. Section 4.06 Deposit of Redemption Price At least one Business Day prior to the redemption date, the Company shall deposit with the Paying Agent money sufficient to pay the redemption price of and accrued interest on all Notes or portions thereof to be redeemed on that date. If any Note surrendered for redemption in the manner provided in this Indenture shall not be so paid on the redemption date due to the failure of the Company to deposit sufficient funds with the Paying Agent, interest shall continue to accrue from the redemption date until such payment is made on the unpaid principal and, to the extent lawful, on any interest not paid on such unpaid principal, in each case at the date and in the manner provided in the Notes. Section 4.07 Notes Redeemed in Part Upon surrender of a Note that is redeemed in part, the Company shall issue and the Trustee shall authenticate for the Holder a new Note equal in principal amount to the unredeemed portion of the Note surrendered. ARTICLE 5 COVENANTS Section 5.01 Payment of Notes The Company shall pay the principal of, premium, if any, and interest on the Notes on the dates and in the manner provided in the Notes. Principal of, premium, if any, and interest shall be considered paid on the date due if the Paying Agent, other than the Company or a Subsidiary of the Company, holds on that date money deposited by the Company designated for and sufficient to pay all principal of, premium, if any, and interest then due. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at the rate equal to 1% per annum in excess of the then applicable interest rate on the Notes to the extent lawful; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace period) at the same rate to the extent lawful. Section 5.02 Maintenance of Office or Agency The Company will maintain, in the Borough of Manhattan, The City of New York, an office or agency (which may be an office of the Trustee or the Registrar) where Notes may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee. The Company also from time to time may designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and from time to time may rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, The City of New York for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. The Company hereby designates the Corporate Trust Office of the Trustee as one such office or agency of the Company in accordance with Section 2.03. Section 5.03 Change of Control (a) Upon the occurrence of a Change of Control, the Company will offer (a "Change of Control Offer") to purchase all outstanding Notes at a purchase price equal to 101% of the aggregate principal amount of the Notes, plus accrued and unpaid interest, if any, to the date of purchase. The Change of Control Offer shall be deemed to have commenced upon mailing of the notice described in Section 5.03(b), which notice shall specify a payment date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed), and shall terminate on the specified payment date, unless a longer offering period is required by law. Promptly after the termination of the Change of Control Offer (the "Change of Control Payment Date"), the Company will purchase and mail or deliver payment for all Notes tendered in response to the Change of Control Offer. If the Change of Control Payment Date is on or after an interest payment record date and on or before the related Interest Payment Date, any accrued interest will be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest will be payable to Holders who tender Notes pursuant to the Change of Control Offer. (b) Within 30 days after any Change of Control, the Company, or the Trustee at the Company's request and expense, will mail or cause to be mailed to all Holders on the date of the Change of Control a notice of the occurrence of such Change of Control. Such notice, which shall govern the terms of the Change of Control Offer, shall state: (1) that a Change of Control has occurred and that the Holders have the right to require the Company to purchase any or all of the outstanding Notes at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase; (2) that the Change of Control Offer is being made pursuant to this Section 5.03 and the length of time the Change of Control Offer will remain open; (3) the purchase price and the Change of Control Payment Date; (4) that any Note not tendered will continue to accrue interest; (5) that any Note accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest on the Change of Control Payment Date; (6) that Holders electing to have a Note purchased pursuant to any Change of Control Offer will be required to surrender the Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse side of the Note completed, to the Company, a depository if appointed by the Company or a Paying Agent at the address specified in the notice prior to termination of the Change of Control Offer; (7) that Holders will be entitled to withdraw their election if the Company, depository or Paying Agent, as the case may be, receives, not later than the expiration of the Change of Control Offer, or such longer period as may be required by law, a telegram, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have the Note purchased; (8) that Holders whose Notes are purchased only in part will be issued Notes equal in principal amount to the unpurchased portion of the Notes surrendered; (9) the instructions, determined by the Company consistent with this Indenture, that Holders must follow in order to have their Notes purchased; (10) the circumstances and relevant facts regarding such Change of Control (including without limitation information with respect to pro forma historical income, cash flow and capitalization after giving effect to such Change of Control); and (11) information regarding the Persons acquiring control and an information regarding such Person's business plans going forward. (c) On, but in no event before, a Change of Control Payment Date, the Company, to the extent lawful, will: (i) deposit with the depository or Paying Agent, if the Company appoints any depository or Paying Agent, money in immediately available funds sufficient to pay the purchase price of all Notes tendered; (ii) deliver or cause such depository or Paying Agent to deliver to the Trustee Notes so tendered; and (iii) deliver an Officers' Certificate identifying the Notes accepted for payment by the Company in accordance with the terms of this Section 5.03. The depository, the Paying Agent or the Company, as the case may be, promptly shall mail or deliver to each tendering Holder an amount equal to the purchase price of the Notes tendered by such Holder and accepted by the Company for purchase, and the Trustee promptly shall authenticate and mail or deliver to such Holders a new Note equal in principal amount to any unpurchased portion of the Note so surrendered. Any Notes not accepted promptly shall be mailed or delivered by the Company to the Holder thereof. The Company publicly will announce the results of the Change of Control Offer on the Change of Control Payment Date. (d) Neither the Board of Directors nor the stockholders of the Company may adopt a Plan of Liquidation that provides for or contemplates, or the effectuation of which is preceded by, (i) the sale, lease, conveyance or other disposition of all or substantially all of the assets of the Company otherwise than substantially as an entirety, and (ii) the distribution of all or substantially all of the proceeds of such sale, lease, conveyance or other disposition and of the remaining assets of the Company to the holders of the Company's Capital Stock unless, prior to making any liquidating distribution pursuant to such Plan of Liquidation, the Company makes provision for the satisfaction of its obligations hereunder and under the Notes. The Company shall be deemed to have made provision for such payments only if the Company delivers in trust to the Trustee or Paying Agent (other than the Company or a Subsidiary) money or U.S. Government Obligations maturing as to principal and interest in such amounts and at such times as are sufficient without consideration of any reinvestment of such principal or interest to pay, when due, the principal of and interest on the Notes and also delivers to the Trustee an Opinion of Counsel or a tax ruling to the effect that Holders of the Notes will not recognize income, gain or loss for federal income tax purposes as a result of such action and will be subject to federal income tax on the same amount and in the same manner and at the same times as would have been the case if such action has not been taken; provided, however, that the Company shall not make any liquidating distribution until after the Company shall have certified to the Trustee with an Officers' Certificate at least five days prior to the making of any liquidating distribution that it has complied with the provisions of this Section 5.03(d) and that no Default or Event of Default then exists or would occur as a result of any such liquidating distribution. (e) Any Change of Control Offer will be conducted in compliance with applicable tender offer rules, including Section 14(e) of the Exchange Act and Rule 14e-1 promulgated thereunder, and any other applicable securities laws or regulations. Section 5.04 Limitations on Additional Indebtedness (a) After the date hereof: (i) the Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume, guarantee, extend the maturity of or otherwise become liable with respect to (collectively, "incur"), any Indebtedness (including without limitation Acquired Indebtedness), other than (A) Junior Subordinated Indebtedness incurred by the Company in compliance with the provisions of the immediately following sentence or (B) Indebtedness between the Company and its Wholly Owned Restricted Subsidiaries (provided that such Indebtedness of the Company to any Wholly Owned Restricted Subsidiary is expressly subordinated in right of payment to the Notes) or among such Wholly Owned Restricted Subsidiaries (provided, however, that any subsequent issue or transfer of any Capital Stock that results in any such Wholly Owned Restricted Subsidiary ceasing to be a Wholly Owned Restricted Subsidiary or any transfer of such Indebtedness (other than to a Wholly Owned Restricted Subsidiary) shall be deemed, in each case, to constitute the incurrence of such Indebtedness by the Company) and (ii) the Company will not permit any of its Restricted Subsidiaries to issue (except to the Company or any of its Wholly Owned Restricted Subsidiaries) any Capital Stock having a preference in liquidation or with respect to the payment of dividends, unless, after giving effect thereto, the Company's Consolidated Fixed Charge Coverage Ratio on the date thereof would be at least: (1) 2.25 to 1, if such date is on or prior to February 28, 1998; and (2) 2.50 to 1, if such date is after February 28, 1998, in each case determined on a pro forma basis as if the incurrence of such additional Indebtedness or the issuance of such Capital Stock, as the case may be, and the application of the net proceeds therefrom, had occurred at the beginning of the four-quarter period used to calculate the Company's Consolidated Fixed Charge Coverage Ratio. In addition, after the date hereof the Company will not directly or indirectly incur any Junior Subordinated Indebtedness unless, after giving effect thereto, the Company's Consolidated Fixed Charge Coverage Ratio on the date thereof would be at least 1.50 to 1, in each case determined on a pro forma basis as if the incurrence of such additional Indebtedness, and the application of the net proceeds therefrom, had occurred at the beginning of the four-quarter period used to calculate the Company's Consolidated Fixed Charge Coverage Ratio. (b) Notwithstanding the provisions of Section 5.04(a), the Company and its Restricted Subsidiaries may: (i) incur Indebtedness under the Bank Credit Agreement in an amount not to exceed $60,000,000; (ii) incur Indebtedness not otherwise permitted by any other provision hereof, so long as the aggregate principal amount of Indebtedness incurred under this clause (ii) does not exceed 7.5% of the Consolidated Tangible Assets of the Company; and (iii) incur Refinancing Indebtedness. In addition, notwithstanding the provisions of Section 5.04(a): (A) Subsidiaries of the Company that are not Wholly Owned Restricted Subsidiaries may incur Indebtedness to the Company or any of its Wholly Owned Restricted Subsidiaries in the amounts and subject to the restrictions in Section 5.05(iii) and (B) Single Purpose Subsidiaries of the Company may incur Non-Recourse Indebtedness to the extent permitted by Section 5.05(iv). (c) Notwithstanding the provisions of Sections 5.04(a) and 5.04(b), the Company may not incur any Indebtedness if such Indebtedness is subordinate or junior in ranking in any respect to any Senior Indebtedness unless such Indebtedness is Junior Subordinated Indebtedness. In addition, the Company may not incur any secured Indebtedness which is not Senior Indebtedness unless contemporaneously therewith effective provision is made to secure the Notes equally and ratably with such secured Indebtedness for so long as such secured Indebtedness is secured by a Lien. Section 5.05 Limitations on Subsidiary Debt and Preferred Stock After the date hereof, the Company will not permit any of its Restricted Subsidiaries, directly or indirectly, to create, incur, assume, guarantee, extend the maturity of or otherwise become liable with respect to (collectively, "incur"), any Indebtedness (which, with respect to any Restricted Subsidiary, includes without limitation preferred stock of such Restricted Subsidiary) except: (i) guarantees by any Restricted Subsidiary of the payment of the principal of, premium, if any, and interest on the Indebtedness incurred pursuant to the Bank Credit Agreement and in compliance with the provisions of Section 5.04(b)(i) and with the provisions of Section 5.11; (ii) Indebtedness issued to and held by the Company or a Wholly Owned Restricted Subsidiary of the Company (provided, however, that any subsequent issue or transfer of any Capital Stock that results in any such Wholly Owned Restricted Subsidiary ceasing to be a Wholly Owned Restricted Subsidiary or any transfer of such Indebtedness (other than to a Wholly Owned Restricted Subsidiary) shall be deemed, in each case, to constitute the incurrence of such Indebtedness by such Restricted Subsidiary); (iii) Indebtedness to the Company or any of its Wholly Owned Restricted Subsidiaries incurred by Subsidiaries of the Company that are not Wholly Owned Restricted Subsidiaries that are engaged in Permitted Businesses in an aggregate amount (together with all Designated Investments made in Subsidiaries that are not Wholly Owned Restricted Subsidiaries in compliance with the provisions of Section 5.06(b)(E)) not to exceed 5% of Consolidated Tangible Assets; and (iv) Non-Recourse Indebtedness incurred by a Single Purpose Subsidiary. Section 5.06 Limitations on Restricted Payments (a) The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, make any Restricted Payment if at the time of such Restricted Payment: (i) a Default or Event of Default shall have occurred and be continuing or shall occur as a consequence thereof; (ii) the Company would be unable to incur an additional $1.00 of Senior Indebtedness under the provisions of Section 5.04(a); or (iii) the amount of such Restricted Payment, when added to the aggregate amount of all Restricted Payments (other than those made pursuant to the provisions of clause (A), (C), (D), (E) or (G) of Section 5.06(b)) made after the date of this Indenture, exceeds the sum of: (a) 50% of the Company's Consolidated Net Income accrued during the period from the date of this Indenture to the end of the Company's most recently ended fiscal quarter for which financial results have been reported at the time of such Restricted Payment (or, if such aggregate Consolidated Net Income shall be a deficit, minus 100% of such aggregate deficit); plus (b) the aggregate amount of Net Reductions in Investments attributable to Designated Investments made by the Company or any Subsidiary subsequent to the date of this Indenture; provided, however, that (1) the Net Reductions in Investments attributable to any Designated Investment for purposes of this calculation shall not exceed the amount of such Designated Investment, (2) to the extent that cash or Cash Equivalents included in any Net Reductions in Investments pursuant to the definition thereof have been or will be included in the computation of Consolidated Net Income for purposes of determining the ability of the Company or any of its Restricted Subsidiaries to make Restricted Payments under clause (iii)(a) of this Section 5.06(a), such cash or Cash Equivalents shall not also be included in computing Net Reductions in Investments for purposes of this clause (iii)(b) and (3) the Company will not be permitted to make any Restricted Payment described in clause (i) or (ii) of the definition of Restricted Payment from any Net Reductions in Investments. (b) Notwithstanding the foregoing, the provisions of clauses (ii) and (iii) of Section 5.06(a) will not prevent: (A) the Company or any Wholly Owned Restricted Subsidiary from making Investments in Subsidiaries, in an aggregate amount not to exceed $4,000,000, pursuant to contractual obligations in existence on the date of this Indenture or directly related to projects in existence on the date of this Indenture; (B) the Company from paying any dividend within 60 days after the date of its declaration if such dividend could have been paid on the date of its declaration without violation of this covenant; (C) the Company from purchasing or redeeming and retiring any shares of Capital Stock of the Company, and paying accrued and unpaid dividends on such shares at the time of such repurchase or redemption, in exchange for, or out of the net proceeds of a substantially concurrent sale (other than to a Subsidiary of the Company or an employee stock ownership plan) of, shares of Qualified Capital Stock of the Company; (D) the Company or any Subsidiary from making (1) Investments pursuant to the provisions of employee benefit plans of the Company or any of its Subsidiaries in an aggregate amount not to exceed $500,000 in any fiscal year, or (2) making loans to officers of the Company in connection with any relocation of residence, approved by a majority of the independent members of the Board of Directors of the Company, provided that the aggregate amount of Investments and loans under this clause (D) shall not exceed $1,000,000 in any fiscal year; (E) the Company or any Wholly Owned Restricted Subsidiary from making Designated Investments (1) in Subsidiaries that are not Wholly Owned Restricted Subsidiaries in an aggregate amount (together with Indebtedness incurred by or on behalf of Subsidiaries that are not Wholly Owned Restricted Subsidiaries in compliance with the provisions of Section 5.05(iii)) not to exceed 5% of Consolidated Tangible Assets or (2) in Joint Ventures in an aggregate amount not to exceed 5% of Consolidated Tangible Assets, provided that: (x) the Person in whom the Investment is made is engaged only in Permitted Businesses; (y) the Company, directly or through Wholly Owned Restricted Subsidiaries of the Company, controls, under an operating and management agreement or otherwise, the day to day management and operation of such Person or otherwise has the right to exercise significant influence over the management and operation of such Person in all material respects (including without limitation the right to control or veto any material act or decision); and (z) after giving effect to such Investment, the aggregate amount of Indebtedness and Investments made by the Company and its Subsidiaries in such Person does not exceed $5,000,000; (F) the Company or any Wholly Owned Restricted Subsidiary from making Designated Investments in Subsidiaries that are not Wholly Owned Restricted Subsidiaries or in Joint Ventures; provided that such Designated Investments are made solely from (1) the net proceeds of a substantially concurrent sale (other than to a Subsidiary of the Company or an employee stock ownership plan) of shares of Qualified Capital Stock of the Company, (2) 50% of the Company's Consolidated Net Income accrued during the period from the date of this Indenture to the end of the Company's most recently ended fiscal quarter for which financial results have been reported at the time of such Restricted Payment or (3) the aggregate amount of Net Reductions in Investments (not to exceed the aggregate amount of such Designated Investments) made by the Company or any Subsidiary subsequent to the date of this Indenture; (G) the Company from redeeming for cash all (but not less than all) of the outstanding shares of the Company's Series 2D Senior Preferred Stock; provided, however, that such redemption shall not be at a price in excess of the redemption price set forth in Section 17.01 of the Company's Amended and Restated Certificate of Incorporation in effect as of the date of this Indenture; and provided, further, that prior to January 13, 1997, the Company shall not redeem any of the outstanding shares of the Company's Series 2D Senior Preferred Stock until the Company delivers to the Trustee an Officer's Certificate certifying that the Company's earnings before interest and taxes for the most recent twelve (12) month period calculated in accordance with generally accepted accounting principles equalled or exceeded $27 million. Nothing contained in this further proviso shall affect the Company's right to redeem the Series 2D Senior Preferred Stock no later than January 13, 1997; or (H) the Company from (1) making all regular quarterly dividends, each such quarterly dividend payment not to exceed $487,500 in the aggregate of $2,437.50 per share, on the outstanding shares of the Company's Series 2D Senior Preferred Stock; and (2) making all payments of any dividends of up to 9.75% on the aggregate unpaid amount of any regular quarterly dividend on the outstanding shares of the Company's Series 2D Senior Preferred Stock from the date such regular quarterly dividend should have been paid to the date of the payment of such dividend; in consideration thereof, and except as provided below, the ------------------------------------------------------ Company shall increase the Interest payable on the Notes by one percent (1%) (the "Additional Interest") from the date of this Indenture, such Additional Interest payable as provided for in the Notes. The Company files its financial results with the Securities and Exchange Commission on quarterly and annual reports, and these reports include the Company's earnings after deducting minority interests and before interest, taxes, depreciation, and amortization calculated in accordance with generally accepted accounting principles ("Earnings"). The Company will measure its Earnings for trailing twelve month periods, each period to end on the last day of a fiscal quarter and extend no further than March 31, 1998 (each a "Quarterly Measurement Period"). If the Company's Earnings equal or exceed $36 million for two consecutive Quarterly Measurement Periods, then the Company is relieved of its obligation to pay any future Additional Interest. However, if the Company's Earnings do not equal or exceed $36 million for any subsequent Quarterly Measurement Period, up to and including the Quarterly Measurement Period ending March 31, 1998, the Company is obligated to commence paying Additional Interest until the Company's Earnings again equal or exceed $36 million on a trailing twelve month basis calculated quarterly. Section 5.07 Limitations on Restrictions on Distributions from Subsidiaries The Company will not, and will not permit any of its Restricted Subsidiaries to, create or otherwise cause or suffer to exist or become effective any consensual Payment Restriction with respect to any of its Restricted Subsidiaries, except for (i) Payment Restrictions covering not more than $1,000,000 in the aggregate of retained earnings of ICF Kaiser Servicios Ambientales, S.A. de C.V., (ii) any such Payment Restriction contained in Existing Indebtedness or existing contracts to which the Company or any of its Restricted Subsidiaries are parties, (iii) any such Payment Restriction under any agreement evidencing any Acquired Indebtedness that was permitted to be incurred pursuant to the provisions of this Indenture, provided that such Payment Restriction only applies to assets that were subject to such restrictions and encumbrances prior to the acquisition of such assets by the Company or its Restricted Subsidiaries and (iv) any such Payment Restriction arising in connection with Refinancing Indebtedness; provided that any such Payment Restrictions that arise under such Refinancing Indebtedness are not, taken as a whole, more restrictive than those under the agreement creating or evidencing the Indebtedness being refunded or refinanced. Section 5.08 Limitations on Transactions With Affiliates (a) The Company will not, and will not permit any of its Restricted Subsidiaries to, make any loan, advance, guarantee or capital contribution to or for the benefit of, or sell, lease, transfer or otherwise dispose of any of its properties or assets to or for the benefit of, or make any Investment in, or purchase or lease any property or assets from, or enter into or amend any contract, agreement or understanding with or for the benefit of, any Affiliate of the Company or any of its Subsidiaries (each an "Affiliate Transaction"), other than Affiliate Transactions in the ordinary course of business and consistent with past practice that are fair to the Company or such Restricted Subsidiary, as the case may be, and are on terms at least as favorable as would have been obtainable at such time from an unaffiliated party, unless the Board of Directors of the Company or such Restricted Subsidiary, as the case may be, pursuant to a Board Resolution reasonably and in good faith determines that such Affiliate Transaction is fair to the Company or such Restricted Subsidiary, as the case may be, and is on terms at least as favorable as would have been obtainable at such time from an unaffiliated party. (b) In addition, the Company will not, and will not permit any of its Restricted Subsidiaries to, enter into any Affiliate Transaction or series of Affiliate Transactions involving or having a value of more than (i) $1,000,000 unless a majority of the members of the Board of Directors of the Company who are not affiliated with any other party to such Affiliate Transaction reasonably and in good faith shall have determined that such Affiliate Transaction or series of Affiliate Transactions is fair to the Company or such Restricted Subsidiary, as the case may be, and is on terms at least as favorable as would have been obtainable at such time from an unaffiliated party and (ii) $5,000,000 unless the Company or such Restricted Subsidiary, as the case may be, has received an opinion from an Independent Financial Advisor to the effect that the financial terms of such Affiliate Transaction are fair to the Company or such Restricted Subsidiary, as the case may be, from a financial point of view. (c) The provisions of Sections 5.08(a) and 5.08(b) shall not apply to: (i) transactions exclusively between or among the Company and any of its Wholly Owned Restricted Subsidiaries or exclusively between or among any of the Company's Wholly Owned Restricted Subsidiaries, provided that such transactions are not otherwise prohibited by the Indenture; (ii) arms-length transactions between the Company or any of its Wholly Owned Restricted Subsidiaries and the other owners of any Subsidiary or Joint Venture described in the last sentence of the definition of Affiliate; and (iii) reasonable compensation, indemnification and other benefits paid or made available to officers, directors and employees of the Company or any Subsidiary for services rendered in such Person's capacity as an officer, director or employee. Section 5.09 Limitations on Asset Sales (a) The Company will not, and will not permit any of its Restricted Subsidiaries to, consummate any Asset Sale unless: (i) the Company or its Restricted Subsidiaries receive consideration at the time of such Asset Sale at least equal to the fair market value of the assets or Capital Stock included in such Asset Sale; (ii) the aggregate fair market value of the consideration from such Asset Sale (other than consideration in the form of assumption of Indebtedness of the Company or one or more of its Restricted Subsidiaries from which the Company or such Restricted Subsidiaries, as the case may be, are released) that is not in the form of cash or Cash Equivalents shall not, when aggregated with the fair market value of all other non-cash or non-Cash Equivalent consideration received by the Company and its Restricted Subsidiaries from all previous Asset Sales since the date of this Indenture that have not yet been converted into cash or Cash Equivalents, exceed 5% of Consolidated Tangible Assets of the Company at the time of such Asset Sale; and (iii) if the aggregate fair market value of the assets or Capital Stock to be sold in such Asset Sale exceeds $3,000,000, such Asset Sale has been approved by the Company's Board of Directors. (b) Within six months after consummation of any such Asset Sale (the Business Day closest to the end of such six-month period is referred to as the "Asset Sale Offer Date"), the Company shall, or shall cause the applicable Restricted Subsidiary to: (i) reinvest the cash and Cash Equivalent portion of the Net Proceeds of such Asset Sale in a manner that would constitute a Related Business Investment; (ii) apply or cause to be applied the cash and Cash Equivalent portion of the Net Proceeds of such Asset Sale to repay outstanding Senior Indebtedness of the Company or any Restricted Subsidiary, provided, however, that any such repayment of Indebtedness under any revolving credit facility or similar agreement shall result in a permanent reduction in the lending commitment relating thereto in an amount equal to the principal amount so repaid; or (iii) apply or cause to be applied the cash and Cash Equivalent portion of the Net Proceeds of such Asset Sale that is neither reinvested as provided in clause (i) nor applied to the repayment of Senior Indebtedness as provided in clause (ii), first to the purchase of Existing Notes tendered to the ----- Company at a purchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, thereon to the date of purchase, pursuant to an offer to purchase made by the Company as set forth in Article 3 and Section 5.09 of the Indenture for the Existing Notes and this Indenture (an "Asset Sale Offer") and second to the purchase of Notes tendered to the Company ------ at a purchase price equal to 100% of the principal thereof, plus accrued and unpaid interest, if any, thereon to the date of purchase, pursuant to an Asset Sale Offer; provided, however, that the Company may defer the Asset Sale Offer until the amount subject thereto would be at least $5,000,000. (c) Notwithstanding the provisions of Sections 5.09(a) and 5.09(b): (i) to the extent that any or all of the Net Proceeds of any Foreign Asset Sale are prohibited or delayed by applicable local law from being repatriated to the United States, the portion of such Net Proceeds so affected will not be required to be applied in the manner set forth in this Section 5.09 but may be retained by the applicable Foreign Subsidiary so long, but only so long, as the applicable local law will not permit repatriation to the United States (the Company hereby agreeing to cause the applicable Foreign Subsidiary promptly to take all actions required by the applicable local law to permit such repatriation) and, once such repatriation of any of such affected Net Proceeds is permitted under the applicable local law, such repatriation will be immediately effected and such repatriated Net Proceeds will be applied in the manner set forth in this Section 5.09; and (ii) to the extent that the Board of Directors has determined in good faith that repatriation of any or all of the Net Proceeds of any Foreign Asset Sale would have a material adverse tax consequence, the Net Proceeds so affected may be retained by the applicable Foreign Subsidiary for so long as such material adverse tax consequence would continue. Section 5.10 Restrictions on Sale of Stock of Subsidiaries The Company may not sell or otherwise dispose of any of the Capital Stock of any Restricted Subsidiary of the Company unless: (i) (a)(x) the Company shall retain ownership of more than 50% of the Common Equity of such Restricted Subsidiary or (y) all of the Capital Stock of such Restricted Subsidiary shall be sold or otherwise disposed of, and (b) the Net Proceeds from any such sale or disposition are applied in a manner consistent with the provisions of Section 5.09; or (ii) the Company elects to treat the amount of its remaining investment in any such Restricted Subsidiary that has become a Joint Venture as a result of such sale or other disposition as an Investment in such Joint Venture subject to the provisions of Section 5.06. Section 5.11 Limitations on Guarantees The Company will not permit any of its Restricted Subsidiaries to guarantee any Indebtedness (other than (i) guarantees permitted under the provisions of Section 5.05(i) and (ii) guarantees delivered pursuant to the Bank Credit Agreement by Subsidiaries of the Company who have delivered similar guarantees prior to the date of this Indenture) unless the Company causes each such Subsidiary to execute and deliver to the Trustee, prior to or concurrently with the issuance of such guarantee, a supplemental indenture, in form satisfactory to the Trustee, pursuant to which such Subsidiary unconditionally guarantees the payment of principal of, premium, if any, and interest on the Notes. Any such guarantee shall be substantially in the form of Exhibit G to this Indenture, which is hereby incorporated in and expressly made a part of this Indenture. Section 5.12 SEC Reports (a) At any time that the Company has a class of securities registered under the Exchange Act, the Company shall file with the Trustee and provide to Holders, within 15 days after it files the same with the SEC, copies of its annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) which the Company or any Subsidiary of the Company is required to file with the SEC pursuant to Section 12, 13 or 15(d) of the Exchange Act. The Company shall cause any annual report furnished to its stockholders generally and any quarterly or other financial reports furnished by it to its stockholders generally to be filed with the Trustee and mailed to the Holders at their addresses appearing in the register of Notes maintained by the Registrar. (b) At any time that the Company does not have a class of securities registered under the Exchange Act, the Company shall furnish to the Trustee (who is hereby authorized and directed to furnish a copy thereof to any Person requesting the same in writing) and shall mail (or cause to be mailed by the Trustee at the Company's expense) to each of the Holders at their addresses as set forth in the register of Notes maintained by the Registrar within 60 days after the close of each of the first three quarters of each fiscal year and within 105 days after the close of each fiscal year consolidated balance sheets of the Company as of the end of each such quarter or fiscal year, as the case may be, and consolidated statements of income and cash flow of the Company for the period commencing at the end of the Company's previous fiscal year and ending with the end of such quarter or fiscal year, as the case may be, all such financial statements setting forth in comparative form the corresponding figures for the corresponding period of the preceding fiscal year, all in reasonable detail and duly certified (subject to year-end adjustments) by an Officer of the Company as having been prepared in accordance with GAAP consistently applied, and, in the case of annual consolidated financial statements, certified by independent public accountants of established national reputation, and a discussion and analysis of the results of operations and financial condition of the Company and its subsidiaries for the periods presented, which discussion and analysis shall be prepared by the management of the Company in a manner responsive to the requirements of Item 303 (or any successor item or section) of Regulation S-K promulgated by the SEC. All financial statements shall be prepared in accordance with GAAP consistently applied, except for changes with which the Company's independent public accountants concur and except that quarterly statements may be subject to year-end adjustments. (c) Delivery of the above-referenced reports, information and documents to the Trustee is for informational purposes only and the Trustee's receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company's compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers' Certificates). Section 5.13 Corporate Existence Subject to the provisions of Sections 5.09 and 6.01, the Company shall, and shall cause each Restricted Subsidiary to, do or cause to be done all things necessary to preserve and keep in full force and effect its rights (charter and statutory), licenses and franchises, except in such cases where a failure to do so would not have a material adverse effect on (a) the business, prospects, assets or financial condition of the Company and its Restricted Subsidiaries taken as a whole, or (b) the Holders. Section 5.14 Stay, Extension and Usury Laws The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, plead or in any manner whatsoever claim or take the benefit or advantage of any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the Company's obligation to pay the Notes; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law insofar as such law applies to the Notes, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law has been enacted. Section 5.15 Insurance; Books and Records; Compliance with Law (a) The Company will and will cause each Subsidiary to maintain insurance with financially sound and responsible insurance companies on all its property in at least such amounts and against at least such risks (but including in any event public liability, product liability and business interruption) as are usually insured against in the same general area by companies engaged in the same or a similar business. (b) The Company will and will cause each Subsidiary to keep proper books of record and account in which full and correct entries shall be made of all financial transactions and the assets and business of the Company and each Subsidiary, in accordance with GAAP consistently applied to the Company and its Subsidiaries taken as a whole. (c) The Company will and will cause each Subsidiary to comply with all statutes, laws, ordinances or government rules and regulations to which it is subject, non-compliance with which would materially adversely affect the business, prospects, earnings, properties, assets or condition (financial or otherwise) of the Company and its Subsidiaries taken as a whole. Section 5.16 Inspection and Confidentiality (a) The Company shall, and shall cause each of its Subsidiaries to, permit authorized representatives of the Trustee to visit and inspect the properties of the Company or its Subsidiaries, all upon reasonable prior notice and at such reasonable times during normal business hours and as often as may be reasonably requested. (b) The Trustee and its authorized representatives referred to in Section 5.16(a) agree not to use any information obtained pursuant to this Section 5.16 for any unlawful purpose and to keep confidential and not to disclose any such information to any Person except that (i) the recipient of the information may disclose any information that becomes publicly available other than as a result of disclosure by such recipient, (ii) the recipient of the information may disclose any information that its counsel reasonably concludes is necessary to be disclosed by law, pursuant to any court or administrative order or ruling or in any pending legal or administrative proceeding or investigation after prior written notice, reasonable under the circumstances, to the Company and (iii) the recipient of the information may disclose any information necessary to be disclosed pursuant to any provision of the TIA. Section 5.17 Compliance Certificate (a) The Company shall deliver to the Trustee, within 105 days after the end of each fiscal year of the Company, an Officers' Certificate stating that a review of the activities of the Company and its Restricted Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture, and further stating, as to each such Officer signing such Officers' Certificate, that to the best of such Officer's knowledge the Company has kept, observed, performed and fulfilled each covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions hereof (or, if a Default or Event of Default shall have occurred, describing all such Defaults or Events of Default of which such Officer may have knowledge and what action the Company is taking or proposes to take with respect thereto) and that to the best of such Officer's knowledge no event has occurred and remains in existence by reason of which payments on account of the principal of, premium, if any, or interest on the Notes are prohibited or, if such event has occurred, a description of the event and what action the Company is taking or proposes to take with respect thereto. Such compliance shall be determined without regard to periods of grace or requirements of notice. (b) So long as not contrary to the then current recommendations of the American Institute of Certified Public Accountants, the year-end financial statements delivered pursuant to Section 5.12 shall be accompanied by a written statement of the Company's independent public accountants (who shall be a firm of established national reputation) that in making the examination necessary for certification of such financial statements nothing has come to their attention that would lead them to believe that the Company has violated any provisions of Article 5 or 6 or, if any such violation has occurred, specifying the nature and period of existence thereof, it being understood that such accountants shall not be liable directly or indirectly to any Person for any failure to obtain knowledge of any such violation. (c) The Company, so long as any of the Notes are outstanding, will deliver to the Trustee, within five Business Days of any Officer becoming aware of any Default or Event of Default under this Indenture, an Officers' Certificate specifying such Default or Event of Default and what action the Company is taking or proposes to take with respect thereto. ARTICLE 6 SUCCESSORS Section 6.01 Limitations on Mergers and Consolidations (a) The Company, in a single transaction or a series of related transactions, will not (i) consolidate or merge with or into, or sell, lease, convey or otherwise dispose of all or substantially all of its assets, or assign any of its obligations under the Notes or this Indenture, to any Person or (ii) adopt a Plan of Liquidation unless, in either case: (A) the Person formed by or surviving such consolidation or merger (if other than the Company) or to which such sale, lease, conveyance or other disposition or assignment shall be made (or, in the case of a Plan of Liquidation, one Person to which assets are transferred) (collectively, the "Successor"), is a corporation organized and existing under the laws of the United States or any State thereof or the District of Columbia, and the Successor assumes by supplemental indenture in a form satisfactory to the Trustee all of the obligations of the Company under the Notes and this Indenture; (B) immediately prior to and immediately after and giving effect to such transaction and the assumption of the obligations as set forth in clause (A) above and the incurrence of any Indebtedness to be incurred in connection therewith, no Default or Event of Default shall have occurred and be continuing; and (C) immediately after and giving effect to such transaction and the assumption of the obligations as set forth in clause (A) above and the incurrence of any Indebtedness to be incurred in connection therewith, and the use of any net proceeds therefrom on a pro forma basis, (1) the Consolidated Tangible Net Worth of the Company or the Successor, as the case may be, would be at least equal to the Consolidated Tangible Net Worth of the Company immediately prior to such transaction and (2) the Company or the Successor, as the case may be, could incur at least $1.00 of additional Senior Indebtedness under the provisions of Section 5.04. (b) In addition, the Company will not permit any Single Purpose Subsidiary that has outstanding Indebtedness to consolidate or merge with any other Person other than a Person the activities of which are limited to ownership of a portion of the same project in which the referent Single Purpose Subsidiary owns an interest. (c) The provisions of Sections 6.01(a) and 6.01(b) will not prohibit a transaction the sole purpose of which (as determined in good faith by the Board of Directors of the Company and evidenced by a Board Resolution) is to change the state of incorporation of the Company or a Single Purpose Subsidiary, as the case may be, and such transaction does not have as one of its purposes the evasion of the limitations described above. Section 6.02 Successor Corporation Substituted (a) Upon any consolidation or merger, or any sale, lease, conveyance or other disposition of all or substantially all of the assets of the Company or any assignment of its obligations under this Indenture or the Notes in accordance with Section 6.01, the Successor formed by such consolidation or into or with which the Company is merged or to which such sale, lease, conveyance or other disposition or assignment is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such Successor had been named as the Company herein. (b) Subject to the provisions of Section 5.03(a), in the event of any such sale, lease, conveyance or other disposition (other than a transfer by way of lease), the Company or any Successor which theretofore shall have been substituted for the Company pursuant to the provisions of this Article 6 shall be discharged from all obligations and covenants under this Indenture and the Notes and may, but need not be, liquidated and dissolved. ARTICLE 7 DEFAULTS AND REMEDIES Section 7.01 Events of Default An "Event of Default" occurs if: (1) the Company fails to pay interest on any of the Notes when it becomes due and payable and such failure continues for 30 days; (2) the Company fails to pay the principal or premium, if any, of the Notes when it becomes due and payable, whether at stated maturity, upon redemption, upon acceleration or otherwise (including failure to make payment pursuant to a Change in Control Offer or an Asset Sale Offer); (3) the Company fails to comply with any covenant in this Indenture and such failure continues for 60 days after notice of such failure has been given to the Company by the Trustee or by the Holders of at least 25% of the aggregate principal amount of the Notes then outstanding; (4) the Company or any of its Subsidiaries fail to make any payment when due or during any applicable grace period in respect of any Indebtedness of the Company or any of its Subsidiaries, other than Non-Recourse Indebtedness of a Single Purpose Subsidiary, that has an aggregate outstanding principal amount of $2,000,000 or more; (5) the Company defaults under any Indebtedness, other than Non-Recourse Indebtedness of a Single Purpose Subsidiary, whether such Indebtedness existed on the date of this Indenture or thereafter shall be created, if (A) such default results in the holder or holders of such Indebtedness causing such Indebtedness to become due prior to its stated maturity and (B) the principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness the maturity of which has been so accelerated, aggregate $2,000,000 or more at any one time outstanding; (6) one or more final judgments or orders that exceed $2,000,000 in the aggregate for the payment of money have been entered by a court or courts of competent jurisdiction against the Company or any of its Subsidiaries and such judgment or judgments have not been satisfied, stayed, annulled or rescinded within 60 days of being entered; (7) the Company or any of its Subsidiaries pursuant to or within the meaning of any Bankruptcy Law: (a) commences a voluntary case, (b) consents to the entry of an order for relief against it in an involuntary case, (c) consents to the appointment of a Custodian of it or for all or substantially all of its property, or (d) makes a general assignment for the benefit of its creditors; or (8) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (a) is for relief against the Company or any of its Subsidiaries as debtor in an involuntary case, (b) appoints a Custodian of the Company or any of its Subsidiaries or a Custodian for all or substantially all of the property of the Company or any of its Subsidiaries, or (c) orders the liquidation of the Company or any of its Subsidiaries, and the order or decree remains unstayed and in effect for 60 days. Section 7.02 Acceleration If an Event of Default (other than an Event of Default with respect to the Company specified in clause (7) or (8) of Section 7.01) occurs and is continuing, the Trustee by written notice to the Company, or the Holders of at least 25% in aggregate principal amount of the Notes then outstanding by notice to the Company and the Trustee, may declare all amounts owing under the Notes to be due and payable immediately for an amount equal to 100% of the principal amount of the Notes plus accrued and unpaid interest, if any, to date of payment. Upon such declaration of acceleration, the aggregate principal of and interest on the Notes shall immediately become due and payable. If an Event of Default with respect to the Company specified in clause (7) or (8) of Section 7.01 occurs, such an amount shall ipso facto become and be immediately due and payable without any declaration, notice or other act on the part of the Trustee or any Holder. The Holders of a majority in aggregate principal amount of the Notes then outstanding by written notice to the Trustee may rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default (except nonpayment of principal or interest on the Notes that has become due solely as a result of such acceleration) have been cured or waived. Section 7.03 Other Remedies If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy by proceeding at law or in equity to collect the payment of principal of, premium, if any, or interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All remedies are cumulative to the extent permitted by law. Section 7.04 Waiver of Past Defaults Subject to the provisions of Section 7.07 and Section 10.02, the Holders of a majority in principal amount of the then outstanding Notes by notice to the Trustee may waive an existing Default or Event of Default and its consequences, except a continuing Default or Event of Default specified in clause (1), (2), (7) or (8) of Section 7.01 or in respect of the provisions of Section 5.03 or any provision hereof that cannot be modified or amended without the consent of the Holder so affected pursuant to Section 10.02. Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon. Section 7.05 Control by Majority The Holders of a majority in principal amount of the then outstanding Notes may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on it. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture, that the Trustee determines may be unduly prejudicial to the rights of other Holders, or that may involve the Trustee in personal liability. Section 7.06 Limitations on Suits Except as provided in Section 7.07, a Holder may pursue a remedy with respect to this Indenture or the Notes only if: (1) the Holder gives to the Trustee written notice of a continuing Event of Default; (2) the Holders of at least 25% in principal amount of the then outstanding Notes make a written request to the Trustee to pursue the remedy; (3) such Holder or Holders offer to the Trustee indemnity satisfactory to the Trustee against any loss, liability or expense; (4) the Trustee does not comply with the request within 60 days after receipt of the request and the offer of indemnity; and (5) during such 60-day period the Holders of a majority in principal amount of the then outstanding Notes do not give the Trustee a direction inconsistent with the request. A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a preference or priority over another Holder. Section 7.07 Rights of Holders to Receive Payment Notwithstanding any other provision of this Indenture, the right of any Holder of a Note to receive payment of principal of, premium, if any, and interest on the Note, on or after the respective due dates expressed in the Note, or to bring suit for the enforcement of any such payment on or after such respective dates, is absolute and unconditional and shall not be impaired or affected without the consent of the Holder. Section 7.08 Collection Suit by Trustee If an Event of Default specified in Section 7.01(1) or (2) occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Company for the amount of principal, premium, if any, and interest remaining unpaid on the Notes, determined in accordance with Section 7.02, and interest on overdue principal and, to the extent lawful, premium, if any, and interest, and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. Section 7.09 Trustee May File Proofs of Claim The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders allowed in any judicial proceedings relative to the Company, its creditors or its property and shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such claims and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 8.06. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. Section 7.10 Priorities If the Trustee collects any money pursuant to this Article 7, it shall pay out the money in the following order: First: to the Trustee for amounts due under Section 8.06; Second: to Holders for amounts due and unpaid on the Notes for interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for interest; Third: to Holders for amounts due and unpaid on the Notes for principal and premium, if any, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal and premium, if any, respectively; and Fourth: as a court of competent jurisdiction may direct. The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section 7.10. Section 7.11 Undertaking for Costs In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 7.11 does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 7.07 or a suit by Holders of more than 10% in principal amount of the then outstanding Notes. Section 7.12 Restoration of Rights and Remedies If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every case, subject to any determination in such proceeding, the Company, the Trustee and the Holder shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. ARTICLE 8 TRUSTEE Section 8.01 Duties of Trustee (1) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in such exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (2) Except during the continuance of an Event of Default: (a) the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (b) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; however, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (3) The Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (a) this paragraph does not limit the effect of paragraph (2) of this Section 8.01; (b) the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (c) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 7.05. (4) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (1), (2) and (3) of this Section 8.01. (5) No provision of this Indenture shall require the Trustee to expend or risk its own funds or incur any liability. The Trustee may refuse to perform any duty or exercise any right or power unless it receives indemnity satisfactory to it against any loss, liability or expense. (6) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. Section 8.02 Rights of Trustee Subject to the provisions of Section 8.01: (1) The Trustee may rely on any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document. (2) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may consult with counsel and an Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon. (3) The Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent (other than an agent who is an employee of the Trustee) appointed with due care. (4) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers conferred upon it by this Indenture. (5) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company shall be sufficient if signed by an Officer of the Company. (6) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which may be incurred by it in compliance with such request or direction. Section 8.03 Individual Rights of Trustee The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or any of its Affiliates with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. Section 8.04 Trustee's Disclaimer The Trustee makes no representation as to the validity or adequacy of this Indenture or the Notes. It shall not be accountable for the Company's use of the proceeds from the Notes or any money paid to the Company or upon the Company's direction under any provision hereof. It shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee. It shall not be responsible for any statement or recital herein or any statement in the Notes other than its certificate of authentication. Section 8.05 Notice of Defaults If a Default or Event of Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to Holders, as their names and addresses shall appear on the Notes register, a notice of the Default or Event of Default within 60 days after it occurs. Except in the case of a Default or Event of Default in payment of principal of, premium, if any, or interest on any Note or that resulted from a failure to comply with Section 5.03, the Trustee may withhold the notice if and so long as a committee of its Trust Officers in good faith determines that withholding the notice is in the interests of Holders. Section 8.06 Compensation and Indemnity The Company shall pay to the Trustee such compensation as the Company and the Trustee may from time to time agree upon in writing for its acceptance of this Indenture and services hereunder. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee upon request for all reasonable disbursements, advances and expenses incurred by it. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee's agents and counsel. The Company shall indemnify each of the Trustee and any predecessor Trustee against any and all loss, damage, claim, liability or expense including taxes (other than taxes based upon, measured by or determined by the income of the Trustee), incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture, except as set forth in the next paragraph. The Trustee promptly shall notify the Company of any claim for which it may seek indemnity. The Company shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel. The Company need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld. The Company need not reimburse any expense or indemnify against any loss or liability incurred by the Trustee through negligence or bad faith. To secure the Company's payment obligations in this Section 8.06, the Trustee shall have a Lien prior to the Notes on all money or property held or collected by the Trustee, except that held in trust to pay principal of, premium, if any, and interest on particular Notes. Such Lien shall survive the satisfaction and discharge of this Indenture. When the Trustee incurs expenses or renders services after an Event of Default specified in Section 7.01(7) or (8) occurs, the expenses (including the reasonable charges and expenses of its counsel) and the compensation for the services are intended to constitute expenses of administration under any Bankruptcy Law. Section 8.07 Replacement of Trustee A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee's acceptance of appointment as provided in this Section 8.07. The Trustee may resign and be discharged from the trust hereby created by so notifying the Company. The Holders of a majority in principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Company. The Company may remove the Trustee if: (1) the Trustee fails to comply with Section 310(b) of the TIA; (2) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law; (3) a Custodian or public officer takes charge of the Trustee or its property; or (4) the Trustee becomes incapable of acting. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Company. If a successor Trustee does not take office within 30 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of at least 10% in principal amount of the then outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee fails to comply with Section 310 of the TIA, any Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Holders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject to the Lien provided for in Section 8.06. Notwithstanding replacement of the Trustee pursuant to this Section 8.07, the Company's obligations under Section 8.06 shall continue for the benefit of the retiring Trustee. Section 8.08 Successor Trustee by Merger, etc. Subject to Section 8.09, if the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor Trustee. Section 8.09 Eligibility; Disqualification There shall at all times be a Trustee hereunder which shall be a corporation organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, shall be authorized under such laws to exercise corporate trust power, shall be subject to supervision or examination by federal or state (or the District of Columbia) authority and shall have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition. Section 8.10 Reports by Trustee to Holders To the extent required by TIA ss. 313(a), within 60 days after May 15 of each year commencing with 1997 and for as long as there are Notes outstanding hereunder, the Trustee shall mail to each Holder the Company's brief report dated as of such date that complies with TIA ss. 313(a). The Trustee also shall comply with TIA ss. 313(b), (c) and (d). A copy of such report at the time of its mailing to Holders shall be filed with the SEC, if required, and each stock exchange, if any, on which the Notes are listed. The Company shall promptly notify the Trustee if the Notes become listed on any national securities exchange and the Trustee shall comply with Section 313(d) of the TIA. ARTICLE 9 DISCHARGE OF INDENTURE Section 9.01 Termination of Company's Obligations This Indenture shall cease to be of further effect (except that the Company's obligations under Section 8.06 and the Trustee's and Paying Agent's obligations under Section 9.03 shall survive) when all outstanding Notes theretofore authenticated and issued have been delivered (other than destroyed, lost or stolen Notes that have been replaced or paid) to the Trustee for cancellation and the Company has paid all sums payable hereunder. In addition, the Company may terminate all of its obligations under this Indenture if: (1) the Company irrevocably deposits in trust with the Trustee or, at the option of the Trustee, with a trustee satisfactory to the Trustee and the Company under the terms of an irrevocable trust agreement in form and substance satisfactory to the Trustee, money or U.S. Government Obligations sufficient to pay principal of, premium, if any, and interest on the Notes to maturity and to pay all other sums payable by it hereunder; provided that (i) the trustee of the irrevocable trust shall have been irrevocably instructed to pay such money or the proceeds of such U.S. Government Obligations to the Trustee and (ii) the Trustee shall have been irrevocably instructed to apply such money or the proceeds of such U.S. Government Obligations to the payment of said principal, premium and interest with respect to the Notes; (2) the Company delivers to the Trustee an Officers' Certificate stating that all conditions precedent to satisfaction and discharge of this Indenture have been complied with, and an Opinion of Counsel to the same effect; (3) no Default or Event of Default shall have occurred and be continuing on the date of such deposit; and (4) the Company shall have delivered to the Trustee an Opinion of Counsel from nationally recognized counsel acceptable to the Trustee or a tax ruling to the effect that the Holders of the Notes will not recognize income, gain or loss for federal income tax purposes as a result of the Company's exercise of its option under this Section 9.01 and will be subject to federal income tax on the same amount and in the same manner and at the same times as would have been the case if such option had not been exercised. In such event, this Indenture shall cease to be of further effect (except as provided in the next succeeding paragraph), and the Trustee, on demand of the Company, shall execute proper instruments acknowledging confirmation of and discharge under this Indenture. However, the Company's obligations in Sections 2.03, 2.04, 2.05, 2.06, 5.01, 5.02, 8.06 and 8.07 and the Company's, the Trustee's and Paying Agent's obligations in Section 9.03 shall survive until the Notes are no longer outstanding. Thereafter, only the Company's obligations in Section 8.06 and the Trustee's and Paying Agent's obligations in Section 9.03 shall survive. After such irrevocable deposit made pursuant to this Section 9.01 and satisfaction of the other conditions set forth herein, the Trustee upon request shall acknowledge in writing the discharge of the Company's obligations under this Indenture except for those surviving obligations specified above. In order to have money available on a payment date to pay principal of, premium, if any, or interest on the Notes, the U.S. Government Obligations shall be payable as to principal or interest on or before such payment date in such amounts as will provide the necessary money. U.S. Government Obligations shall not be callable at the issuer's option. Section 9.02 Application of Trust Money The Trustee or a trustee satisfactory to the Trustee and the Company shall hold in trust money or U.S. Government Obligations deposited with it pursuant to Section 9.01. It shall apply the deposited money and the money from U.S. Government Obligations through the Paying Agent and in accordance with this Indenture to the payment of principal of, premium, if any, and interest on the Notes. Section 9.03 Repayment to Company The Trustee and the Paying Agent shall promptly pay to the Company upon written request any excess money or securities held by them at any time. The Trustee and the Paying Agent shall pay to the Company upon written request any money held by them for the payment of principal, premium, if any, or interest that remains unclaimed for two years after the date upon which such payment shall have become due; provided, however, that the Company shall have either caused notice of such payment to be mailed to each Holder entitled thereto no less than 30 days prior to such repayment or within such period shall have published such notice in a financial newspaper of general circulation published in The City of New York. After payment to the Company, Holders entitled to the money must look to the Company for payment as general creditors unless an applicable abandoned property law designates another Person, and all liability of the Trustee and such Paying Agent with respect to such money shall cease. Section 9.04 Reinstatement If the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with Section 9.01 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company's obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 9.01 until such time as the Trustee or Paying Agent is permitted to apply all such money or U.S. Government Obligations in accordance with Section 9.01; provided, however, that if the Company has made any payment of principal of, premium, if any, or interest on any Notes because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent. ARTICLE 10 AMENDMENTS Section 10.01 Without Consent of Holders The Company and the Trustee may amend this Indenture or the Notes or waive any provision hereof without the consent of any Holder: (1) to cure any ambiguity, defect or inconsistency; (2) to comply with Section 6.01; (3) to provide for uncertificated Notes in addition to certificated Notes; (4) to make any change that does not adversely affect the legal rights hereunder of any Holder; (5) to surrender any right or power herein conferred upon the Company; (6) to modify, eliminate or add to the provisions of this Indenture to such extent as shall be necessary to effect the qualification of the Indenture under the TIA, or under any similar federal statute hereafter enacted; or (7) to add or release any Guarantor pursuant to the terms of this Indenture or the Guarantees. Upon the request of the Company, accompanied by a resolution of the Board of Directors authorizing the execution of any such supplemental indenture, and upon receipt by the Trustee of the documents described in Section 10.06, the Trustee shall join with the Company in the execution of any supplemental indenture authorized or permitted by the terms of this Indenture and make any further appropriate agreements and stipulations that may be therein contained, but the Trustee shall not be obligated to enter into any supplemental indenture that affects its own rights, duties or immunities under this Indenture or otherwise. After an amendment or waiver under this Section 10.01 becomes effective, the Company shall mail to the Holders of each Note affected thereby a notice briefly describing the amendment or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture. Section 10.02 With Consent of Holders Except as provided in this Section 10.02, the Company and the Trustee may amend this Indenture or the Notes with the written consent (including consents obtained in connection with a tender offer or exchange offer for Notes) of the Holders of at least a majority in principal amount of the then outstanding Notes. Upon the request of the Company, accompanied by a resolution of the Board of Directors of the Company authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of the Holders as aforesaid, and upon receipt by the Trustee of the documents described in Section 10.06, the Trustee shall join with the Company in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture. It shall not be necessary for the consent of the Holders under this Section 10.02 to approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent approves the substance thereof. The Holders of a majority in principal amount of the Notes then outstanding may waive compliance in a particular instance by the Company with any provision of this Indenture or the Notes (including waivers obtained in connection with a tender offer or exchange offer for Notes). However, without the consent of each Holder affected, an amendment or waiver under this Section 10.02 may not: (1) reduce the amount of Notes whose Holders must consent to an amendment, supplement or waiver; (2) reduce the rate of or change the time for payment of interest, including default interest, on any Note ; (3) reduce the principal of or change the fixed maturity of any Note or alter the provisions with respect to optional redemption or mandatory repurchase of the Notes under this Indenture, including without limitation purchases of Notes under Section 3.04; (4) make any Note payable in money other than that stated in the Note; (5) make any change in Section 5.03, 7.04 or 7.07 or in this paragraph of this Section 10.02; or (6) waive a continuing Default or Event of Default in the payment of principal of or interest on the Notes or that resulted from a failure to comply with Section 5.03. The right of any Holder to participate in any consent required or sought pursuant to any provision of this Indenture (and the obligation of the Company to obtain any such consent otherwise required from such Holder) may be subject to the requirement that such Holder shall have been the Holder of record of any Notes with respect to which such consent is required or sought as of a date identified by the Trustee or the Company in a notice furnished to Holders in accordance with the terms of this Indenture. Section 10.03 Compliance with Trust Indenture Act Every amendment to this Indenture or the Notes shall comply in form and substance with the TIA as then in effect. Section 10.04 Revocation and Effect of Consents Until an amendment (which includes any supplement) or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note, even if notation of the consent is not made on any Note. However, any such Holder or subsequent Holder may revoke the consent as to his or her Note or portion of a Note if the Trustee receives written notice of revocation before the date the amendment or waiver becomes effective. An amendment or waiver becomes effective in accordance with its terms and thereafter binds every Holder. The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to consent to any amendment or waiver. If the Company elects to fix a record date for such purpose, the record date shall be fixed at (i) the later of 30 days prior to the first solicitation of such consent or the date of the most recent list of Holders furnished to the Trustee prior to such solicitation, or (ii) such other date as the Company shall designate. If a record date is fixed, then notwithstanding the provisions of the immediately preceding paragraph, those Persons who were Holders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to consent to such amendment or waiver or to revoke any consent previously given, whether or not such Persons continue to be Holders after such record date. No consent shall be valid or effective for more than 90 days after such record date unless consents from Holders of the principal amount of Notes required hereunder for such amendment or waiver to be effective shall have also been given and not revoked within such 90-day period. After an amendment or waiver becomes effective it shall bind every Holder, unless it is of the type described in any of clauses (1) through (7) of Section 10.02. In such case, the amendment or waiver shall bind each Holder of a Note who has consented to it and every subsequent Holder of a Note that evidences the same debt as the consenting Holder's Note. Section 10.05 Notation on or Exchange of Notes The Trustee may place an appropriate notation about an amendment or waiver on any Note thereafter authenticated. The Company in exchange for all Notes may issue and the Trustee shall authenticate new Notes that reflect the amendment or waiver. Section 10.06 Trustee to Sign Amendments, etc. The Trustee shall sign any amendment or supplemental indenture authorized pursuant to this Article 10 if the amendment does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may, but need not, sign it. In signing or refusing to sign such amendment or supplemental indenture, the Trustee shall be entitled to receive and, subject to Section 8.01, shall be fully protected in relying upon, an Officers' Certificate and an Opinion of Counsel as conclusive evidence that such amendment or supplemental indenture is authorized or permitted by this Indenture, that it is not inconsistent herewith and that it will be valid and binding upon the Company in accordance with its terms. ARTICLE 11 MISCELLANEOUS Section 11.01 Trust Indenture Act Controls If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by TIA ss. 318(c), the imposed duties shall control. Section 11.02 Notices Any notice or communication by the Company or the Trustee to the other is duly given if in writing and delivered in Person or mailed by first-class mail (registered or certified, return receipt requested), telecopier or overnight air courier guaranteeing next day delivery, to the other's address: If to the Company: ICF Kaiser International, Inc. 9300 Lee Highway Fairfax, Virginia 22031-1207 Attention: Executive Vice President and Chief Financial Officer cc: Senior Vice President and General Counsel If to the Trustee: The Bank of New York 101 Barclay Street, 21 West New York, New York 10286 Attention: Corporate Trust Trustee Administration The Company or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications. All notices and communications 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. Any notice or communication to a Holder shall be mailed by first-class mail to the Holder's address shown on the register kept by the Registrar. 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. If the Company mails a notice or communication to Holders, it shall mail a copy to the Trustee and each Agent at the same time. Section 11.03 Certificate and Opinion as to Conditions Precedent Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee: (1) an Officers' Certificate (which shall include the statements set forth in Section 11.04) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been complied with; and (2) an Opinion of Counsel (which shall include the statements set forth in Section 11.04) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been complied with. Section 11.04 Statements Required in Certificate or Opinion Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to Section 314(a)(4) of the TIA) shall include: (1) a statement that the Person making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such Person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been complied with. Section 11.05 Rules by Trustee and Agents The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions. Section 11.06 Legal Holidays A "Legal Holiday" is a Saturday, a Sunday or a day on which banking institutions in The City of New York or at a place of payment are authorized or obligated by law, regulation or executive order to remain closed. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. Section 11.07 No Recourse Against Others A director, officer, employee or stockholder of the Company, as such, shall not have any liability for any obligations of the Company under the Notes or this Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. Section 11.08 Governing Law THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. Section 11.09 No Adverse Interpretation of Other Agreements This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company or a Subsidiary. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. Section 11.10 Successors All agreements of the Company in this Indenture and the Notes shall bind its successor. All agreements of the Trustee in this Indenture shall bind its successor. Section 11.11 Severability In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 11.12 Counterpart Originals The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. Section 11.13 Trustee as Paying Agent and Registrar The Company initially appoints the Trustee as Paying Agent and Registrar. Section 11.14 Table of Contents, Headings, etc. The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof and shall in no way modify or restrict any of the terms or provisions hereof. SIGNATURES ICF KAISER INTERNATIONAL, INC. Issuer By: /s/ James O. Edwards Title: Chairman and Chief Executive Officer THE BANK OF NEW YORK Trustee By: /s/ B. Merino Title: Assistant Treasurer EXHIBIT A [FORM OF SERIES A NOTE] THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A PROMULGATED UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) PROMULGATED UNDER THE SECURITIES ACT (AN "ACCREDITED INVESTOR")) OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S PROMULGATED UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE ISSUER THEREOF OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A PROMULGATED UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHED (OR HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY, (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S PROMULGATED UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 PROMULGATED UNDER THE SECURITIES ACT (IF AVAILABLE), OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY, IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE ISSUER SUCH CERTIFICATIONS, WRITTEN LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE RESPECTIVE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. ICF KAISER INTERNATIONAL, INC. 12% SENIOR NOTE DUE 2003, SERIES A CUSIP No. 449244_____ No. $____________________ ICF Kaiser International, Inc., a Delaware corporation (the "Company"), for value received promises to pay to [ ], or registered assigns, the principal sum of _______________ Dollars on December 31, 2003. Interest Payment Dates: June 30 and December 31 Record Dates: June 15 and December 15 Reference is made to the further provisions of this Security contained herein, which will for all purposes have the same effect as if set forth at this place. IN WITNESS WHEREOF, the Company has caused the Security to be signed manually or by facsimile by its duly authorized officers. Dated: ICF KAISER INTERNATIONAL, INC. By: ------------------------------------ By: ------------------------------------ (SEAL) Trustee's Certificate of Authentication This is one of the Series A Notes referred to in the within-mentioned Indenture. Dated: THE BANK OF NEW YORK as Trustee By: ----------------------------------- Authorized Signatory [REVERSE OF SECURITY] 12% SENIOR NOTE DUE 2003, SERIES A Certain capitalized terms used but not defined herein shall have the meanings given to them in the Indenture under which this Note is issued. 1. Interest. ICF Kaiser International, Inc., a Delaware corporation (the "Company," which term shall include any Successor under the Indenture), promises to pay interest on the principal amount of this Note at 12%, provided that one percent (1%) additional interest (the "Additional Interest") is payable on the Notes from the date of, and as provided in, the Indenture. The Company files its financial results with the Securities and Exchange Commission on quarterly and annual reports, and these reports include the Company's earnings after deducting minority interests and before interest, taxes, depreciation, and amortization calculated in accordance with generally accepted accounting principles ("Earnings"). The Company measures its Earnings for trailing twelve month periods, each period to end on the last day of a fiscal quarter and extend no further than March 31, 1998 (each a "Quarterly Measurement Period"). If the Company's Earnings equal or exceed $36 million for two consecutive Quarterly Measurement Periods, then the Company is relieved of its obligation to pay any future Additional Interest. However, if the Company's Earnings do not equal or exceed $36 million for any subsequent Quarterly Measurement Period, up to and including the Quarterly Measurement Period ending March 31, 1998, the Company is obligated to commence paying Additional Interest until the Company's Earnings again equal or exceed $36 million on a trailing twelve month basis calculated quarterly. The Company will pay interest semiannually on June 30 and December 31 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date"). Interest on the Notes will accrue from the most recent date on which interest has been paid or, if no interest has been paid, from the date of issuance; provided, that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be June 30, 1997. The Company shall pay interest on overdue principal from time to time on demand at the rate of 1% per annum in excess of the interest rate then in effect; it shall pay interest on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2. Method of Payment. The Company will pay interest on the Notes (except defaulted interest) to the Persons who are registered Holders of Notes at the close of business on the record date next preceding the Interest Payment Date, even if such Notes are cancelled after such record date and on or before such Interest Payment Date. Holders must surrender Notes to a Paying Agent to collect principal payments. The Company will pay the principal of, premium, if any, and interest on the Notes in money of the United States of America that at the time of payment is legal tender for payment of public and private debts ("U.S. Legal Tender"). The Company, however, may pay such amounts by check payable in such U.S. Legal Tender. It may mail an interest check to a Holder's registered address. 3. Paying Agent and Registrar. Initially, The Bank of New York (the "Trustee") will act as Paying Agent and Registrar. The Company may change any Paying Agent, Registrar or co-registrar without notice to any Holder. The Company may act in any such capacity. 4. Indenture and Guarantees. The Company issued the Notes under an Indenture dated as of December 23, 1996 (the "Indenture") between the Company and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbbb), as in effect on the date of execution of the Indenture until such time as the Indenture is qualified under the TIA, and thereafter as in effect on the date on which the Indenture is qualified under the TIA. The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. Capitalized and certain other terms used herein and not otherwise defined have the meanings set forth in the Indenture. The Notes are unsecured general obligations of the Company limited to $15,000,000 in aggregate principal amount. Payment on each Note is guaranteed, jointly and severally, by the Guarantors pursuant to Section 5.11 of the Indenture. 5. Optional Redemption. The Notes may not be redeemed prior to December 31, 1998, but will be redeemable at the option of the Company, in whole or in part, at any time on or after December 31, 1998, at the following redemption prices (expressed as percentages of principal amount), together with accrued and unpaid interest, if any, thereon to the redemption date, if redeemed during the 12-month period beginning December 31:
Optional Year Redemption Price ---- ---------------- 1998 108.0% 1999 106.4% 2000 104.8% 2001 103.2% 2002 101.6%
If fewer than all of the Notes are to be redeemed at any time, selection of the Notes to be redeemed will be made by the Trustee from among the outstanding Notes on a pro rata basis, by lot or by any other method permitted in the Indenture. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at the registered address of such Holder. On and after the redemption date, interest shall cease to accrue on the Notes or portions thereof called for redemption. 6. Offers to Repurchase. (a) Change of Control Offer. In accordance with the terms of the Indenture, upon the occurrence of a Change of Control, the Company will be required to offer (a "Change of Control Offer") to purchase all outstanding Notes at a purchase price equal to 101% of the aggregate principal amount of the Notes, plus accrued and unpaid interest to the date of purchase. A Holder of Notes may tender or refrain from tendering all or any portion of his Notes at his discretion by completing the form entitled "OPTION OF HOLDER TO ELECT PURCHASE" appearing below on this Note. Any portion of Notes tendered must be in integral multiples of $1,000. (b) Asset Sale Offer. In accordance with the terms of the Indenture, if the Company or any Restricted Subsidiary consummates an Asset Sale, the Company will, under certain circumstances, be required to utilize a portion of the net proceeds received from such Asset Sale to offer to purchase Notes at a purchase price equal to 100% of the aggregate principal amount of the Notes plus accrued interest to the date fixed for the purchase. A Holder of Notes may tender or refrain from tendering all or any portion of his Notes at his discretion by completing the form entitled "OPTION OF HOLDER TO ELECT PURCHASE" appearing below this Note. Any portion of Notes tendered must be in integral multiples of $1,000. Subject to the provisions described above and compliance with Article 6 of the Indenture, the Company may sell or otherwise dispose of all or substantially all of its assets to a Successor that assumes all of the Company's obligations under the Notes and Indenture, and thereafter be discharged from such obligations. 7. Denominations, Transfer, Exchange. The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. 8. Persons Deemed Owners. The registered Holder of a Note may be treated as its owner for all purposes. 52 9. Unclaimed Funds. If funds for the payment of principal or interest remain unclaimed for two years, the Trustee and the Paying Agent will repay the funds to the Company at its request. After that, all liability of the Trustee and Paying Agent with respect to such funds shall cease. 10. Discharge. The Company may be discharged from its obligations under the Indenture and the Notes, except for certain provisions thereof, upon satisfaction of certain conditions specified in the Indenture. 11. Amendments and Waivers. Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the consent (which may include consents obtained in connection with a tender offer or exchange offer for Notes) of the Holders of at least a majority in principal amount of the Notes then outstanding, and any existing Default under, or compliance with any provision of, the Indenture may be waived (other than any continuing Default or Event of Default in the payment of interest on or the principal of the Notes, or any failure to comply with the provisions of the Indenture relating to a Change of Control Offer (as defined in the Indenture)) with the consent (which may include consents obtained in connection with a tender offer or exchange offer for Notes) of the Holders of a majority in principal amount of the Notes then outstanding. Without the consent of any Holder, the Company and the Trustee may amend or supplement the Indenture or the Notes to cure any ambiguity, defect or inconsistency; to provide for the assumption of the Company's obligations to Holders in the case of a merger or acquisition; to provide for uncertificated Notes in addition to or in place of certificated Notes; to make any change that does not adversely affect the legal rights of any Holder; to surrender any right or power conferred upon the Company in the Indenture or the Notes; or to modify, eliminate or add to the provisions of the Indenture or the Notes to such extent as shall be necessary to effect the qualification of the Indenture under the TIA or under any similar federal statute hereafter enacted. The right of any Holder to participate in any consent required or sought pursuant to any provision of the Indenture (and the obligation of the Company to obtain any such consent otherwise required from such Holder) may be subject to the requirement that such Holder shall have been the Holder of record of any Notes with respect to which such consent is required or sought as of a date identified by the Trustee or the Company in a notice furnished to Holder in accordance with the terms of the Indenture. Without the consent of each Holder affected, the Company may not take certain actions, including: (i) reduce the amount of Notes whose Holders must consent to an amendment, supplement or waiver; (ii) reduce the rate of or change the time for payment of interest, including default interest, on any Note; (iii) reduce the principal of or change the fixed maturity of any Note or alter the provisions with respect to optional redemption or mandatory repurchase of the Notes under the Indenture; (iv) make any Note payable in money other than that stated in this Note; (v) make any change in certain provisions of the Indenture regarding a Change of Control, a waiver of past Defaults and the rights of Holders to receive payment; or (vi) waive a continuing Default or Event of Default in the payment of principal of or interest on the Notes or that resulted from a failure to comply with the Change of Control provisions of the Indenture. 12. Restrictive Covenants. The Indenture contains certain covenants which, among other things, limit: (i) the incurrence of additional Indebtedness by the Company and Restricted Subsidiaries; (ii) the payment of dividends; (iii) the repurchase of capital stock or subordinated indebtedness; (iv) the making of certain other distributions, loans and investments; (v) the sale of assets and the sale of the stock of Restricted Subsidiaries; (vi) the creation of restrictions on the ability of Restricted Subsidiaries to pay dividends or make other payments to the Company; and (vii) the ability of the Company and Restricted Subsidiaries to enter into certain transactions with Affiliates or to merge, consolidate or transfer substantially all assets. These restrictions are subject to important qualifications and exceptions. The Company must report to the Trustee on compliance with such limitations. 13. Defaults and Remedies. Events of Default include: default in payment of interest on the Notes for 30 days; default in payment of principal on the Notes; failure by the Company for 60 days after notice to it to comply with any of its other agreements in the Indenture or the Notes; certain defaults under other Indebtedness; certain final judgments that remain undercharged; and certain events of bankruptcy or insolvency. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be immediately due and payable for an amount equal to 100% of the principal amount of the Notes plus accrued interest to the date of payment, except that in the case of an Event of Default arising from certain events of bankruptcy or insolvency, all outstanding Notes become due and payable immediately without further action or notice. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Notes. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing default (except a default in payment of principal or interest) if it determines that withholding notice is in their interests. The Company must furnish an annual compliance certificate to the Trustee. 14. Trustee Dealings with Company. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not Trustee. 15. No Recourse Against Others. A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Notes or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. 16. Authentication. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. 17. Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (-- tenants in common), TEN ENT (-- tenants by the entireties), JT TEN (-- joint tenants with right of survivorship and not as tenants in common), CUST (--Custodian), and U/G/M/A (-- Uniform Gifts to Minors Act). 18. CUSIP Numbers. Pursuant to a recommendation promulgated by the Commission on Uniform Security Identification Procedures, the Company has caused CUSIP Numbers to be printed on the Notes as a convenience to the Holders of the Notes. No representation is made to the accuracy of such numbers as provided on the Notes, and reliance may be placed only on the other identification numbers printed thereon. 19. Governing Law. THIS NOTE AND THE INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. 20. Registration Rights. Pursuant to the Registration Rights Agreement, the Company will be obligated upon the occurrence of certain events to consummate an exchange offer pursuant to which the Holders of the Series A Notes shall have the right to exchange the Series A Notes for the Company's 12% Senior Notes due 2003, Series B, which have been registered under the Securities Act, in like principal amount and having terms identical in all material respects as the Series A Notes. The Holders shall be entitled to receive certain additional interest payments in the event such exchange offer is not consummated and upon certain other conditions, all pursuant to and in accordance with the terms of the Registration Rights Agreement. The Company will furnish to any Holder upon written request and without charge a copy of the Indenture. Request may be made to: ICF Kaiser International, Inc. 9300 Lee Highway Fairfax, Virginia 22031-1207 Attention: Executive Vice President and Chief Financial Officer GUARANTEE The Guarantors (as defined in the Indenture referred to in the Note upon which this notation is endorsed and each hereinafter referred to as a "Guarantor," which term includes any successor to a Guarantor) have unconditionally guaranteed (such guarantee by each Guarantor being referred to herein as the "Guarantee") (a) the full and prompt payment of the principal of and premium, if any, on any Note when and as the same shall come due and payable, whether at the stated maturity thereof, by acceleration, redemption or otherwise and (b) the full and prompt payment of any interest on any Note when and as the same shall become due, according to the terms of such Note and the Indenture. No stockholder, officer, director or incorporator, as such, past, present or future, of any Guarantor shall have any liability under this Guarantee by reason of his or its status as such stockholder, officer, director or incorporator. The Guarantees shall not be valid or obligatory for any purpose until the certificate of authentication on the Notes upon which the guarantees are noted shall have been executed by the Trustee under the indenture by the manual signature of its authorized officers. CYGNA CONSULTING ENGINEERS AND Attest: BY: --------------------------- Name: Title: ICF KAISER GOVERNMENT PROGRAMS, INC. Attest: BY: --------------------------- Name: Title: PCI OPERATING COMPANY, INC. Attest: BY: --------------------------- Name: Title: SYSTEMS APPLICATIONS INTERNATIONAL, INC. Attest: BY: --------------------------- Name: Title: ASSIGNMENT FORM To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to - --------------------------------------------- (Insert assignee's Soc. Sec. or tax I.D. No.) - --------------------------------------------- - --------------------------------------------- - --------------------------------------------- - --------------------------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint --------------------- to transfer this Note on the books of the Company. The agent may substitute another to act for him. Date: ------------------------------------- Your Signature: --------------------------- (Sign exactly as your name appears on the face of this Note) Signature Guarantee: OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Company pursuant to an Asset Sale Offer or a Change in Control Offer, please execute and return this form to the Company. If you want to elect to have only part of the Note purchased by the Company pursuant to the Indenture, state the amount you elect to have purchased: $ ----------------------- Date: ------------------------------- Your Signature: -------------------------------- (Sign exactly as your name appears on the face of this Note) Signature Guarantee: EXHIBIT B [FORM OF SERIES B NOTE] ICF KAISER INTERNATIONAL, INC. 12% SENIOR NOTE DUE 2003, SERIES B CUSIP No. 449244 ----- No. $ ---------------------- ICF Kaiser International, Inc., a Delaware corporation (the "Company"), for value received promises to pay to [ ], or registered assigns, the principal sum of Dollars on December 31, 2003. --------------- Interest Payment Dates: June 30 and December 31 Record Dates: June 15 and December 15 Reference is made to the further provisions of this Security contained herein, which will for all purposes have the same effect as if set forth at this place. IN WITNESS WHEREOF, the Company has caused the Security to be signed manually or by facsimile by its duly authorized officers. Dated: ICF KAISER INTERNATIONAL, INC. By: -------------------------------------- By: -------------------------------------- (SEAL) Trustee's Certificate of Authentication This is one of the Series B Notes referred to in the within-mentioned Indenture. Dated: THE BANK OF NEW YORK as Trustee By: ----------------------------------- Authorized Signatory [REVERSE OF SECURITY] 12% SENIOR NOTE DUE 2003, SERIES B Certain capitalized terms used but not defined herein shall have the meanings given to them in the Indenture under which this Note is issued. 1. Interest. ICF Kaiser International, Inc., a Delaware corporation (the "Company," which term shall include any Successor under the Indenture), promises to pay interest on the principal amount of this Note at 12% provided that one percent (1%) additional interest (the "Additional Interest") is payable on the Notes from the date of, and as provided in, the Indenture. The Company files its financial results with the Securities and Exchange Commission on quarterly and annual reports, and these reports include the Company's earnings after deducting minority interests and before interest, taxes, depreciation, and amortization calculated in accordance with generally accepted accounting principles ("Earnings"). The Company measures its Earnings for trailing twelve month periods, each period to end on the last day of a fiscal quarter and extend no further than March 31, 1998 (each a "Quarterly Measurement Period"). If the Company's Earnings equal or exceed $36 million for two consecutive Quarterly Measurement Periods, then the Company is relieved of its obligation to pay any future Additional Interest. However, if the Company's Earnings do not equal or exceed $36 million for any subsequent Quarterly Measurement Period, up to and including the Quarterly Measurement Period ending March 31, 1998, the Company is obligated to commence paying Additional Interest until the Company's Earnings again equal or exceed $36 million on a trailing twelve month basis calculated quarterly. The Company will pay interest semiannually on June 30 and December 31 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date"). Interest on the Notes will accrue from the most recent date on which interest has been paid or, if no interest has been paid, from the date of issuance; provided, that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be June 30, 1997. The Company shall pay interest on overdue principal from time to time on demand at the rate of 1% per annum in excess of the interest rate then in effect; it shall pay interest on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2. Method of Payment. The Company will pay interest on the Notes (except defaulted interest) to the Persons who are registered Holders of Notes at the close of business on the record date next preceding the Interest Payment Date, even if such Notes are cancelled after such record date and on or before such Interest Payment Date. Holders must surrender Notes to a Paying Agent to collect principal payments. The Company will pay the principal of, premium, if any, and interest on the Notes in money of the United States of America that at the time of payment is legal tender for payment of public and private debts ("U.S. Legal Tender"). The Company, however, may pay such amounts by check payable in such U.S. Legal Tender. It may mail an interest check to a Holder's registered address. 3. Paying Agent and Registrar. Initially, The Bank of New York (the "Trustee") will act as Paying Agent and Registrar. The Company may change any Paying Agent, Registrar or co-registrar without notice to any Holder. The Company may act in any such capacity. 4. Indenture and Guarantees. The Company issued the Notes under an Indenture dated as of December 23, 1996 (the "Indenture") between the Company and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code (S)(S) 77aaa-77bbbb), as in effect on the date of execution of the Indenture until such time as the Indenture is qualified under the TIA, and thereafter as in effect on the date on which the Indenture is qualified under the TIA. The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. Capitalized and certain other terms used herein and not otherwise defined have the meanings set forth in the Indenture. The Notes are unsecured general obligations of the Company limited to $15,000,000 in aggregate principal amount. Payment on each Note is guaranteed, jointly and severally, by the Guarantors pursuant to Section 5.11 of the Indenture. 5. Optional Redemption. The Notes may not be redeemed prior to December 31, 1998, but will be redeemable at the option of the Company, in whole or in part, at any time on or after December 31, 1998, at the following redemption prices (expressed as percentages of principal amount), together with accrued and unpaid interest, if any, thereon to the redemption date, if redeemed during the 12-month period beginning December 31: Optional Year Redemption Price ---- ---------------- 1998 108.0% 1999 106.4% 2000 104.8% 2001 103.2% 2002 101.6% If fewer than all of the Notes are to be redeemed at any time, selection of the Notes to be redeemed will be made by the Trustee from among the outstanding Notes on a pro rata basis, by lot or by any other method permitted in the Indenture. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at the registered address of such Holder. On and after the redemption date, interest shall cease to accrue on the Notes or portions thereof called for redemption. 6. Offers to Repurchase. (a) Change of Control Offer. In accordance with the terms of the Indenture, upon the occurrence of a Change of Control, the Company will be required to offer (a "Change of Control Offer") to purchase all outstanding Notes at a purchase price equal to 101% of the aggregate principal amount of the Notes, plus accrued and unpaid interest to the date of purchase. A Holder of Notes may tender or refrain from tendering all or any portion of his Notes at his discretion by completing the form entitled "OPTION OF HOLDER TO ELECT PURCHASE" appearing below on this Note. Any portion of Notes tendered must be in integral multiples of $1,000. (b) Asset Sale Offer. In accordance with the terms of the Indenture, if the Company or any Restricted Subsidiary consummates an Asset Sale, the Company will, under certain circumstances, be required to utilize a portion of the net proceeds received from such Asset Sale to offer to purchase Notes at a purchase price equal to 100% of the aggregate principal amount of the Notes plus accrued interest to the date fixed for the purchase. A Holder of Notes may tender or refrain from tendering all or any portion of his Notes at his discretion by completing the form entitled "OPTION OF HOLDER TO ELECT PURCHASE" appearing below this Note. Any portion of Notes tendered must be in integral multiples of $1,000. Subject to the provisions described above and compliance with Article 6 of the Indenture, the Company may sell or otherwise dispose of all or substantially all of its assets to a Successor that assumes all of the Company's obligations under the Notes and Indenture, and thereafter be discharged from such obligations. The Notes rank pari passu with the $125,000,000 12% Senior Subordinated Notes due 2003 issued by the Company pursuant to an Indenture dated as of January 11, 1994 between the Company and The Bank of New York as Trustee. 7. Denominations, Transfer, Exchange. The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. 8. Persons Deemed Owners. The registered Holder of a Note may be treated as its owner for all purposes. 9. Unclaimed Funds. If funds for the payment of principal or interest remain unclaimed for two years, the Trustee and the Paying Agent will repay the funds to the Company at its request. After that, all liability of the Trustee and Paying Agent with respect to such funds shall cease. 10. Discharge. The Company may be discharged from its obligations under the Indenture and the Notes, except for certain provisions thereof, upon satisfaction of certain conditions specified in the Indenture. 11. Amendments and Waivers. Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the consent (which may include consents obtained in connection with a tender offer or exchange offer for Notes) of the Holders of at least a majority in principal amount of the Notes then outstanding, and any existing Default under, or compliance with any provision of, the Indenture may be waived (other than any continuing Default or Event of Default in the payment of interest on or the principal of the Notes, or any failure to comply with the provisions of the Indenture relating to a Change of Control Offer (as defined in the Indenture)) with the consent (which may include consents obtained in connection with a tender offer or exchange offer for Notes) of the Holders of a majority in principal amount of the Notes then outstanding. Without the consent of any Holder, the Company and the Trustee may amend or supplement the Indenture or the Notes to cure any ambiguity, defect or inconsistency; to provide for the assumption of the Company's obligations to Holders in the case of a merger or acquisition; to provide for uncertificated Notes in addition to or in place of certificated Notes; to make any change that does not adversely affect the legal rights of any Holder; to surrender any right or power conferred upon the Company in the Indenture or the Notes; or to modify, eliminate or add to the provisions of the Indenture or the Notes to such extent as shall be necessary to effect the qualification of the Indenture under the TIA or under any similar federal statute hereafter enacted. The right of any Holder to participate in any consent required or sought pursuant to any provision of the Indenture (and the obligation of the Company to obtain any such consent otherwise required from such Holder) may be subject to the requirement that such Holder shall have been the Holder of record of any Notes with respect to which such consent is required or sought as of a date identified by the Trustee or the Company in a notice furnished to Holder in accordance with the terms of the Indenture. Without the consent of each Holder affected, the Company may not take certain actions, including: (i) reduce the amount of Notes whose Holders must consent to an amendment, supplement or waiver; (ii) reduce the rate of or change the time for payment of interest, including default interest, on any Note; (iii) reduce the principal of or change the fixed maturity of any Note or alter the provisions with respect to optional redemption or mandatory repurchase of the Notes under the Indenture; (iv) make any Note payable in money other than that stated in this Note; (v) make any change in certain provisions of the Indenture regarding a Change of Control, a waiver of past Defaults and the rights of Holders to receive payment; or (vi) waive a continuing Default or Event of Default in the payment of principal of or interest on the Notes or that resulted from a failure to comply with the Change of Control provisions of the Indenture. 12. Restrictive Covenants. The Indenture contains certain covenants which, among other things, limit: (i) the incurrence of additional Indebtedness by the Company and Restricted Subsidiaries; (ii) the payment of dividends; (iii) the repurchase of capital stock or subordinated indebtedness; (iv) the making of certain other distributions, loans and investments; (v) the sale of assets and the sale of the stock of Restricted Subsidiaries; (vi) the creation of restrictions on the ability of Restricted Subsidiaries to pay dividends or make other payments to the Company; and (vii) the ability of the Company and Restricted Subsidiaries to enter into certain transactions with Affiliates or to merge, consolidate or transfer substantially all assets. These restrictions are subject to important qualifications and exceptions. The Company must report to the Trustee on compliance with such limitations. 13. Defaults and Remedies. Events of Default include: default in payment of interest on the Notes for 30 days; default in payment of principal on the Notes; failure by the Company for 60 days after notice to it to comply with any of its other agreements in the Indenture or the Notes; certain defaults under other Indebtedness; certain final judgments that remain undercharged; and certain events of bankruptcy or insolvency. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be immediately due and payable for an amount equal to 100% of the principal amount of the Notes plus accrued interest to the date of payment, except that in the case of an Event of Default arising from certain events of bankruptcy or insolvency, all outstanding Notes become due and payable immediately without further action or notice. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Notes. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing default (except a default in payment of principal or interest) if it determines that withholding notice is in their interests. The Company must furnish an annual compliance certificate to the Trustee. 14. Trustee Dealings with Company. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not Trustee. 15. No Recourse Against Others. A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Notes or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. 16. Authentication. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. 17. Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (-- tenants in common), TEN ENT (-- tenants by the entireties), JT TEN (-- joint tenants with right of survivorship and not as tenants in common), CUST (--Custodian), and U/G/M/A (-- Uniform Gifts to Minors Act). 18. CUSIP Numbers. Pursuant to a recommendation promulgated by the Commission on Uniform Security Identification Procedures, the Company has caused CUSIP Numbers to be printed on the Notes as a convenience to the Holders of the Notes. No representation is made to the accuracy of such numbers as provided on the Notes, and reliance may be placed only on the other identification numbers printed thereon. 19. Governing Law. THIS NOTE AND THE INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. The Company will furnish to any Holder upon written request and without charge a copy of the Indenture. Request may be made to: ICF Kaiser International, Inc. 9300 Lee Highway Fairfax, Virginia 22031-1207 Attention: Executive Vice President and Chief Financial Officer GUARANTEE The Guarantors (as defined in the Indenture referred to in the Note upon which this notation is endorsed and each hereinafter referred to as a "Guarantor," which term includes any successor to a Guarantor) have unconditionally guaranteed (such guarantee by each Guarantor being referred to herein as the "Guarantee") (a) the full and prompt payment of the principal of and premium, if any, on any Note when and as the same shall come due and payable, whether at the stated maturity thereof, by acceleration, redemption or otherwise and (b) the full and prompt payment of any interest on any Note when and as the same shall become due, according to the terms of such Note and the Indenture. No stockholder, officer, director or incorporator, as such, past, present or future, of any Guarantor shall have any liability under this Guarantee by reason of his or its status as such stockholder, officer, director or incorporator. The Guarantees shall not be valid or obligatory for any purpose until the certificate of authentication on the Notes upon which the guarantees are noted shall have been executed by the Trustee under the indenture by the manual signature of its authorized officers. GUARANTORS: CYGNA CONSULTING ENGINEERS AND Attest: BY: --------------------------------- Name: Title: ICF KAISER GOVERNMENT PROGRAMS, INC. Attest: BY: --------------------------------- Name: Title: PCI OPERATING COMPANY, INC. Attest: BY: --------------------------------- Name: Title: SYSTEMS APPLICATIONS INTERNATIONAL, INC. Attest: BY: --------------------------------- Name: Title: ASSIGNMENT FORM To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to - ------------------------------------------ (Insert assignee's Soc. Sec. or tax I.D. No.) - ------------------------------------------ - ------------------------------------------ - ------------------------------------------ - ------------------------------------------ (Print or type assignee's name, address and zip code) and irrevocably appoint ------------------ to transfer this Note on the books of the Company. The agent may substitute another to act for him. Date: ----------------------------------- Your Signature: ---------------------- (Sign exactly as your name appears on the face of this Note) Signature Guarantee: OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Company pursuant to an Asset Sale Offer or a Change in Control Offer, please execute and return this form to the Company. If you want to elect to have only part of the Note purchased by the Company pursuant to the Indenture, state the amount you elect to have purchased: $ ----------------------------- Date: ------------------------- Your Signature: --------------------------------- (Sign exactly as your name appears on the face of this Note) Signature Guarantee: EXHIBIT C FORM OF LEGEND FOR GLOBAL NOTES Any Global Note authenticated and delivered hereunder shall bear a legend (which would be in addition to any other legends required in the case of a Restricted Note) in substantially the following form: THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS NOTE IS NOT EXCHANGEABLE FOR NOTES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. EXHIBIT D CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF NOTES Re: 12% Senior Notes due 2003, Series A, and 12% Senior Notes due 2003, Series B (the "Notes"), of ICF Kaiser International, Inc. ------------------------------------------------ This Certificate relates to $_____ principal amount of Notes held in the form of* ___ a beneficial interest in a Global Note or* ______ Physical Notes by _____ (the "Transferor"). The Transferor:* __ /__/ has requested by written order that the Registrar deliver in exchange for its beneficial interest in the Global Note held by the Depositary a Physical Note or Physical Notes in definitive, registered form of authorized denominations and an aggregate principal amount equal to its beneficial interest in such Global Note (or the portion thereof indicated above); or __ /__/ has requested that the Registrar by written order to exchange or register the transfer of a Physical Note or Physical Notes. In connection with such request and in respect of each such Note, the Transferor does hereby certify that the Transferor is familiar with the Indenture relating to the above captioned Notes and the restrictions on transfers thereof as provided in Section 2.05 of such Indenture, and that the transfer of this Note does not require registration under the Securities Act of 1933, as amended (the "Act") because*: __ /__/ Such Note is being acquired for the Transferor's own account, without transfer (in satisfaction of Section 2.05(a)(B)(I) or Section 2.05(d)(i)(A) of the Indenture). __ /__/ Such Note is being transferred to a "qualified institutional buyer" (as defined in Rule 144A under the Act), in reliance on Rule 144A. __ /__/ Such Note is being transferred to an institutional "accredited investor" (within the meaning of subparagraphs (a)(1), (2), (3) or (7) of Rule 501 under the Act). __ /__/ Such Note is being transferred in reliance on Regulation S under the Act. __ /__/ Such Note is being transferred in reliance on Rule 144 under the Act. __ /__/ Such Note is being transferred in reliance on and in compliance with an exemption from the registration requirements of the Act other than Rule 144A or Rule 144 or Regulation S under the Act to a person other than an institutional "accredited investor." --------------------------------------- [INSERT NAME OF TRANSFEROR] By: --------------------------------------- [Authorized Signatory] Date: ---------------------- *Check applicable box. EXHIBIT E Form of Certificate to Be Delivered in Connection with Transfers to Institutional Accredited Investors ----------------------------------------------- ________________, ______ The Bank of New York 101 Barclay Street, 21 West New York, New York 10286 Attention: Corporate Trust Trustee Administration Re: ICF Kaiser International, Inc. (the "Company") Indenture (the "Indenture") relating to 12% Senior Notes due 2003, Series A, and 12% Senior Notes due 2003, Series B -------------------------------------------------- Ladies and Gentlemen: In connection with our proposed purchase of 12% Senior Notes due 2003, Series A, or 12% Senior Notes due 2003, Series B (the "Notes"), of the Company, we confirm that: 1. We have received such information as we deem necessary in order to make our investment decision. 2. We understand that any subsequent transfer of the Notes is subject to certain restrictions and conditions set forth in the Indenture and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Notes except in compliance with, such restrictions and conditions and the Securities Act of 1933, as amended (the "Securities Act"). 3. We understand that the offer and sale of the Notes have not been registered under the Securities Act, and that the Notes may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell any Notes, we will do so only (A) to the Company or any subsidiary thereof, (B) inside the United States in accordance with Rule 144A under the Securities Act to a "qualified institutional buyer" (as defined therein), (C) inside the United States to an institutional "accredited investor" (as defined below) that, prior to such transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to the Trustee a signed letter substantially in the form hereof, (D) outside the United States in accordance with Regulation S under the Securities Act, (E) pursuant to the exemption from registration provided by Rule 144 under the Securities Act (if available) or (F) pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any person purchasing Notes from us a notice advising such purchaser that resales of the Notes are restricted as stated herein. 4. We understand that, on any proposed resale of Notes, we will be required to furnish to the Trustee and the Company, such certification, legal opinions and other information as the Trustee and the Company may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Notes purchased by us will bear a legend to the foregoing effect. 5. We are an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Notes, and we and any accounts for which we are acting are each able to bear the economic risk of our or their investment, as the case may be. 6. We are acquiring the Notes purchased by us for our account or for one or more accounts (each of which is an institutional "accredited investor") as to each of which we exercise sole investment discretion. You and the Company are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby. Very truly yours, [Name of Transferor] By: ---------------------------- [Authorized Signatory] EXHIBIT F Form of Certificate to Be Delivered in Connection with with Regulation S Transfers ------------------------------- ________________, ______ The Bank of New York 101 Barclay Street, 21 West New York, New York 10286 Attention: Corporate Trust Trustee Administration Re: ICF Kaiser International, Inc. (the "Company") Indenture (the "Indenture") relating to 12% Senior Notes due 2003, Series A, and 12% Senior Notes due 2003, Series B (the "Notes") -------------------------------------------------- Dear Sirs: In connection with our proposed sale of $_________________ aggregate principal amount of the Notes, we confirm that such sale has been effected pursuant to and in accordance with Regulation S under the Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we represent that: (1) the offer of the Notes was not made to a person in the United States; (2) either (a) at the time the buy offer was originated, the transferee was outside the United States or we and any person acting on our behalf reasonably believed that the transferee was outside the United States, or (b) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither we nor any person acting on our behalf knows that the transaction has been pre-arranged with a buyer in the United States; (3) no directed selling efforts have been made in the United States in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S, as applicable; (4) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act; and (5) we have advised the transferee of the transfer restrictions applicable to the Notes. You and the Company are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Defined terms used herein without definition have the respective meanings provided in Regulation S. Very truly yours, [Name of Transferor] By: ------------------------------ [Authorized Signature] EXHIBIT G FORM OF GUARANTEE FOR VALUE RECEIVED, [name of subsidiary], a corporation duly organized and existing under the laws of the State [state] (herein called the "Guarantor", which term includes any successor corporation under the Indenture dated December 23, 1996, as supplemented (herein called the "Indenture") referred to in the Notes to which this Guarantee relates), hereby unconditionally guarantees to the Holders from time to time of the Notes: (a) the full and prompt payment of the principal of, and premium, if any, on any Note when and as the same shall come due and payable, whether at the stated maturity thereof, by acceleration, redemption or otherwise, and (b) the full and prompt payment of any interest on any Note when and as the same shall become due, according to the terms of such Note and the Indenture. In addition, the Guarantor hereby unconditionally agrees that upon default by the Company in the payment when due of the principal of, premium, if any, on and interest on the Notes (whether at stated maturity thereof, acceleration, redemption or otherwise), the Guarantor will forthwith pay the same, without further notice or demand. The obligations of the Guarantor hereunder shall be absolute and unconditional and, except as otherwise provided herein, shall remain in full force and effect until the entire principal of, premium, if any, on, and interest on the Notes shall have been paid or provided for in accordance with the provisions of the Indenture, and such obligations shall not be affected, modified or impaired upon the happening from time to time of any event, including without limitation any of the following, whether or not with notice to, or the consent of, the Guarantor: (a) the waiver, surrender, compromise, settlement, release, or termination of any or all of the obligations, covenants, or agreements of the Company under the Indenture or the Notes, unless the waiver, surrender, compromise, settlement, release or termination is made specifically applicable to the Guarantor; b) the failure to give notice to the Guarantor of the occurrence of an Event of Default; (c) the waiver, compromise, or release of the payment, performance or observance by the Company of any or all of its obligations, covenants or agreements contained in the Indenture, unless such waiver, compromise or release is specifically applicable to the Guarantor; (d) the extension of time for payment of any principal of, premium, if any, on, or interest on any Notes or for any other payments under the Indenture or of the time for performance of any other obligations, covenants or agreements under or arising out of the Indenture, unless such extension of time is specifically applicable to the Guarantor; (e) the modification or amendment (whether material or otherwise) of any obligation, covenant, or agreement set forth in the Indenture or the Notes, unless such modification or amendment is specifically applicable to the Guarantor; (f) the taking or the omission of any of the actions referred to in the Indenture and any of the actions under the Notes; (g) any failure, omission, delay, or lack on the part of the Trustee to enforce, assert or exercise any right, power or remedy conferred on the Trustee in the Indenture, or any other act or acts on the part of the Trustee or any of the Holders from time to time of the Notes; (h) the voluntary or involuntary liquidation, dissolution, sale, or other disposition of all or substantially all of the assets, marshalling of assets and liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition with creditors, or readjustment of, or other similar proceedings affecting the Guarantor, or the Company or any of the assets of any of them, or any allegation or contest of the validity of this Guarantee in any such proceeding; (i) to the extent permitted by law, the release or discharge by operation of law of the Company from the performance or observance of any obligation, covenant, or agreement contained in the Indenture, unless the Guarantor is also released or discharged by operation of law; (j) the default or failure of the Guarantor or the Trustee fully to perform any of its obligations set forth in the Indenture or the Notes; or (k) the invalidity of the Indenture or the Notes or any part thereof. No set-off, counterclaim, reduction, or diminution of any obligation, or any defense of any kind or nature which the Guarantor has or may have against the Trustee shall be available hereunder to the Guarantor against the Trustee to reduce the payments of the Guarantor under this Guarantee. The Guarantor shall be released from all of its obligations under this Guarantee if: (a) the Guarantor has sold all or substantially all of its assets or the Company and its Restricted Subsidiaries have sold all of the Capital Stock of the Guarantor owned by them, in each case in a transaction in compliance with Sections 5.09 and 6.01 of the Indenture; or (b) The Guarantor merges with or into or consolidates with, or transfers all or substantially all of its assets to, the Company or another Guarantor in a transaction in compliance with Section 6.01 hereof; and in each such case, the Company has delivered to the Trustee an Officer's Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for in the Indenture relating to such transactions have been complied with. No stockholder, officer, director or incorporator, as such, past, present or future, of the Guarantor shall have any liability under this Guarantee by reason of his or its status as such stockholder, officer, director or incorporator. This Guarantee 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. All terms used in this Guarantee which are defined in the Indenture shall have the meanings assigned to them in the Indenture. Unless the certificate of authentication on the Note to which this Guarantee is endorsed has been executed by or on behalf of the Trustee, by the manual signature of its, or its Authenticating Agent's, authorized signatories, this Guarantee shall not be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be duly executed. Dated: [Name of Subsidiary] [CORPORATE SEAL] By: ----------------------------- Title Attest: ---------------- Secretary EXHIBIT H GUARANTEE OF CYGNA CONSULTING ENGINEERS AND PROJECT MANAGEMENT, INC. FOR VALUE RECEIVED, Cygna Consulting Engineers and Projects Management, Inc., a corporation duly organized and existing under the laws of the State of California (herein called the "Guarantor", which term includes any successor corporation under the Indenture dated December 23, 1996, as supplemented (herein called the "Indenture") referred to in the Notes to which this Guarantee relates), hereby unconditionally guarantees to the Holders from time to time of the Notes: (a) the full and prompt payment of the principal of, and premium, if any, on any Note when and as the same shall come due and payable, whether at the stated maturity thereof, by acceleration, redemption or otherwise, and (b) the full and prompt payment of any interest on any Note when and as the same shall become due, according to the terms of such Note and the Indenture. In addition, the Guarantor hereby unconditionally agrees that upon default by the Company in the payment when due of the principal of, premium, if any, on and interest on the Notes (whether at stated maturity thereof, acceleration, redemption or otherwise), the Guarantor will forthwith pay the same, without further notice or demand. The obligations of the Guarantor hereunder shall be absolute and unconditional and, except as otherwise provided herein, shall remain in full force and effect until the entire principal of, premium, if any, on, and interest on the Notes shall have been paid or provided for in accordance with the provisions of the Indenture, and such obligations shall not be affected, modified or impaired upon the happening from time to time of any event, including without limitation any of the following, whether or not with notice to, or the consent of, the Guarantor: (a) the waiver, surrender, compromise, settlement, release, or termination of any or all of the obligations, covenants, or agreements of the Company under the Indenture or the Notes, unless the waiver, surrender, compromise, settlement, release or termination is made specifically applicable to the Guarantor; (b) the failure to give notice to the Guarantor of the occurrence of an Event of Default; (c) the waiver, compromise, or release of the payment, performance or observance by the Company of any or all of its obligations, covenants or agreements contained in the Indenture, unless such waiver, compromise or release is specifically applicable to the Guarantor; (d) the extension of time for payment of any principal of, premium, if any, on, or interest on any Notes or for any other payments under the Indenture or of the time for performance of any other obligations, covenants or agreements under or arising out of the Indenture, unless such extension of time is specifically applicable to the Guarantor; (e) the modification or amendment (whether material or otherwise) of any obligation, covenant, or agreement set forth in the Indenture or the Notes, unless such modification or amendment is specifically applicable to the Guarantor; (f) the taking or the omission of any of the actions referred to in the Indenture and any of the actions under the Notes; (g) any failure, omission, delay, or lack on the part of the Trustee to enforce, assert or exercise any right, power or remedy conferred on the Trustee in the Indenture, or any other act or acts on the part of the Trustee or any of the Holders from time to time of the Notes; (h) the voluntary or involuntary liquidation, dissolution, sale, or other disposition of all or substantially all of the assets, marshalling of assets and liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition with creditors, or readjustment of, or other similar proceedings affecting the Guarantor, or the Company or any of the assets of any of them, or any allegation or contest of the validity of this Guarantee in any such proceeding; (i) to the extent permitted by law, the release or discharge by operation of law of the Company from the performance or observance of any obligation, covenant, or agreement contained in the Indenture, unless the Guarantor is also released or discharged by operation of law; (j) the default or failure of the Guarantor or the Trustee fully to perform any of its obligations set forth in the Indenture or the Notes; or (k) the invalidity of the Indenture or the Notes or any part thereof. No set-off, counterclaim, reduction, or diminution of any obligation, or any defense of any kind or nature which the Guarantor has or may have against the Trustee shall be available hereunder to the Guarantor against the Trustee to reduce the payments of the Guarantor under this Guarantee. The Guarantor shall be released from all of its obligations under this Guarantee if: (a) the Guarantor has sold all or substantially all of its assets or the Company and its Restricted Subsidiaries have sold all of the Capital Stock of the Guarantor owned by them, in each case in a transaction in compliance with Sections 5.09 and 6.01 of the Indenture; or (b) The Guarantor merges with or into or consolidates with, or transfers all or substantially all of its assets to, the Company or another Guarantor in a transaction in compliance with Section 6.01 hereof; and in each such case, the Company has delivered to the Trustee an Officer's Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for in the Indenture relating to such transactions have been complied with. No stockholder, officer, director or incorporator, as such, past, present or future, of the Guarantor shall have any liability under this Guarantee by reason of his or its status as such stockholder, officer, director or incorporator. This Guarantee 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. All terms used in this Guarantee which are defined in the Indenture shall have the meanings assigned to them in the Indenture. Unless the certificate of authentication on the Note to which this Guarantee is endorsed has been executed by or on behalf of the Trustee, by the manual signature of its, or its Authenticating Agent's, authorized signatories, this Guarantee shall not be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be duly executed. CYGNA CONSULTING ENGINEERS AND PROJECT MANAGEMENT, INC. [CORPORATE SEAL] By: /s/ Michael K. Goldman, Title: President Attest: /s/ Paul Weeks, II, Secretary EXHIBIT I GUARANTEE OF ICF KAISER GOVERNMENT PROGRAMS, INC. FOR VALUE RECEIVED, ICF Kaiser Government Programs, Inc., a corporation duly organized and existing under the laws of the State of Delaware (herein called the "Guarantor", which term includes any successor corporation under the Indenture dated December 23, 1996, as supplemented (herein called the "Indenture") referred to in the Notes to which this Guarantee relates), hereby unconditionally guarantees to the Holders from time to time of the Notes: (a) the full and prompt payment of the principal of, and premium, if any, on any Note when and as the same shall come due and payable, whether at the stated maturity thereof, by acceleration, redemption or otherwise, and (b) the full and prompt payment of any interest on any Note when and as the same shall become due, according to the terms of such Note and the Indenture. In addition, the Guarantor hereby unconditionally agrees that upon default by the Company in the payment when due of the principal of, premium, if any, on and interest on the Notes (whether at stated maturity thereof, acceleration, redemption or otherwise), the Guarantor will forthwith pay the same, without further notice or demand. The obligations of the Guarantor hereunder shall be absolute and unconditional and, except as otherwise provided herein, shall remain in full force and effect until the entire principal of, premium, if any, on, and interest on the Notes shall have been paid or provided for in accordance with the provisions of the Indenture, and such obligations shall not be affected, modified or impaired upon the happening from time to time of any event, including without limitation any of the following, whether or not with notice to, or the consent of, the Guarantor: (a) the waiver, surrender, compromise, settlement, release, or termination of any or all of the obligations, covenants, or agreements of the Company under the Indenture or the Notes, unless the waiver, surrender, compromise, settlement, release or termination is made specifically applicable to the Guarantor; (b) the failure to give notice to the Guarantor of the occurrence of an Event of Default; (c) the waiver, compromise, or release of the payment, performance or observance by the Company of any or all of its obligations, covenants or agreements contained in the Indenture, unless such waiver, compromise or release is specifically applicable to the Guarantor; (d) the extension of time for payment of any principal of, premium, if any, on, or interest on any Notes or for any other payments under the Indenture or of the time for performance of any other obligations, covenants or agreements under or arising out of the Indenture, unless such extension of time is specifically applicable to the Guarantor; (e) the modification or amendment (whether material or otherwise) of any obligation, covenant, or agreement set forth in the Indenture or the Notes, unless such modification or amendment is specifically applicable to the Guarantor; (f) the taking or the omission of any of the actions referred to in the Indenture and any of the actions under the Notes; (g) any failure, omission, delay, or lack on the part of the Trustee to enforce, assert or exercise any right, power or remedy conferred on the Trustee in the Indenture, or any other act or acts on the part of the Trustee or any of the Holders from time to time of the Notes; (h) the voluntary or involuntary liquidation, dissolution, sale, or other disposition of all or substantially all of the assets, marshalling of assets and liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition with creditors, or readjustment of, or other similar proceedings affecting the Guarantor, or the Company or any of the assets of any of them, or any allegation or contest of the validity of this Guarantee in any such proceeding; (i) to the extent permitted by law, the release or discharge by operation of law of the Company from the performance or observance of any obligation, covenant, or agreement contained in the Indenture, unless the Guarantor is also released or discharged by operation of law; (j) the default or failure of the Guarantor or the Trustee fully to perform any of its obligations set forth in the Indenture or the Notes; or (k) the invalidity of the Indenture or the Notes or any part thereof. No set-off, counterclaim, reduction, or diminution of any obligation, or any defense of any kind or nature which the Guarantor has or may have against the Trustee shall be available hereunder to the Guarantor against the Trustee to reduce the payments of the Guarantor under this Guarantee. The Guarantor shall be released from all of its obligations under this Guarantee if: (a) the Guarantor has sold all or substantially all of its assets or the Company and its Restricted Subsidiaries have sold all of the Capital Stock of the Guarantor owned by them, in each case in a transaction in compliance with Sections 5.09 and 6.01 of the Indenture; or (b) The Guarantor merges with or into or consolidates with, or transfers all or substantially all of its assets to, the Company or another Guarantor in a transaction in compliance with Section 6.01 hereof; and in each such case, the Company has delivered to the Trustee an Officer's Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for in the Indenture relating to such transactions have been complied with. No stockholder, officer, director or incorporator, as such, past, present or future, of the Guarantor shall have any liability under this Guarantee by reason of his or its status as such stockholder, officer, director or incorporator. This Guarantee 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. All terms used in this Guarantee which are defined in the Indenture shall have the meanings assigned to them in the Indenture. Unless the certificate of authentication on the Note to which this Guarantee is endorsed has been executed by or on behalf of the Trustee, by the manual signature of its, or its Authenticating Agent's, authorized signatories, this Guarantee shall not be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be duly executed. ICF KAISER GOVERNMENT PROGRAMS, INC. [CORPORATE SEAL] By: /s/ James O. Edwards Title President Attest: /s/ Paul Weeks, II, Secretary EXHIBIT J GUARANTEE OF PCI OPERATING COMPANY, INC. FOR VALUE RECEIVED, PCI Operating Company, Inc., a corporation duly organized and existing under the laws of the State of Delaware (herein called the "Guarantor", which term includes any successor corporation under the Indenture dated December 23, 1996, as supplemented (herein called the "Indenture") referred to in the Notes to which this Guarantee relates), hereby unconditionally guarantees to the Holders from time to time of the Notes: (a) the full and prompt payment of the principal of, and premium, if any, on any Note when and as the same shall come due and payable, whether at the stated maturity thereof, by acceleration, redemption or otherwise, and (b) the full and prompt payment of any interest on any Note when and as the same shall become due, according to the terms of such Note and the Indenture. In addition, the Guarantor hereby unconditionally agrees that upon default by the Company in the payment when due of the principal of, premium, if any, on and interest on the Notes (whether at stated maturity thereof, acceleration, redemption or otherwise), the Guarantor will forthwith pay the same, without further notice or demand. The obligations of the Guarantor hereunder shall be absolute and unconditional and, except as otherwise provided herein, shall remain in full force and effect until the entire principal of, premium, if any, on, and interest on the Notes shall have been paid or provided for in accordance with the provisions of the Indenture, and such obligations shall not be affected, modified or impaired upon the happening from time to time of any event, including without limitation any of the following, whether or not with notice to, or the consent of, the Guarantor: (a) the waiver, surrender, compromise, settlement, release, or termination of any or all of the obligations, covenants, or agreements of the Company under the Indenture or the Notes, unless the waiver, surrender, compromise, settlement, release or termination is made specifically applicable to the Guarantor; (b) the failure to give notice to the Guarantor of the occurrence of an Event of Default; (c) the waiver, compromise, or release of the payment, performance or observance by the Company of any or all of its obligations, covenants or agreements contained in the Indenture, unless such waiver, compromise or release is specifically applicable to the Guarantor; (d) the extension of time for payment of any principal of, premium, if any, on, or interest on any Notes or for any other payments under the Indenture or of the time for performance of any other obligations, covenants or agreements under or arising out of the Indenture, unless such extension of time is specifically applicable to the Guarantor; (e) the modification or amendment (whether material or otherwise) of any obligation, covenant, or agreement set forth in the Indenture or the Notes, unless such modification or amendment is specifically applicable to the Guarantor; (f) the taking or the omission of any of the actions referred to in the Indenture and any of the actions under the Notes; (g) any failure, omission, delay, or lack on the part of the Trustee to enforce, assert or exercise any right, power or remedy conferred on the Trustee in the Indenture, or any other act or acts on the part of the Trustee or any of the Holders from time to time of the Notes; (h) the voluntary or involuntary liquidation, dissolution, sale, or other disposition of all or substantially all of the assets, marshalling of assets and liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition with creditors, or readjustment of, or other similar proceedings affecting the Guarantor, or the Company or any of the assets of any of them, or any allegation or contest of the validity of this Guarantee in any such proceeding; (i) to the extent permitted by law, the release or discharge by operation of law of the Company from the performance or observance of any obligation, covenant, or agreement contained in the Indenture, unless the Guarantor is also released or discharged by operation of law; (j) the default or failure of the Guarantor or the Trustee fully to perform any of its obligations set forth in the Indenture or the Notes; or (k) the invalidity of the Indenture or the Notes or any part thereof. No set-off, counterclaim, reduction, or diminution of any obligation, or any defense of any kind or nature which the Guarantor has or may have against the Trustee shall be available hereunder to the Guarantor against the Trustee to reduce the payments of the Guarantor under this Guarantee. The Guarantor shall be released from all of its obligations under this Guarantee if: (a) the Guarantor has sold all or substantially all of its assets or the Company and its Restricted Subsidiaries have sold all of the Capital Stock of the Guarantor owned by them, in each case in a transaction in compliance with Sections 5.09 and 6.01 of the Indenture; or (b) The Guarantor merges with or into or consolidates with, or transfers all or substantially all of its assets to, the Company or another Guarantor in a transaction in compliance with Section 6.01 hereof; and in each such case, the Company has delivered to the Trustee an Officer's Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for in the Indenture relating to such transactions have been complied with. No stockholder, officer, director or incorporator, as such, past, present or future, of the Guarantor shall have any liability under this Guarantee by reason of his or its status as such stockholder, officer, director or incorporator. This Guarantee 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. All terms used in this Guarantee which are defined in the Indenture shall have the meanings assigned to them in the Indenture. Unless the certificate of authentication on the Note to which this Guarantee is endorsed has been executed by or on behalf of the Trustee, by the manual signature of its, or its Authenticating Agent's, authorized signatories, this Guarantee shall not be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be duly executed. Dated: December 23, 1996 PCI OPERATING COMPANY, INC. [CORPORATE SEAL] By: /s/ Michael K. Goldman Title Chief Executive Officer Attest: /s/ Paul Weeks, II Secretary EXHIBIT K GUARANTEE OF SYSTEMS APPLICATIONS INTERNATIONAL, INC. FOR VALUE RECEIVED, Systems Applications International, Inc., a corporation duly organized and existing under the laws of the State of Delaware (herein called the "Guarantor", which term includes any successor corporation under the Indenture dated December 23, 1996, as supplemented (herein called the "Indenture") referred to in the Notes to which this Guarantee relates), hereby unconditionally guarantees to the Holders from time to time of the Notes: (a) the full and prompt payment of the principal of, and premium, if any, on any Note when and as the same shall come due and payable, whether at the stated maturity thereof, by acceleration, redemption or otherwise, and (b) the full and prompt payment of any interest on any Note when and as the same shall become due, according to the terms of such Note and the Indenture. In addition, the Guarantor hereby unconditionally agrees that upon default by the Company in the payment when due of the principal of, premium, if any, on and interest on the Notes (whether at stated maturity thereof, acceleration, redemption or otherwise), the Guarantor will forthwith pay the same, without further notice or demand. The obligations of the Guarantor hereunder shall be absolute and unconditional and, except as otherwise provided herein, shall remain in full force and effect until the entire principal of, premium, if any, on, and interest on the Notes shall have been paid or provided for in accordance with the provisions of the Indenture, and such obligations shall not be affected, modified or impaired upon the happening from time to time of any event, including without limitation any of the following, whether or not with notice to, or the consent of, the Guarantor: (a) the waiver, surrender, compromise, settlement, release, or termination of any or all of the obligations, covenants, or agreements of the Company under the Indenture or the Notes, unless the waiver, surrender, compromise, settlement, release or termination is made specifically applicable to the Guarantor; (b) the failure to give notice to the Guarantor of the occurrence of an Event of Default; (c) the waiver, compromise, or release of the payment, performance or observance by the Company of any or all of its obligations, covenants or agreements contained in the Indenture, unless such waiver, compromise or release is specifically applicable to the Guarantor; (d) the extension of time for payment of any principal of, premium, if any, on, or interest on any Notes or for any other payments under the Indenture or of the time for performance of any other obligations, covenants or agreements under or arising out of the Indenture, unless such extension of time is specifically applicable to the Guarantor; (e) the modification or amendment (whether material or otherwise) of any obligation, covenant, or agreement set forth in the Indenture or the Notes, unless such modification or amendment is specifically applicable to the Guarantor; (f) the taking or the omission of any of the actions referred to in the Indenture and any of the actions under the Notes; (g) any failure, omission, delay, or lack on the part of the Trustee to enforce, assert or exercise any right, power or remedy conferred on the Trustee in the Indenture, or any other act or acts on the part of the Trustee or any of the Holders from time to time of the Notes; (h) the voluntary or involuntary liquidation, dissolution, sale, or other disposition of all or substantially all of the assets, marshalling of assets and liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition with creditors, or readjustment of, or other similar proceedings affecting the Guarantor, or the Company or any of the assets of any of them, or any allegation or contest of the validity of this Guarantee in any such proceeding; (i) to the extent permitted by law, the release or discharge by operation of law of the Company from the performance or observance of any obligation, covenant, or agreement contained in the Indenture, unless the Guarantor is also released or discharged by operation of law; (j) the default or failure of the Guarantor or the Trustee fully to perform any of its obligations set forth in the Indenture or the Notes; or (k) the invalidity of the Indenture or the Notes or any part thereof. No set-off, counterclaim, reduction, or diminution of any obligation, or any defense of any kind or nature which the Guarantor has or may have against the Trustee shall be available hereunder to the Guarantor against the Trustee to reduce the payments of the Guarantor under this Guarantee. The Guarantor shall be released from all of its obligations under this Guarantee if: (a) the Guarantor has sold all or substantially all of its assets or the Company and its Restricted Subsidiaries have sold all of the Capital Stock of the Guarantor owned by them, in each case in a transaction in compliance with Sections 5.09 and 6.01 of the Indenture; or (b) The Guarantor merges with or into or consolidates with, or transfers all or substantially all of its assets to, the Company or another Guarantor in a transaction in compliance with Section 6.01 hereof; and in each such case, the Company has delivered to the Trustee an Officer's Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for in the Indenture relating to such transactions have been complied with. No stockholder, officer, director or incorporator, as such, past, present or future, of the Guarantor shall have any liability under this Guarantee by reason of his or its status as such stockholder, officer, director or incorporator. This Guarantee 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. All terms used in this Guarantee which are defined in the Indenture shall have the meanings assigned to them in the Indenture. Unless the certificate of authentication on the Note to which this Guarantee is endorsed has been executed by or on behalf of the Trustee, by the manual signature of its, or its Authenticating Agent's, authorized signatories, this Guarantee shall not be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be duly executed. Dated: December 23, 1996 SYSTEMS APPLICATIONS INTERNATIONAL, INC. [CORPORATE SEAL] By: /s/ Michael K. Goldman Title Chief Executive Officer Attest: /s/ Paul Weeks, II Secretary EX-4.H 11 EXHIBIT 4(H) Exhibit No. 4(h) ICF KAISER INTERNATIONAL, INC. 12% SENIOR NOTE DUE 2003, SERIES A THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A PROMULGATED UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) PROMULGATED UNDER THE SECURITIES ACT (AN "ACCREDITED INVESTOR")) OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S PROMULGATED UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE ISSUER THEREOF OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A PROMULGATED UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHED (OR HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY, (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S PROMULGATED UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 PROMULGATED UNDER THE SECURITIES ACT (IF AVAILABLE), OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY, IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE ISSUER SUCH CERTIFICATIONS, WRITTEN LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE RESPECTIVE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS NOTE IS NOT EXCHANGEABLE FOR NOTES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. ICF KAISER INTERNATIONAL, INC. 12% SENIOR NOTE DUE 2003, SERIES A CUSIP No. 449244 AC6 No. AQ-1 $15,000,000 ICF Kaiser International, Inc., a Delaware corporation (the "Company"), for value received promises to pay to CEDE & CO. or registered assigns, the principal sum of Fifteen Million Dollars on December 31, 2003. Interest Payment Dates: June 30 and December 31 Record Dates: June 15 and December 15 Reference is made to the further provisions of this Security contained herein, which will for all purposes have the same effect as if set forth at this place. IN WITNESS WHEREOF, the Company has caused the Security to be signed manually or by facsimile by its duly authorized officers. Dated: December 23, 1996 ICF KAISER INTERNATIONAL, INC. By: ------------------------------------ By: ------------------------------------ (SEAL) Trustee's Certificate of Authentication This is one of the Series A Notes referred to in the within-mentioned Indenture. Dated: December 23, 1996 THE BANK OF NEW YORK as Trustee By: --------------------------------- Authorized Signatory Face - 2 12% SENIOR NOTE DUE 2003, SERIES A Certain capitalized terms used but not defined herein shall have the meanings given to them in the Indenture under which this Note is issued. 1. Interest. ICF Kaiser International, Inc., a Delaware corporation (the "Company," which term shall include any Successor under the Indenture), promises to pay interest on the principal amount of this Note at 12%, provided that one percent (1%) additional interest (the "Additional Interest") is payable on the Notes from the date of, and as provided in, the Indenture. The Company files its financial results with the Securities and Exchange Commission on quarterly and annual reports, and these reports include the Company's earnings after deducting minority interests and before interest, taxes, depreciation, and amortization calculated in accordance with generally accepted accounting principles ("Earnings"). The Company measures its Earnings for trailing twelve month periods, each period to end on the last day of a fiscal quarter and extend no further than March 31, 1998 (each a "Quarterly Measurement Period"). If the Company's Earnings equal or exceed $36 million for two consecutive Quarterly Measurement Periods, then the Company is relieved of its obligation to pay any future Additional Interest. However, if the Company's Earnings do not equal or exceed $36 million for any subsequent Quarterly Measurement Period, up to and including the Quarterly Measurement Period ending March 31, 1998, the Company is obligated to commence paying Additional Interest until the Company's Earnings again equal or exceed $36 million on a trailing twelve month basis calculated quarterly. The Company will pay interest semiannually on June 30 and December 31 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date"). Interest on the Notes will accrue from the most recent date on which interest has been paid or, if no interest has been paid, from the date of issuance; provided, that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be June 30, 1997. The Company shall pay interest on overdue principal from time to time on demand at the rate of 1% per annum in excess of the interest rate then in effect; it shall pay interest on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2. Method of Payment. The Company will pay interest on the Notes (except defaulted interest) to the Persons who are registered Holders of Notes at the close of business on the record date next preceding the Interest Payment Date, even if such Notes are cancelled after such record date and on or before such Interest Payment Date. Holders must surrender Notes to a Paying Agent to collect principal payments. The Company will pay the principal of, premium, if any, and interest on the Notes in money of the United States of America that at the time of payment is legal tender for payment of public and private debts ("U.S. Legal Tender"). The Company, however, may pay such amounts by check payable in such U.S. Legal Tender. It may mail an interest check to a Holder's registered address. 3. Paying Agent and Registrar. Initially, The Bank of New York (the "Trustee") will act as Paying Agent and Registrar. The Company may change any Paying Agent, Registrar or co-registrar without notice to any Holder. The Company may act in any such capacity. 4. Indenture and Guarantees. The Company issued the Notes under an Indenture dated as of December 23, 1996 (the "Indenture") between the Company and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code (S)(S)77aaa-77bbbb), as in effect on the date of execution of the Indenture until such time as the Indenture is qualified under the TIA, and thereafter as in effect on the date on which the Indenture is qualified under the TIA. The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. Capitalized and certain other terms used herein and not otherwise defined have the meanings set forth in the Indenture. The Notes are unsecured general obligations of the Company limited to $15,000,000 in aggregate principal amount. Payment on each Note is guaranteed, jointly and severally, by the Guarantors pursuant to Section 5.11 of the Indenture. Reverse - 3 5. Optional Redemption. The Notes may not be redeemed prior to December 31, 1998, but will be redeemable at the option of the Company, in whole or in part, at any time on or after December 31, 1998, at the following redemption prices (expressed as percentages of principal amount), together with accrued and unpaid interest, if any, thereon to the redemption date, if redeemed during the 12-month period beginning December 31:
Optional Year Redemption Price ---- ---------------- 1998 108.0% 1999 106.4% 2000 104.8% 2001 103.2% 2002 101.6%
If fewer than all of the Notes are to be redeemed at any time, selection of the Notes to be redeemed will be made by the Trustee from among the outstanding Notes on a pro rata basis, by lot or by any other method permitted in the Indenture. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at the registered address of such Holder. On and after the redemption date, interest shall cease to accrue on the Notes or portions thereof called for redemption. 6. Offers to Repurchase. (a) Change of Control Offer. In accordance with the terms of the Indenture, upon the occurrence of a Change of Control, the Company will be required to offer (a "Change of Control Offer") to purchase all outstanding Notes at a purchase price equal to 101% of the aggregate principal amount of the Notes, plus accrued and unpaid interest to the date of purchase. A Holder of Notes may tender or refrain from tendering all or any portion of his Notes at his discretion by completing the form entitled "OPTION OF HOLDER TO ELECT PURCHASE" appearing below on this Note. Any portion of Notes tendered must be in integral multiples of $1,000. (b) Asset Sale Offer. In accordance with the terms of the Indenture, if the Company or any Restricted Subsidiary consummates an Asset Sale, the Company will, under certain circumstances, be required to utilize a portion of the net proceeds received from such Asset Sale to offer to purchase Notes at a purchase price equal to 100% of the aggregate principal amount of the Notes plus accrued interest to the date fixed for the purchase. A Holder of Notes may tender or refrain from tendering all or any portion of his Notes at his discretion by completing the form entitled "OPTION OF HOLDER TO ELECT PURCHASE" appearing below this Note. Any portion of Notes tendered must be in integral multiples of $1,000. Subject to the provisions described above and compliance with Article 6 of the Indenture, the Company may sell or otherwise dispose of all or substantially all of its assets to a Successor that assumes all of the Company's obligations under the Notes and Indenture, and thereafter be discharged from such obligations. 7. Denominations, Transfer, Exchange. The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. 8. Persons Deemed Owners. The registered Holder of a Note may be treated as its owner for all purposes. Reverse - 4 9. Unclaimed Funds. If funds for the payment of principal or interest remain unclaimed for two years, the Trustee and the Paying Agent will repay the funds to the Company at its request. After that, all liability of the Trustee and Paying Agent with respect to such funds shall cease. 10. Discharge. The Company may be discharged from its obligations under the Indenture and the Notes, except for certain provisions thereof, upon satisfaction of certain conditions specified in the Indenture. 11. Amendments and Waivers. Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the consent (which may include consents obtained in connection with a tender offer or exchange offer for Notes) of the Holders of at least a majority in principal amount of the Notes then outstanding, and any existing Default under, or compliance with any provision of, the Indenture may be waived (other than any continuing Default or Event of Default in the payment of interest on or the principal of the Notes, or any failure to comply with the provisions of the Indenture relating to a Change of Control Offer (as defined in the Indenture)) with the consent (which may include consents obtained in connection with a tender offer or exchange offer for Notes) of the Holders of a majority in principal amount of the Notes then outstanding. Without the consent of any Holder, the Company and the Trustee may amend or supplement the Indenture or the Notes to cure any ambiguity, defect or inconsistency; to provide for the assumption of the Company's obligations to Holders in the case of a merger or acquisition; to provide for uncertificated Notes in addition to or in place of certificated Notes; to make any change that does not adversely affect the legal rights of any Holder; to surrender any right or power conferred upon the Company in the Indenture or the Notes; or to modify, eliminate or add to the provisions of the Indenture or the Notes to such extent as shall be necessary to effect the qualification of the Indenture under the TIA or under any similar federal statute hereafter enacted. The right of any Holder to participate in any consent required or sought pursuant to any provision of the Indenture (and the obligation of the Company to obtain any such consent otherwise required from such Holder) may be subject to the requirement that such Holder shall have been the Holder of record of any Notes with respect to which such consent is required or sought as of a date identified by the Trustee or the Company in a notice furnished to Holder in accordance with the terms of the Indenture. Without the consent of each Holder affected, the Company may not take certain actions, including: (i) reduce the amount of Notes whose Holders must consent to an amendment, supplement or waiver; (ii) reduce the rate of or change the time for payment of interest, including default interest, on any Note; (iii) reduce the principal of or change the fixed maturity of any Note or alter the provisions with respect to optional redemption or mandatory repurchase of the Notes under the Indenture; (iv) make any Note payable in money other than that stated in this Note; (v) make any change in certain provisions of the Indenture regarding a Change of Control, a waiver of past Defaults and the rights of Holders to receive payment; or (vi) waive a continuing Default or Event of Default in the payment of principal of or interest on the Notes or that resulted from a failure to comply with the Change of Control provisions of the Indenture. 12. Restrictive Covenants. The Indenture contains certain covenants which, among other things, limit: (i) the incurrence of additional Indebtedness by the Company and Restricted Subsidiaries; (ii) the payment of dividends; (iii) the repurchase of capital stock or subordinated indebtedness; (iv) the making of certain other distributions, loans and investments; (v) the sale of assets and the sale of the stock of Restricted Subsidiaries; (vi) the creation of restrictions on the ability of Restricted Subsidiaries to pay dividends or make other payments to the Company; and (vii) the ability of the Company and Restricted Subsidiaries to enter into certain transactions with Affiliates or to merge, consolidate or transfer substantially all assets. These restrictions are subject to important qualifications and exceptions. The Company must report to the Trustee on compliance with such limitations. 13. Defaults and Remedies. Events of Default include: default in payment of interest on the Notes for 30 days; default in payment of principal on the Notes; failure by the Company for 60 days after notice to it to comply with any of its other agreements in the Indenture or the Notes; certain defaults under other Indebtedness; certain final judgments that remain undercharged; and certain events of bankruptcy or insolvency. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be immediately due and payable for an amount equal to 100% of the principal amount of the Notes plus accrued interest to the date of payment, except that in the case of an Event of Default arising from certain events of bankruptcy or insolvency, all outstanding Notes become due and payable immediately without further action or notice. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee may Reverse - 5 require indemnity satisfactory to it before it enforces the Indenture or the Notes. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing default (except a default in payment of principal or interest) if it determines that withholding notice is in their interests. The Company must furnish an annual compliance certificate to the Trustee. 14. Trustee Dealings with Company. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not Trustee. 15. No Recourse Against Others. A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Notes or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. 16. Authentication. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. 17. Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (-- tenants in common), TEN ENT (-- tenants by the entireties), JT TEN (-- joint tenants with right of survivorship and not as tenants in common), CUST (--Custodian), and U/G/M/A (--Uniform Gifts to Minors Act). 18. CUSIP Numbers. Pursuant to a recommendation promulgated by the Commission on Uniform Security Identification Procedures, the Company has caused CUSIP Numbers to be printed on the Notes as a convenience to the Holders of the Notes. No representation is made to the accuracy of such numbers as provided on the Notes, and reliance may be placed only on the other identification numbers printed thereon. 19. Governing Law. THIS NOTE AND THE INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. 20. Registration Rights. Pursuant to the Registration Rights Agreement, the Company will be obligated upon the occurrence of certain events to consummate an exchange offer pursuant to which the Holders of the Series A Notes shall have the right to exchange the Series A Notes for the Company's 12% Senior Notes due 2003, Series B, which have been registered under the Securities Act, in like principal amount and having terms identical in all material respects as the Series A Notes. The Holders shall be entitled to receive certain additional interest payments in the event such exchange offer is not consummated and upon certain other conditions, all pursuant to and in accordance with the terms of the Registration Rights Agreement. ICF Kaiser International, Inc. 9300 Lee Highway Fairfax, Virginia 22031-1207 Attention: Executive Vice President and Chief Financial Officer Reverse - 6 GUARANTEE The Guarantors (as defined in the Indenture referred to in the Note upon which this notation is endorsed and each hereinafter referred to as a "Guarantor," which term includes any successor to a Guarantor) have unconditionally guaranteed (such guarantee by each Guarantor being referred to herein as the "Guarantee") (a) the full and prompt payment of the principal of and premium, if any, on any Note when and as the same shall come due and payable, whether at the stated maturity thereof, by acceleration, redemption or otherwise and (b) the full and prompt payment of any interest on any Note when and as the same shall become due, according to the terms of such Note and the Indenture. No stockholder, officer, director or incorporator, as such, past, present or future, of any Guarantor shall have any liability under this Guarantee by reason of his or its status as such stockholder, officer, director or incorporator. The Guarantees shall not be valid or obligatory for any purpose until the certificate of authentication on the Notes upon which the guarantees are noted shall have been executed by the Trustee under the indenture by the manual signature of its authorized officers. CYGNA CONSULTING ENGINEERS AND PROJECT MANAGEMENT, INC. Attest: BY: ------------------------ --------------------------------------- Name: Title: ICF KAISER GOVERNMENT PROGRAMS, INC. Attest: BY: ------------------------ ---------------------------------------- Name: Title: PCI OPERATING COMPANY, INC. Attest: BY: ------------------------ --------------------------------------- Name: Title: SYSTEMS APPLICATIONS INTERNATIONAL, INC. Attest: BY: ------------------------ ---------------------------------------- Name: Title: Reverse - 7 ASSIGNMENT FORM To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to - -------------------------------------------------------------------------------- (Insert assignee's Soc. Sec. or tax I.D. No.) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint_________________________________________________________ to transfer this Note on the books of the Company. The agent may substitute another to act for him. Date: ----------------------- Your Signature: ------------------------------- (Sign exactly as your name appears on the face of this Note) Signature Guarantee: OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Company pursuant to an Asset Sale Offer or a Change in Control Offer, please execute and return this form to the Company. If you want to elect to have only part of the Note purchased by the Company pursuant to the Indenture, state the amount you elect to have purchased: $____________________ Date: -------------- Your Signature: ------------------------------- (Sign exactly as your name appears on the face of this Note) Signature Guarantee: Reverse - 8 EX-4.I 12 EXHIBIT 4(I) EXHIBIT 4(i) THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS NOTE IS NOT EXCHANGEABLE FOR NOTES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. ICF KAISER INTERNATIONAL, INC. 12% SENIOR NOTE DUE 2003, SERIES B CUSIP No. 449244 -------- No.BQ- $ ---------- ----------------------- ICF Kaiser International, Inc., a Delaware corporation (the "Company"), for value received promises to pay to CEDE & Co., or registered assigns, the principal sum of ________ Dollars on December 31, 2003. Interest Payment Dates: June 30 and December 31 Record Dates: June 15 and December 15 Reference is made to the further provisions of this Security contained herein, which will for all purposes have the same effect as if set forth at this place. IN WITNESS WHEREOF, the Company has caused the Security to be signed manually or by facsimile by its duly authorized officers. Dated: ICF KAISER INTERNATIONAL, INC. By: ---------------------------- By: ---------------------------- (SEAL) Face - 2 Trustee's Certificate of Authentication This is one of the Series B Notes referred to in the within-mentioned Indenture. Dated: THE BANK OF NEW YORK as Trustee By: -------------------------- Authorized Signatory Face - 3 12% SENIOR NOTE DUE 2003, SERIES B Certain capitalized terms used but not defined herein shall have the meanings given to them in the Indenture under which this Note is issued. 1. Interest. ICF Kaiser International, Inc., a Delaware corporation (the "Company," which term shall include any Successor under the Indenture), promises to pay interest on the principal amount of this Note at 12% provided that one percent (1%) additional interest (the "Additional Interest") is payable on the Notes from the date of, and as provided in, the Indenture. The Company files its financial results with the Securities and Exchange Commission on quarterly and annual reports, and these reports include the Company's earnings after deducting minority interests and before interest, taxes, depreciation, and amortization calculated in accordance with generally accepted accounting principles ("Earnings"). The Company measures its Earnings for trailing twelve month periods, each period to end on the last day of a fiscal quarter and extend no further than March 31, 1998 (each a "Quarterly Measurement Period"). If the Company's Earnings equal or exceed $36 million for two consecutive Quarterly Measurement Periods, then the Company is relieved of its obligation to pay any future Additional Interest. However, if the Company's Earnings do not equal or exceed $36 million for any subsequent Quarterly Measurement Period, up to and including the Quarterly Measurement Period ending March 31, 1998, the Company is obligated to commence paying Additional Interest until the Company's Earnings again equal or exceed $36 million on a trailing twelve month basis calculated quarterly. The Company will pay interest semiannually on June 30 and December 31 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date"). Interest on the Notes will accrue from the most recent date on which interest has been paid or, if no interest has been paid, from December 31, 1996; provided, that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be June 30, 1997. The Company shall pay interest on overdue principal from time to time on demand at the rate of 1% per annum in excess of the interest rate then in effect; it shall pay interest on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2. Method of Payment. The Company will pay interest on the Notes (except defaulted interest) to the Persons who are registered Holders of Notes at the close of business on the record date next preceding the Interest Payment Date, even if such Notes are cancelled after such record date and on or before such Interest Payment Date. Holders must surrender Notes to a Paying Agent to collect principal payments. The Company will pay the principal of, premium, if any, and interest on the Notes in money of the United States of America that at the time of payment is legal tender for payment of public and private debts ("U.S. Legal Tender"). The Reverse - 1 Company, however, may pay such amounts by check payable in such U.S. Legal Tender. It may mail an interest check to a Holder's registered address. 3. Paying Agent and Registrar. Initially, The Bank of New York (the "Trustee") will act as Paying Agent and Registrar. The Company may change any Paying Agent, Registrar or co-registrar without notice to any Holder. The Company may act in any such capacity. 4. Indenture and Guarantees. The Company issued the Notes under an Indenture dated as of December 23, 1996 (the "Indenture") between the Company and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code (S)(S) 77aaa-77bbbb), as in effect on the date of execution of the Indenture until such time as the Indenture is qualified under the TIA, and thereafter as in effect on the date on which the Indenture is qualified under the TIA. The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. Capitalized and certain other terms used herein and not otherwise defined have the meanings set forth in the Indenture. The Notes are unsecured general obligations of the Company limited to $15,000,000 in aggregate principal amount. Payment on each Note is guaranteed, jointly and severally, by the Guarantors pursuant to Section 5.11 of the Indenture. 5. Optional Redemption. The Notes may not be redeemed prior to December 31, 1998, but will be redeemable at the option of the Company, in whole or in part, at any time on or after December 31, 1998, at the following redemption prices (expressed as percentages of principal amount), together with accrued and unpaid interest, if any, thereon to the redemption date, if redeemed during the 12-month period beginning December 31: Optional Year Redemption Price ---- ---------------- 1998 108.0% 1999 106.4% 2000 104.8% 2001 103.2% 2002 101.6% If fewer than all of the Notes are to be redeemed at any time, selection of the Notes to be redeemed will be made by the Trustee from among the outstanding Notes on a pro rata basis, by lot or by any other method permitted in the Indenture. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at the registered address of such Holder. On and after the redemption date, interest shall cease to accrue on the Notes or portions thereof called for redemption. Reverse - 2 6. Offers to Repurchase. (a) Change of Control Offer. In accordance with the terms of the Indenture, upon the occurrence of a Change of Control, the Company will be required to offer (a "Change of Control Offer") to purchase all outstanding Notes at a purchase price equal to 101% of the aggregate principal amount of the Notes, plus accrued and unpaid interest to the date of purchase. A Holder of Notes may tender or refrain from tendering all or any portion of his Notes at his discretion by completing the form entitled "OPTION OF HOLDER TO ELECT PURCHASE" appearing below on this Note. Any portion of Notes tendered must be in integral multiples of $1,000. (b) Asset Sale Offer. In accordance with the terms of the Indenture, if the Company or any Restricted Subsidiary consummates an Asset Sale, the Company will, under certain circumstances, be required to utilize a portion of the net proceeds received from such Asset Sale to offer to purchase Notes at a purchase price equal to 100% of the aggregate principal amount of the Notes plus accrued interest to the date fixed for the purchase. A Holder of Notes may tender or refrain from tendering all or any portion of his Notes at his discretion by completing the form entitled "OPTION OF HOLDER TO ELECT PURCHASE" appearing below this Note. Any portion of Notes tendered must be in integral multiples of $1,000. Subject to the provisions described above and compliance with Article 6 of the Indenture, the Company may sell or otherwise dispose of all or substantially all of its assets to a Successor that assumes all of the Company's obligations under the Notes and Indenture, and thereafter be discharged from such obligations. 7. Denominations, Transfer, Exchange. The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. 8. Persons Deemed Owners. The registered Holder of a Note may be treated as its owner for all purposes. Reverse - 3 9. Unclaimed Funds. If funds for the payment of principal or interest remain unclaimed for two years, the Trustee and the Paying Agent will repay the funds to the Company at its request. After that, all liability of the Trustee and Paying Agent with respect to such funds shall cease. 10. Discharge. The Company may be discharged from its obligations under the Indenture and the Notes, except for certain provisions thereof, upon satisfaction of certain conditions specified in the Indenture. 11. Amendments and Waivers. Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the consent (which may include consents obtained in connection with a tender offer or exchange offer for Notes) of the Holders of at least a majority in principal amount of the Notes then outstanding, and any existing Default under, or compliance with any provision of, the Indenture may be waived (other than any continuing Default or Event of Default in the payment of interest on or the principal of the Notes, or any failure to comply with the provisions of the Indenture relating to a Change of Control Offer (as defined in the Indenture)) with the consent (which may include consents obtained in connection with a tender offer or exchange offer for Notes) of the Holders of a majority in principal amount of the Notes then outstanding. Without the consent of any Holder, the Company and the Trustee may amend or supplement the Indenture or the Notes to cure any ambiguity, defect or inconsistency; to provide for the assumption of the Company's obligations to Holders in the case of a merger or acquisition; to provide for uncertificated Notes in addition to or in place of certificated Notes; to make any change that does not adversely affect the legal rights of any Holder; to surrender any right or power conferred upon the Company in the Indenture or the Notes; or to modify, eliminate or add to the provisions of the Indenture or the Notes to such extent as shall be necessary to effect the qualification of the Indenture under the TIA or under any similar federal statute hereafter enacted. The right of any Holder to participate in any consent required or sought pursuant to any provision of the Indenture (and the obligation of the Company to obtain any such consent otherwise required from such Holder) may be subject to the requirement that such Holder shall have been the Holder of record of any Notes with respect to which such consent is required or sought as of a date identified by the Trustee or the Company in a notice furnished to Holder in accordance with the terms of the Indenture. Without the consent of each Holder affected, the Company may not take certain actions, including: (i) reduce the amount of Notes whose Holders must consent to an amendment, supplement or waiver; (ii) reduce the rate of or change the time for payment of interest, including default interest, on any Note; (iii) reduce the principal of or change the fixed maturity of any Note or alter the provisions with respect to optional redemption or mandatory repurchase of the Notes under the Indenture; (iv) make any Note payable in money other than that stated in this Note; (v) make any change in certain provisions of the Indenture regarding a Change of Control, a waiver of past Defaults and the rights of Holders to receive payment; or Reverse - 4 (vi) waive a continuing Default or Event of Default in the payment of principal of or interest on the Notes or that resulted from a failure to comply with the Change of Control provisions of the Indenture. 12. Restrictive Covenants. The Indenture contains certain covenants which, among other things, limit: (i) the incurrence of additional Indebtedness by the Company and Restricted Subsidiaries; (ii) the payment of dividends; (iii) the repurchase of capital stock or subordinated indebtedness; (iv) the making of certain other distributions, loans and investments; (v) the sale of assets and the sale of the stock of Restricted Subsidiaries; (vi) the creation of restrictions on the ability of Restricted Subsidiaries to pay dividends or make other payments to the Company; and (vii) the ability of the Company and Restricted Subsidiaries to enter into certain transactions with Affiliates or to merge, consolidate or transfer substantially all assets. These restrictions are subject to important qualifications and exceptions. The Company must report to the Trustee on compliance with such limitations. 13. Defaults and Remedies. Events of Default include: default in payment of interest on the Notes for 30 days; default in payment of principal on the Notes; failure by the Company for 60 days after notice to it to comply with any of its other agreements in the Indenture or the Notes; certain defaults under other Indebtedness; certain final judgments that remain undercharged; and certain events of bankruptcy or insolvency. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be immediately due and payable for an amount equal to 100% of the principal amount of the Notes plus accrued interest to the date of payment, except that in the case of an Event of Default arising from certain events of bankruptcy or insolvency, all outstanding Notes become due and payable immediately without further action or notice. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Notes. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing default (except a default in payment of principal or interest) if it determines that withholding notice is in their interests. The Company must furnish an annual compliance certificate to the Trustee. 14. Trustee Dealings with Company. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not Trustee. 15. No Recourse Against Others. A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Notes or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. Reverse - 5 16. Authentication. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. 17. Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (-- tenants in common), TEN ENT (-- tenants by the entireties), JT TEN (-- joint tenants with right of survivorship and not as tenants in common), CUST (--Custodian), and U/G/M/A (-- Uniform Gifts to Minors Act). 18. CUSIP Numbers. Pursuant to a recommendation promulgated by the Commission on Uniform Security Identification Procedures, the Company has caused CUSIP Numbers to be printed on the Notes as a convenience to the Holders of the Notes. No representation is made to the accuracy of such numbers as provided on the Notes, and reliance may be placed only on the other identification numbers printed thereon. 19. Governing Law. THIS NOTE AND THE INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. The Company will furnish to any Holder upon written request and without charge a copy of the Indenture. Request may be made to: ICF Kaiser International, Inc. 9300 Lee Highway Fairfax, Virginia 22031-1207 Attention: Executive Vice President and Chief Financial Officer Reverse - 6 GUARANTEE The Guarantors (as defined in the Indenture referred to in the Note upon which this notation is endorsed and each hereinafter referred to as a "Guarantor," which term includes any successor to a Guarantor) have unconditionally guaranteed (such guarantee by each Guarantor being referred to herein as the "Guarantee") (a) the full and prompt payment of the principal of and premium, if any, on any Note when and as the same shall come due and payable, whether at the stated maturity thereof, by acceleration, redemption or otherwise and (b) the full and prompt payment of any interest on any Note when and as the same shall become due, according to the terms of such Note and the Indenture. No stockholder, officer, director or incorporator, as such, past, present or future, of any Guarantor shall have any liability under this Guarantee by reason of his or its status as such stockholder, officer, director or incorporator. The Guarantees shall not be valid or obligatory for any purpose until the certificate of authentication on the Notes upon which the guarantees are noted shall have been executed by the Trustee under the indenture by the manual signature of its authorized officers. GUARANTORS: CYGNA CONSULTING ENGINEERS AND PROJECTS MANAGEMENT, INC. Attest: BY: --------------- -------------------------------------------------- Name: Title: ICF KAISER GOVERNMENT PROGRAMS, INC. Attest: BY: --------------- -------------------------------------------------- Name: Title: PCI OPERATING COMPANY, INC. Attest: BY: --------------- -------------------------------------------------- Name: Title: SYSTEMS APPLICATIONS INTERNATIONAL, INC. Attest: BY: --------------- -------------------------------------------------- Name: Title: Reverse - 7 ASSIGNMENT FORM To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to - ------------------------------------------------------------------------------- (Insert assignee's Soc. Sec. or tax I.D. No.) - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint ------------------------------------------------------- to transfer this Note on the books of the Company. The agent may substitute another to act for him. Date: --------------- Your Signature: ------------------------------- (Sign exactly as your name appears on the face of this Note) Signature Guarantee: Referse - 8 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Company pursuant to an Asset Sale Offer or a Change in Control Offer, please execute and return this form to the Company. If you want to elect to have only part of the Note purchased by the Company pursuant to the Indenture, state the amount you elect to have purchased: $ ------------- Date: -------------- Your Signature: ------------------------------ (Sign exactly as your name appears on the face of this Note) Signature Guarantee: Reverse - 9 EX-4.J 13 EXHIBIT 4(J) Exhibit No. 4(j) WARRANT AGREEMENT dated as of December 23, 1996, between ICF KAISER INTERNATIONAL, INC., a Delaware corporation (the "Company"), and The Bank of New York, a New York banking corporation, as warrant agent (with any successor Warrant Agent, the "Warrant Agent"). WHEREAS, the Company proposes to issue and deliver its warrant certificates (the "Warrant Certificates") evidencing warrants (the "Warrants") to acquire, under certain circumstances, up to an aggregate of 105,000 shares, subject to adjustment, of its Common Stock (as defined below), in connection with an offering by the Company of 15,000 Units comprising the Warrants and $15,000,000 aggregate principal amount of its 12% Senior Notes due 2003, Series A (the "Notes"). The Notes are to be issued under an indenture to be dated as of December 23, 1996 between the Company and The Bank of New York, a New York banking corporation, as trustee (the "Indenture"). Each Warrant shall represent the right to purchase from the Company one share of Common Stock, at an initial price of $2.30 per share, subject to adjustment under certain circumstances; and WHEREAS, the Company desires the Warrant Agent to act on behalf of the Company, and the Warrant Agent is willing so to act, in connection with the issuance of the Warrant Certificates and other matters as provided herein; NOW, THEREFORE, in consideration of the foregoing and for the purpose of defining the terms and provisions of the Warrants and the respective rights and obligations thereunder of the Company, the Warrant Agent and the record holders from time to time of the Warrants, the Company and the Warrant Agent hereby agree as follows: 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. "Common Equity Securities" means Common Stock and securities convertible into, or exercisable or exchangeable for, Common Stock or rights or options to acquire Common Stock or such other securities, excluding the Warrants. "Common Stock" means the common stock, $0.01 par value per share, of the Company, and any other capital stock of the Company into which such common stock may be converted or reclassified or that may be issued in respect of, in exchange for, or in substitution of, such common stock by reason of any stock splits, stock dividends, distributions, mergers, consolidations or other like events. "Company" means ICF Kaiser International, Inc., a Delaware corporation, and its successors and assigns. "Depositary" means, with respect to the Warrants issued in the form of one or more Global Warrants, The Depository Trust Company or another Person designated as Depositary by the Company, which must be a clearing agency registered under the Exchange Act. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Expiration Date" means December 31, 1999, subject to the provisions of Section 3.05. "Global Warrant" means a security evidencing all or a portion of the Warrants issued to the Depositary or its nominee in accordance with Section 2.01 and bearing the legend set forth in Exhibit B. "Holders" means, from time to time, the holders of the Warrants; in the case of Section 8.04, "Holders" also means, from time to time, the holders of Restricted Shares. "Institutional Accredited Investor" means an institution that is an "accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act. "NASD" means the National Association of Securities Dealers, Inc. "Nasdaq Stock Market" means The Nasdaq Stock Market, Inc. "Non-Surviving Combination" means any merger, consolidation or other business combination by the Company with one or more persons (other than a wholly-owned subsidiary of the Company) in which the Company is not the survivor, or a sale of all or substantially all of the assets of the Company to one or more such other persons, if, in connection with any of the foregoing, consideration (other than consideration which includes Common Equity Securities) is distributed to holders of Common Stock in exchange for all or substantially all of their equity interest in the Company. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Private Placement Legend" means the legend set forth on the Warrants in the form set forth on Exhibit A. "Purchase Price" means the purchase price per share of Common Stock to be paid upon the exercise of each Warrant in accordance with the terms hereof, which price shall initially be $2.30 per share, subject to adjustment from time to time pursuant to Article IV hereof. "Qualified Institutional Buyer" or "QIB" means a "qualified institutional buyer" as such term is defined in Rule 144A. "Restricted Shares" means (i) any shares of Common Stock issued or issuable as a result of the exercise of Warrants and (ii) any other shares of Common Stock issuable with respect to any of such shares of Common Stock (x) by way of stock dividend or stock split, (y) in connection with a Transaction or (z) otherwise. "Regulation S" means Regulation S under the Securities Act. "Rule 144A" means Rule 144A under the Securities Act. "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended. "Surviving Combination" means any merger, consolidation or other business combination by the Company with one or more persons in which the Company is the survivor, or a purchase of assets by the Company from one or more other persons. "Transaction" means any transaction (including, without limitation, a merger, consolidation, sale of all or substantially all of the Company's assets, liquidation or recapitalization of the Common Stock or any combination thereof), in which the previously outstanding Common Stock shall be changed into or exchanged for different -2- securities of the Company or common stock or other securities of another corporation or interests in a noncorporate entity or other property (including cash) or any combination of any of the foregoing. "Underlying Common Stock" means the shares of Common Stock issuable upon the exercise of the Warrants. "Warrant Agent" means The Bank of New York, a New York banking corporation, or the successor or successors of such Warrant Agent appointed in accordance with the terms hereof. Section 1.02 Certain Other Defined Terms
Term Defined in Section "Change of Shares"................... 4.01(a) "Common Stock Distribution".......... 4.01(b) "Convertible Securities"............. 4.01(c) "Indemnified Holder"................. 8.04(b) "Indenture".......................... Preamble "Note"............................... Preamble "Offshore Physical Warrants"......... 2.01 "Options"............................ 4.01(c) "Physical Warrants".................. 2.01 "Rights"............................. 4.01(c) "Survivor"........................... 3.05(b) "Transfer Agent"..................... 8.01 "U.S. Physical Warrants"............. 2.01 "Warrant Certificates"............... Preamble "Warrants"........................... Preamble
ARTICLE II ORIGINAL ISSUE OF WARRANTS Section 2.01 Form of Warrant Certificates The Warrant Certificates (a) shall be issued in registered form only and substantially in the form attached hereto as Exhibit A, (b) shall be dated the date of issuance thereof (whether upon initial issuance, registration of transfer, exchange or replacement), (c) shall show the date of countersignature and (d) shall have such legends and endorsements, each as provided by the Company, typed, stamped, printed, lithographed or engraved thereon as the Company may deem appropriate and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any law or with any rule or regulation pursuant thereto or with any rule or regulation of any securities exchange on which the Warrant may be listed, or to conform to customary usage, including, without limitation, the Private Placement Legend set forth on the form of face of Warrant Certificate attached hereto as Exhibit A. The Warrant Certificates shall be in a format and in a form reasonably satisfactory to the Warrant Agent. Warrants offered and sold in reliance on Rule 144A and to Institutional Accredited Investors shall be issued initially in the form of one or more permanent Global Warrants in registered form, substantially in the form set forth in Exhibit A, deposited with the Warrant Agent, as custodian for the Depositary, and shall bear the legend set forth on Exhibit B. The aggregate number of Warrants represented by any Global Warrant may from time to time be increased or decreased by adjustments made on the records of the Warrant Agent, as custodian for the Depositary, as hereinafter provided. Warrants offered and sold in offshore transactions in reliance on Regulation S shall be issued in the form of certificated Warrants in registered form, substantially in the form set forth in Exhibit A (the "Offshore Physical Warrants"). Notes offered and sold in reliance on any other exemption from registration under the Securities Act -3- other than as described in the preceding paragraph shall be issued, and Warrants offered and sold in reliance on Rule 144A may be issued, in the form of certificated Warrants in registered form in substantially the form set forth in Exhibit A (the "U.S. Physical Warrants"). The Offshore Physical Warrants and the U.S. Physical Warrants are sometimes collectively herein referred to as the "Physical Warrants." Pending the preparation of definitive Warrant Certificates, temporary Warrant Certificates may be issued, which may be printed, lithographed, typewritten, mimeographed or otherwise produced, and which will be substantially of the tenor of the definitive Warrant Certificates in lieu of which they are issued. If temporary Warrant Certificates are issued, the Company will cause definitive Warrant Certificates to be prepared without unreasonable delay. After the preparation of definitive Warrant Certificates, the temporary Warrant Certificates shall be exchangeable for definitive Warrant Certificates upon surrender of the temporary Warrant Certificates to the Warrant Agent, without charge to the Holder. Until so exchanged the temporary Warrant Certificates shall in all respects be entitled to the same benefits under this Agreement as definitive Warrant Certificates. Section 2.02 Execution and Delivery of Warrant Certificates Warrant Certificates evidencing Warrants to purchase initially an aggregate of up to 105,000 shares of Common Stock shall be executed, on or after the date of this Agreement, by the Company and delivered to the Warrant Agent for countersignature, and the Warrant Agent shall thereupon countersign and deliver such Warrant Certificates upon the order and at the direction of the Company to the purchasers thereof on the date of issuance. The Warrant Agent is hereby authorized to countersign and deliver Warrant Certificates as required by this Section 2.02 or by Section 3.04, Article V or Section 9.04. The Warrant Certificates shall be executed on behalf of the Company by its Chairman, Chief Executive Officer or President or by any of its Vice Presidents, either manually or by facsimile signature printed thereon. The Warrant Certificates shall be authenticated by manual signature of an authorized signatory of the Warrant Agent and shall not be valid for any purpose unless so countersigned, and shall be dated the date of authentication by the Warrant Agent. In case any officer of the Company whose signature shall have been placed upon any of the Warrant Certificates shall cease to be the Chairman, Chief Executive Officer, President or a Vice President of the Company before countersignature by the Warrant Agent and issue and delivery thereof, such Warrant Certificates may, nevertheless, be countersigned by the Warrant Agent and issued and delivered with the same force and effect as though such person had not ceased to be such officer of the Company. ARTICLE III EXERCISE PRICE; EXERCISE OF WARRANTS GENERALLY; NON-SURVIVING COMBINATION Section 3.01 Exercise Price Each Warrant Certificate shall, when countersigned by the Warrant Agent, entitle the Holder thereof, subject to the provisions thereof and of this Agreement, to receive one share of Common Stock for each Warrant represented thereby, subject to adjustment as herein provided upon payment of the Purchase Price for each of such shares. The Purchase Price shall be payable by certified or official bank check or wire transfer, payable in United States currency to the order of the Company. Section 3.02 Exercise of Warrants Subject to the terms and conditions set forth herein, the Warrants shall be exercisable at any time on or prior to the Expiration Date. Section 3.03 Expiration of Warrants -4- The Warrants shall terminate and become void as of the close of business on the Expiration Date; provided, however, that the Warrants will -------- ------- terminate and become void prior to the Expiration Date in the event of a Non- Surviving Combination, pursuant to Section 3.05. The Company shall give notice not less than 90, and not more than 120, days prior to the Expiration Date to the Holders of all then outstanding Warrants to the effect that the Warrants will terminate and become void as of the close of business on the Expiration Date; provided, however, that the -------- ------- failure by the Company to give such notice as provided in this Section shall not affect such termination and becoming void of the Warrants as of the close of business on the Expiration Date. Section 3.04 Method of Exercise In order to exercise a Warrant, the Holder thereof must surrender the Warrant Certificates evidencing such Warrant to the Warrant Agent, with one of the forms on the reverse of or attached to the Warrant Certificate duly executed, and tender the Purchase Price therefor in accordance with this Article III. In order for a Person having a beneficial interest in a Global Warrant to exercise a Warrant, such Person must first exchange such beneficial interest for a Physical Warrant in the manner provided in Section 5.02(d). If fewer than all of the Warrants represented by a Warrant Certificate are surrendered, such Warrant Certificate shall be surrendered and, subject to the provisions of Article V, a new Warrant Certificate of the same tenor and for the number of Warrants that were not surrendered shall be executed by the Company. The Warrant Agent shall countersign the new Warrant Certificate, register it in such name or names as may be directed in writing by the Holder and deliver the new Warrant Certificate to the person or persons entitled to receive the same. Upon surrender of a Warrant Certificate and payment of the Purchase Price in conformity with the foregoing provisions, the Warrant Agent shall thereupon promptly notify the Company, and the Warrant Agent will deliver or cause to be delivered to or upon written order of any Holder appropriate evidence of ownership of any shares of Underlying Common Stock or other securities or property (including any money) to which the Holder is entitled, subject to the provisions of Section 9.02. Section 3.05 Non-Surviving Combination (a) If the Company proposes, prior to the Expiration Date, to enter into a transaction that would constitute a Non-Surviving Combination if consummated, the Company shall give written notice thereof to the Warrant Agent and to the Holders of Warrants, promptly after an agreement is reached with respect to the Non-Surviving Combination but in no event less than 30 days prior to the consummation thereof. Such notice shall describe the transaction in reasonable detail and specify the consideration to be received by the Holders. The Company shall also furnish to each Holder of Warrants all notices and materials furnished to its stockholders in connection with such transactions. (b) The Company agrees that it will not enter into an agreement providing for a Non-Surviving Combination, unless the party to such transaction that is the surviving entity (the "Survivor") shall be obligated to distribute or pay to each Holder of Warrants, upon payment of the Purchase Price prior to the Expiration Date, the number of shares of stock or other securities or other property (including any cash) of the Survivor that would have been distributable or payable on account of the Underlying Common Stock if such Holder's Warrants had been exercised immediately prior to such Non-Surviving Combination (or, if applicable, the record date therefor). Following the consummation of a Non- Surviving Combination, the Warrants shall represent only the right to receive such shares of stock or other property from the Survivor upon payment of the Purchase Price prior to the Expiration Date. ARTICLE IV ADJUSTMENTS -5- Section 4.01 Adjustments of Exercise Price and Number of Shares of Common Stock The number and kind of shares purchasable upon the exercise of Warrants and the Purchase Price shall be subject to adjustment from time to time as follows: (a) Changes in Common Stock. In the event the Company shall, at any ----------------------- time or from time to time after the date hereof, (i) issue any shares of Common Stock as a stock dividend to the holders of Common Stock, (ii) subdivide or combine the outstanding shares of Common Stock into a greater or lesser number of shares or (iii) issue any shares of its capital stock in a reclassification or reorganization of the Common Stock (any such issuance, subdivision, combination, reclassification or reorganization being herein called a "Change of Shares"), then (A) in the case of (i) or (ii) above, the number of shares of Common Stock that may be purchased upon the exercise of each Warrant shall be adjusted to the number of shares of Common Stock that the Holder of such Warrant would have owned or have been entitled to receive after the happening of such event had such Warrant been exercised immediately prior to the record date (or, if there is no record date, the effective date) for such event, and the Purchase Price shall be adjusted to the price (calculated to the nearest 1,000th of one cent) determined by multiplying the Purchase Price immediately prior to such event by a fraction, the numerator of which shall be the number of shares of Common Stock purchasable with one Warrant immediately prior to such event and the denominator of which shall be the number of shares of Common Stock purchasable with one Warrant after the adjustment referred to above and (B) in the case of (iii) above, paragraph (l) below shall apply. An adjustment made pursuant to clause (A) of this paragraph (a) shall become effective retroactively immediately after the record date in the case of such dividend and shall become effective immediately after the effective date in other cases, but any shares of Common Stock issuable solely as a result of such adjustment shall not be issued prior to the effective date of such event. (b) Common Stock Distribution. In the event the Company shall, at any ------------------------- time or from time to time after the date hereof, issue, sell or otherwise distribute (including by way of deemed distributions pursuant to paragraphs (c) and (d) below) any shares of Common Stock (other than pursuant to a Change of Shares or the exercise of any Option, Convertible Security (each as defined in paragraph (c) below) or Warrant) (any such event, including any deemed distributions described in paragraphs (c) and (d), being herein called a "Common Stock Distribution"), for a consideration per share less than the current market price per share of Common Stock (as defined in paragraph (f) below), on the date of such Common Stock Distribution, then, effective upon such Common Stock Distribution, the Purchase Price shall be reduced to the price (calculated to the nearest 1,000th of one cent) determined by multiplying the Purchase Price in effect immediately prior to such Common Stock Distribution by a fraction, the numerator of which shall be the sum of (i) the number of shares of Common Stock outstanding (exclusive of any treasury shares) immediately prior to such Common Stock Distribution multiplied by the current market price per share of Common Stock on the date of such Common Stock Distribution, plus (ii) the consideration, if any, received by the Company upon such Common Stock Distribution, and the denominator of which shall be the product of (A) the total number of shares of Common Stock outstanding (exclusive of any treasury shares) immediately after such Common Stock Distribution multiplied by (B) the current market price per share of Common Stock on the date of such Common Stock Distribution. If any Common Stock Distribution shall require an adjustment to the Purchase Price pursuant to the foregoing provisions of this paragraph (b), including by operation of paragraph (c) or (d) below, then, effective at the time such adjustment is made, the number of shares of Common Stock purchasable upon the exercise of each Warrant shall be increased to a number determined by multiplying the number of such shares so purchasable immediately prior to such Common Stock Distribution by a fraction, the numerator of which shall be the Purchase Price in effect immediately prior to such adjustment and the denominator of which shall be the Purchase Price in effect immediately after such adjustment. In computing adjustments under this paragraph, fractional interests in Common Stock shall be taken into account to the nearest 1,000th of a share. The provisions of this paragraph (b), including by operation of paragraph (c) or (d) below, shall not operate to increase the Purchase Price or reduce the number of shares of Common Stock purchasable upon the exercise of any Warrant, except by operation of paragraph (j) or (k) below. -6- (c) Issuance of Options. In the event the Company shall, at any time ------------------- or from time to time after the date hereof, issue, sell, distribute or otherwise grant in any manner (including by assumption) any rights to subscribe for or to purchase, or any warrants or options for the purchase of, Common Stock or any stock or securities convertible into or exchangeable for Common Stock (any such rights, warrants or options being herein called "Options" (the term "Options" shall also include without limitation any rights ("Rights") to purchase Common Stock and each other security for which such rights are at any time exercisable issued pursuant to the Rights Agreement between the Company and the Rights Agent designated therein approved by the Board of Directors of the Company on January 13, 1992, as amended from time to time) and any such convertible or exchangeable stock or securities being herein called "Convertible Securities"), whether or not such Options or the rights to convert or exchange such Convertible Securities are immediately exercisable, and the price per share at which Common Stock is issuable upon the exercise of such Options or upon the conversion or exchange of such Convertible Securities (determined by dividing (i) the aggregate amount, if any, received or receivable by the Company as consideration for the issuance, sale, distribution or granting of such Options, plus the minimum aggregate amount of additional consideration, if any, payable to the Company upon the exercise of all such Options, plus, in the case of Options to acquire Convertible Securities, the minimum aggregate amount of additional consideration, if any, payable upon the conversion or exchange of all such Convertible Securities, by (ii) the total maximum number of shares of Common Stock issuable upon the exercise of all such Options or upon the conversion or exchange of all Convertible Securities issuable upon the exercise of all such Options) shall be less than the current market price per share of Common Stock on the date of the issuance, sale, distribution or granting of such Options then, for purposes of paragraph (b) above, the total maximum number of shares of Common Stock issuable upon the exercise of all such Options or upon the conversion or exchange of the total maximum amount of the Convertible Securities issuable upon the exercise of all such Options shall be deemed to have been issued as of the date of the issuance, sale, distribution or granting of such Options and thereafter shall be deemed to be outstanding and the Company shall be deemed to have received as consideration such price per share, determined as provided above, therefor. Except as otherwise provided in paragraphs (j) and (k) below, no additional adjustment of the Purchase Price shall be made upon the actual exercise of such Options or upon conversion or exchange of the Convertible Securities issuable upon the exercise of such Options. If the minimum and maximum numbers or amounts referred to in this paragraph (c) or in paragraph (d) below cannot be calculated with certainty as of the date of the required adjustment, such numbers and amounts shall be determined in good faith by the Board of Directors of the Company. (d) Issuance of Convertible Securities. In the event the Company ---------------------------------- shall, at any time or from time to time after the date hereof, issue, sell or otherwise distribute (including by assumption) any Convertible Securities (other than upon the exercise of any Option), whether or not the rights to convert or exchange such Convertible Securities are immediately exercisable, and the price per share at which Common Stock is issuable upon the conversion or exchange of such Convertible Securities (determined by dividing (i) the aggregate amount, if any, received or receivable by the Company as consideration for the issuance, sale or distribution of such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to the Company upon the conversion or exchange of all such Convertible Securities, by (ii) the total maximum number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities) shall be less than the current market price per share of Common Stock on the date of such issuance, sale or distribution, then, for the purposes of paragraph (b) above, the total number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities shall be deemed to have been issued as of the date of the issuance, sale or distribution of such Convertible Securities and thereafter shall be deemed to be outstanding and the Company shall be deemed to have received as consideration such price per share, determined as provided above, therefor. Except as otherwise provided in paragraphs (j) and (k) below, no additional adjustment of the Purchase Price shall be made upon the actual conversion or exchange of such Convertible Securities. (e) Dividends and Distributions. In the event the Company shall, at --------------------------- any time or from time to time after the date hereof, distribute to the holders of Common Stock any dividend or other distribution of cash, evidences of its indebtedness, other securities or other properties or assets (in each case other than (i) dividends payable in Common Stock, Options or Convertible Securities and (ii) any cash dividend that, when added to all other cash dividends paid in the one year prior to the declaration date of such dividend (excluding any such other dividend included in a previous adjustment of the Purchase Price pursuant to this paragraph (e)), does not exceed 10% of the current market price per share of Common Stock on such declaration date), or any options, warrants or -7- other rights to subscribe for or purchase any of the foregoing, then (A) the Purchase Price shall be decreased to a price determined by multiplying the Purchase Price then in effect by a fraction, the numerator of which shall be the current market price per share of Common Stock on the record date for such distribution less the sum of (X) the cash portion, if any, of such distribution per share of Common Stock outstanding (exclusive of any treasury shares) on the record date for such distribution plus (Y) the then fair market value (as determined in good faith by the Board of Directors of the Company) per share of Common Stock outstanding (exclusive of any treasury shares) on the record date for such distribution of that portion, if any, of such distribution consisting of evidences of indebtedness, other securities, properties, assets, options, warrants or subscription or purchase rights, and the denominator of which shall be such current market price per share of Common Stock and (B) the number of shares of Common Stock purchasable upon the exercise of each Warrant shall be increased to a number determined by multiplying the number of shares of Common Stock so purchasable immediately prior to the record date for such distribution by a fraction, the numerator of which shall be the Purchase Price in effect immediately prior to the adjustment required by clause (A) of this sentence and the denominator of which shall be the Purchase Price in effect immediately after such adjustment. The adjustments required by this paragraph (e) shall be made whenever any such distribution is made and shall be retroactive to the record date for the determination of stockholders entitled to receive such distribution. (f) Current Market Price. For the purpose of any computation under -------------------- paragraphs (b), (c), (d) and (e) of this Section, the current market price per share of Common Stock at any date shall be the average of the daily closing prices for the shorter of (i) the 20 consecutive trading days ending on the last full trading day on the exchange or market specified in the second succeeding sentence prior to the Time of Determination and (ii) the period commencing on the date next succeeding the first public announcement of the issuance, sale, distribution or granting in question through such last full trading day prior to the Time of Determination. The term "Time of Determination" as used herein shall be the time and date of the earlier to occur of (A) the date as of which the current market price is to be computed and (B) the last full trading day on such exchange or market before the commencement of "ex-dividend" trading in the Common Stock relating to the event giving rise to the adjustment required by paragraph (b), (c), (d) or (e). The closing price for any day shall be the last reported sale price regular way or, in case no such reported sale takes place on such day, the average of the closing bid and asked prices regular way for such day, in each case (1) on the principal national securities exchange on which the shares of Common Stock are listed or to which such shares are admitted to trading or (2) if the Common Stock is not listed or admitted to trading on a national securities exchange, in the over-the counter market as reported by the Nasdaq Stock Market or any comparable system or (3) if the Common Stock is not listed on the Nasdaq Stock Market or a comparable system, as furnished by two members of the NASD selected from time to time in good faith by the Board of Directors of the Company for that purpose. In the absence of all of the foregoing, or if for any other reason the current market price per share cannot be determined pursuant to the foregoing provisions of this paragraph (f), the current market price per share shall be the fair market value thereof as determined in good faith by the Board of Directors of the Company. (g) Certain Distributions. If the Company shall pay a dividend or --------------------- make any other distribution payable in Options or Convertible Securities, then, for purposes of paragraph (b) above (by operation of paragraph (c) or (d) above, as the case may be), such Options or Convertible Securities shall be deemed to have been issued or sold without consideration except for such amounts of consideration as shall have been deemed to have been received by the Company pursuant to paragraphs (c) or (d) above, as appropriate. (h) Consideration Received. If any shares of Common Stock shall be ---------------------- issued and sold in an underwritten public offering, the consideration received by the Company for such shares of Common Stock shall be deemed to include the underwriting discounts and commissions realized by the underwriters of such public offering. If any shares of Common Stock, Options or Convertible Securities shall be issued, sold or distributed for a consideration other than cash, the amount of the consideration other than cash received by the Company in respect thereof shall be deemed to be the then fair market value of such consideration (as determined in good faith by the Board of Directors of the Company). If any Options shall be issued in connection with the issuance and sale of other securities of the Company, together comprising one integral transaction in which no specific consideration is allocated to such Options by the parties thereto, such Options shall be deemed to have been issued, sold or -8- distributed for such amount of consideration as shall be allocated to such Options in good faith by the Board of Directors of the Company. (i) Deferral of Certain Adjustments. No adjustment to the Purchase ------------------------------- Price (including the related adjustment to the number of shares of Common Stock purchasable upon the exercise of each Warrant) shall be required hereunder (i) unless such adjustment, together with other adjustments carried forward as provided below, would result in an increase or decrease of at least one percent of the Purchase Price, provided, however, that any adjustment which by reason of this clause (i) of this paragraph (i) is not required to be made shall be carried forward and taken into account in any subsequent adjustment and (ii) solely with respect to Options that are Rights, until the time such Options become exercisable. (j) Changes in Options and Convertible Securities. If the exercise --------------------------------------------- price provided for in any Options referred to in paragraph (c) above, the additional consideration, if any, payable upon the conversion or exchange of any Convertible Securities referred to in paragraph (c) or (d) above, or the rate at which any Convertible Securities referred to in paragraph (c) or (d) above are convertible into or exchangeable for Common Stock shall change at any time (other than under or by reason of provisions designed to protect against dilution upon an event which results in a related adjustment pursuant to this Article IV), the Purchase Price then in effect and the number of shares of Common Stock purchasable upon the exercise of each Warrant shall forthwith be readjusted (effective only with respect to any exercise of any Warrant after such readjustment) to the Purchase Price and number of shares of Common Stock so purchasable that would then be in effect had the adjustment made upon the issuance, sale, distribution or granting of such Options or Convertible Securities been made based upon such changed purchase price, additional consideration or conversion rate, as the case may be, but only with respect to such Options and Convertible Securities as then remain outstanding. (k) Expiration of Options and Convertible Securities. If, at any time ------------------------------------------------ after any adjustment to the number of shares of Common Stock purchasable upon the exercise of each Warrant shall have been made pursuant to paragraph (c), (d) or (j) above or this paragraph (k), any Options or Convertible Securities shall have expired unexercised or, solely with respect to Options that are Rights, are redeemed, the number of such shares so purchasable shall, upon such expiration or such redemption, be readjusted and shall thereafter be such as they would have been had they been originally adjusted (or had the original adjustment not been required, as the case may be) as if (i) the only shares of Common Stock deemed to have been issued in connection with such Options or Convertible Securities were the shares of Common Stock, if any, actually issued or sold upon the exercise of such Options or Convertible Securities and (ii) such shares of Common Stock, if any, were issued or sold for the consideration actually received by the Company upon such exercise plus the aggregate consideration, if any, actually received by the Company for the issuance, sale, distribution or granting of all such Options or Convertible Securities, whether or not exercised; provided, however, that (x) no such readjustment shall have the effect of decreasing the number of such shares so purchasable by an amount (calculated by adjusting such decrease to account for all other adjustments made pursuant to this Article IV following the date of the original adjustment referred to above) in excess of the amount of the adjustment initially made in respect of the issuance, sale, distribution or granting of such Options or Convertible Securities and (y) in the case of the redemption of any Rights, there shall be deemed (for the purposes of paragraph (c) above) to have been issued as of the date of such redemption for no consideration a number of shares of Common Stock equal to the aggregate consideration paid to effect such redemption divided by the current market price of the Common Stock on the date of such redemption. (l) Other Adjustments. In the event that at any time, as a result of ----------------- an adjustment made pursuant to this Article IV, the Holders shall become entitled to receive any securities of the Company other than shares of Common Stock, thereafter the number of such other securities so receivable upon exercise of the Warrants and the Purchase Price applicable to such exercise shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the shares of Common Stock contained in this Article IV. (m) Excluded Transactions. Notwithstanding any provision in this --------------------- Article IV to the contrary, no adjustment shall be made pursuant to this Article IV in respect of (i) any change in the par value of the Common Stock, (ii) the granting of any Options or the issuance of any shares of Common Stock, in either case, which would -9- otherwise trigger an adjustment under paragraph (b) above, that may be registered on Form S-8 or any successor form under the Securities Act, to any officers, directors or employees of, or any consultants or advisors to, the Company, or (iii) the issuance of Common Stock pursuant to any dividend reinvestment plan which provides that the price of the Common Stock purchased for plan participants from the Company will be no less than 95% of the average of the high and low sales prices of the Common Stock on the investment date or, if no trading in the Common Stock occurs on such date, the next preceding date on which trading occurred (1) on the principal national securities exchange on which the shares of Common Stock are listed or to which such shares are admitted to trading or (2) if the Common Stock is not listed or admitted to trading on a national securities exchange, in the over-the-counter market as reported by the Nasdaq Stock Market or any comparable system or (3) if the Common Stock is not listed on the Nasdaq Stock Market or a comparable system, as furnished by two members of the NASD selected from time to time in good faith by the Board of Directors of the Company for that purpose. In the absence of all of the foregoing, or if for any other reason the current market price per share cannot be determined pursuant to the foregoing provisions of this paragraph, the current market price per share shall be the fair market value thereof as determined in good faith by the Board of Directors of the Company; provided, however, that clause (ii) of this paragraph (m) shall not apply to any such grant or issuance if, after giving effect thereto, the aggregate amount of Common Stock issued in all transactions covered by clause (ii) of this paragraph (m) (assuming the exercise of all then outstanding Options granted in such transactions) would exceed 5% of the number of shares of Common Stock then outstanding (after giving effect to the exercise of the Options so granted and all then outstanding Options or Convertible Securities). Section 4.02 Notice of Adjustment Whenever the number of shares of Common Stock or other stock or property issuable upon the exercise of each Warrant is adjusted, as herein provided, the Company shall promptly give a written certificate of the Company to the Warrant Agent of such adjustment or adjustments and shall cause the Warrant Agent promptly to mail by first class mail, postage prepaid, to each Holder and the Warrant Agent notice of such adjustment or adjustments. In addition, the Company at its sole expense shall within 120 calendar days following the end of each fiscal year of the Company during which any Warrants remain outstanding, and promptly upon the request of any Holder of a Warrant in connection with the exercise of any of such Holder's Warrants, cause to be delivered to the Warrant Agent a certificate of a firm of independent public accountants selected by the Board of Directors of the Company (who may be the regular accountants employed by the Company) setting forth the number of shares of Common Stock or other stock or property issuable upon the exercise of each Warrant after such adjustment, setting forth a brief statement of the facts requiring such adjustment and setting forth the computation by which such adjustment was made. The Warrant Agent shall be entitled to rely on such certificates and shall be under no duty or responsibility with respect to any such certificate except to exhibit the same from time to time to any Holder desiring an inspection thereof during reasonable business hours. The Warrant Agent shall not at any time be under any duty or responsibility to any Holder to determine whether any facts exist that may require any adjustment of the number of shares of Common Stock or other stock or property issuable on exercise of the Warrants, or with respect to the nature or extent or any such adjustment when made, or with respect to the method employed in making such adjustment or the validity or value (or the kind or amount) of any shares of Common Stock or other stock or property which may be issuable on exercise of the Warrants. The Warrant Agent shall not be responsible for any failure of the Company to make any cash payment or to issue, transfer or deliver any shares of Common Stock or stock certificates or other common stock or property upon the exercise of any Warrant. Section 4.03 Statement of Warrants Irrespective of any adjustment in the number or kind of shares issuable upon the exercise of the Warrants, Warrants theretofore or thereafter issued may continue to express the same number and kind of shares as are stated in the Warrants initially issuable pursuant to this Agreement. Section 4.04 Fractional Interest The Company shall not be required to issue fractional shares of Common Stock on the exercise of Warrants. If more than one Warrant shall be presented for exercise in full at the same time by the same Holder, the -10- number of full shares of Common Stock which shall be issuable upon such exercise shall be computed on the basis of the aggregate number of shares of Common Stock acquirable on exercise of the Warrants so presented. If any fraction of a share of Common Stock would, except for the provisions of this Section, be issuable on the exercise of any Warrant (or specified portion thereof), the Company shall pay an amount in cash calculated by it to be equal to the then current market price per share multiplied by such fraction computed to the nearest whole cent. The Holders, by their acceptance of the Warrant Certificates, expressly waive any and all rights to receive any fraction of a share of Common Stock or a stock certificate representing a fraction of a share of Common Stock. ARTICLE V WARRANT TRANSFERS Section 5.01 Warrant Transfer Books The Warrant Certificates shall be issued in registered form only. The Company shall cause to be kept at the office of the Warrant Agent a register in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Warrant Certificates and of transfers or exchanges of Warrant Certificates by the Warrant Agent as herein provided. At the option of the Holder thereof, Warrant Certificates may be exchanged at such office, upon payment of the charges hereinafter provided. Whenever any Warrant Certificates are so surrendered for exchange, the Company shall execute, and the Warrant Agent shall countersign and deliver, the Warrant Certificates that the Holder making the exchange is entitled to receive. All Warrant Certificates issued upon any registration of transfer or exchange of Warrant Certificates shall be the valid obligations of the Company, evidencing the same obligations, and entitled to the same benefits under this Agreement, as the Warrant Certificates surrendered for such registration of transfer or exchange. Section 5.02 Registration of Transfer and Exchange (a) Transfer and Exchange of Physical Warrants. When Physical ------------------------------------------ Warrants are presented to the Warrant Agent with a request: (i) to register the transfer of the Physical Warrants; or (ii) to exchange such Physical Warrants for an equal number of Physical Warrants of other denominations, the Warrant Agent shall register the transfer or make the exchange as requested if the requirements under this Warrant Agreement as set forth in this Section 5.02 for such transactions are met; provided, however, that the Physical -------- ------- Warrants presented or surrendered for registration of transfer or exchange: (A) shall be duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Warrant Agent, duly executed by the Holder thereof or his attorney duly authorized in writing; and (B) in the case of Physical Warrants the offer and sale of which have not been registered under the Securities Act, such Physical Warrants shall be accompanied, in the sole discretion of the Company, by the following additional information and documents, as applicable: (I) if such Physical Warrant is being delivered to the Warrant Agent by a Holder for registration in the name of such Holder, without transfer, a certification from such Holder to that effect (substantially in the form of Exhibit C hereto); or (II) if such Physical Warrant is being transferred to a Qualified Institutional Buyer in accordance with Rule 144A, a certification to that effect (substantially in the form of Exhibit C hereto); or -11- (III) if such Physical Warrant is being transferred to an Institutional Accredited Investor, delivery of a certification to that effect (substantially in the form of Exhibit C hereto) and a Transferee Certificate for Institutional Accredited Investors substantially in the form of Exhibit D hereto; or (IV) if such Physical Warrant is being transferred in reliance on Regulation S, delivery of a certification to that effect (substantially in the form of Exhibit C hereto), a Transferee Certificate for Regulation S Transfers substantially in the form of Exhibit E hereto and an Opinion of Counsel reasonably satisfactory to the Company to the effect that such transfer is in compliance with the Securities Act; or (V) if such Physical Warrant is being transferred in reliance on Rule 144 under the Securities Act, delivery of a certification to that effect (substantially in the form of Exhibit C hereto) and an Opinion of Counsel reasonably satisfactory to the Company to the effect that such transfer is in compliance with the Securities Act; or (VI) if such Physical Warrant is being transferred in reliance on another exemption from the registration requirements of the Securities Act, a certification to that effect (substantially in the form of Exhibit C hereto) and an Opinion of Counsel reasonably acceptable to the Company to the effect that such transfer is in compliance with the Securities Act. (b) Restrictions on Exchange of a Physical Warrant for a Beneficial --------------------------------------------------------------- Interest in a Global Warrant. A Physical Warrant may not be exchanged for a - ---------------------------- beneficial interest in a Global Warrant except upon satisfaction of the requirements set forth below. Upon receipt by the Warrant Agent of a Physical Warrant, duly endorsed or accompanied by appropriate instruments of transfer, in form satisfactory to the Warrant Agent, together with: (i) certification, substantially in the form of Exhibit C hereto, that such Physical Warrant is being transferred (A) to a Qualified Institutional Buyer, (B) to an Accredited Investor or (C) in an offshore transaction in reliance on Regulation S; and (ii) written instructions from the Company directing the Warrant Agent to make, or to direct the Depositary to make, an endorsement on the Global Warrant to reflect an increase in the aggregate number of Warrants represented by the Global Warrant, then the Warrant Agent shall cancel such Physical Warrant and cause, or direct the Depositary to cause, in accordance with the standing instructions and procedures existing between the Depositary and the Warrant Agent, the aggregate number of Warrants represented by the Global Warrant to be increased accordingly. If no Global Warrant is then outstanding, the Company shall issue and the Warrant Agent shall authenticate such a Global Warrant for the appropriate number of Warrants. (c) Transfer and Exchange of Global Warrants. The transfer and exchange of ---------------------------------------- Global Warrants or beneficial interests therein shall be effected through the Depositary in accordance with this Warrant Agreement (including the restrictions on transfer set forth herein) and the procedures of the Depositary therefor. (d) Transfer of a Beneficial Interest in a Global Warrant for a Physical -------------------------------------------------------------------- Warrant. - ------- (i) Any Person having a beneficial interest in a Global Warrant may upon request exchange such beneficial interest for a Physical Warrant. Upon receipt by the Warrant Agent of instructions from the Depositary or its nominee on behalf of any Person having a beneficial interest in a Global Warrant and upon receipt by the Warrant Agent of a written order or such other form of instructions as is customary for the Depositary or the Person designated by the Depositary as having such a beneficial interest containing registration instructions and, in the case of any such transfer or exchange of a beneficial interest in Warrants the offer and sale of which have not been registered under the Securities Act, the following additional information and documents: (A) if such beneficial interest is being transferred to the Person designated by the Depositary as being the beneficial owner, a certification from such Person to that effect (substantially in the form of Exhibit C hereto); or -12- (B) if such beneficial interest is being transferred to a Qualified Institutional Buyer in accordance with Rule 144A, a certification to that effect (substantially in the form of Exhibit C hereto); or (C) if such beneficial interest is being transferred to an Institutional Accredited Investor, delivery of a certification to that effect (substantially in the form of Exhibit C hereto) and a Certificate for Institutional Accredited Investors substantially in the form of Exhibit D hereto; or (D) if such beneficial interest is being transferred in reliance on Regulation S, delivery of a certification to that effect (substantially in the form of Exhibit C hereto) and a Transferee Certificate for Regulation S Transfers substantially in the form of Exhibit E hereto and an Opinion of Counsel reasonably satisfactory to the Company to the effect that such transfer is in compliance with the Securities Act; or (E) if such beneficial interest is being transferred in reliance on Rule 144 under the Securities Act, delivery of a certification to that effect (substantially in the form of Exhibit C hereto) and an Opinion of Counsel reasonably satisfactory to the Company to the effect that such transfer is in compliance with the Securities Act; or (F) if such beneficial interest is being transferred in reliance on another exemption from the registration requirements of the Securities Act, a certification to that effect (substantially in the form of Exhibit C hereto) and an Opinion of Counsel reasonably satisfactory to the Company to the effect that such transfer is in compliance with the Securities Act, then the Warrant Agent will cause, in accordance with the standing instructions and procedures existing between the Depositary and the Warrant Agent, the aggregate number of Warrants represented by the Global Warrant to be reduced and, following such reduction, the Company will execute and the Warrant Agent will authenticate and deliver to the transferee a Physical Warrant. (ii) Warrants issued in exchange for a beneficial interest in a Global Warrant pursuant to this Section 5.02(d) shall be registered in such names and in such denominations as the Depositary, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Warrant Agent in writing. The Warrant Agent shall deliver such Physical Warrants to the Persons in whose names such Physical Warrants are so registered. (e) Restrictions on Transfer and Exchange of Global Warrants. -------------------------------------------------------- Notwithstanding any other provisions of this Warrant Agreement, a Global Warrant may not be transferred as a whole except by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. (f) Private Placement Legend. Upon the transfer, exchange or replacement ------------------------ of Warrants, the Warrant Agent shall deliver only Warrants that bear the Private Placement Legend unless, and the Warrant Agent is hereby authorized to deliver Warrants without the Private Placement Legend if, (i) there is delivered to the Warrant Agent an Opinion of Counsel reasonably satisfactory to the Company and the Warrant Agent to the effect that neither such legend nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act or (ii) such Warrant has been sold pursuant to an effective registration statement under the Securities Act. (g) General. By its acceptance of any Warrant bearing the Private ------- Placement Legend, each Holder of such a Warrant acknowledges the restrictions on transfer of such Warrant set forth in this Warrant Agreement and in the Private Placement Legend and agrees that it will transfer such Warrant only as provided in this Warrant Agreement. The Warrant Agent shall retain copies of all letters, notices and other written communications received pursuant to this Section 5.02. The Company 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 Warrant Agent. -13- No service charge shall be payable by Holders for any registration of transfer or exchange of Warrant Certificates. The Company 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 or exchange of Warrant Certificates. ARTICLE VI WARRANT HOLDERS Section 6.01 No Voting Rights Prior to the exercise of the Warrants, no Holder of a Warrant Certificate, as such, shall be entitled to any rights of a stockholder of the Company, including, without limitation, the right to receive dividends or subscription rights, the right to vote, to consent, to exercise any preemptive right, to receive any notice of meetings of stockholders for the election of directors of the Company or any other matter or to receive any notice of any proceedings of the Company, except as may be specifically provided for herein. Section 6.02 Right of Action All rights of action in respect of this Agreement are vested in the Holders of the Warrants, and any Holder of any Warrant, without the consent of the Warrant Agent or any Holder of any other Warrant, 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 hereunder, including the right to exercise, exchange or surrender for purchase such Holder's Warrants in the manner provided in this Agreement. ARTICLE VII WARRANT AGENT Section 7.01 Nature of Duties and Responsibilities Assumed The Company hereby appoints the Warrant Agent to act as agent of the Company as set forth in this Agreement. The Warrant Agent hereby accepts the appointment as agent of the Company and agrees to perform that agency upon the terms and conditions herein set forth, by all of which the Company and the Holders of Warrants, by their acceptance thereof, shall be bound. The Warrant Agent shall not by countersigning Warrant Certificates or by any other act hereunder be deemed to make any representation as to validity or authorization of the Warrants or the Warrant Certificates (except as to its countersignature thereon) or of any securities or other property delivered upon exercise of any Warrant, or as to the number or kind or amount of stock or other securities or other property deliverable upon exercise of any Warrant or the correctness of the representations of the Company made in such certificates that the Warrant Agent receives. The Warrant Agent 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 Warrants required from time to time, and the Warrant Agent shall have no duty or responsibility in determining the accuracy or correctness of any such calculation, other than to apply any adjustment, notice of which is given by the Company to the Warrant Agent to be mailed to the Holders in accordance with Section 4.02. The Warrant Agent shall not (a) be liable for any recital or statement of fact contained herein or in the Warrant Certificates or for any action taken, suffered or omitted by it in good faith in the belief that any Warrant Certificate or any other document or any signature is genuine or properly authorized, (b) be responsible for any failure on the part of the Company to comply with any of its covenants and obligations contained in this Agreement or in the Warrant Certificates or (c) be liable for any act or omission in connection with this Agreement except for its own gross negligence or willful misconduct. The Warrant Agent is hereby authorized to accept instructions with respect to the performance of its duties hereunder from the Chief Executive Officer, the President, any Vice President, the Chief Financial Officer, the Treasurer, the Secretary or the Assistant Secretary of the Company and to apply to any such officer for instructions (which instructions will be promptly given in writing when requested), and the Warrant Agent 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 or willful -14- misconduct, but in its discretion the Warrant Agent may in lieu thereof accept other evidence of such or may require such further or additional evidence as it may deem reasonable. Any application by the Warrant Agent for written instructions from the Company may, at the option of the Warrant Agent, set forth in writing any action proposed to be taken or omitted by the Warrant Agent under this Agreement and the date on and/or after which such action shall be taken or such omission shall be effective. The Warrant Agent shall not be liable for any action taken by, or omission of, the Warrant Agent 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 the Company 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 Warrant Agent shall have received written instructions in response to such application specifying the action to be taken or omitted. The Warrant Agent may execute and exercise any of the rights and powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys, agents or employees, provided reasonable care has been exercised in the selection of any such attorney, agent or employee. The Warrant Agent shall not be under any obligation or duty to institute, appear in or defend any action, suit or legal proceeding in respect hereof, unless first indemnified to its satisfaction, but this provision shall not affect the power of the Warrant Agent to take such action as the Warrant Agent may consider proper, whether with or without such indemnity. The Warrant Agent shall promptly notify the Company in writing of any claim made or action, suit or proceeding instituted against or arising out of or in connection with this Agreement. No provision of this Agreement shall require the Warrant Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder 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. The Company 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 Warrant Agent in order to enable it to carry out or perform its duties under this Agreement. The Warrant Agent shall act solely as agent of the Company hereunder. The Warrant Agent shall not be liable except for the failure to perform such duties as are specifically set forth herein, and no implied covenants or obligations shall be read into this Agreement against the Warrant Agent, whose duties and obligations shall be determined solely by the express provisions hereof. Section 7.02 Right to Consult Counsel The Warrant Agent may at any time consult with legal counsel of its selection satisfactory to it (who may be legal counsel for the Company), and the Warrant Agent shall incur no liability or responsibility to 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. Section 7.03 Compensation and Reimbursement The Company agrees to pay to the Warrant Agent from time to time compensation for all services rendered by it hereunder as the Company and the Warrant Agent may agree from time to time in writing, and to reimburse the Warrant Agent for reasonable expenses and disbursements incurred in connection with the execution and administration of this Agreement (including the reasonable compensation and the expenses of its counsel), and further agrees to indemnify the Warrant Agent 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 the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. The provisions of this Section 7.03 shall survive the termination of this Agreement. Section 7.04 Warrant Agent May Hold Company Securities -15- Except as may be limited by applicable law, the Warrant Agent and any stockholder, director, officer or employee of the Warrant Agent may buy, sell or deal in any of the Warrants or other securities of the Company or its Affiliates or become pecuniarily interested in transactions in which the Company or its Affiliates may be interested, or contract with or lend money to the Company or its Affiliates or otherwise act as fully and freely as though it were not the Warrant Agent under this Agreement. Nothing herein shall preclude the Warrant Agent from acting in any other capacity for the Company or for any other person. Section 7.05 Resignation and Removal; Appointment of Successor (a) No resignation or removal of the Warrant Agent and no appointment of a successor warrant agent shall become effective until the acceptance of appointment by the successor warrant agent as provided herein. The Warrant Agent may resign its duties and be discharged from all further duties and liability hereunder (except liability arising as a result of the Warrant Agent's own gross negligence, bad faith or willful misconduct) after giving written notice to the Company. The Company may remove the Warrant Agent upon written notice, and the Warrant Agent shall thereupon in like manner be discharged from all further duties and liabilities hereunder, except as aforesaid. The Warrant Agent shall, at the Company's expense, cause to be mailed (by first class mail, postage prepaid) to each Holder of a Warrant at his last address as shown on the register of the Company maintained by the Warrant Agent a copy of said notice of resignation or notice of removal, as the case may be. Upon such resignation or removal, the Company shall appoint in writing a new warrant agent. If the Company shall fail to make such appointment within a period of 30 days after it has been notified in writing of such resignation by the resigning Warrant Agent or after such removal, then the Company shall become Warrant Agent until a successor Warrant Agent has been appointed, and the Holder of any Warrant may apply to any court of competent jurisdiction for the appointment of a new warrant agent. Any new warrant agent, whether appointed by the Company or by such a court, shall be a corporation doing business under the laws of the United States, any state thereof 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 warrant agent 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 warrant agent 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 warrant agent, it shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named herein as the Warrant Agent, 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 the Company and shall be legally and validly executed and delivered by the resigning or removed Warrant Agent. Not later than the effective date of any such appointment, the Company shall give notice thereof to the resigning or removed Warrant Agent. Failure to give any notice provided for in this Section, however, or any defect therein, shall not affect the legality or validity of the resignation or removal of the Warrant Agent or the appointment of a new warrant agent, as the case may be. (b) Any corporation into which the Warrant Agent or any new warrant agent may be merged or any corporation resulting from any consolidation to which the Warrant Agent or any new warrant agent shall be a party or any person to whom the Warrant Agent transfers substantially all of its corporate trust business shall be a successor Warrant Agent under this Agreement without any further act, provided that such corporation (i) would be eligible for appointment as successor to the Warrant Agent under the provisions of Section 7.05(a) or (ii) is a wholly-owned subsidiary of the Warrant Agent. Any such successor Warrant Agent shall promptly cause notice of its succession as Warrant Agent 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 Warrant Agent pursuant to Section 5.01. ARTICLE VIII COVENANTS OF THE COMPANY Section 8.01 Reservation of Common Stock for Issuance on Exercise of Warrants; Listing The Company will at all times reserve and keep available, free from preemptive rights, out of its authorized but unissued Common Stock, solely for the purpose of issuance upon exercise of Warrants as herein provided, such -16- number of shares of Common Stock as shall then be issuable upon the exercise of all outstanding Warrants. The Company covenants that all shares of Common Stock which shall be so issuable shall, upon such issuance, be duly and validly issued and fully paid and nonassessable, and that upon issuance such shares shall be listed on each national securities exchange or quotation system (including the Nasdaq Stock Market), if any, on which any other shares of outstanding Common Stock of the Company are then listed. The Company or the transfer agent for the Common Stock (the "Transfer Agent") and every subsequent transfer agent for any shares of the Company's capital stock issuable upon the exercise of any of the Warrants as herein provided will be irrevocably authorized and directed at all times to reserve such number of authorized shares as shall be required for such purpose. The Company will keep a copy of this Agreement on file with the Transfer Agent and with every subsequent transfer agent for any shares of the Company's capital stock issuable upon the exercise of the rights of purchase represented by the Warrants. The Warrant Agent is hereby irrevocably authorized to requisition from time to time from such Transfer Agent the stock certificates required to honor outstanding Warrants upon exercise thereof in accordance with the terms of this Agreement. The Company will supply such Transfer Agent with duly executed certificates for such purposes and will provide or otherwise make available any cash that may be payable as provided in Section 4.04. The Company will furnish such Transfer Agent a copy of all notices of adjustment and certificates related thereto transmitted to each holder pursuant to Section 4.02 hereof. Section 8.02 Reports to Holders To the extent such documents are required to be sent by the Company to the holders of its outstanding Common Stock, the Company shall file with the Warrant Agent and provide Holders of Warrants, within 15 days after it files them with the SEC, copies of its annual report and of the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) which the Company is required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. Notwithstanding that the Company may not be required to remain subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, it shall continue to file with the SEC and, to the extent it is required to send such documents to the holders of its outstanding Common Stock, provide the Warrant Agent and the Holders of the Warrants with reports containing substantially the same information as would have been required to be filed with the SEC and sent to holders of its outstanding Common Stock had the Company continued to have been subject to such reporting requirements; provided, however, that the Company shall not be so obligated to file with the SEC if the SEC does not permit such filings. In such event, such reports shall be provided to the Warrant Agent and Holders of Warrants at the times the Company would have been required to provide such reports had it been subject to such reporting retirements. Delivery of such reports, information and documents to the Warrant Agent is for informational purposes only and the Warrant Agent's receipt of such shall not constitute constructive notice of any information contained therein, including the Company's compliance with any of its covenants hereunder. Section 8.03 Agreements Respecting Warrants The Company agrees that it will not enter into any agreement or instrument which would preclude the exercise of the Warrants for shares of Underlying Common Stock. Section 8.04 Registration under the Securities Laws (a) Mandatory Registration. Not later than December 31, 1997, the ---------------------- Company shall file with the SEC, at the Company's expense, a registration statement registering under the Securities Act for resale by the Holders all of the Restricted Shares. The Company shall use all reasonable efforts to cause such registration statement to become effective as soon as possible thereafter and to maintain such effectiveness continually until the first to occur of (i) December 31, 2001, (ii) the date all Restricted Shares covered by such registration statement have been disposed of in accordance with such registration statement, (iii) the date the Company has received a written opinion of independent counsel, a copy of which will be provided to each Holder, that all of the Restricted Shares are freely tradable without registration pursuant to Rule 144 (or any successor thereto) under the Securities Act and applicable state securities laws, or (iv) if no Warrants have been exercised on or prior to the Expiration Date or such other date on which the Warrants terminate and become void prior to the Expiration Date, the close of business on the -17- Expiration Date or such other date on which the Warrants terminate and become void prior to the Expiration Date. Such registration statement will include a plan of distribution permitting any reasonable method of resale by the Holders of the Restricted Shares including resale in the public market, in broker's transactions, or in privately negotiated transactions. The Company also will prepare and file promptly with the SEC, at the Company's expense, such amendments and supplements to such registration statement and the prospectus included in such registration statement as may be necessary to comply with the provisions of the Securities Act. The Holders shall provide the Company in writing with such information about the Holders and the proposed plan of distribution as the Company shall reasonably request for inclusion in the registration statement. The Company will provide to each Holder such number of copies of such registration statement and of each amendment and supplement thereto, such number of copies of the prospectus included in such registration statement and each amendment and supplement thereto, and such other documents as such Holder may reasonably request in order to facilitate the disposition of the Restricted Shares owned by such Holder. The Company shall, as expeditiously as possible following the filing of such registration statement, use all reasonable efforts to register or qualify the Restricted Shares covered by the registration statement under the securities or Blue Sky laws of such states as the Holders shall reasonably request, and do any and all other acts and things that may be necessary or desirable to enable the Holders to consummate the public or other disposition in each such jurisdiction of the Restricted Shares; provided, -------- however, that the Company shall not be required in connection with this Section - ------- 8.04 to qualify as a foreign corporation, subject itself to taxation or execute a general consent to service of process in any jurisdiction. (b) Indemnification. --------------- (i) Indemnification by the Company. The Company will, and hereby ------------------------------ does, indemnify and hold harmless each Holder, its directors and officers, each other person who participates as an underwriter, broker or dealer in the offering or sale of Restricted Shares by such Holder and each other person, if any, who controls such Holder or any such participating person within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act (each such person being sometimes referred to as an "Indemnified Holder"), against any losses, claims, damages or liabilities, joint or several, to which such Holder or any such director or officer or participating or controlling person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of or are based upon (x) any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such Restricted Shares were registered under the Securities Act, any preliminary prospectus, final prospectus or summary prospectus contained therein, or any amendment or supplement thereto, (y) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein in the light of the circumstances under which they were made not misleading or (z) any violation or alleged violation by the Company of the Securities Act; and the Company will reimburse such Holder and each such director, officer, participating person and controlling person for any legal or any other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, liability, action or proceeding; provided that the Company shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement, any such preliminary prospectus, final prospectus, summary prospectus, amendment or supplement in reliance upon and in conformity with written information relating to such Indemnified Holder furnished to the Company through an instrument duly executed by such Indemnified Holder expressly for use therein. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Holder or any such director, officer, participating person or controlling person and shall survive the transfer of such securities by such Holder. (ii) Indemnification by the Holders of Restricted Shares. Each --------------------------------------------------- Holder participating in the registration provided for in paragraph (a) above shall indemnify and hold harmless (in the same manner and to the same extent as set forth in clause (i)) the Company, each director of the Company, each officer of the Company who shall sign such registration statement and each other person, if any, who controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, with respect to any statement in or omission from such registration statement, any preliminary prospectus, final prospectus, or summary prospectus contained therein, or any amendment or supplement thereto, if such statement or omission was made in reliance upon and in conformity with written information relating to such Holders furnished to the Company through an instrument duly -18- executed by such Holder expressly for use in the preparation of such registration statement, preliminary prospectus, final prospectus or summary prospectus contained therein, amendment or supplement. In no event, however, shall the liability of any such Holder for indemnification under this paragraph exceed the net proceeds received by the such Holder from the sale of such Restricted Shares. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Company or any such director, officer or controlling person and shall survive the transfer or such securities by such Holder. (iii) Notice of Claims, etc. Promptly after receipt by an --------------------- indemnified party of notice of the commencement of any action or proceeding involving a claim referred to in clause (i) or (ii) of this paragraph (b), such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party, give written notice to the latter of the commencement of such action; provided, however, that the failure of any indemnified party to -------- ------- give notice as provided herein shall not relieve the indemnifying party of its obligations under the preceding clauses of this paragraph (b), except to the extent that the indemnifying party is actually prejudiced by such failure to give notice. In case any action is brought against an indemnified party, the indemnifying party will be entitled to participate in and to assume the defense of such action, jointly with any other indemnifying party to the extent that it may wish, with counsel reasonably satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party for any legal or other expenses subsequently incurred by the latter in connection with the defense thereof; provided, however, that if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of the indemnified party or parties. No indemnifying party will consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation. (iv) Contribution. If for any reason the indemnification provided ------------ for in this paragraph (b) is unavailable to an indemnified party as contemplated by this paragraph (b), then the indemnifying party in lieu of indemnification shall contribute to the amount paid or payable by the indemnified party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect not only the relative benefits received by the indemnified party and the indemnifying party, but also the relative fault of the indemnified party and the indemnifying party, as well as any other relevant equitable considerations, provided that no Holder shall be required to -------- contribute in an amount greater than the excess of the net proceeds received by the Holder from the sale of such Restricted Shares over all amounts already contributed by such Holder with respect to such claims, including amounts paid for any legal or other fees or expenses incurred by such Holder. The relative fault of the Company on the one hand and of the Indemnified Holder on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or by the Indemnified Holder and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in this paragraph (b), any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending an action or claim. The Company and each Holder shall agree that it would not be just and equitable if contribution pursuant to this paragraph (b) were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this paragraph (b), an Indemnified Holder shall not be required to contribute any amount in excess of the amount by which the total price at which the Restricted Shares sold by such Indemnified Holder or its affiliated Indemnified Holders and distributed to the public were offered to the public exceeds the amount of any damages that such Indemnified Holder, or its affiliated Indemnified Holder, has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent -19- misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. (v) Other Indemnification. Indemnification and contribution --------------------- similar to that specified in the preceding clauses of this paragraph (b) (with appropriate modifications) shall be given by the Company and each seller of Restricted Shares with respect to any required registration or other qualification of such Restricted Shares under any Federal or state law or regulations of governmental authority other than the Securities Act. The indemnification and contribution rights under this paragraph (b) shall be in addition to any rights that any indemnified person may have at common law or otherwise. ARTICLE IX MISCELLANEOUS Section 9.01 Money and Other Property Deposited with the Warrant Agent Any money, securities or other property which at any time shall be deposited by the Company or on its behalf with the Warrant Agent pursuant to this Agreement shall be and are hereby assigned, transferred and set over to the Warrant Agent 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 Warrant Agent except to the extent required by law. The Warrant Agent 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 Warrant register maintained pursuant to Section 5.01, or as it may be otherwise directed in writing by such Holder, upon surrender of such Holder's Warrants. Any money or other property deposited with the Warrant Agent 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 Warrant Agent shall be paid to the Company upon its request therefor. Section 9.02 Payment of Taxes The Company will pay all taxes and other governmental charges that may be imposed on the Company or on the holders of the Warrants or on the holders of any securities deliverable upon exercise of Warrants with respect thereto. The Company will not be required, however, to pay any tax or other charge imposed in connection with any transfer involved in the issue of any certificate for shares of Common Stock or other securities underlying the Warrants or payment of cash or other property to any person other than the Holder of a Warrant Certificate surrendered upon the exercise thereof, and in case of such transfer or payment, the Warrant Agent and the Company shall not be required to issue any stock certificate or security or pay any cash or distribute any property until such tax or charge has been paid or it has been established to the Warrant Agent's and the Company's satisfaction that no such tax or other charge is due. Section 9.03 Surrender of Certificates Any Warrant Certificate surrendered for exercise or purchased or otherwise acquired by the Company shall, if surrendered to the Company, be delivered to the Warrant Agent, and all Warrant Certificates surrendered or so delivered to the Warrant Agent shall promptly be canceled by such Warrant Agent and shall not be reissued by the Company. The Warrant Agent shall return such canceled Warrant Certificates to the Company. Section 9.04 Mutilated, Destroyed, Lost and Stolen Warrant Certificates If (a) any mutilated Warrant Certificate is surrendered to the Warrant Agent or (b) the Company and the Warrant Agent receive evidence to their satisfaction of the destruction, loss or theft of any Warrant Certificate, and there is delivered to the Company and the Warrant Agent such security or indemnity as may be reasonably required by them to save each of them harmless, then, in the absence of notice to the Company or any officer in the corporate trust department of the Warrant Agent that such Warrant Certificate has been acquired by a bona fide purchaser, the Company shall execute and upon its written request the Warrant Agent shall countersign and deliver, in exchange -20- for any such mutilated Warrant Certificate or in lieu of any such destroyed, lost or stolen Warrant Certificate, a new Warrant Certificate of like tenor and for a like aggregate number of warrants. Upon the issuance of any new Warrant Certificate under this Section 9.04, the Company 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 thereto and other expenses (including the reasonable fees and expenses of the Warrant Agent) in connection therewith. Every new Warrant Certificate executed and delivered pursuant to this Section 9.04 in lieu of any destroyed, lost or stolen Warrant Certificate shall constitute an original contractual obligation of the Company, whether or not the destroyed, lost or stolen Warrant Certificate shall be at any time enforceable by anyone, and shall be entitled to the benefits of this Agreement equally and proportionately with any and all other Warrant Certificates duly executed and delivered hereunder. The provisions of this Section 9.04 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 Warrant Certificates. Section 9.05 Miscellaneous Rights The rights of Holders upon the occurrence of the events set forth in this Agreement are cumulative. If more than one such event shall occur and the periods following the occurrence of such events and prior to the closing of the transactions that are the subject of such events overlap, each Holder may exercise such rights arising therefrom as such Holder may elect without any condition imposed upon such exercise not contained in this Agreement. Neither the Company nor any of its Affiliates involved in any proposed transaction that is the subject of such an event shall have any obligation to the Holders to consummate any such proposed transaction once an agreement or agreement in principle or decision to proceed with respect thereto is reached, whether on the terms first proposed or as revised, or to include any Holder in, or apprise any Holder of, any negotiations or discussions concerning any such proposed transaction among the prospective parties thereto. Section 9.06 Notices Any notice or communication by the Company or the Warrant Agent to the other 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 the Company: ICF Kaiser International, Inc. 9300 Lee Highway Fairfax, Virginia 22031-1207 Attention: Executive Vice President and Chief Financial Officer cc: Senior Vice President and General Counsel If to the Warrant Agent: The Bank of New York 101 Barclay Street, 21 West New York, New York 10286 Attention: Corporate Trust Trustee Administration -21- The Company or the Warrant Agent by notice to the other may designate additional or different addresses for subsequent notices or communications. All notices and communications 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. Any notice or communication to a Holder shall be mailed by first-class mail to the Holder's address shown on the register of the Company maintained by the Warrant Agent. 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. If the Company mails a notice or communication to Holders, it shall mail a copy to the Warrant Agent at the same time. Section 9.07 Persons Benefiting This Agreement shall be binding upon and inure to the benefit of the Company and the Warrant Agent, and their respective successors and assigns, and the Holders from time to time of the Warrants. Nothing in this Agreement is intended or shall be construed to confer upon any person, other than the Company, the Warrant Agent and the Holders of the Warrants, any right, remedy or claim under or by reason of this Agreement or any part hereof. Section 9.08 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 9.09 Amendments The Company may, without the consent of the Holders of the Warrants, by supplemental agreement or otherwise, make any changes or corrections in this Agreement (a) to cure any ambiguity or to correct or supplement any provision herein which may be defective or inconsistent with any other provision herein, (b) to add to the covenants and agreements of the Company for the benefit of the Holders, or surrender any rights or power reserved to or conferred upon the Company in this Agreement, or (c) that do not adversely affect the interests of the Holders in any material respect. The Warrant Agent shall join with the Company in the execution and delivery of any such supplemental agreements unless it affects the Warrant Agent's own rights, duties or immunities hereunder, 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 Warrant Agent shall be entitled to receive and shall be protected in relying upon a certificate of the Company which states that the proposed supplemental agreement is in compliance with the terms of this Section 9.09. Section 9.10 Termination This Agreement (other than the Company's obligations with respect to Warrants previously exercised under Article III, and with respect to compensation, reimbursement and indemnification under Section 7.03) shall terminate and be of no further force and effect, provided the Company has complied with Section 3.05 hereof in the case of a Non-Surviving Combination, on the earlier of (a) the Expiration Date and (b) the consummation of a Non- Surviving Combination. -22- Section 9.11 Governing Law THIS AGREEMENT AND EACH WARRANT ISSUED HEREUNDER 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. Section 9.12 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 hereof and shall in no way modify or restrict any of the terms or provisions hereof. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, as of the day and year first above written. ICF KAISER INTERNATIONAL, INC. By: /s/ James O. Edwards Name: James O. Edwards Title: Chairman and Chief Executive Officer THE BANK OF NEW YORK, as Warrant Agent By: /s/ B. Merino Name: B. Merino Title: Assistant Treasurer -23- EXHIBIT A [FORM OF FACE OF WARRANT CERTIFICATE] THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH BELOW. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QUALIFIED INSTITUTIONAL BUYER") OR (B) IT IS AN "INSTITUTIONAL ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE WARRANT AGENT A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE WARRANT AGENT), (D) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE WARRANT AGENT AND THE COMPANY SUCH LETTERS, CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. No. 1996W- Certificate for _______ Warrants CUSIP No. 449244____ WARRANTS TO ACQUIRE COMMON STOCK OF ICF KAISER INTERNATIONAL, INC. This certifies that _________________________________, or registered assigns, is the registered holder of the number of Warrants set forth above (the "Warrants"). Each Warrant entitles the holder thereof (the "Holder"), subject to the provisions contained herein and in the Warrant Agreement referred to below, to acquire from ICF Kaiser International, Inc., a Delaware corporation (the "Company"), one share of Common Stock, $0.01 par value per share, of the Company (the "Common Stock") for consideration equal to the Purchase Price (as defined in the Warrant Agreement) per share of Common Stock. The Warrants evidenced by this Warrant Certificate shall not be exercisable after and shall terminate and become void as of the close of business on December 31, 1999 (the "Expiration Date") or as of the closing of any Non-Surviving Combination, if earlier. This Warrant Certificate is issued under and in accordance with a Warrant Agreement dated as of December 23, 1996 (the "Warrant Agreement"), between the Company and The Bank of New York, as warrant agent (the "Warrant Agent", which term includes any successor Warrant Agent under the Warrant Agreement), and is subject to the terms and provisions contained in the Warrant Agreement, to all of which terms and provisions the Holder of this Warrant Certificate consents by acceptance hereof. The Warrant Agreement is hereby incorporated herein by reference and made a part hereof. Reference is hereby made to the Warrant Agreement for a full statement of the respective rights, limitations of rights, duties and obligations of the Company, the Warrant Agent and the Holders of the Warrants. Capitalized terms not defined herein have the meanings ascribed thereto in the Warrant Agreement. A copy of the Warrant Agreement may be obtained for inspection by the Holder hereof upon written request to the Company at 9300 Lee Highway, Fairfax, Virginia 22031-1207, Attention of Senior Vice President, General Counsel and Secretary. As provided in the Warrant Agreement and subject to the terms and conditions therein set forth, the Warrants are immediately exercisable. If the Company proposes, prior to the Expiration Date, to enter into a merger, consolidation, sale of assets or other business combination with one or more persons (other than a wholly-owned subsidiary of the Company) in which consideration (other than Common Equity Securities) is distributed to the holders of Common Stock in exchange for all or substantially all of their equity interest in the Company (a "Non-Surviving Combination"), the Company shall give written notice thereof to the Holders promptly after an agreement is reached but in no event less than 30 days prior to the closing thereof. In the event the Company enters into a Non-Surviving Combination, upon payment of the Purchase Price prior to the Expiration Date, the Holder hereof will be entitled to receive the shares of stock or other securities or other property (including any money) of the surviving entity in such Non-Surviving Combination as the Holder would have received had the Holder exercised its Warrants immediately prior to such Non-Surviving Combination (or, if applicable, the record date therefor). In order to exercise a Warrant, the registered Holder hereof must surrender this Warrant Certificate at the office of the Warrant Agent, with the Exercise Subscription Form on the reverse hereof duly executed by the Holder hereof, with signature guaranteed as therein specified and tender the Purchase Price therefor. ICF KAISER INTERNATIONAL, INC. By: ------------------------------ Name: Title: [SEAL] Attest: ------------------------ Secretary DATED: Countersigned: The Bank of New York, as Warrant Agent By: --------------------------- Authorized Signatory Date of Countersignature: [FORM OF REVERSE OF WARRANT CERTIFICATE] ICF KAISER INTERNATIONAL, INC. ------------------------------ This Warrant Certificate and all rights hereunder are transferable by the registered Holder hereof, in whole or in part, on the register maintained by the Warrant Agent, upon surrender of this Warrant Certificate for registration of transfer at the office of the Warrant Agent maintained for such purpose, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Warrant Agent duly executed by, the registered Holder hereof or his attorney duly authorized in writing, with signature guaranteed as specified in the attached Form of Assignment. Upon any partial transfer, the Company will issue and deliver to such Holder a new Warrant Certificate or Certificates with respect to any portion not so transferred. No service charge shall be made for any registration of transfer or exchange of Warrant Certificates, but the Company may require payment by the Holder of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. All shares of Common Stock issuable by the Company upon the exercise of the Warrants shall, upon such issue, be duly and validly issued and fully paid and nonassessable, and upon issuance such shares shall be listed on each national securities exchange or quotation system (including the Nasdaq Stock Market), if any, on which any other shares of outstanding Common Stock are then listed. Each taker and holder of this Warrant Certificate, by taking or holding the same, consents and agrees that the holder of this Warrant Certificate when duly endorsed in blank may be treated by the Company, the Warrant Agent and all other persons dealing with this Warrant Certificate as the absolute owner hereof for any purpose and as the person entitled to exercise the rights represented hereby, or to the transfer hereof on the register of the Company maintained by the Warrant Agent, any notice to the contrary notwithstanding, but until such transfer on such register, the Company and the Warrant Agent may treat the registered Holder hereof as the owner for all purposes. The number of shares of Common Stock issuable upon exercise of the Warrants is subject to adjustment in certain events, including (i) stock dividends, stock splits and reclassification affecting the Common Stock, (ii) the issuance of certain rights, warrants or options, or convertible or exchangeable securities, to the holders of Common Stock entitling them to acquire Common Stock at a price per share lower than its then market value and (iii) sales by the Company of Common Stock at a price per share lower than its then market value. The Warrants do not entitle any Holder to any of the rights of a stockholder of the Company. This Warrant Certificate and the Warrant Agreement are subject to amendment as provided in the Warrant Agreement. This Warrant Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by an authorized signatory of the Warrant Agent. This Warrant Certificate and all rights hereunder 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. EXERCISE SUBSCRIPTION FORM (to be executed only upon exercise of Warrant) The undersigned hereby irrevocably elects to exercise ____________________ of the Warrants represented by this Warrant Certificate, for the acquisition of one share each of Common Stock, $0.01 par value per share, of ICF Kaiser International, Inc., on the terms and conditions specified in this Warrant Certificate and the Warrant Agreement herein referred to, surrenders this Warrant Certificate and all right, title and interest therein to ICF Kaiser International, Inc. and directs that the shares of Common Stock deliverable upon the exercise of such Warrants be registered or placed in the name and at the address specified below and delivered thereto. Date: _____________, ____ /1/ -------------------------- (Signature of Owner) -------------------------- (Street Address) -------------------------- (City) (State) (Zip Code) Signature Guaranteed by: -------------------------- FORM OF TRANSFER FOR VALUE RECEIVED the undersigned registered Holder of this Warrant Certificate hereby sells, assigns and transfers unto the Assignee(s) named below (including the undersigned with respect to any Warrants constituting a part of the Warrants evidenced by this Warrant Certificate not being assigned hereby) all of the right of the undersigned under this Warrant Certificate, with respect to the number of Warrants set forth below:
================================================================================ Social Security or Name of Assignee(s) Address other identifying Number of Warrants number of assignee(s) - -------------------------------------------------------------------------------- ================================================================================
and does hereby irrevocably constitute and appoint the Warrant Agent as the undersigned's attorney to make such transfer on the register maintained by the Warrant Agent for that purpose, with full power of substitution in the premises. Date: _________, ____ /2/ ------------------------- (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 within Warrant Certificate in every particular, without alteration or enlargement or any change whatsoever, and must be guaranteed. /2/ The signature must correspond with the name as written upon the face of the within Warrant Certificate in every particular, without alteration or enlargement or any change whatsoever, and must be guaranteed. EXHIBIT B FORM OF LEGEND FOR GLOBAL WARRANTS Any Global Warrant authenticated and delivered hereunder shall bear a legend in substantially the following form: THIS WARRANT IS A GLOBAL WARRANT WITHIN THE MEANING OF THE WARRANT AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY OR A SUCCESSOR DEPOSITARY. THIS WARRANT IS NOT EXCHANGEABLE FOR WARRANTS REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE WARRANT AGREEMENT, AND NO TRANSFER OF THIS WARRANT (OTHER THAN A TRANSFER OF THIS WARRANT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE WARRANT AGREEMENT. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER OR EXCHANGE, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. EXHIBIT C CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF WARRANTS Re: Warrants to Acquire Common Stock (the "Warrants") of ICF Kaiser ------------- International, Inc. ------------------------------ This Certificate relates to _____ Warrants held in the form of* ___ a beneficial interest in a Global Warrant or* ______ Physical Warrants by _____ (the "Transferor"). The Transferor:* [ ] has requested by written order that the Warrant Agent deliver in exchange for its beneficial interest in the Global Warrant held by the Depositary a Physical Warrant or Physical Warrants in definitive, registered form representing the number of Warrants equal to its beneficial interest in such Global Warrant (or the portion thereof indicated above); or [ ] has requested the Warrant Agent by written order to exchange or register the transfer of a Physical Warrant or Physical Warrants. In connection with such request and in respect of each such Warrant, the Transferor does hereby certify that the Transferor is familiar with the Warrant Agreement relating to the above captioned Warrants and the restrictions on transfers thereof as provided in Section 5.02 of such Warrant Agreement, and that the transfer of this Warrant does not require registration under the Securities Act of 1933, as amended (the "Act") because* [ ] Such Warrant is being acquired for the Transferor's own account, without transfer (in satisfaction of Section 5.02(a)(B)(I) or Section 5.02(d)(i)(A) of the Warrant Agreement. [ ] Such Warrant is being transferred to a "qualified institutional buyer" (as defined in Rule 144A under the Act), in reliance on Rule 144A. [ ] Such Warrant is being transferred to an institutional "accredited investor" (within the meaning of subparagraphs (a)(1), (2), (3) or (7) of Rule 501 under the Act). [ ] Such Warrant is being transferred in reliance on Regulation S under the Act. [ ] Such Warrant is being transferred in reliance on Rule 144 under the Act. [ ] Such Warrant is being transferred in reliance on and in compliance with an exemption from the registration requirements of the Act other than Rule 144A or Rule 144 or Regulation S under the Act to a person other than an institutional "accredited investor." --------------------------- [INSERT NAME OF TRANSFEROR] By: ------------------------ [Authorized Signatory] Date: ------------------------ *Check applicable box EXHIBIT D Form of Certificate to Be Delivered in Connection with Transfers to Institutional Accredited Investors ________________, ____ The Bank of New York 101 Barclay Street, 21 West New York, New York 10286 Attention: Corporate Trust Trustee Administration Re: ICF Kaiser International, Inc. (the "Company") Warrant Agreement, dated as of December __, 1996, (the "Warrant Agreement"), relating to Warrants to Acquire Common Stock of the Company, (the Warrants") Ladies and Gentlemen: In connection with our proposed purchase of Warrants, we confirm that: 1. We have received such information as we deem necessary in order to make our investment decision. 2. We understand that any subsequent transfer of the Warrants is subject to certain restrictions and conditions set forth in the Warrant Agreement and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Warrants except in compliance with, such restrictions and conditions and the Securities Act of 1933, as amended (the "Securities Act"). 3. We understand that the offer and sale of the Warrants have not been registered under the Securities Act, and that the Warrants may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell any Warrants, we will do so only (A) to the Company or any subsidiary thereof, (B) inside the United States in accordance with Rule 144A under the Securities Act to a "qualified institutional buyer" (as defined therein), (C) inside the United States to an institutional "accredited investor" (as defined below) that, prior to such transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to the Warrant Agent a signed letter substantially in the form hereof, (D) outside the United States in accordance with Regulation S under the Securities Act, (E) pursuant to the exemption from registration provided by Rule 144 under the Securities Act (if available) or (F) pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any person purchasing Warrants from us a notice advising such purchaser that resales of the Warrants are restricted as stated herein. 4. We understand that, on any proposed resale of Warrants, we will be required to furnish to the Warrant Agent and the Company, such certification, legal opinions and other information as the Warrant Agent and the Company may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Warrants purchased by us will bear a legend to the foregoing effect. 5. We are an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Warrants, and we and any accounts for which we are acting are each able to bear the economic risk of our or their investment, as the case may be. 6. We are acquiring the Warrants purchased by us for our account or for one or more accounts (each of which is an institutional "accredited investor") as to each of which we exercise sole investment discretion. You and the Company are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby. Very truly yours, [Name of Transferor] By: --------------------------------- [Authorized Signatory] EXHIBIT E Form of Certificate to Be Delivered in Connection with Regulation S Transfers ________________, ____ The Bank of New York 101 Barclay Street, 21 West New York, New York 10286 Attention: Corporate Trust Trustee Administration Re: ICF Kaiser International, Inc. (the "Company") Warrant Agreement, dated as of December __, 1996 (the "Warrant Agreement"), relating to Warrants to Acquire Common Stock of the Company (the "Warrants") ---------------------------------------------------- Dear Sirs: In connection with our proposed sale of _________________ Warrants, we confirm that such sale has been effected pursuant to and in accordance with Regulation S under the Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we represent that: (1) the offer of the Warrants was not made to a person in the United States; (2) either (a) at the time the buy offer was originated, the transferee was outside the United States or we and any person acting on our behalf reasonably believed that the transferee was outside the United States, or (b) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither we nor any person acting on our behalf knows that the transaction has been pre-arranged with a buyer in the United States; (3) no directed selling efforts have been made in the United States in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S, as applicable; (4) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act; and (5) we have advised the transferee of the transfer restrictions applicable to the Warrants. You and the Company are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Defined terms used herein without definition have the respective meanings provided in Regulation S. Very truly yours, [Name of Transferor] By: --------------------------------- [Authorized Signature] EX-4.K 14 EXHIBIT 4(K) Exhibit No. 4(k) WARRANTS TO ACQUIRE COMMON STOCK OF ICF KAISER INTERNATIONAL, INC. THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH BELOW. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QUALIFIED INSTITUTIONAL BUYER") OR (B) IT IS AN "INSTITUTIONAL ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE WARRANT AGENT A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE WARRANT AGENT), (D) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE WARRANT AGENT AND THE COMPANY SUCH LETTERS, CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATIONS UNDER THE SECURITIES ACT. THIS WARRANT IS A GLOBAL WARRANT WITHIN THE MEANING OF THE WARRANT AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY OR A SUCCESSOR DEPOSITARY. THIS WARRANT IS NOT EXCHANGEABLE FOR WARRANTS REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE WARRANT AGREEMENT, AND NO TRANSFER OF THIS WARRANT (OTHER THAN A TRANSFER OF THIS WARRANT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE WARRANT AGREEMENT. 1 UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER OR EXCHANGE, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. No. 1996WQ-1 Certificate for 105,000 Warrants CUSIP No. 449244 128 WARRANTS TO ACQUIRE COMMON STOCK OF ICF KAISER INTERNATIONAL, INC. This certifies that CEDE & CO., or registered assigns, is the registered holder of the number of Warrants set forth above (the "Warrants"). Each Warrant entitles the holder thereof (the "Holder"), subject to the provisions contained herein and in the Warrant Agreement referred to below, to acquire from ICF Kaiser International, Inc., a Delaware corporation (the "Company"), one share of Common Stock, $0.01 par value per share, of the Company (the "Common Stock") for consideration equal to the Purchase Price (as defined in the Warrant Agreement) per share of Common Stock. The Warrants evidenced by this Warrant Certificate shall not be exercisable after and shall terminate and become void as of the close of business on December 31, 1999 (the "Expiration Date") or as of the closing of any Non-Surviving Combination, if earlier. This Warrant Certificate is issued under and in accordance with a Warrant Agreement dated as of December 23, 1996 (the "Warrant Agreement"), between the Company and The Bank of New York, as warrant agent (the "Warrant Agent", which term includes any successor Warrant Agent under the Warrant Agreement), and is subject to the terms and provisions contained in the Warrant Agreement, to all of which terms and provisions the Holder of this Warrant Certificate consents by acceptance hereof. The Warrant Agreement is hereby incorporated herein by reference and made a part hereof. Reference is hereby made to the Warrant Agreement for a full statement of the respective rights, limitations of rights, duties and obligations of the Company, the Warrant Agent and the Holders of the Warrants. Capitalized terms not defined herein have the meanings ascribed thereto in the Warrant Agreement. A copy of the Warrant Agreement may be obtained for inspection by the Holder hereof upon written request to the Company at 9300 Lee Highway, Fairfax, Virginia 22031-1207, Attention of Senior Vice President, General Counsel and Secretary. As provided in the Warrant Agreement and subject to the terms and conditions therein set forth, the Warrants are immediately exercisable. If the Company proposes, prior to the Expiration Date, to enter into a merger, consolidation, sale of assets or other business combination with one or more persons (other than a wholly-owned subsidiary of the Company) in which consideration (other than Common Equity Securities) is distributed to the holders of Common Stock in exchange for all or substantially all of their equity interest in the Company (a "Non-Surviving Combination"), the Company shall give written notice thereof to the Holders promptly after an agreement is reached but in no event less than 30 days prior to the closing thereof. In the event the Company enters into a Non-Surviving Combination, upon payment of the Purchase Price prior to the Expiration Date, the Holder hereof will be entitled to receive the shares of stock or other securities or other property (including any money) of the surviving entity in such Non-Surviving Combination as the Holder would have received had the Holder exercised its Warrants immediately prior to such Non-Surviving Combination (or, if applicable, the record date therefor). 2 In order to exercise a Warrant, the registered Holder hereof must surrender this Warrant Certificate at the office of the Warrant Agent, with the Exercise Subscription Form on the reverse hereof duly executed by the Holder hereof, with signature guaranteed as therein specified and tender the Purchase Price therefor. ICF KAISER INTERNATIONAL, INC. By: ______________________________ Name: Title: [SEAL] Attest: _______________________________________ Secretary DATED: December 23, 1996 Countersigned: The Bank of New York, as Warrant Agent By: ________________________ Authorized Signatory Date of Countersignature: December 23, 1996 ICF KAISER INTERNATIONAL, INC. This Warrant Certificate and all rights hereunder are transferable by the registered Holder hereof, in whole or in part, on the register maintained by the Warrant Agent, upon surrender of this Warrant Certificate for registration of transfer at the office of the Warrant Agent maintained for such purpose, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Warrant Agent duly executed by, the registered Holder hereof or his attorney duly authorized in writing, with signature guaranteed as specified in the attached Form of Assignment. Upon any partial transfer, the Company will issue and deliver to such Holder a new Warrant Certificate or Certificates with respect to any portion not so transferred. No service charge shall be made for any registration of transfer or exchange of Warrant Certificates, but the Company may require payment by the Holder of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. All shares of Common Stock issuable by the Company upon the exercise of the Warrants shall, upon such issue, be duly and validly issued and fully paid and nonassessable, and upon issuance such shares shall be listed on each national securities exchange or quotation system (including the Nasdaq Stock Market), if any, on which any other shares of outstanding Common Stock are then listed. Each taker and holder of this Warrant Certificate, by taking or holding the same, consents and agrees that the holder of this Warrant Certificate when duly endorsed in blank may be treated by the Company, the Warrant Agent and all other persons dealing with this Warrant Certificate as the absolute owner hereof for any purpose and as the person entitled to exercise the rights represented hereby, or to the transfer hereof on the register of the Company maintained by the Warrant Agent, any notice to the contrary notwithstanding, but until such transfer on such register, the Company and the Warrant Agent may treat the registered Holder hereof as the owner for all purposes. 3 The number of shares of Common Stock issuable upon exercise of the Warrants is subject to adjustment in certain events, including (i) stock dividends, stock splits and reclassification affecting the Common Stock, (ii) the issuance of certain rights, warrants or options, or convertible or exchangeable securities, to the holders of Common Stock entitling them to acquire Common Stock at a price per share lower than its then market value and (iii) sales by the Company of Common Stock at a price per share lower than its then market value. The Warrants do not entitle any Holder to any of the rights of a stockholder of the Company. This Warrant Certificate and the Warrant Agreement are subject to amendment as provided in the Warrant Agreement. This Warrant Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by an authorized signatory of the Warrant Agent. This Warrant Certificate and all rights hereunder 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. EXERCISE SUBSCRIPTION FORM (to be executed only upon exercise of Warrant) The undersigned hereby irrevocably elects to exercise ____________________ of the Warrants represented by this Warrant Certificate, for the acquisition of one share each of Common Stock, $0.01 par value per share, of ICF Kaiser International, Inc., on the terms and conditions specified in this Warrant Certificate and the Warrant Agreement herein referred to, surrenders this Warrant Certificate and all right, title and interest therein to ICF Kaiser International, Inc. and directs that the shares of Common Stock deliverable upon the exercise of such Warrants be registered or placed in the name and at the address specified below and delivered thereto. 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 within Warrant Certificate in every particular, without alteration or enlargement or any change whatsoever, and must be guaranteed. 4 FORM OF TRANSFER FOR VALUE RECEIVED the undersigned registered Holder of this Warrant Certificate hereby sells, assigns and transfers unto the Assignee(s) named below (including the undersigned with respect to any Warrants constituting a part of the Warrants evidenced by this Warrant Certificate not being assigned hereby) all of the right of the undersigned under this Warrant Certificate, with respect to the number of Warrants set forth below: ================================================================================ Social Security or other identifying number of assignee(s) Name of Assignee(s) Number of Warrants Address - -------------------------------------------------------------------------------- ================================================================================ and does hereby irrevocably constitute and appoint the Warrant Agent as the undersigned's attorney to make such transfer on the register maintained by the Warrant Agent for that purpose, with full power of substitution in the premises. Date: _________, ____ /2/ --------------------- (Signature of Owner) --------------------- (Street Address) --------------------- (City) (State) (Zip Code) Signature Guaranteed by: --------------------- - --------------------------------- /2/ The signature must correspond with the name as written upon the face of the within Warrant Certificate in every particular, without alteration or enlargement or any change whatsoever, and must be guaranteed. 5 EX-4.L 15 EXHIBIT 4(L) Exhibit No. 4(l) REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement (the "Agreement") is dated as of December 23, 1996 between ICF Kaiser International, Inc., a Delaware corporation (the "Company"), and BT Securities Corporation (the "Initial Purchaser"). This Agreement is entered into in connection with the Purchase Agreement, dated as of December 19, 1996, between the Company and the Initial Purchaser (the "Purchase Agreement") that provides for the sale by the Company to the Initial Purchaser of 15,000 units consisting of $15,000,000 aggregate principal amount of the Company's 12% Senior Notes due 2003 (the "Notes") and warrants to purchase 105,000 shares of the Company's common stock, par value $0.01 per share. In order to induce the Initial Purchaser to enter into the Purchase Agreement, the Company has agreed to provide the registration rights set forth in this Agreement for the benefit of the Initial Purchaser and its direct and indirect transferees and assigns. The execution and delivery of this Agreement is a condition to the Initial Purchaser's obligation to purchase the Notes under the Purchase Agreement. The parties hereby agree as follows: 1. Definitions As used in this Agreement, the following terms shall have the following meanings: Additional Interest: See Section 4(a) hereof. Advice: See the last paragraph of Section 5 hereof. Agreement: See the first introductory paragraph hereto. Applicable Period: See Section 2(b) hereof. Closing Date: The Closing Date as defined in the Purchase Agreement. Company: See the first introductory paragraph hereto. Effectiveness Date: The date that is 135 days after the Issue Date. Effectiveness Period: See Section 3(a) hereof. Event Date: See Section 4(b) hereof. Exchange Act: The Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder. Exchange Notes: See Section 2(a) hereof. Exchange Offer: See Section 2(a) hereof. Exchange Registration Statement: See Section 2(a) hereof. Filing Date: Within 45 days after the Issue Date. Holder: Any holder of a Registrable Note or Registrable Notes. Indemnified Person: See Section 7(c) hereof. Indemnifying Person: See Section 7(c) hereof. Indenture: The Indenture, dated as of December 23, 1996 between the Company and The Bank of New York, as trustee, pursuant to which the Notes are being issued, as amended or supplemented from time to time in accordance with the terms thereof. Initial Purchaser: See the first introductory paragraph hereto. Inspectors: See Section 5(o) hereof. Issue Date: The date on which the original Notes were sold to the Initial Purchaser pursuant to the Purchase Agreement. NASD: See Section 5(s) hereof. Notes: See the second introductory paragraph hereto. Participant: See Section 7(a) hereof. Participating Broker-Dealer: See Section 2(b) hereof. Person: An individual, trustee, corporation, partnership, limited liability company, joint stock company, trust, unincorporated association, union, business association, firm or other legal entity. Private Exchange: See Section 2(b) hereof. Private Exchange Notes: See Section 2(b) hereof. Prospectus: The prospectus included in any Registration Statement (including, without limitation, any prospectus subject to completion and a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, and all other amendments and supplements to the Prospectus, with respect to the terms of the offering of any portion of the Registrable Notes covered by such Registration Statement including post- effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus. Purchase Agreement: See the second introductory paragraph hereto. Records: See Section 5(o) hereof. Registrable Notes: Each Note upon original issuance of the Notes and at all times subsequent thereto, each Exchange Note as to which Section 2(c)(v) hereof is applicable upon original issuance and at all times subsequent thereto and each Private Exchange Note upon original issuance thereof and at all times subsequent thereto, until in the case of any such Note, Exchange Note or Private Exchange Note, as the case may be, the earliest to occur of (i) a Registration Statement (other than, with respect to any Exchange Note as to which Section 2(c)(v) hereof is applicable, the Exchange Registration Statement) covering such Note, Exchange Note or Private Exchange Note, as the case may be, has been declared effective by the SEC and such Note, Exchange Note or Private Exchange Note, as the case may be, has been disposed of in accordance with such effective Registration Statement, (ii) such Note, Exchange Note or Private Exchange Note, as the case may be, is sold in compliance with Rule 144, (iii) such Note has been exchanged for an Exchange Note or Exchange Notes pursuant to an Exchange Offer and is entitled to be resold without complying with the prospectus delivery requirements of the Securities Act or (iv) such Note, Exchange Note or Private Exchange Note, as the case may be, ceases to be outstanding for purposes of the Indenture. Registration Statement: Any registration statement of the Company, including, but not limited to, the Exchange Registration Statement and any registration statement filed in connection with a Shelf Registration, filed with the SEC pursuant to the provisions of this Agreement, including the Prospectus, amendments and supplements to such registration statement, including post- effective amendments, all exhibits and all material incorporated by reference or deemed to be incorporated by reference in such registration statement. Rule 144: Rule 144 promulgated under the Securities Act, as such Rule may be amended from time to time, or any similar rule (other than Rule 144A) or regulation hereafter adopted by the SEC providing for offers and sales of securities made in compliance therewith resulting in offers and sales by subsequent holders that are not affiliates of an issuer of such securities being free of the registration and prospectus delivery requirements of the Securities Act. Rule 144A: Rule 144A promulgated under the Securities Act, as such Rule may be amended from time to time, or any similar rule (other than Rule 144) or regulation hereafter adopted by the SEC. Rule 415: Rule 415 promulgated under the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC. SEC: The Securities and Exchange Commission. Securities Act: The Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder. Shelf Notice: See Section 2(c) hereof. Shelf Registration: See Section 3(a) hereof. TIA: The Trust Indenture Act of 1939, as amended. Trustee: The trustee under the Indenture and, if existent, the trustee under any indenture governing the Exchange Notes and Private Exchange Notes (if any). 2 Underwritten registration or underwritten offering: A registration in which securities of the Company are sold to an underwriter for reoffering to the public. 2. Exchange Offer (a) The Company shall file with the SEC no later than the Filing Date an offer to exchange (the "Exchange Offer") any and all of the Registrable Notes (other than the Private Exchange Notes, if any) for a like aggregate principal amount of debt securities of the Company that are identical in all material respects to the Notes (the "Exchange Notes") (and that are entitled to the benefits of the Indenture or a trust indenture that is identical in all material respects to the Indenture (other than such changes to the Indenture or any such identical trust indenture as are necessary to comply with any requirements of the SEC to effect or maintain the qualification thereof under the TIA) and that, in either case, has been qualified under the TIA), except that the Exchange Notes (other than Private Exchange Notes, if any) shall have been registered pursuant to an effective Registration Statement under the Securities Act and shall contain no restrictive legend thereon. The Exchange Offer shall be registered under the Securities Act on the appropriate form (the "Exchange Registration Statement") and shall comply with all applicable tender offer rules and regulations under the Exchange Act. The Company agrees to use its best efforts to (x) cause the Exchange Registration Statement to be declared effective under the Securities Act on or before the Effectiveness Date; (y) keep the Exchange Offer open for at least 20 business days (or longer if required by applicable law) after the date that notice of the Exchange Offer is mailed to Holders; and (z) consummate the Exchange Offer on or prior to the 180th day following the Issue Date. If after such Exchange Registration Statement is declared effective by the SEC, the Exchange Offer or the issuance of the Exchange Notes thereunder is interfered with by any stop order, injunction or other order or requirement of the SEC or any other governmental agency or court, such Exchange Registration Statement shall be deemed not to have become effective for purposes of this Agreement. Each Holder who participates in the Exchange Offer will be required to represent that any Exchange Notes received by it will be acquired in the ordinary course of its business, that at the time of the consummation of the Exchange Offer such Holder will have no arrangement or understanding with any Person to participate in the distribution of the Exchange Notes in violation of the provisions of the Securities Act and that such Holder is not an affiliate of the Company within the meaning of the Securities Act and is not acting on behalf of any persons or entities who could not truthfully make the foregoing representations. Upon consummation of the Exchange Offer in accordance with this Section 2, the provisions of this Agreement shall continue to apply, mutatis mutandis, solely with respect to Registrable Notes that are Private Exchange Notes and Exchange Notes held by Participating Broker-Dealers, and the Company shall have no further obligation to register Registrable Notes (other than Private Exchange Notes and other than in respect of any Exchange Notes as to which clause 2(c)(v) hereof applies) pursuant to Section 3 hereof. No securities other than the Exchange Notes shall be included in the Exchange Registration Statement. (b) The Company shall include within the Prospectus contained in the Exchange Registration Statement a section entitled "Plan of Distribution," reasonably acceptable to the Initial Purchaser, that shall contain a summary statement of the positions taken or policies made by the Staff of the SEC with respect to the potential "underwriter" status of any broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of Exchange Notes received by such broker-dealer in the Exchange Offer (a "Participating Broker-Dealer"), whether such positions or policies have been publicly disseminated by the staff of the SEC or such positions or policies, in the judgment of the Initial Purchaser, represent the prevailing views of the Staff of the SEC. Such "Plan of Distribution" section shall also expressly permit the use of the Prospectus by all Persons subject to the prospectus delivery requirements of the Securities Act, including all Participating Broker-Dealers, and include a statement describing the means by which Participating Broker- Dealers may resell the Exchange Notes. The Company shall use its best efforts to keep the Exchange Registration Statement effective and to amend and supplement the Prospectus contained therein in order to permit such Prospectus to be lawfully delivered by all Persons subject to the prospectus delivery requirements of the Securities Act for such period of time as is necessary to comply with applicable law in connection with any resale of the Exchange Notes; provided, however, that such period shall not exceed 180 days after the consummation of the Exchange Offer (or such longer period if extended pursuant to the last paragraph of Section 5 hereof) (the "Applicable Period"). 3 If, prior to consummation of the Exchange Offer, the Initial Purchaser holds any Notes acquired by it and having, or that are reasonably likely to be determined to have, the status of an unsold allotment in the initial distribution, the Company, upon the request of the Initial Purchaser simultaneously with the delivery of the Exchange Notes in the Exchange Offer, shall issue and deliver to the Initial Purchaser in exchange (the "Private Exchange") for such Notes held by the Initial Purchaser a like principal amount of debt securities of the Company that are identical in all material respects to the Exchange Notes (the "Private Exchange Notes") (and that are issued pursuant to the same indenture as the Exchange Notes), except for the placement of a restrictive legend on such Private Exchange Notes. The Private Exchange Notes shall bear the same CUSIP number as the Exchange Notes. Interest on the Exchange Notes and the Private Exchange Notes will accrue from the last interest payment date on which interest was paid on the Notes surrendered in exchange therefor or, if no interest has been paid on the Notes, from the Issue Date. In connection with the Exchange Offer, the Company shall: (1) mail to each Holder a copy of the Prospectus forming part of the Exchange Registration Statement, together with an appropriate letter of transmittal and related documents; (2) utilize the services of a depositary for the Exchange Offer with an address in the Borough of Manhattan, The City of New York; (3) permit Holders to withdraw tendered Notes at any time prior to the close of business, New York time, on the last business day on which the Exchange Offer shall remain open; and (4) otherwise comply in all material respects with all applicable laws, rules and regulations. As soon as practicable after the close of the Exchange Offer or the Private Exchange, as the case may be, the Company shall: (1) accept for exchange all Notes properly tendered and not validly withdrawn pursuant to the Exchange Offer or the Private Exchange; (2) deliver to the Trustee for cancellation all Notes so accepted for exchange; and (3) cause the Trustee to authenticate and deliver promptly to each Holder of Notes, Exchange Notes or Private Exchange Notes, as the case may be, equal in principal amount to the Notes of such Holder so accepted for exchange. The Exchange Notes and the Private Exchange Notes may be issued under (i) the Indenture or (ii) an indenture identical in all material respects to the Indenture, which in either event shall provide that (1) the Exchange Notes shall not be subject to the transfer restrictions set forth in the Indenture and (2) the Private Exchange Notes shall be subject to the transfer restrictions set forth in the Indenture. The Indenture or such indenture shall provide that the Exchange Notes, the Private Exchange Notes and the Notes shall vote and consent together on all matters as one class and that neither the Exchange Notes, the Private Exchange Notes or the Notes will have the right to vote or consent as a separate class on any matter. (c) If, (i) because of any change in law or in currently prevailing interpretations of the Staff of the SEC, the Company is not permitted to effect an Exchange Offer, (ii) the Exchange Offer is not consummated within 180 days of the Issue Date, (iii) the holder of Private Exchange Notes so requests at any time after the consummation of the Private Exchange, (iv) the Holders of not less than a majority in aggregate principal amount of the Registrable Notes determine that the interests of the Holders would be materially adversely affected by consummation of the Exchange Offer or (v) in the case of any Holder that participates in the Exchange Offer, such Holder does not receive Exchange Notes on the date of the exchange that may be sold without restriction under state 4 and federal securities laws (other than due solely to the status of such Holder as an affiliate of the Company within the meaning of the Securities Act), then the Company shall promptly deliver to the Holders and the Trustee written notice thereof (the "Shelf Notice") to the Trustee and in the case of clauses (i), (ii) and (iv), all Holders, in the case of clause (iii), the Holders of the Private Exchange Notes and in the case of clause (v), the affected Holder, and shall file a Shelf Registration pursuant to Section 3 hereof. 3. Shelf Registration If a Shelf Notice is delivered as contemplated by Section 2(c) hereof, then: (a) Shelf Registration. The Company shall as promptly as reasonably practicable file with the SEC a Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415 covering all of the Registrable Notes (the "Shelf Registration"). If the Company shall not have yet filed an Exchange Registration Statement, the Company shall use its best efforts to file with the SEC the Shelf Registration on or prior to the Filing Date. The Shelf Registration shall be on Form S-1 or another appropriate form permitting registration of such Registrable Notes for resale by Holders in the manner or manners designated by them (including, without limitation, one or more underwritten offerings). The Company shall not permit any securities other than the Registrable Notes to be included in the Shelf Registration. The Company shall use its best efforts to cause the Shelf Registration to be declared effective under the Securities Act on or prior to the Effectiveness Date and to keep the Shelf Registration continuously effective under the Securities Act until the date that is three years from the Issue Date (the "Effectiveness Period"), or such shorter period ending when all Registrable Notes covered by the Shelf Registration have been sold in the manner set forth and as contemplated in the Shelf Registration. (b) Withdrawal of Stop Orders. If the Shelf Registration ceases to be effective for any reason at any time during the Effectiveness Period (other than because of the sale of all of the securities registered thereunder), the Company shall use its best efforts to obtain the prompt withdrawal of any order suspending the effectiveness thereof. (c) Supplements and Amendments. The Company shall promptly supplement and amend the Shelf Registration if required by the rules, regulations or instructions applicable to the registration form used for such Shelf Registration, if required by the Securities Act, or if reasonably requested by the Holders of a majority in aggregate principal amount of the Registrable Notes covered by such Registration Statement or by any underwriter of such Registrable Notes. 4. Additional Interest (a) The Company and the Initial Purchaser agree that the Holders of Registrable Notes will suffer damages if the Company fails to fulfill its obligation under Section 2 or Section 3 hereof and that it would not be feasible to ascertain the extent of such damages with precision. Accordingly, the Company agrees to pay, as liquidated damages, additional interest on the Notes ("Additional Interest") under the circumstances and to the extent set forth below (without duplication): (i) if neither the Exchange Registration Statement nor the Shelf Registration has been filed on or prior to the Filing Date, Additional Interest shall accrue on the Notes over and above the stated interest at a rate of 0.50% per annum for the first 90 days immediately following the Filing Date, such Additional Interest rate increasing by an additional 0.50% per annum at the beginning of each subsequent 90-day period; (ii) if neither the Exchange Registration Statement nor the Initial Shelf Registration is declared effective by the SEC on or prior to the Effectiveness Date, then, commencing on the 136th day after the Issue Date, Additional Interest shall be accrued on the Notes included or that should have been included in such Registration Statement over and above the stated interest at a rate of 0.50% per annum for the first 90 days 5 immediately following the Effectiveness Date, such Additional Interest rate increasing by an additional 0.50% per annum at the beginning of each subsequent 90-day period; and (iii) if either (A) the Company has not exchanged Exchange Notes for all Notes validly tendered in accordance with the terms of the Exchange Offer on or prior to the 180th day after the Issue Date or (B) the Exchange Registration Statement ceases to be effective at any time prior to the time that the Exchange Offer is consummated or (C) if applicable, the Shelf Registration has been declared effective and such Shelf Registration ceases to be effective at any time during the Effectiveness Period, then Additional Interest shall be accrued on the Notes (over and above any interest otherwise payable on the Notes) at a rate of 0.50% per annum on (x) the 181st day after the Issue Date, in the case of (A) above, or (y) the day the Exchange Registration Statement ceases to be effective without being declared effective within five business days in the case of (B) above, or (z) the day such Shelf Registration ceases to be effective, in the case of (C) above, such Additional Interest rate increasing by an additional 0.50% per annum at the beginning of each such subsequent 90-day period (it being understood and agreed that, notwithstanding any provision to the contrary, so long as any Note that is the subject of a Shelf Notice is then covered by an effective Shelf Registration Statement, no Additional Interest shall accrue on such Note); provided, however, that the Additional Interest rate on any affected Note may not exceed at any one time in the aggregate 2.0% per annum; and provided, further, that (1) upon the filing of the Exchange Registration Statement or a Shelf Registration (in the case of clause (i) of this Section 4(a)), (2) upon the effectiveness of the Exchange Registration Statement or the Shelf Registration (in the case of clause (ii) of this Section 4(a)), or (3) upon the exchange of Exchange Notes for all Notes tendered (in the case of clause (iii)(A) of this Section 4(a)), or upon the effectiveness of the Exchange Registration Statement that had ceased to remain effective (in the case of (iii)(B) of this Section 4(a)) or upon the effectiveness of the Shelf Registration that had ceased to remain effective (in the case of (iii)(C) of this Section 4(a)), Additional Interest on the affected Notes as a result of such clause (or the relevant subclause thereof), as the case may be, shall cease to accrue. (b) The Company shall notify the Trustee within one business day after each and every date on which an event occurs in respect of which Additional Interest is required to be paid (an "Event Date"). Any amounts of Additional Interest due pursuant to (a)(i), (a)(ii) or (a)(iii) of this Section 4 will be payable in cash semi-annually on each December 31 and June 30 (to the holders of record on the December 15 and June 15 immediately preceding such dates), commencing with the first such date occurring after any such Additional Interest commences to accrue. The amount of Additional Interest will be determined by multiplying the applicable Additional Interest rate by the principal amount of the Registrable Notes, multiplied by a fraction, the numerator of which is the number of days such Additional Interest rate was applicable during such period (determined on the basis of a 360-day year consisting of twelve 30-day months and, in the case of a partial month, the actual number of days elapsed) and the denominator of which is 360. 5. Registration Procedures In connection with the filing of any Registration Statement pursuant to Sections 2 or 3 hereof, the Company shall effect such registrations to permit the sale of the securities covered thereby in accordance with the intended method or methods of disposition thereof, and pursuant thereto and in connection with any Registration Statement filed by the Company, hereunder the Company shall: (a) Prepare and file with the SEC prior to the Filing Date, a Registration Statement or Registration Statements as prescribed by Sections 2 or 3 hereof, and use its best efforts to cause each such Registration Statement to become effective and remain effective as provided herein; provided, however, that, if (1) such filing is pursuant to Section 3 hereof or (2) a Prospectus contained in an Exchange Registration Statement filed pursuant to Section 2 hereof is required to be delivered under the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, before filing any Registration Statement or Prospectus or any amendments or supplements thereto, the Company shall furnish to and afford the Holders of the Registrable Notes covered by such Registration Statement or each such Participating Broker-Dealer, as the case may be, their counsel and the managing underwriters, if any, a reasonable opportunity to review copies of all such documents (including 6 copies of any documents to be incorporated by reference therein and all exhibits thereto) proposed to be filed (in each case at least five business days prior to such filing). The Company shall not file any Registration Statement or Prospectus or any amendments or supplements thereto if the Holders of a majority in aggregate principal amount of the Registrable Notes covered by such Registration Statement, or any such Participating Broker-Dealer, as the case may be, or their counsel, or the managing underwriters, if any, shall reasonably object. (b) Prepare and file with the SEC such amendments and post-effective amendments to each Shelf Registration or Exchange Registration Statement, as the case may be, as may be necessary to keep such Registration Statement continuously effective for the Effectiveness Period or the Applicable Period, as the case may be; cause the related Prospectus to be supplemented by any prospectus supplement required by applicable law, and as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then in force) promulgated under the Securities Act; and comply with the provisions of the Securities Act and the Exchange Act applicable to it with respect to the disposition of all securities covered by such Registration Statement as so amended or in such Prospectus as so supplemented and with respect to the subsequent resale of any securities being sold by a Participating Broker-Dealer covered by any such Prospectus; the Company shall be deemed not to have used its best efforts to keep a Registration Statement effective during the Applicable Period if it voluntarily takes any action that would result in selling Holders of the Registrable Notes covered thereby or Participating Broker-Dealers seeking to sell Exchange Notes not being able to sell such Registrable Notes or such Exchange Notes during that period, unless such action is required by applicable law or unless the Company complies with this Agreement, including without limitation, the provisions of paragraph 5(k) hereof and the last paragraph of this Section 5. (c) If (1) a Shelf Registration is filed pursuant to Section 3 hereof or (2) a Prospectus contained in an Exchange Registration Statement filed pursuant to Section 2 hereof is required to be delivered under the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, notify the selling Holders of Registrable Notes, or each such Participating Broker-Dealer, as the case may be, their counsel and the managing underwriters, if any, promptly (but in any event within two business days) and confirm such notice in writing, (i) when a Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to a Registration Statement or any post-effective amendment, when the same has become effective under the Securities Act (including in such notice a written statement that any Holder may, upon request, obtain, at the sole expense of the Company, one conformed copy of such Registration Statement or post- effective amendment including financial statements and schedules, documents incorporated or deemed to be incorporated by reference and exhibits), (ii) of the issuance by the SEC of any stop order suspending the effectiveness of a Registration Statement or of any order preventing or suspending the use of any preliminary prospectus or the initiation of any proceedings for that purpose, (iii) if at any time when a prospectus is required by the Securities Act to be delivered in connection with sales of the Registrable Notes or resales of Exchange Notes by Participating Broker-Dealers the representations and warranties of the Company contained in any agreement (including any underwriting agreement), contemplated by Section 5(n) hereof cease to be true and correct, (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of a Registration Statement or any of the Registrable Notes or the Exchange Notes to be sold by any Participating Broker-Dealer for offer or sale in any jurisdiction, or the initiation or written threat of any proceeding for such purpose, (v) of the happening of any event, the existence of any condition or any information becoming known that makes any statement made in such Registration Statement or related Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respects or that requires the making of any changes in or amendments or supplements to such Registration Statement, Prospectus or documents so that, in the case of the Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and that in the case of the Prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading and (vi) of the Company's determination that a post- effective amendment to a Registration Statement would be appropriate. (d) Use its reasonable best efforts to prevent the issuance of any order suspending the effectiveness of a Registration Statement or of any order preventing or suspending the use of a Prospectus or suspending the 7 qualification (or exemption from qualification) of any of the Registrable Notes or the Exchange Notes for sale in any jurisdiction and, if any such order is issued, to use their best efforts to obtain the withdrawal of any such order at the earliest possible moment. (e) If a Shelf Registration is filed pursuant to Section 3 and if requested by the managing underwriter or underwriters, if any, or the Holders of a majority in aggregate principal amount of the Registrable Notes being sold in connection with an underwritten offering, (i) promptly incorporate in a prospectus supplement or post-effective amendment such information as the managing underwriter or underwriters, if any, such Holders or counsel for any of them determine is reasonably necessary to be included therein, (ii) make all required filings of such prospectus supplement or such post-effective amendment as soon as practicable after the Company has received notification of the matters to be incorporated in such prospectus supplement or post-effective amendment and (iii) supplement or make amendments to such Registration Statement. (f) If (1) a Shelf Registration is filed pursuant to Section 3 hereof or (2) a Prospectus contained in an Exchange Registration Statement filed pursuant to Section 2 hereof is required to be delivered under the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, furnish to each selling Holder of Registrable Notes and to each such Participating Broker-Dealer who so requests and to their respective counsel and each managing underwriter, if any, at the sole expense of the Company, one conformed copy of the Registration Statement or Registration Statements and each post-effective amendment thereto, including financial statements and schedules and, if requested, all documents incorporated or deemed to be incorporated therein by reference and all exhibits. (g) If (1) a Shelf Registration is filed pursuant to Section 3 hereof or (2) a Prospectus contained in an Exchange Registration Statement filed pursuant to Section 2 hereof is required to be delivered under the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, deliver to each selling Holder of Registrable Notes, or each such Participating Broker-Dealer, as the case may be, their respective counsel and the underwriters, if any, at the sole expense of the Company, as many copies of the Prospectus or Prospectuses (including each form of preliminary prospectus) and each amendment or supplement thereto and any documents incorporated by reference therein as such Persons may reasonably request; and, subject to the last paragraph of this Section 5, the Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling Holders of Registrable Notes or each such Participating Broker-Dealer, as the case may be, and the underwriters or agents, if any, and dealers, if any, in connection with the offering and sale of the Registrable Notes covered by, or the sale by Participating Broker-Dealers of the Exchange Notes pursuant to, such Prospectus and any amendment or supplement thereto. (h) Prior to any public offering of Registrable Notes or Exchange Notes or any delivery of a Prospectus contained in the Exchange Registration Statement by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, to use their best efforts to register or qualify and to cooperate with the selling Holders of Registrable Notes or each such Participating Broker-Dealer, as the case may be, the managing underwriter or underwriters, if any, and their respective counsel in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Notes for offer and sale under the securities or Blue Sky laws of such jurisdictions within the United States as any selling Holder, Participating Broker-Dealer or the managing underwriter or underwriters reasonably request in writing; provided, however, that where Exchange Notes held by Participating Broker-Dealers or Registrable Notes are offered other than through an underwritten offering, the Company agrees to cause the Company's counsel to perform Blue Sky investigations and file registrations and qualifications required to be filed pursuant to this Section 5(h); keep each such registration or qualification (or exemption therefrom) effective during the period such Registration Statement is required to be kept effective and do any and all other acts or things reasonably necessary or advisable to enable the disposition in such jurisdictions of the Exchange Notes held by Participating Broker-Dealers or the Registrable Notes covered by the applicable Registration Statement; provided, however, that the Company shall not be required to (A) qualify generally to do business in any jurisdiction where it is not then so qualified, (B) take any action that would subject it to general service of process in any such jurisdiction where it is not then so subject or (C) subject itself to taxation in any such jurisdiction where it is not then so subject. 8 (i) If a Shelf Registration is filed pursuant to Section 3 hereof, cooperate with the selling Holders of Registrable Notes and the managing underwriter or underwriters, if any, to facilitate the timely preparation and delivery of certificates representing Registrable Notes to be sold, which certificates shall not bear any restrictive legends and shall be in a form eligible for deposit with The Depository Trust Company; and enable such Registrable Notes to be in such denominations and registered in such names as the managing underwriter or underwriters, if any, or Holders may reasonably request. (j) Use its best efforts to cause the Registrable Notes covered by the Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the Holders thereof or the underwriter or underwriters, if any, to consummate the disposition of such Registrable Notes, except as may be required solely as a consequence of the nature of such selling Holder's business, in which case the Company will cooperate in all reasonable respects with the filing of such Registration Statement and the granting of such approvals. (k) If (1) a Shelf Registration is filed pursuant to Section 3 hereof or (2) a Prospectus contained in an Exchange Registration Statement filed pursuant to Section 2 hereof is required to be delivered under the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, upon the occurrence of any event contemplated by paragraph 5(c)(v) or 5(c)(vi), hereof, as promptly as practicable prepare and (subject to Section 5(a) hereof) file with the SEC, at the Company's sole expense, a supplement or post-effective amendment to the Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Notes being sold thereunder or to the purchasers of the Exchange Notes to whom such Prospectus will be delivered by a Participating Broker-Dealer, any such Prospectus will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (l) Use its best efforts to cause the Registrable Notes covered by a Registration Statement or the Exchange Notes, as the case may be, to be rated with the appropriate rating agencies, if so requested by the Holders of a majority in aggregate principal amount of Registrable Notes covered by such Registration Statement or the Exchange Notes, as the case may be, or the managing underwriter or underwriters, if any. (m) Prior to the effective date of the first Registration Statement relating to the Registrable Notes, (i) provide the Trustee with certificates for the Registrable Notes or Exchange Notes, as the case may be, in a form eligible for deposit with The Depository Trust Company and (ii) provide a CUSIP number for the Registrable Notes or Exchange Notes, as the case may be. (n) In connection with any underwritten offering of Registrable Notes pursuant to a Shelf Registration, enter into an underwriting agreement as is customary in underwritten offerings of debt securities similar to the Notes and take all such other actions as are reasonably requested by the managing underwriter or underwriters in order to expedite or facilitate the registration or the disposition of such Registrable Notes and, in such connection, (i) make such representations and warranties to, and covenants with, the underwriters with respect to the business of the Company and its subsidiaries (including any acquired business, properties or entity, if applicable) and the Registration Statement, Prospectus and documents, if any, incorporated or deemed to be incorporated by reference therein, in each case, as are customarily made by issuers to underwriters in underwritten offerings of debt securities similar to the Notes, and confirm the same in writing if and when requested; (ii) obtain the written opinion of counsel to the Company and written updates thereof in form, scope and substance reasonably satisfactory to the managing underwriter or underwriters, addressed to the underwriters covering the matters customarily covered in opinions requested in underwritten offerings of debt similar to the Notes and such other matters as may be reasonably requested by the managing underwriter or underwriters; (iii) obtain "cold comfort" letters and updates thereof in form, scope and substance reasonably satisfactory to the managing underwriter or underwriters from the independent certified public accountants of the Company (and, if necessary, any other independent certified public accountants of any subsidiary of the Company or of any business acquired by the 9 Company for which financial statements and financial data are, or are required to be, included or incorporated by reference in the Registration Statement), addressed to each of the underwriters, such letters to be in customary form and covering matters of the type customarily covered in "cold comfort" letters in connection with underwritten offerings of debt securities similar to the Notes and such other matters as reasonably requested by the managing underwriter or underwriters; and (iv) if an underwriting agreement is entered into, the same shall contain indemnification provisions and procedures no less favorable than those set forth in Section 7 hereof (or such other provisions and procedures acceptable to Holders of a majority in aggregate principal amount of Registrable Notes covered by such Registration Statement and the managing underwriter or underwriters or agents) with respect to all parties to be indemnified pursuant to said Section. The above shall be done at each closing under such underwriting agreement, or as and to the extent required thereunder. (o) If (1) a Shelf Registration is filed pursuant to Section 3 hereof or (2) a Prospectus contained in an Exchange Registration Statement filed pursuant to Section 2 hereof is required to be delivered under the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, make available for inspection by any selling Holder of such Registrable Notes being sold, or each such Participating Broker-Dealer, as the case may be, any underwriter participating in any such disposition of Registrable Notes, if any, and any attorney, accountant or other agent retained by any such selling Holder or each such Participating Broker-Dealer, as the case may be, or underwriter (collectively, the "Inspectors"), at the offices where normally kept, during reasonable business hours, all financial and other records, pertinent corporate documents and instruments of the Company and its subsidiaries (collectively, the "Records") as shall be reasonably necessary to enable them to exercise any applicable due diligence responsibilities, and cause the respective officers, directors and employees of the Company and its subsidiaries to supply all information reasonably requested by any such Inspector in connection with such Registration Statement. Records that the Company determines, in good faith, to be confidential and any Records that it notifies the Inspectors are confidential shall not be disclosed by the Inspectors unless (i) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in such Registration Statement, (ii) the release of such Records is ordered pursuant to a subpoena or other order from a court of competent jurisdiction, (iii) disclosure of such information is, in the opinion of counsel for any Inspector, necessary or advisable in connection with any action, claim, suit or proceeding, directly or indirectly, involving or potentially involving such Inspector and arising out of, based upon, relating to or involving this Agreement or any transactions contemplated hereby or arising hereunder or (iv) the information in such Records has been made generally available to the public. Each selling Holder of such Registrable Securities and each such Participating Broker-Dealer will be required to agree that information obtained by it as a result of such inspections shall be deemed confidential and shall not be used by it as the basis for any market transactions in the securities of the Company unless and until such information is generally available to the public. Each selling Holder of such Registrable Notes and each such Participating Broker-Dealer will be required to further agree that it will, upon learning that disclosure of such Records is sought in a court of competent jurisdiction, give notice to the Company and allow the Company to undertake appropriate action to prevent disclosure of the Records deemed confidential at the Company's sole expense. (p) Provide an indenture trustee for the Registrable Notes or the Exchange Notes, as the case may be, and cause the Indenture or the trust indenture provided for in Section 2(a) hereof, as the case may be, to be qualified under the TIA not later than the effective date of the Exchange Offer or the first Registration Statement relating to the Registrable Notes; and in connection therewith, cooperate with the trustee under any such indenture and the Holders of the Registrable Notes, to effect such changes to such indenture as may be required for such indenture to be so qualified in accordance with the terms of the TIA; and execute, and use its reasonable best efforts to cause such trustee to execute, all documents as may be required to effect such changes and all other forms and documents required to be filed with the SEC to enable such indenture to be so qualified in a timely manner. (q) Comply with all applicable rules and regulations of the SEC and make generally available to its securityholders earning statements satisfying the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any similar rule promulgated under the Securities Act) no later than 45 days after the end of any 12-month period (or 90 days after the end of any 12-month period if such period is a fiscal year) (i) commencing at the end of any fiscal quarter in which Registrable Notes are sold to underwriters in a firm commitment or best efforts 10 underwritten offering and (ii) if not sold to underwriters in such an offering, commencing on the first day of the first fiscal quarter of the Company after the effective date of a Registration Statement, which statements shall cover said 12-month periods. (r) Upon consummation of an Exchange Offer or a Private Exchange, obtain an opinion of counsel to the Company, who may, at the Company's election, be internal counsel to the Company, in a form customary for underwritten transactions, addressed to the Trustee for the benefit of all Holders of Registrable Notes participating in the Exchange Offer or the Private Exchange, as the case may be, that the Exchange Notes or Private Exchange Notes, as the case may be, and the related indenture constitute legal, valid and binding obligations of the Company, enforceable against the Company in accordance with its respective terms, subject to customary exceptions and qualifications. (s) If an Exchange Offer or a Private Exchange is to be consummated, upon delivery of the Registrable Notes by Holders to the Company (or to such other Person as directed by the Company) in exchange for the Exchange Notes or the Private Exchange Notes, as the case may be, the Company shall mark, or cause to be marked, on such Registrable Notes that such Registrable Notes are being cancelled in exchange for the Exchange Notes or the Private Exchange Notes, as the case may be; in no event shall such Registrable Notes be marked as paid or otherwise satisfied. (t) Cooperate with each seller of Registrable Notes covered by any Registration Statement and each underwriter, if any, participating in the disposition of such Registrable Notes and their respective counsel in connection with any filings required to be made with the National Association of Securities Dealers, Inc. (the "NASD"). (u) Use its best efforts to take all other steps necessary or advisable to effect the registration of the Registrable Notes covered by a Registration Statement contemplated hereby. The Company may require each seller of Registrable Notes as to which any registration is being effected to furnish to the Company such information regarding such seller and the distribution of such Registrable Notes as the Company may, from time to time, reasonably request. The Company may exclude from such registration the Registrable Notes of any seller who unreasonably fails to furnish such information within a reasonable time after receiving such request and in such event shall have no further obligation under this Agreement (including, without limitation, obligations under Section 4 hereof) with respect to such seller or any subsequent holder of such Registrable Notes. Each seller as to which any Shelf Registration is being effected agrees to furnish promptly to the Company all information required to be disclosed in order to make the information previously furnished to the Company by such seller not materially misleading. Each Holder of Registrable Notes and each Participating Broker-Dealer agrees by acquisition of such Registrable Notes or Exchange Notes to be sold by such Participating Broker-Dealer, as the case may be, that, upon actual receipt of any notice from the Company of the happening of any event of the kind described in Sections 5(c)(ii), 5(c)(iv), 5(c)(v) or 5(c)(vi) hereof, such Holder will forthwith discontinue disposition of such Registrable Notes covered by such Registration Statement or Prospectus or Exchange Notes to be sold by such Holder or Participating Broker-Dealer, as the case may be, until such Holder's or Participating Broker-Dealer's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 5(k) hereof, or until it is advised in writing (the "Advice") by the Company that the use of the applicable Prospectus may be resumed, and has received copies of any amendments or supplements thereto. In the event that the Company shall give any such notice, each of the Effectiveness Period and the Applicable Period shall be extended by the number of days during such periods from and including the date of the giving of such notice to and including the date when each seller of Registrable Notes covered by such Registration Statement or Exchange Notes to be sold by such Participating Broker-Dealer, as the case may be, shall have received (x) the copies of the supplemented or amended Prospectus contemplated by Section 5(k) hereof or (y) the Advice. 6. Registration Expenses 11 (a) All fees and expenses incident to the performance of or compliance with this Agreement by the Company shall be borne by the Company whether or not the Exchange Offer or a Shelf Registration is filed or becomes effective, including, without limitation, (i) all registration and filing fees (including, without limitation, (A) fees with respect to filings required to be made with the NASD in connection with an underwritten offering and (B) fees and expenses of compliance with state securities or Blue Sky laws (including, without limitation, reasonable fees and disbursements of counsel in connection with Blue Sky qualifications of the Registrable Notes or Exchange Notes and determination of the eligibility of the Registrable Notes or Exchange Notes for investment under the laws of such jurisdictions (x) where the holders of Registrable Notes are located, in the case of the Exchange Notes, or (y) as provided in Section 5(h) hereof, in the case of Registrable Notes or Exchange Notes to be sold by a Participating Broker-Dealer during the Applicable Period)), (ii) printing expenses, including, without limitation, expenses of printing certificates for Registrable Notes or Exchange Notes in a form eligible for deposit with The Depository Trust Company and of printing prospectuses if the printing of prospectuses is requested by the managing underwriter or underwriters, if any, by the Holders of a majority in aggregate principal amount of the Registrable Notes included in any Registration Statement or sold by any Participating Broker-Dealer, as the case may be, (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company and fees and disbursements of special counsel for the sellers of Registrable Notes (subject to the provisions of Section 6(b) hereof), (v) fees and disbursements of all independent certified public accountants referred to in Section 5(n)(iii) hereof (including, without limitation, the expenses of any special audit and "cold comfort" letters required by or incident to such performance), (vi) rating agency fees, if any, and any fees associated with making the Registrable Notes or Exchange Notes eligible for trading through the Depository Trust Company, (vii) Securities Act liability insurance, if the Company desires such insurance, (viii) fees and expenses of all other Persons retained by the Company, (ix) internal expenses of the Company (including, without limitation, all salaries and expenses of officers and employees of the Company performing legal or accounting duties), (x) the expense of any annual audit, (xi) the fees and expenses incurred in connection with the listing of the securities to be registered on any securities exchange, if applicable, and (xii) the expenses relating to printing, word processing and distributing of all Registration Statements, underwriting agreements, securities sales agreements, indentures and any other documents necessary to comply with this Agreement. (b) The Company shall (i) reimburse the Holders of the Registrable Notes being registered in a Shelf Registration for the reasonable fees and disbursements of not more than one counsel chosen by the Holders of a majority in aggregate principal amount of the Registrable Notes to be included in such Registration Statement and (ii) reimburse out-of-pocket expenses (other than legal expenses) of Holders of Registrable Notes incurred in connection with the registration and sale of the Registrable Notes pursuant to a Shelf Registration or in connection with the exchange of Registrable Notes pursuant to the Exchange Offer. In addition, the Company shall reimburse the Initial Purchaser for the reasonable fees and expenses of one counsel in connection with the Exchange Offer, which shall be Cahill Gordon & Reindel, and shall not be required to pay any other legal expenses in connection therewith. 7. Indemnification (a) The Company agrees to indemnify and hold harmless each Holder of Registrable Notes offered pursuant to a Shelf Registration Statement and each Participating Broker-Dealer selling Exchange Notes during the Applicable Period, the officers and directors of each such Person or its affiliates, and each other Person, if any, who controls any such Person or its affiliates within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act (each, a "Participant"), from and against any and all losses, claims, damages and liabilities (including, without limitation, the reasonable legal fees and other expenses actually incurred in connection with any suit, action or proceeding or any claim asserted) caused by, arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement pursuant to which the offering of such Registrable Notes or Exchange Notes, as the case may be, is registered (or any amendment thereto) or related Prospectus (or any amendments or supplements thereto) or any related preliminary prospectus, or caused by, arising out of or based upon any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not 12 misleading; provided, however, that the Company will not be required to indemnify a Participant if (i) such losses, claims, damages or liabilities are caused by any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with information relating to any Participant furnished to the Company in writing by or on behalf of such Participant expressly for use therein or (ii) if such Participant sold to the person asserting the claim the Registrable Notes or Exchange Notes that are the subject of such claim and such untrue statement or omission or alleged untrue statement or omission was contained or made in any preliminary prospectus and corrected in the Prospectus or any amendment or supplement thereto and the Prospectus does not contain any other untrue statement or omission or alleged untrue statement or omission of a material fact that was the subject matter of the related proceeding and it is established by the Company in the related proceeding that such Participant failed to deliver or provide a copy of the Prospectus (as amended or supplemented) to such Person with or prior to the confirmation of the sale of such Registrable Notes or Exchange Notes sold to such Person if required by applicable law, unless such failure to deliver or provide a copy of the Prospectus (as amended or supplemented) was a result of noncompliance by the Company with Section 5 of this Agreement. (b) Each Participant agrees, severally and not jointly, to indemnify and hold harmless the Company, its directors and officers and each Person who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the foregoing indemnity from the Company to each Participant, but only (i) with reference to information relating to such Participant furnished to the Company in writing by or on behalf of such Participant expressly for use in any Registration Statement or Prospectus, any amendment or supplement thereto or any preliminary prospectus or (ii) with respect to any untrue statement or representation made by such Participant in writing to the Company. The liability of any Participant under this paragraph shall in no event exceed the proceeds received by such Participant from sales of Registrable Notes or Exchange Notes giving rise to such obligations. (c) If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against any Person in respect of which indemnity may be sought pursuant to either of the two preceding paragraphs, such Person (the "Indemnified Person") shall promptly notify the Person against whom such indemnity may be sought (the "Indemnifying Person") in writing, and the Indemnifying Person, upon request of the Indemnified Person, shall retain counsel reasonably satisfactory to the Indemnified Person to represent the Indemnified Person and any others the Indemnifying Person may reasonably designate in such proceeding and shall pay the reasonable fees and expenses actually incurred by such counsel related to such proceeding; provided, however, that the failure to so notify the Indemnifying Person shall not relieve it of any obligation or liability that it may have hereunder or otherwise (unless and only to the extent that such failure directly results in the loss or compromise of any material rights or defenses by the Indemnifying Person and the Indemnifying Person was not otherwise aware of such action or claim). In any such proceeding, any Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless (i) the Indemnifying Person and the Indemnified Person shall have mutually agreed in writing to the contrary, (ii) the Indemnifying Person shall have failed within a reasonable period of time to retain counsel reasonably satisfactory to the Indemnified Person or (iii) the named parties in any such proceeding (including any impleaded parties) include both the Indemnifying Person and the Indemnified Person and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that, unless there exists a conflict among Indemnified Persons, the Indemnifying Person shall not, in connection with any one such proceeding or separate but substantially similar related proceeding in the same jurisdiction arising out of the same general allegations, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all Indemnified Persons, and that all such fees and expenses shall be reimbursed promptly as they are incurred. Any such separate firm for the Participants and such control Persons of Participants shall be designated in writing by Participants who sold a majority in interest of Registrable Notes and Exchange Notes sold by all such Participants and any such separate firm for the Company, its directors, its officers and such control Persons of the Company shall be designated in writing by the Company. The Indemnifying Person shall not be liable for any settlement of any proceeding effected without its prior written consent, but if settled with such consent or if there be a final non-appealable judgment for the plaintiff for which the Indemnified Person is entitled to indemnification pursuant to this Agreement, the Indemnifying Person agrees to indemnify and hold harmless each Indemnified Person from and against any loss or 13 liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified Person shall have requested an Indemnifying Person to reimburse the Indemnified Person for reasonable fees and expenses actually incurred by counsel as contemplated by the third sentence of this paragraph, the Indemnifying Person agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by such Indemnifying Person of the aforesaid request and (ii) such Indemnifying Person shall not have reimbursed the Indemnified Person in accordance with such request prior to the date of such settlement; provided, however, that the Indemnifying Person shall not be liable for any settlement effected without its consent pursuant to this sentence if the Indemnifying Person is contesting, in good faith, the request for reimbursement. No Indemnifying Person shall, without the prior written consent of the Indemnified Person, effect any settlement or compromise of any pending or threatened proceeding in respect of which any Indemnified Person is or could have been a party, and indemnity could have been sought hereunder by such Indemnified Person, unless such settlement (A) includes an unconditional written release of such Indemnified Person, in form and substance reasonably satisfactory to such Indemnified Person, from all liability on claims that are the subject matter of such proceeding and (B) does not include any statement as to an admission of fault, culpability or failure to act by or on behalf of any Indemnified Person. (d) If the indemnification provided for in the first and second paragraphs of this Section 7 is for any reason unavailable to, or insufficient to hold harmless, an Indemnified Person in respect of any losses, claims, damages or liabilities referred to therein, then each Indemnifying Person under such paragraphs, in lieu of indemnifying such Indemnified Person thereunder and in order to provide for just and equitable contribution, shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities in such proportion as is appropriate to reflect (i) the relative benefits received by the Indemnifying Person or Persons on the one hand and the Indemnified Person or Persons on the other from the offering of the Notes or (ii) if the allocation provided by the foregoing clause (i) is not permitted by applicable law, not only such relative benefits but also the relative fault of the Indemnifying Person or Persons on the one hand and the Indemnified Person or Persons on the other in connection with the statements or omissions or alleged statements or omissions that resulted in such losses, claims, damages or liabilities (or actions in respect thereof). The relative fault of the parties shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or such Participant or such other Indemnified Person, as the case may be, on the other, the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission, and any other equitable considerations appropriate in the circumstances. (e) The parties agree that it would not be just and equitable if contribution pursuant to this Section 7 were determined by pro rata allocation (even if the Participants were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an Indemnified Person as a result of the losses, claims, damages and liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any reasonable legal or other expenses actually incurred by such Indemnified Person in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 7, in no event shall a Participant be required to contribute any amount in excess of the amount by which proceeds received by such Participant from sales of Registrable Notes or Exchange Notes, as the case may be, exceeds the amount of any damages that such Participant has otherwise been required to pay or has paid by reason of such untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. (f) The indemnity and contribution agreements contained in this Section 7 will be in addition to any liability that the Indemnifying Persons may otherwise have to the Indemnified Persons referred to above. 8. Rule 144 and 144A 14 The Company covenants that it will file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder in a timely manner in accordance with the requirements of the Securities Act and the Exchange Act and, if at any time the Company is not required to file such reports, it will, upon the request of any Holder of Registrable Notes, make publicly available annual reports and such information, documents and other reports of the type specified in Sections 13 and 15(d) of the Exchange Act. The Company further covenants for so long as any Registrable Notes remain outstanding, to make available to any Holder or beneficial owner of Registrable Notes in connection with any sale thereof and any prospective purchaser of such Registrable Notes from such Holder or beneficial owner the information required by Rule 144A(d)(4) under the Securities Act in order to permit resales of such Registrable Notes pursuant to Rule 144A. 9. Underwritten Registrations If any of the Registrable Notes covered by any Shelf Registration are to be sold in an underwritten offering, the investment banker or investment bankers and manager or managers that will manage the offering will be selected by the Holders of a majority in aggregate principal amount of such Registrable Notes included in such offering and reasonably acceptable to the Company. No Holder of Registrable Notes may participate in any underwritten registration hereunder unless such Holder (a) agrees to sell such Holder's Registrable Notes on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements and (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements. 10. Miscellaneous (a) No Inconsistent Agreements. The Company has not, as of the date hereof, and shall not, after the date of this Agreement, enter into any agreement with respect to any of the Company's securities that is inconsistent with the rights granted to the Holders of Registrable Notes in this Agreement or otherwise conflicts with the provisions hereof. The Company has not entered and will not enter into any agreement with respect to any of its securities that will grant to any Person piggy-back registration rights with respect to a Registration Statement. (b) Adjustments Affecting Registrable Notes. The Company shall not, directly or indirectly, take any action with respect to the Registrable Notes as a class that would adversely affect the ability of the Holders of Registrable Notes to include such Registrable Notes in a registration undertaken pursuant to this Agreement. (c) Amendments and Waivers. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, otherwise than with the prior written consent of the Holders of not less than a majority in aggregate principal amount of the then outstanding Registrable Notes. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of Holders of Registrable Notes whose securities are being sold pursuant to a Registration Statement and that does not directly or indirectly affect, impair, limit or compromise the rights of other Holders of Registrable Notes may be given by Holders of at least a majority in aggregate principal amount of the Registrable Notes being sold by such Holders pursuant to such Registration Statement; provided, however, that the provisions of this sentence may not be amended, modified or supplemented except in accordance with the provisions of the immediately preceding sentence. (d) Notices. All notices and other communications (including without limitation any notices or other communications to the Trustee) provided for or permitted hereunder shall be made in writing by hand-delivery, registered first- class mail, next-day air courier or facsimile: 1. if to a Holder of the Registrable Notes or any Participating Broker-Dealer, at the most current address of such Holder or Participating Broker-Dealer, as the case may be, set forth on the records of the registrar under the Indenture, with a copy in like manner to the Initial Purchaser as follows: 15 BT SECURITIES CORPORATION Bankers Trust Plaza 130 Liberty Street New York, New York 10006 Facsimile No.: (212) 250-7200 Attention: Corporate Finance Department with a copy to: Cahill Gordon & Reindel 80 Pine Street New York, New York 10005 Facsimile No.: (212) 269-5420 Attention: William M. Hartnett, Esq. 2. if to the Initial Purchaser, at the addresses specified in Section 10(d)(1); 3. if to the Company, at the address as follows: ICF KAISER INTERNATIONAL, INC. 9300 Lee Highway Fairfax, Virginia 22031-1207 Facsimile No.: (703) 934-3029 Attention: General Counsel with a copy to: Crowell & Moring LLP 1001 Pennsylvania Avenue, N.W. Washington, D.C. 20004 Facsimile No.: (202) 628-5116 Attention: James J. Maiwurm, Esq. All such notices and communications shall be deemed to have been duly given: when delivered by hand, if personally delivered; five business days after being deposited in the mail, postage prepaid, if mailed; one business day after being timely delivered to a next-day air courier; and when receipt is acknowledged by the addressee, if sent by facsimile. Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee at the address and in the manner specified in such Indenture. (e) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties hereto; provided, however, that this Agreement shall not inure to the benefit of or be binding upon a successor or assign of a Holder unless and to the extent such successor or assign holds Registrable Notes. (f) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. 16 (g) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT. (i) Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their best efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable. (j) Securities Held by the Company or Its Affiliates. Whenever the consent or approval of Holders of a specified percentage of Registrable Notes is required hereunder, Registrable Notes held by the Company or its affiliates (as such term is defined in Rule 405 under the Securities Act) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage. (k) Third Party Beneficiaries. Holders of Registrable Notes and Participating Broker-Dealers are intended third party beneficiaries of this Agreement and this Agreement may be enforced by such Persons. (l) Entire Agreement. This Agreement, together with the Purchase Agreement and the Indenture, is intended by the parties as a final and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein and therein and any and all prior oral or written agreements, representations, or warranties, contracts, understandings, correspondence, conversations and memoranda between the Initial Purchaser on the one hand and the Company on the other, or between or among any agents, representatives, parents, subsidiaries, affiliates, predecessors in interest or successors in interest with respect to the subject matter hereof and thereof are merged herein and replaced hereby. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. ICF KAISER INTERNATIONAL, INC. By: /s/ Richard K. Nason Name: Richard K. Nason Title: Executive Vice President and Chief Financial Officer BT SECURITIES CORPORATION By: /s/ Timothy Hynes Name: Timothy Hynes Title: Vice President 17 EX-5 16 EXHIBIT 5 EXHIBIT 5 ICF KAISER INTERNATIONAL, INC. 9300 Lee Highway Fairfax, Virginia 22031 (703) 934-3600 January 10, 1997 ICF Kaiser International, Inc. Cygna Consulting Engineers and Project Management, Inc. ICF Kaiser Government Programs, Inc. PCI Operating Company, Inc. Systems Applications International, Inc. 9300 Lee Highway Fairfax, Virginia 22031 Re: ICF Kaiser International, Inc. 12% Senior Notes due 2003, Series B Registration Statement on Form S-1 ------------------------------------- Ladies and Gentlemen: I have acted as counsel to ICF Kaiser International, Inc., a Delaware corporation (the "Company"), and each of Cygna Consulting Engineers and Project Management, Inc., a California corporation, ICF Kaiser Government Programs, Inc., a Delaware corporation, PCI Operating Company, Inc., a Delaware corporation, and Systems Applications International, Inc., a Delaware corporation (each a "Subsidiary Guarantor" and collectively the "Subsidiary Guarantors"), in connection with the registration under the Securities Act of 1933, as amended (the "Securities Act"), of, and the offer to exchange (the "Exchange Offer"), the Company's 12% Senior Notes due 2003, Series B (the "Exchange Notes"), for its outstanding 12% Senior Notes due 2003, Series A (the "Old Notes"), and the guarantee of the Exchange Notes by each of the Subsidiary Guarantors (collectively the "Guarantees"). This opinion is delivered to you in connection with the Registration Statement on Form S-1 for the aforementioned Exchange Notes, Exchange Offer and the Guarantees (the "Registration Statement"). Capitalized terms used herein without definition shall have the meanings given to them in the Registration Statement. In arriving at the opinions expressed below, I have examined and relied on the originals, or copies certified or otherwise identified to my satisfaction, or each of (a) the Exchange Notes, (b) the Indenture and (c) the Guarantees, each of which has been filed as an exhibit to the Registration Statement. ICF Kaiser International, Inc. and Subsidiary Guarantors January 10, 1997 Page 2 I have assumed for purposes of my opinions hereinafter set forth that (a) the Indenture has been duly authorized, executed and delivered by the Trustee and (b) the Trustee has full power, authority and legal right to perform its obligations under the Indenture. In connection with rendering the opinions expressed below, I have examined and relied upon the originals, or copies authenticated to my satisfaction, of such public and corporate records, certificates of public officials, certificates of officers and representatives of the Company and the Subsidiary Guarantors and other documents and instruments as I have deemed relevant and necessary as the basis of the opinions hereinafter set forth. Insofar as this opinion involves factual matters, I have relied, to the extent I have deemed proper, upon certificates of officers of the Company and the Subsidiary Guarantors and certificates of public officials. In my examination of all of the foregoing, I have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of all documents submitted to me as originals, the conformity to original documents of all documents submitted to me as certified or photostatic copies and the authenticity of the originals of such copies. Based upon the foregoing and subject to the qualifications, exceptions and limitations set forth herein, I am of the opinion that when the Registration Statement shall become effective under the Securities Act, when the Indenture shall become qualified under the Trust Indenture Act of 1939, as amended, and when the Exchange Notes shall have been duly executed and authenticated as specified in the Indenture: 1. The Indenture has been duly and validly authorized by the Company and constitutes the valid and legally binding agreement of the Company, enforceable against the Company in accordance with its terms. 2. The Guarantees have been duly and validly authorized by each of the Subsidiary Guarantors and (assuming due authentication and delivery of the Exchange Notes by the Trustee in accordance with the Indenture) each of the Guarantees constitutes the valid and legally binding agreement of the Subsidiary Guarantor that issued it, enforceable against such Subsidiary Guarantor in accordance with its terms. 3. The Exchange Notes have been duly and validly authorized by the Company and, when duly executed and delivered by the Company upon delivery to the Company of Old Notes in accordance with the terms of the Exchange Offer (assuming due authentication and delivery of the Exchange Notes by the Trustee in accordance with the Indenture), will constitute the valid and legally binding obligations of the Company, enforceable against the Company in accordance with their terms. The enforceability of the Indenture, the Guarantees and the Exchange Notes is subject in each case to (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights generally and (ii) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity) and the discretion of the court before which any proceeding therefor may be brought. ICF Kaiser International, Inc. and Subsidiary Guarantors January 10, 1997 Page 3 This opinion deals only with the specific legal issues it addresses explicitly. In rendering this opinion, I express no opinion as to the laws of any jurisdiction other than the federal laws of the United States, the laws of the State of New York and the General Corporation Law of the State of Delaware. I am admitted to practice only in the Commonwealth of Virginia and the District of Columbia and for purposes of rendering this opinion I have assumed that the laws of the State of New York are the same in all material respects as the laws of the Commonwealth of Virginia. I hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to me under the caption "Legal Matters" in the Prospectus that is a part of the Registration Statement. Respectfully submitted, /s/ Paul Weeks, II Paul Weeks, II Senior Vice President, General Counsel and Secretary EX-8 17 EXHIBIT 8 EXHIBIT 8 CROWELL & MORING LLP 1001 PENNSYLVANIA AVENUE, N.W. WASHINGTON, D.C. 20004-2595 (202) 624-2500 FACSIMILE (202) 628-5116 January 10, 1997 ICF Kaiser International, Inc. 9300 Lee Highway Fairfax, Virginia 22031 Ladies and Gentlemen: We have acted as special tax counsel to ICF Kaiser International, Inc. (the "Company") and participated in the preparation of the Registration Statement on Form S-1 (Commission File No. 333-_____) (such Registration Statement, as amended at the effective date thereof, being referred to herein as the "Registration Statement") filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the "Securities Act"), with respect to the registration of the Company's 12% Senior Notes due 2003, Series B, and the related Guarantees of certain Subsidiary Guarantors of the Company, together with the Prospectus relating thereto and included as part of the Registration Statement. Based on our examination of such documents and questions of law as we have deemed necessary or appropriate, we confirm to you our opinion, as stated in the first paragraph under the caption "Risk Factors--Original Issue Discount" and under the caption "Certain Federal Income Tax Considerations" in the Prospectus included as part of the Registration Statement. The other statements under the caption "Certain Federal Income Tax Considerations" in the Prospectus are also, in our opinion, accurate in all material respects insofar as they are, or refer to, statements of United States law or legal conclusions. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to our firm under the heading "Certain Federal Income Tax Considerations" in the Prospectus included as part of the Registration Statement. By giving ICF Kaiser International, Inc. January 10, 1997 Page 2 such consent, we do not admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Securities and Exchange Commission thereunder. Very truly yours, /s/ CROWELL & MORING LLP CROWELL & MORING LLP EX-10.A.1 18 EXHIBIT 10(A)(1) Exhibit No. 10(a)(1) FIRST AMENDMENT TO CREDIT AGREEMENT This First Amendment to Credit Agreement, dated as of December 17, 1996 (this "Agreement"), is entered into by and among ICF Kaiser International, Inc. ("Borrower"), a Delaware corporation, each of its subsidiaries signatories hereto (each a "Subsidiary Guarantor" and collectively the "Subsidiary Guarantors"), the banking institutions signatories hereto (each, a "Bank" and collectively, the "Banks") and Corestates Bank, N.A., as agent for the Banks under this Agreement (in such capacity, the "Agent"). WITNESSETH WHEREAS, Borrower, each Subsidiary Guarantor, the Banks and the Agent are parties to a Credit Agreement, dated as of May 6, 1996, whereby the Banks have agreed to provide a revolving credit facility for loans and for letters of credit; WHEREAS, the Borrower and the Subsidiary Guarantors have requested, and the Banks and the Agent have agreed, to amend the Credit Agreement in certain respects, as provided herein. NOW, THEREFORE, in consideration of the premises and intending to be legally bound hereby, the parties hereto agree as follows: 1. Amendment to Credit Agreement a. The following definitions are hereby amended in their entirety so that such definitions, as so amended, shall read as follows: "Excluded Transaction" shall mean the redemption on or before January 13, 1997 of the Series 2D Senior Preferred Stock of Borrower from the proceeds of any one or more of (i) the sale of some or all of Borrower's investment in the entities owning and operating a pulverized coal injection facility in Gary, Indiana, (ii) the 1996 Senior Notes and (iii) up to $6,500,000 of Loans hereunder. "Security Agreement" shall mean the Security Agreement, dated as of May 6, 1996, as amended as of the date hereof. b. The following definitions are hereby added to Section 1.1: "Amendment Closing Date" shall mean December 17, 1996. "1996 Senior Notes" shall mean the Borrower's 12% Senior Notes due 2003, Series A, to be issued December 23, 1996, and all 12% Senior Notes due 2003, Series B, issued in exchange therefor. "Overadvance Availability" shall mean, prior to and on March 31, 1997, $5,000,000, and after March 31, 1997, $0, subject to reductions provided in Section 2.7 (c). "Overadvance Amount" shall mean, at any time, the amount by which the unpaid principal amount of all Revolving Credit Loans then outstanding plus the Letter of Credit Outstandings at such time exceeds the then current Borrowing Base. c. Clauses (3), (4) and (5) of Section 2.1 (a) are hereby amended in their entirety so that such clauses, as so amended, shall read as follows: (3) Notwithstanding the foregoing, Borrower shall not be entitled to a Revolving Credit Loan if, after giving effect to such Revolving Credit Loans to Borrower then outstanding plus the Letter of Credit Outstandings at such time would exceed the lesser of (i) the Aggregate Revolving Loan Commitment or (ii) the then current Borrowing Base plus the Overadvance Availability or (B) the unpaid principal amount of the Revolving Credit Loans to Borrower then outstanding would exceed $25,000,000. (4) Except for Revolving Credit Loans which exhaust the full remaining amount permitted by clause (3) above, and conversions which result in the conversion of all Revolving Credit Loans subject to a particular interest rate option, each of which hereof may be in lesser amounts, each Loan when made and each conversion of Loans of one type into Loans of another type hereunder shall be in an amount at least equal to $1,000,000, or if greater, then in such minimum amount plus $1,000,000 multiples. (5) Within the limits of clause (3) above, the Aggregate Revolving Loan Commitment and the Borrowing Base, Borrower may borrow, prepay (in accordance with Section 2.8) and reborrow Revolving Credit Loans. All Revolving Credit Loans shall, in any event, be repaid by Borrower on the Revolving Termination Date. d. Section 2.4(e) is hereby amended in its entirety so that such Section, as so amended, shall read as follows: (e) Applicable Margins. The margin applicable to Base Rate Loans and the Loans (in each such case, the "Applicable Margin"), other than the Overadvance Amount, will be determined from time to time based on the ratio of EBIT to Consolidated Interest Expense. Upon receipt by the Agent of the quarterly financial statements required to be delivered pursuant to Section 6.1 (b), the Agent shall determine the ratio of EBIT to Consolidated Interest Expense for the quarterly period covered by such statements. The Agent shall thereupon determine the Applicable Margin corresponding to such ratio, in each case pursuant to the schedule attached as Schedule 2.4(e) hereto. Any adjustment to the Applicable Margins shall become effective five Business Days following receipt by the Agent of the financial statements required pursuant to Section 6.1(b) hereof or, if Borrower fails to provide financial statements within the time period required by Section 6.1 (b) hereof, and such financial statements cause the Applicable Margins to increase, such adjustment of the Applicable Margins shall become effective retroactive to the date five Business Days following the date the financial statements were required under Section 6.1(b) to be furnished. Any adjustment in such Applicable Margins shall affect the Applicable Margin of Base Rate Loans then in effect or thereafter made, and shall apply to the Applicable Margin of LIBO Rate Loans thereafter made. Overadvance Amounts shall be subject to a Base Rate Margin of 1% and a LIBO Rate Margin of 2 1/2 %. For purposes of determining the interest rate applicable to outstanding Loans, the Overadvance Amount shall be included in Base Rate Loans then outstanding and, to the extent the Overadvance Amount exceeds the Base Rate Loans then outstanding, LIBO Rate Loans then outstanding. e. Section 2.7(c) is hereby amended by inserting, at the end of such Section, the following sentences: In addition, the Aggregate Revolving Loan Commitment shall be reduced by $5,000,000 on March 31, 1997. Any reduction in the Aggregate Revolving Loan Commitment pursuant to this Section 2.7(c) shall also result in a corresponding reduction in the Overadvance Availability. f. Section 2.8(a) is hereby amended in its entirety, so for such Section, as amended, shall read as follows: (a) Mandatory Prepayments. If at any time the aggregate outstanding Revolving Credit Loans plus Letter of Credit Outstandings exceed the lesser of (y)) the then Aggregate Revolving Loan Commitment or (z) the then current Borrowing Base plus the Overadvance Availability, Borrower shall make a prepayment of principal in respect of the Base Rate Loans in such amount as is necessary to assure that the aggregate principal amount of Loans outstanding immediately after such reduction plus Letter of Credit Outstandings will not exceed the lesser of the then Aggregate Revolving Loan Commitment and the then current Borrowing Base plus the Overadvance Availability. If prepayment in full as of the Base Rate Loans does not reduce the amount of all Loans outstanding plus Letter of Credit Outstandings to an amount that will not exceed the lesser of the then Aggregate Revolving Loan Commitment and the then current Borrowing Base plus the Overadvance Availability, Borrower shall deposit with the Agent cash and Discounted Treasuries in an amount sufficient to repay that portion of the principal amount of LIBO Rate Loans outstanding, with interest thereon through the end of each applicable Interest Period, as is necessary to assure that the aggregate principal amount of Loans outstanding immediately after such reduction of -2- the Base Rate Loans less the principal amount of LIBO Loans repaid by such collateral plus Letter of Credit Outstandings will not exceed the lesser of the then Aggregate Revolving Loan Commitment and the then current Borrowing Base plus the Overadvance Availability, such collateral to be held by the Agent on behalf of the Banks until each such maturity date and then applied to the repayment of such Loans. If, upon prepayment in full of the Base Rate Loans and deposit of cash and Discounted Treasuries in an amount sufficient to repay the principal amount of the LIBO Rate Loans, the Letter of Credit Outstandings exceed the lesser of the then Aggregate Revolving Loan Commitment and the then current Borrowing Base plus the Overadvance Availability, Borrower shall deposit with the Agent cash and Discounted Treasuries in an amount equal to one hundred five percent (105%) of the amount by which Letters of Credit Outstandings exceed the lesser of the then Aggregate Revolving Loan Commitment and the then current Borrowing Base plus the Overadvance Availability, such collateral to be held by the Agent on Behalf of the Banks to reimburse the Issuing Bank for the amount of any Unpaid Drawings. Upon reduction of Letter of Credit Outstandings to an amount equal to the lesser of the then Aggregate Revolving Loan Commitment and the then current Borrowing Base plus the Overadvance Availability and if no Event of Default or Potential Default then exists, any such collateral held for reimbursement of Unpaid Drawings of Letters of Credit shall be released to Borrower. If Borrower sells or otherwise disposes of assets requiring a reduction in the Aggregate Revolving Loan Commitment pursuant to Section 2.7(c) hereof, Borrower shall use the proceeds of each such sale or disposition to prepay the Revolving Credit Loans, unless the Required Banks consent in writing to the waiver of this provision, such waiver being required for each sale or disposition. g. The first sentence of Section 3.5 is hereby amended to read as follows: The consolidated financial statements of Borrower and its Subsidiaries as of and for the nine (9) months ended September 30, 1996, consisting in each case of a balance sheet, a statement of operations, a statement of shareholders' equity, a statement of cash flows and accompanying footnotes, present fairly, in all material respects, the financial position, results of operations and cash flows of Borrower and its Subsidiaries as of the dates and for the periods referred to, in conformity with Generally Accepted Accounting Principles. h. Section 6.1 is hereby amended by the addition of the following subsection (k) at the end of such Section. (k) Additional Information during Overadvance Availability. Until the later of reduction of the Overadvance Availability to $0 and repayment of the Overadvance Amount (i) as soon as available but no later than twenty-five (25) Business Days after the end of each month, a consolidated balance sheet of Borrower and its Subsidiaries and related consolidated statements of operations, retained earnings and cash flows for such month and for the period from the beginning of such fiscal year to the end of such month, together with consolidating information, and a corresponding financial statement for the same periods in the preceding year certified by the Executive Vice President and Chief Financial Officer or the Vice President and Treasurer of Borrower as having been financial statements and weekly statement of cash flow will be in a form reasonably acceptable to the Agent. i. Section 6.11 is hereby amended by the addition, at the end of such Section of the following phrase: "and for the redemption of the Series 2D Senior Preferred Stock as and to the extent provided in the definition of "Excluded Transaction". j. Section 7.2 is hereby amended by deleting subsection (e) and replacing it with new (e) as follows: (e) the 1996 Senior Notes. k. Section 7.6 is hereby amended by the addition, at the end of such Section, of the following: ; provided, however, that no Investment otherwise permitted under any of the clauses (d), (e) or (f) above (other than an Investment not in excess of $300,000 in connection with a New York light rail transit proposal) shall be made after the Amendment Closing Date until the later of reduction of the Overadvance Availability to $0 and repayment of the Overadvance Amount. -3- l. Section 7.10 is hereby amended in its entirety so that such Section, as so amended, shall read as follows: 7.10 Modification of Indenture. Consent to or permit any amendment, modification or waiver of any material provision or term contained in (a) the Indenture dated as of January 11, 1994, as supplemented between Borrower and The Bank of New York, as Trustee, relating to the 12% Senior Subordinated Notes due 2003 issued by Borrower or (b) the Indenture dated as of December 20, 1996 between the Borrower, the guarantors named therein and The Bank of New York, as Trustee, relating to the 1996 Senior Notes unless, fifteen (15) days before consenting to or permitting such amendment, modification or waiver, Borrower shall furnish to the Agent and each of the Banks a certificate signed by the Executive Vice President and Chief Financial Officer or Vice President and Treasurer of Borrower certifying that, to the best of such officer's knowledge, after due inquiry, immediately after such amendment, modification or waiver, (i) Borrower has complied with all covenants, agreements and conditions in each Loan Document and each representation and warranty contained in each Loan Document is true and correct with the same effect as though each such representation and warranty had been made on the date of such certificate (except to the extent such representation or warranty related to a specific prior date), and (ii) no event has occurred and is continuing that constitutes an Event of Default or Potential Default. m. Article VIII is hereby amended in its entirety so that such Article, as so amended, shall read as follows: VIII. FINANCIAL COVENANTS Borrower covenants and agrees that, without the prior written consent of the Required Banks, from and after the date hereof and so long as the Revolving Loan Commitments are in effect or any Obligations remain unpaid or outstanding, Borrower will not: 8.1 Fixed Charge Coverage. Permit, as of the end of any fiscal quarter ending in the periods set forth below for the immediately preceding four fiscal quarters, the ratio of (i) EBITDA less Capital Expenditures plus Consolidated Lease Expenses of Borrower and its Subsidiaries, to (ii) Consolidated Fixed Charges for such period to be less than the ratio set forth opposite such period below: Fiscal Quarters Ending Amendment Closing Date through September 30, 1997 1.05:1.0 October 1, 1997 through June 30, 1998 1.20:1.0 8.2 Interest Coverage. Permit, as of the end of any fiscal quarter ending in the periods set forth below for the immediately preceding four fiscal quarters, the ratio of (i) EBITDA for such period to (ii) Consolidated Interest Expense for such period to be less than the ratio set forth opposite such period below: Test Period Amendment Closing Date through September 30, 1997 1.5:1.0 October 1, 1997 through June 30, 1998 1.75:1.0 8.3 Senior Funded Indebtedness to EBITDA. Permit the ratio of Senior Funded Indebtedness on the last day of any fiscal quarter to EBITDA as of such day for the immediately preceding four fiscal quarters to be greater than 2.5:1.0. 8.4 Indebtedness for Borrowed Money to Total Capitalization. Permit the ratio of Indebtedness for Borrowed Money to Total Capitalization on the last day of any fiscal quarter to be greater than .86:1.0: 8.5 Indebtedness for Borrowed Money to EBITDA. Permit the ratio of Indebtedness for Borrowed Money on the last day of any fiscal quarter ending in the periods set forth below to EBITDA as of such day for the immediately preceding four (4) fiscal quarters to be greater than the ratio set forth opposite such period below: -4- Test Period Amendment Closing Date through March 30, 1997 6.25:1.0 March 31, 1997 through June 30, 1997 6.00:1.0 July 1, 1997 through September 30, 1997 5.50:1.0 October 1, 1997 through December 31, 1997 5.00:1.0 January 1, 1998 through June 30, 1998 4.75:1.0 n. Exhibit A is hereby amended to read in the form attached hereto as Exhibit A. 2. Conditions Precedent. The Amendment to the Credit Agreement contained in Section 1 hereof shall be effective upon satisfaction of the following conditions precedent. (a) Evidence of Authorization. The Banks shall have received copies certified by the Secretary or Assistant Secretary of Borrower and each Subsidiary Guarantor of all corporate or other action taken by such party to authorize its execution and delivery and performance of this Amendment, the Security Agreement and the Loan Documents as amended hereby together with such other related papers as the Banks shall reasonably require; (b) Legal Opinions. The Banks shall have received a favorable written opinion of Crowell & Moring, Counsel for Borrower and the Subsidiary Guarantors, which shall be addressed to the Banks and be dated the date of the first Loan, in substantially the form attached as Exhibit E, and such other legal opinion or opinions as the Banks may reasonably request; (c) Notes. Each Bank shall have received an executed Note payable to the order of such Bank and otherwise in the form of Exhibit C hereto, in substitution for the Notes previously issued; (d) Documents. The Agent shall have received all certificates, instruments and other documents then required to be delivered pursuant to any Loan Documents, in each instance in form and substance reasonably satisfactory to the Agent and the Banks; (e) Other Agreements. Borrower and each Subsidiary Guarantor shall have executed and delivered each other Loan Document required hereunder; 3. Additional Conditions Precedent. Notwithstanding the satisfaction of the conditions set forth in Section 2 above, the amendment to the Credit Agreement contained in Subsections 1(c), (d), (e), (f) and (o) hereof shall not be effective until satisfaction of the following additional conditions precedent: (a) Issuance of 1996 Senior Notes. The Agent shall have received evidence in form and substance satisfactory to it that not less than $15,000,000 of the 1996 Senior Notes shall have been issued by the Company, which 1996 Senior Notes shall have terms satisfactory to each of the Banks in its sole discretion. 4. Representations and Warranties. The Borrower confirms the accuracy of the representations and warranties made in Article 3 of the Credit Agreement as of the date originally given and restates to the Banks such representations and warranties, as previously amended, on and as of the date hereof as if originally given on such date. 5. Covenants. (a) The Borrower warrants to the Banks that the Borrower is in compliance and have complied with all covenants, agreements and conditions in each Loan Document on and as of the date hereof, that no Potential Default or Event of Default has occurred and is continuing on the date hereof and that, upon the consummation of -5- the transactions contemplated hereby, no Potential Default or Event of Default shall have occurred and be continuing. (b) The Borrowers shall provide to the Agent and its representatives all requested access and assistance as shall be reasonably necessary for such due diligence review as the Agent shall determine is necessary or advisable, including without limitation a collateral audit. 6. Effect of Agreement. This Agreement amends the Loan Documents only to the extent and in the manner herein set forth, and in all other respects the Loan Documents are ratified and confirmed. 7. Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures hereto were upon the same instrument. 8. Governing Law. This Agreement and all rights and obligations of the parties hereunder shall be governed by and be construed and enforced in accordance with the laws of Pennsylvania without regard to principles of conflict of law. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures hereto were upon the same instrument. 8. Governing Law. This Agreement and all rights and obligations of the parties hereunder shall be governed by and be construed and enforced in accordance with the laws of Pennsylvania without regard to principles of conflict of law. IN WITNESS WHEREOF, Borrower and the Banks have caused this Agreement to be executed by their proper corporate officers thereunto duly authorized as of the day and year first above written.
ICF KAISER INTERNATIONAL, INC. By: /s/ Richard K. Nason Title: Executive Vice President and Chief Financial Officer CLEMENT INTERNATIONAL CYGNA GROUP, INC. HENRY J. KAISER COMPANY CORPORATION By: /s/ Richard K. Nason By: /s/ Richard K. Nason By: /s/ Richard K. Nason Title: Treasurer Title: Treasurer Title: Assistant Treasurer EXCELL DEVELOPMENT ICF INFORMATION ICF INCORPORATED CONSTRUCTION, INC. TECHNOLOGY, INC. By: /s/ Richard K. Nason By: /s/ Richard K. Nason By: /s/ Richard K. Nason Title: Assistant Treasurer Title: Assistant Treasurer Title: Assistant Treasurer
-6- ICF KAISER ENGINEERS ICF KAISER ENGINEERS ICF KAISER ENGINEERS CORPORATION (CALIFORNIA) CORPORATION MASSACHUSETTS, INC. By: /s/ Richard K. Nason By: /s/ Richard K. Nason By: /s/ Richard K. Nason Title: Treasurer Title: Assistant Treasurer Title: Treasurer ICF KAISER ENGINEERS ICF KAISER GOVERNMENT ICF KAISER ENGINEERS, INC. GROUP, INC. PROGRAMS, INC. By: /s/ Richard K. Nason By: /s/ Richard K. Nason By: /s/ Richard K. Nason Title: Treasurer Title: Treasurer Title: Treasurer ICF KAISER HOLDINGS ICF KAISER HANFORD COMPANY ICF RESOURCES UNLIMITED, INC. By: /s/ Paul Weeks, II INCORPORATED By: /s/ Richard K. Nason Title: Assistant Secretary By: /s/ Richard K. Nason Title: Assistant Treasurer Title: Assistant Treasurer ICF LEASING CORPORATION, KE SERVICES CORPORATION KE LIVERMORE, INC. INC. By: /s/ Richard K. Nason By: /s/ Richard K. Nason By: /s/ Richard K. Nason Title: Treasurer Title: Treasurer Title: Assistant Treasurer KAISER ENGINEERS AND KAISER ENGINEERS CYGNA CONSULTING CONSTRUCTORS, INC. INTERNATIONAL, INC. ENGINEERS & PROJECT By: /s/ Richard K. Nason By: /s/ Richard K. Nason MANAGEMENT, INC. Title: Treasurer Title: Treasurer By: /s/ Richard K. Nason Title: Treasurer TUDOR ENGINEERING COMPANY PCI OPERATING COMPANY, INC. SYSTEMS APPLICATIONS By: /s/ Richard K. Nason By: /s/ Richard K. Nason INTERNATIONAL, INC. Title: Treasurer Title: Treasurer By: /s/ Richard K. Nason Title: Treasurer CORESTATES BANK, N.A. BHF-BANK AKTIENGESELLSCHAFT SIGNET BANK By: /s/ John D. Brady By: Linda Pace By: Brian Haggerty Title: Assistant Vice President Title: Assistant Vice President Title: Vice President By: Elmer Cantos Title: Vice President
-7- EX-10.B.3 19 EXHIBIT 10(B)(3) Exhibit No. 10(b)(3) Amendments to the ICF Kaiser International, Inc. Employee Stock Ownership Plan . The procedure for voting ICF Kaiser stock held under the Plan is clarified to provide that each participant may instruct the Trustee how to vote shares allocated to the participant's account and, if no instructions are received, the Committee will direct the Trustee how to vote the uninstructed shares. . The Plan Year is changed to the calendar year. . The Trustee is changed to Vanguard Fiduciary Trust Company. NOW, THEREFORE, BE IT RESOLVED that the Plans be and hereby are amended, as follows, effective as of March 1, 1995, except as otherwise provided herein: 1. Sections 1.2 and 1.35 are amended by substituting "December" for "February", and by adding at the end of Section 1.35: There shall be a short Plan Year beginning March 1, 1995 and ending December 31, 1995. 2. A new Section 1.36 is added, effective December 12, 1994, and Sections 1.36 through 1.48 are renumbered accordingly, to provide: 1.36 "Qualified Military Service" shall mean qualified military service as defined in (S)414(u) of the Code. 3. Section 1.47 is amended, effective August 31, 1995, by substituting "Vanguard Fiduciary Trust Company" for the named individual trustees. 4. Section 1.48 is deleted in its entirety, and the following language is substituted therefor, effective August 31, 1995: 1.48 "Valuation Date" shall mean the most current date with respect to which the Trustee determines the fair value of the assets comprising the Trust or any portion thereof, in accordance with the Trustee's procedures, as they may be amended from time to time, provided, however, that a Valuation Date shall occur at least once per Plan Year. Under current procedures, a Valuation Date generally occurs on each business day of the Trustee. 5. A new Section 2.7 is added, effective December 12, 1994, to provide as follows: 2.7 Qualified Military Service. Notwithstanding any provision of this Plan to -------------------------- the contrary, contributions, benefits and service credit with respect to Qualified Military Service will be provided in accordance with (S)414(u) of the Code. 6. Section 4.1 is amended by adding at the end thereof: When a contribution is made in a form other than cash, until such contribution is reduced to cash, a Participant's Account shall contain an allocable share of such contribution, provided that an allocation of Company Stock shall be in whole shares, with the value of any fractional shares to be allocated in cash. 7. Section 7.1 is amended by deleting the phrase "including fractional shares" in the first sentence thereof. 8. Section 7.3 is amended by adding the following language at the end thereof: Notwithstanding any other provision of the Plan, the Trustee may credit the contribution for a Plan Year as of the date such contribution is actually received by the Trustee, subject to any required approval by the Internal Revenue Service. 9. Section 8.4(a) is amended, effective August 31, 1995, by deleting the second sentence thereof and substituting the following language therefor: The Vested portion of a Participant's Account shall be computed as soon as practicable after receipt of authorized distribution instructions, as of the applicable Valuation Date under the Trustee's procedures, as they may be amended from time to time, provided that the Participant's Vested benefit may not be paid without the written consent of the Participant and his spouse, if any, if the present value of his accrued benefit exceeds, or at the time of any prior distribution exceeded, $3,500. 10. Section 9.7 is amended by deleting the last sentence of subsection (a) thereof and substituting the following therefor: In the absence of receipt of such written direction from the Participant with respect to any such shares within 3 business days before the exercise of any shareholder rights, the Committee, in its sole discretion, shall direct the Trustee how to vote such shares, and the Trustee shall vote such shares in accordance with the directions of the Committee. 11. Section 9.7(d) is deleted in its entirety and the following language is substituted therefor: To the extent required by the Department of Labor Regulations under (S) 404(c), each Participant shall be entitled to direct the exercise of rights other than voting rights (such as, for example, acceptance or rejection of a tender offer or a conversion privilege) with respect to Company Stock in his Account in the same manner as prescribed in this Section. In the absence of receipt of such written direction from the Participant with respect to any such shares within 3 business days before the exercise of any shareholder rights, the Committee, in its sole discretion, shall direct the Trustee how to exercise such shareholder rights and the Trustee shall exercise such shareholder rights shares in accordance with the directions of the Committee. EX-10.D.3 20 EXHIBIT 10(D)(3) Exhibit No. 10(d)(3) Amendments to the ICF Kaiser International, Inc. Retirement Plan . The procedure for voting ICF Kaiser stock held under the Plan is clarified to provide that (a) the Committee will instruct the Trustee how to vote ICF Kaiser stock that is not subject to the participant's investment election, and (b) the participant may instruct the Trustee how to vote shares allocated to the participant's account that are subject to his investment election and, if no instructions are received, the Committee will direct the Trustee how to vote the uninstructed shares. . The Plan Year is changed to the calendar year. . The Trustee is changed to Vanguard Fiduciary Trust Company. NOW, THEREFORE, BE IT RESOLVED that the Plans be and hereby are amended, as follows, effective as of March 1, 1995, except as otherwise provided herein: 1. Sections 1.2 and 1.36 are amended by substituting "December" for "February", and by adding at the end of Section 1.36: There shall be a short Plan Year beginning March 1, 1995 and ending December 31, 1995. 2. A new Section 1.38 is added, effective December 12, 1994, and Sections 1.38 through 1.49 are renumbered accordingly, to provide: 1.38 "Qualified Military Service" shall mean qualified military service as defined in (S) 414(u) of the Code. 3. Section 1.48 is amended, effective August 31, 1995, by substituting "Vanguard Fiduciary Trust Company" for "U.S. Trust Company of California, N.A." 4. Section 1.49 is deleted in its entirety, and the following language is substituted therefor, effective August 31, 1995: 1.49 "Valuation Date" shall mean the most current date with respect to which the Trustee determines the fair value of the assets comprising the Trust or any portion thereof, in accordance with the Trustee's procedures, as they may be amended from time to time, provided, however, that a Valuation Date shall occur at least once per Plan Year. Under current procedures, a Valuation Date generally occurs on each business day of the Trustee. 5. Section 2.1 is amended by adding the following sentence at the end thereof: For purposes of the Plan Year beginning March 1, 1995 and ending on December 31, 1995, the 1,000 Hours of Service requirement shall be satisfied by completion of 648 Hours of Service. 6. A new Section 2.7 is added, effective December 12, 1994, to provide as follows: 2.7 Qualified Military Service. Notwithstanding any provision of this Plan to -------------------------- the contrary, contributions, benefits and service credit with respect to Qualified Military Service will be provided in accordance with (S) 414(u) of the Code. 7. Section 3.6 is amended by adding the following language at the end thereof: For purposes of the Plan Year beginning March 1, 1995 and ending on December 31, 1995, a Participant shall be credited with a Year of Service if his Period of Service includes December 31, 1995. 8. Section 4.1 is amended by deleting the last sentence thereof and substituting the following language therefor: When a contribution is made in a form other than cash, until such contribution is reduced to cash, a Participant's Account shall contain an allocable share of such contribution, provided that an allocation of Company Stock shall be in whole shares, with the value of any fractional shares to be allocated in cash. For purposes of the Plan Year beginning March 1, 1995 and ending December 31, 1995, a Participant shall satisfy the 1,000 Hours of Service requirement if he has completed 648 Hours of Service. 9. Section 4.4 is amended by adding the following language at the end thereof: For purposes of the Plan Year beginning March 1, 1995 and ending December 31, 1995, the limits under (S) 415 shall be pro-rated as required under the applicable regulations. 10. Section 6.1 is deleted in its entirety and the following language is substituted therefor: Participants may direct the investment of assets in their Account in specific investments that have been approved by the Committee, in accordance with procedures provided by the Trustee and authorized by the Committee, except for assets that have been contributed in a form other than cash, and have not been reduced to cash. Participants' Accounts shall be invested as directed by each Participant in Directed Investment Sub-Accounts, which shall be charged or credited as appropriate with the net earnings, gains, losses and expenses as well as appreciation or depreciation in market value during each Plan Year attributable to such Sub-Accounts. Such amounts shall not be considered in determining Trust gains or losses, apart from such Sub-Accounts. 11. Section 6.2 is amended by deleting the first sentence thereof and substituting the following language therefor: A Participant may notify the Committee in writing on such form and in such manner as determined by the Committee that he elects to have that portion of his Account available for investment direction invested in whole shares of the stock of the Company, to be held under the Plan in the ICF Stock Fund, and the Committee shall direct the Trustee to invest such portion accordingly at such time and on such terms as the Committee may determine. 12. Section 7.1 is amended by deleting the phrase "including fractional shares" and by adding the following language at the end thereof: For purposes of the Plan Year beginning March 1, 1995 and ending December 31, 1995, a Participant who has completed 648 Hours of Service shall satisfy the 1,000 Hours of Service requirement. 13. Section 7.2 is amended by adding the following language at the end thereof: Notwithstanding any other provision of the Plan, the Trustee may credit the contribution for a Plan Year as of the date such contribution is actually received by the Trustee, subject to any required approval by the Internal Revenue Service. 14. Section 7.6(b) is amended, effective August 31, 1995, by deleting the phrase "allocated to his Account for" and substituting therefor "contributed to his Account during". 15. Section 8.4(a) is amended by deleting the second sentence thereof and substituting the following language therefor, to be effective August 31, 1995: The Vested portion of a Participant's Account shall be computed as soon as practicable after receipt of authorized distribution instructions, as of the applicable Valuation Date under the Trustee's procedures, as they may be amended from time to time. 16. Section 8.10(c) is amended by adding the following language at the end thereof: The Committee may delegate to the Trustee the function of approval of loans, in accordance with the terms of the Plan. 17. Section 8.10(d) is amended by adding the following language to the end thereof: To the extent allowable by law, loans shall not be granted to any Participant or his Beneficiary that provide for a repayment period extending beyond such Participant's Normal Retirement Date. Loan repayments will be suspended under the Plan as permitted under (S) 414(u)(4). 18. Section 9.7 is deleted in its entirety and the following language is substituted therefor: (a) Company Stock Not Allocated to a Participant's Directed Investment Sub- ---------------------------------------------------------------------- Account. With respect to Company Stock that is not allocated to a ------- Participant's Directed Investment Sub-Account, the Committee, in its sole discretion, shall direct the Trustee how to exercise all shareholder rights, including, but not limited to, voting and the acceptance or rejection of a tender offer, and the Trustee shall vote such shares in accordance with the directions of the Committee. (b) Company Stock Allocated to a Participant's Directed Investment Sub- -------------------------------------------------------------------- Account. A Participant (or Beneficiary) shall have the right to direct the ------- Trustee to take or refrain from taking any shareholder action, including but not limited to, voting and the acceptance or rejection of a tender offer, with respect to the shares of Company Stock allocated to the Participant's Directed Investment Sub-Account. In the absence of receipt of written direction from the Participant within 3 business days prior to the exercise of such shareholder rights, the Committee, in its sole discretion, shall direct the Trustee how to exercise such shareholder rights and the Trustee shall exercise such shareholder rights in accordance with the directions of the Committee. The Committee shall notify the Participants in writing of each occasion for the exercise of voting rights as soon as practicable, and generally not less than 30 days, before such rights are to be exercised. Such notification shall include all the information that the Corporation distributes to shareholders regarding the exercise of such rights. EX-10.N 21 EXHIBIT 10(N) Exhibit No. 10(n) United States of America Department of Energy Richland Operations Office P.O. Box 550 Richland, Washington 99352 96-PRO-596 Mr. R. E. Tiller, General Manager ICF Kaiser Hanford Company Richland, Washington Dear Mr. Tiller: CONTRACT DE-AC06-93RL12359, TERMINATION FOR CONVENIENCE OF THE GOVERNMENT Pursuant to Clause 1.b. of the Assignment Agreement for Contract No. DE- AC06-93RL12359, RL has retained sole termination rights for your contract. You are hereby notified that effective midnight on September 30, 1996, the subject contract with ICF Kaiser Hanford Company is terminated in whole for the convenience of the Government. The administration of any termination claim or settlement will be performed by WHC as part of the closeout effort. If you have any questions on this decision, please call me or your staff may contact Bill Kellogg at 376-7489 Sincerely, /s/ John D. Wagoner John D. Wagoner Manager PRO:AWK cc: H.J. Hatch, FDH S.J. Morgan, WHC EX-10.Q.3 22 EXHIBIT 10(Q)(3) Exhibit No. 10(q)(3) Amendments to the ICF Kaiser International, Inc. Section 401(k) Plan . The procedure for voting ICF Kaiser stock held under the Plan is clarified to provide that each participant may instruct the Trustee how to vote shares allocated to the participant's account and, if no instructions are received, the Committee will direct the Trustee how to vote the uninstructed shares. NOW, THEREFORE, BE IT RESOLVED that the Plans be and hereby are amended, as follows, effective as of March 1, 1995, except as otherwise provided herein: 1. A new Section 1.33 is added, effective December 12, 1994, and Sections 1.33 through 1.43 are renumbered accordingly, to provide: 1.33 "Qualified Military Service" shall mean qualified military service as defined in (S)414(u) of the Code. 2. A new Section 2.6 is added, effective December 12, 1994, to provide as follows: 2.6 Qualified Military Service. Notwithstanding any provision of this Plan to -------------------------- the contrary, contributions, benefits and service credit with respect to Qualified Military Service will be provided in accordance with (S)414(u) of the Code. 3. Section 4.10 is amended, effective January 1, 1995, by adding the following Section 4.10(c): (c) Excess Deferrals. To the extent necessary to comply with the limits set ---------------- forth in Sections 4.7 and 4.8 of the Plan, Matching Contributions shall be forfeited. Such forfeited amounts shall be used to reduce the Company's future contributions to the Plan. 4. Section 8.5(c)(3) is amended, effective December 12, 1994, by adding the following to the end thereof: Loan repayments will be suspended under the Plan as permitted under (S)414(u)(4). 5. Section 9.7 is deleted in its entirety and the following language is substituted therefor: 9.7 Shareholder Rights. ------------------ (a) Voting Rights. The Committee shall exercise all voting powers granted to ------------- the Trust through ownership of Company Stock, except with respect to Company Stock allocated to Participant's Accounts. All shares of Company Stock allocated to a Participant's Account shall be voted by the Trustee in accordance with the written direction of the Participant. In the absence of receipt of such written direction from the Participant with respect to any such shares within 3 business days before the exercise of any shareholder rights, the Committee shall direct the Trustee how to vote such allocated but uninstructed shares and the Trustee shall vote such shares in accordance with the directions of the Committee. (b) Notification. The Committee shall notify the Participants in writing of ------------ each occasion for the exercise of voting rights as soon as practicable, and generally not less than 30 days, before such rights are to be exercised. Such notification shall include all the information that the Corporation distributes to shareholders regarding the exercise of such rights. (c) Other Shareholder Rights. To the extent required by the Department of ------------------------ Labor regulations under (S)404(c) of ERISA, each Participant shall be entitled to direct the exercise of rights other than voting rights (such as, for example, a tender offer or conversion privilege) with respect to Company Stock in his Account in the same manner as prescribed in this Section. In the absence of receipt of such written direction from the Participant within 3 business days prior to the exercise of such shareholder rights, the Committee, in its sole discretion, shall direct the Trustee how to exercise such shareholder rights and the Trustee shall exercise such shareholder rights in accordance with the directions of the Committee. EX-12 23 EXHIBIT 12 Exhibit No. 12 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES COMPUTATION OF EARNINGS TO FIXED CHARGES (Unaudited) The computations of the ratio of earnings to fixed charges for the nine months ended September 30, 1996 and 1995, for the ten months ended December 31, 1995, and for the years ended February 28 or 29, 1995, 1994, 1993 and 1992 are set forth below (in thousands except ratio). In the years ended February 29, 1992 and February 28, 1994, income from continuing operations before fixed charges and income taxes (Earnings) were inadequate to cover fixed charges. The deficiencies were $54.3 million and $12.9 million for the years ended February 29, 1992 and February 28, 1994, respectively.
Nine Months Ended Ten Months September 30, Ended Year Ended February 28 or 29, ------------------------------ December 31, ----------------------------------------------- 1996 1995 1995 1995 1994 1993 ------------- -------------- -------------- -------------- --------------- --------------- Income before income taxes, minority interests, and extraordinary item $ 9,285 $ 2,542 $ 6,303 $ 1,239 $ (12,877) $ 14,894 Less: Minority interest of fifty- percent-owned subsidiary (4,725) (1,315) (1,960) - - - ------------- -------------- -------------- -------------- --------------- --------------- Income before income taxes and extraordinary item and after minority interest of fifty-percent-owned subsidiary 4,560 1,227 4,343 1,239 (12,877) 14,894 ------------- -------------- -------------- -------------- --------------- --------------- Fixed charges: Interest expense 12,829 12,117 13,255 14,799 8,212 8,629 Interest factor in rental expense 7,865 7,537 8,317 10,392 10,278 10,522 ------------- -------------- -------------- -------------- --------------- --------------- Total fixed charges 20,694 19,654 21,572 25,191 18,490 19,151 ------------- -------------- -------------- -------------- --------------- --------------- Earnings $ 25,254 $ 20,881 $ 25,915 $ 26,430 $ 5,613 $ 34,045 ============= ============== ============== ============== =============== =============== Earnings to fixed charges 1.2 1.1 1.2 1.0 N/A 1.8 ============= ============== ============== ============== =============== =============== Year Ended February 28 or 29, ---------------------------- 1992 ---------------------------- Income before income taxes, minority interests, and extraordinary item $ (54,310) Less: Minority interest of fifty- percent-owned subsidiary - -------------- Income before income taxes and extraordinary item and after minority interest of fifty-percent-owned subsidiary (54,310) -------------- Fixed charges: Interest expense 10,778 Interest factor in rental expense 10,861 -------------- Total fixed charges 21,639 -------------- Earnings $ (32,671) ============== Earnings to fixed charges N/A ==============
EX-21 24 EXHIBIT 21 Exhibit No. 21 CONSOLIDATED SUBSIDIARIES OF ICF KAISER INTERNATIONAL, INC.
JURISDICTION ENTITY NAME OF FORMATION - ------------------------------------------------------------------------------------------------------- I. Clement International Corporation Delaware I. Cygna Group, Inc. Delaware II. Liability Risk Management, Inc. California I. ICF Cannon Associates, Inc. Delaware I. ICF Consulting Associates, Inc. Delaware I. ICF Incorporated Delaware I. ICF Information Technology, Inc. Delaware II. Phase Linear Systems Incorporated Delaware I. ICF Kaiser Development Corporation, Inc. Delaware II. Global Trade & Investment, Inc. Delaware I. ICF Kaiser Engineers Group, Inc. Delaware II. Henry J. Kaiser Company Nevada II. ICF Florida First, Inc. Delaware II. ICF Kaiser Engineers, Inc. Ohio III. ICF Kaiser Engineers (California) Corporation Delaware III. ICF Kaiser Engineers Corporation New York III. ICF Kaiser Engineers of Michigan, Inc. Michigan III. ICF Kaiser International Planning & Design, Inc. Pennsylvania III. ICF Kaiser Mound, LLC (99.9%) Ohio III. ICF Kaiser Remediation Company Delaware III. Kaiser Engineers Australia Pty. Limited (50%) Australia IV. ICF Kaiser Aluterv Hungary IV. ICF Kaiser Cayman Islands, Ltd. (99.9%) Cayman Islands IV. Kaiser Engineers (NZ) Ltd (99%) New Zealand III. Kaiser Engineers and Constructors, Inc. Nevada IV. ICF Pty. Ltd. (50%) Australia IV. Kaiser Engineers Limited (0.02%) U.K. IV. Kaiser Engineers Australia Pty. Limited (50%) Australia IV. Kaiser Engenharia de Portugal Limitada (50%) Portugal V. ICF Kaiser Cayman Islands, Ltd. (0.1%) Cayman Islands IV. Kaiser Engineers (NZ) Ltd (1%) New Zealand IV. Kaiser Engineers Pty. Ltd. (50%) Australia IV. Kaiser Ingenieria de Chile Limitada (51%) Chile III. Kaiser Engineers International, Inc. Nevada IV. ICF Pty. Ltd. (50%) Australia IV. Kaiser Engenharia de Portugal Limitada (50%) Portugal IV. Kaiser Engineers Pty. Ltd. (50%) Australia IV. Kaiser Ingenieria de Chile Limitada (49%) Chile III. Kaiser Engineers Limited (99.98%) U.K. IV. Kaiser Engineers Technical Services Limited (80%) Cyprus IV. Kaiser Engineers (UK) Limited (50%) U.K.
-Page 1 of 2- Current as of January 1, 1997 III. Kaiser Engineers (UK) Limited (50%) U.K. IV. Kaiser Engineers Technical Services Limited (20%) Cyprus III. Kaiser Engenharia e Constructoes Limitada Brazil III. KE, Inc. Philippines III. ICF Kaiser Engineers & Builders, Inc. Delaware III. KE Services Corporation Delaware III. La Compagnie Henry J. Kaiser Company (Canada) Ltee. Canada III. ICF Kaiser Overseas Engineering, Inc. Delaware III. PCI Operating Company, Inc. Delaware II. ICF Technology Incorporated Delaware II. International Waste Energy Systems, Inc. Delaware II. KE Livermore, Inc. Delaware I. ICF Kaiser Engineers Massachusetts, Inc. Delaware I. ICF Kaiser/Georgia Wilson, Inc. Delaware I. ICF Kaiser Government Programs, Inc. Delaware II. Kaiser-Hill Company, LLC (50%) Colorado I. ICF Kaiser Hanford Company Delaware I. ICF Kaiser Holdings Unlimited, Inc. Delaware II. American Venture Investments Incorporated Delaware III. American Venture Holdings, Inc. Delaware II. Cygna Consulting Engineers and Project Management, Inc. California II. Excell Development Construction, Inc. Delaware III. International Systems, Inc. Colorado II. ICF Kaiser Engineers Eastern Europe, Inc. Delaware III. ICF Kaiser Netherlands B.V. (10%) Netherlands II. ICF Kaiser Netherlands B.V. (90%) Netherlands II. ICF Leasing Corporation, Inc. Delaware I. ICF Kaiser Mound (Ohio), Inc. Ohio I. ICF Kaiser Mound, LLC (0.1%) Ohio I. ICF Kaiser Panama S.A. Panama I. ICF Kaiser Servicios Ambientales, S.A. de C.V. Mexico I. ICF Kaiser Systems, Inc. Delaware I. ICF Resources Incorporated Delaware II. HBG Hawaii, Inc. Delaware II. HBG International, Inc. Delaware I. Kaiser Engineers Pacific, Inc. Nevada I. Monument Select Insurance Company Vermont I. Systems Applications, Inc. Nevada I. Systems Applications International, Inc. Delaware I. Tudor Engineering Company Delaware
-Page 2 of 2- Current as of December 31, 1996 EX-23.A 25 EXHIBIT 23(A) EXHIBIT 23(a) CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the inclusion in this Registration Statement on Form S-1 of our report dated March 8, 1996, except for Note 1, as to which the date is January 7, 1997, on our audits of the financial statements and the financial statement schedule of ICF Kaiser International, Inc. We also consent to the reference to our firm under the caption "Experts". Coopers & Lybrand L.L.P. Washington, D.C. January 7, 1997 EX-25 26 EXHIBIT 25 Exhibit 25 CONFORMED COPY ================================================================================ FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) [_] ---------------------- THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (State of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) 48 Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) ---------------------- ICF KAISER INTERNATIONAL, INC. (Exact name of obligor as specified in its charter) Delaware 54-1437073 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) and Subsidiary Guarantors Cygna Consulting Engineers and Project Management, Inc. ICF Kaiser Government Programs, Inc. PCI Operating Company, Inc. Systems Applications International, Inc. (Exact names of registrants as specified in their respective charters) California 94-2278222 Delaware 54-1761768 Delaware 54-1589711 Delaware 54-1770848 (State of incorporation) (I.R.S. employer identification number) 9300 Lee Highway Fairfax, Virginia 22031 (Address of principal executive offices) (Zip code) ---------------------- 12% Senior Notes due 2003, Series B (Title of the indenture securities) ================================================================================ 1. General information. Furnish the following information as to the Trustee: (a) Name and address of each examining or supervising authority to which it is subject. - -------------------------------------------------------------------------------- Name Address - -------------------------------------------------------------------------------- Superintendent of Banks of the State of 2 Rector Street, New York, New York N.Y. 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York (b) Whether it is authorized to exercise corporate trust powers. Yes. 2. Affiliations with Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. None. (See Note on page 3.) 16. List of Exhibits. Exhibits identified in parentheses below, on file with the Commission, are incorporated herein by reference as an exhibit hereto, pursuant to Rule 7a-29 under the Trust Indenture Act of 1939 (the "Act") and Rule 24 of the Commission's Rules of Practice. 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) -2- 6. The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.) 7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. NOTE Inasmuch as this Form T-1 is filed prior to the ascertainment by the Trustee of all facts on which to base a responsive answer to Item 2, the answer to said Item is based on incomplete information. Item 2 may, however, be considered as correct unless amended by an amendment to this Form T-1. -3- SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 3rd day of January, 1997. THE BANK OF NEW YORK By: /S/ BYRON MERINO ------------------------ Name: BYRON MERINO Title: ASSISTANT TREASURER -4- Exhibit 7 - -------------------------------------------------------------------------------- Consolidated Report of Condition of THE BANK OF NEW YORK of 48 Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business September 30, 1996, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts ASSETS in Thousands Cash and balances due from depos- itory institutions: Noninterest-bearing balances and currency and coin..................... $ 4,404,522 Interest-bearing balances............... 732,833 Securities: Held-to-maturity securities............. 789,964 Available-for-sale securities........... 2,005,509 Federal funds sold in domestic offices of the bank: Federal funds sold...................... 3,364,838 Loans and lease financing receivables: Loans and leases, net of unearned income .....................28,728,602 LESS: Allowance for loan and lease losses ..................584,525 LESS: Allocated transfer risk reserve............................429 Loans and leases, net of unearned income, allowance, and reserve........ 28,143,648 Assets held in trading accounts........... 1,004,242 Premises and fixed assets (including capitalized leases)..................... 605,668 Other real estate owned................... 41,238 Investments in unconsolidated subsidiaries and associated companies............................... 205,031 Customers' liability to this bank on acceptances outstanding................. 949,154 Intangible assets......................... 490,524 Other assets.............................. 1,305,839 ----------- Total assets.............................. $44,043,010 =========== LIABILITIES Deposits: In domestic offices..................... $20,441,318 Noninterest-bearing ...........8,158,472 Interest-bearing .............12,282,846 In foreign offices, Edge and Agreement subsidiaries, and IBFs........ 11,710,903 Noninterest-bearing ..............46,182 Interest-bearing .............11,664,721 Federal funds purchased in domestic offices of the bank: Federal funds purchased................. 1,565,288 Demand notes issued to the U.S. Treasury................................ 293,186 Trading liabilities....................... 826,856 Other borrowed money: With original maturity of one year or less............................... 2,103,443 With original maturity of more than one year.............................. 20,766 Bank's liability on acceptances exe- cuted and outstanding................... 951,116 Subordinated notes and debentures......... 1,020,400 Other liabilities......................... 1,522,884 ----------- Total liabilities......................... 40,456,160 ----------- EQUITY CAPITAL Common stock.............................. 942,284 Surplus................................... 525,666 Undivided profits and capital reserves................................ 2,129,376 Net unrealized holding gains (losses) on available-for-sale securities.............................. ( 2,073) Cumulative foreign currency transla- tion adjustments........................ ( 8,403) ----------- Total equity capital...................... 3,586,850 ----------- Total liabilities and equity capital ................................ $44,043,010 ===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the above- named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Robert E. Keilman We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. J. Carter Bacot Thomas A. Renyi Directors Alan R. Griffith - -------------------------------------------------------------------------------- EX-99.A 27 EXHIBIT 99(A) Exhibit 99(a) THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON ________, 1997, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE. ICF KAISER INTERNATIONAL, INC. 9300 Lee Highway Fairfax, Virginia 22031 LETTER OF TRANSMITTAL To Exchange 12% Senior Notes due 2003, Series A, For 12% Senior Notes due 2003, Series B, That Have Been Registered Under the Securities Act of 1933, As Amended Exchange Agent: BANKERS TRUST COMPANY --------------------- To: Bankers Trust Company -------------------------- Facsimile Transmission: (212) 250-6961 or (212) 250-6392 Confirm by telephone to: (800) 735-7777 By Mail: Bankers Trust Company Corporate Trust and Agency Group Reorganization Department P.O. Box 1458 Church Street Station New York, New York 10008-1458 By Hand/Overnight Delivery: Bankers Trust Company Receipt & Delivery Window 123 Washington Street, 1st Floor New York, New York 10006 DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION VIA A FACSIMILE NUMBER OTHER THAN ONE LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. The undersigned acknowledges receipt of the Prospectus dated _______, 1997 (the "Prospectus") of ICF Kaiser International, Inc., a Delaware corporation (the "Company"), and this Letter of Transmittal for 12% Senior Notes due 2003, Series A, which may be amended from time to time (this "Letter"), which together constitute the Company's offer (the "Exchange Offer") to exchange $1,000 principal amount of its 12% Senior Notes due 2003, Series B (the "Exchange Notes"), for each $1,000 in principal amount of its outstanding 12% Senior Notes due 2003, Series A (the "Old Notes"), that were issued and sold in a transaction exempt from registration under the Securities Act of 1933, as amended (the "Securities Act"). The undersigned has completed, executed and delivered this Letter to indicate the action he or she desires to take with respect to the Exchange Offer. All holders of Old Notes who wish to tender their Old Notes must, prior to the Expiration Date: (1) complete, sign, date and deliver this Letter, or a facsimile thereof, to the Exchange Agent, in person or to the address set forth above; and (2) tender his or her Old Notes or, if a tender of Old Notes is to be made by book-entry transfer to the account maintained by the Exchange Agent at The Depository Trust Company (the "Book-Entry Transfer Facility"), confirm such book-entry transfer (a "Book-Entry Confirmation"), in each case in accordance with the procedures for tendering described in the instructions to this Letter. Holders of Old Notes whose certificates are not immediately available, or who are unable to deliver their certificates or Book-Entry Confirmation and all other documents required by this Letter to be delivered to the Exchange Agent on or prior to the Expiration Date, must tender their Old Notes according to the guaranteed delivery procedures set forth under the caption "The Exchange Offer - - - How to Tender" in the Prospectus. (See Instruction 1). Upon the terms and subject to the conditions of the Exchange Offer, the acceptance for exchange of Old Notes validly tendered and not withdrawn and the issuance of the Exchange Notes will be made on the Exchange Date. For the purposes of the Exchange Offer, the Company shall be deemed to have accepted for exchange validly tendered Old Notes when, as and if the Company has given written notice thereof to the Exchange Agent. The Instructions included with this Letter must be followed in their entirety. Questions and requests for assistance or for additional copies of the Prospectus or this Letter may be directed to the Exchange Agent, at the address listed above, or to Paul Weeks, II, Senior Vice President, General Counsel and Secretary of the Company, 9300 Lee Highway, Fairfax, Virginia 22031, at (703) 934-3600. -2- PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL, INCLUDING THE INSTRUCTIONS TO THIS LETTER, CAREFULLY BEFORE CHECKING ANY BOX BELOW Capitalized terms used in this Letter and not defined herein shall have the respective meanings ascribed to them in the Prospectus. List in Box 1 below the Old Notes of which you are the holder. If the space provided in Box 1 is inadequate, list the certificate numbers and principal amount of Old Notes on a separate signed schedule and affix that schedule to this Letter. BOX 1 TO BE COMPLETED BY ALL TENDERING HOLDERS ---------------------------------------- Principal Name(s) and Address(es) of Amount of Registered Holder(s) Certificate Principal Amount Old Notes (Please fill in if blank) Number(s) (1) of Old Notes Tendered (2) - -------------------------- ------------- ---------------- ------------ Totals: (1) Need not be completed if Old Notes are being tendered by book-entry transfer. (2) Unless otherwise indicated, the entire principal amount of Old Notes represented by a certificate or Book-Entry Confirmation delivered to the Exchange Agent will be deemed to have been tendered. -3- Ladies and Gentlemen: Upon the terms and subject to the conditions of the Exchange Offer, the undersigned tenders to the Company the principal amount of Old Notes indicated above. Subject to, and effective upon, the acceptance for exchange of the Old Notes tendered with this Letter, the undersigned exchanges, assigns and transfers to, or upon the order of, the Company all right, title and interest in and to the Old Notes tendered. The undersigned constitutes and appoints the Exchange Agent as his or her agent and attorney-in-fact (with full knowledge that the Exchange Agent also acts as the agent of the Company) with respect to the tendered Old Notes, with full power of substitution, to: (a) deliver certificates for such Old Notes; (b) deliver Old Notes and all accompanying evidence of transfer and authenticity to or upon the order of the Company upon receipt by the Exchange Agent, as the undersigned's agent, of the Exchange Notes to which the undersigned is entitled upon the acceptance by the Company of the Old Notes tendered under the Exchange Offer; and (c) receive all benefits and otherwise exercise all rights of beneficial ownership of the Old Notes, all in accordance with the terms of the Exchange Offer. The power of attorney granted in this paragraph shall be deemed irrevocable and coupled with an interest. The undersigned hereby represents and warrants that he or she has full power and authority to tender, exchange, assign and transfer the Old Notes tendered hereby and that the Company will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim. The undersigned will, upon request, execute and deliver any additional documents deemed by the Company to be necessary or desirable to complete the assignment and transfer of the Old Notes tendered. The undersigned agrees that acceptance of any tendered Old Notes by the Company and the issuance of Exchange Notes (together with the guarantees of the Subsidiary Guarantors (as defined in the Prospectus) with respect thereto) in exchange therefor shall constitute performance in full by the Company of its obligations under the Registration Rights Agreement (as defined in the Prospectus) and that, upon the issuance of the Exchange Notes, the Company will have no further obligations or liabilities thereunder (except in certain limited circumstances). By tendering Old Notes, the undersigned certifies (a) that it is not an "affiliate" of the Company within the meaning of the Securities Act (an "Affiliate"), that it is not a broker-dealer that owns Old Notes acquired directly from the Company or an Affiliate, that it is acquiring the Exchange Notes offered hereby in the ordinary course of the undersigned's business and that the undersigned has no arrangement with any person to participate in the distribution of such Exchange Notes; (b) that it is an Affiliate of the Company or of the Initial Purchaser of the Old Notes and that it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable to it; or (c) that it is a Participating Broker-Dealer (as defined in the Registration Rights Agreement) and that it will deliver a prospectus in connection with any resale of the Exchange Notes. By tendering Old Notes and executing this Letter of Transmittal, the undersigned further certifies that it is not engaged in and does not intend to engage in a distribution of the Exchange Notes. The undersigned acknowledges that, if it is a broker-dealer that will receive Exchange Notes for its own account, it will deliver a prospectus in connection with any resale of such Exchange Notes. By so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. The undersigned understands that the Company may accept the undersigned's tender by delivering written notice of acceptance to the Exchange Agent, at which time the undersigned's right to withdraw such tender will terminate. The undersigned understands that the Exchange Notes will bear interest from December 31, 1996, and waives the right to receive any payment in respect of interest on the Old Notes accrued from December 31, 1996 to the date of issuance of the Exchange Notes. -4- All authority conferred or agreed to be conferred by this Letter shall survive the death or incapacity of the undersigned, and every obligation of the undersigned under this Letter shall be binding upon the undersigned's heirs, legal representatives, successors, assigns, executors and administrators. Tenders may be withdrawn only in accordance with the procedures set forth in the Instructions contained in this Letter. Unless otherwise indicated under "Special Delivery Instructions" below, the Exchange Agent will deliver Exchange Notes (and, if applicable, a certificate for any Old Notes not tendered but represented by a certificate also encompassing Old Notes that are tendered) to the undersigned at the address set forth in Box 1. The undersigned acknowledges that the Exchange Offer is subject to the more detailed terms set forth in the Prospectus and, in case of any conflict between the terms of the Prospectus and this Letter, the Prospectus shall prevail. ____ /___ / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING: Name of Tendering Institution: ----------------------------------------- Account Number: -------------------------------------------------------- Transaction Code Number: ----------------------------------------------- ____ /___ / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING: Name(s) of Registered Owner(s): ---------------------------------------- Date of Execution of Notice of Guaranteed Delivery: -------------------- Window Ticket Number (if available): ----------------------------------- Name of Institution that Guaranteed Delivery: -------------------------- -5- PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY BOX 2 PLEASE SIGN HERE WHETHER OR NOT OLD NOTES ARE BEING PHYSICALLY TENDERED HEREBY This box must be signed by registered holder(s) of Old Notes as their name(s) appear(s) on certificate(s) for Old Notes, or by person(s) authorized to become registered holder(s) by endorsement and documents transmitted with this Letter. If signature is by a trustee, executor, administrator, guardian, attorney-in- fact, officer or other person acting in a fiduciary or representative capacity, such person must set forth his or her full title below. (See Instruction 3). X ------------------------------------------------- X ------------------------------------------------- Signature(s) of Owner(s) or Authorized Signatory Date:____________________, 1997 Name(s):______________________________________ (Please Print) Capacity: Address: (Include Zip Code) Area Code and Telephone No.: PLEASE COMPLETE SUBSTITUTE FORM W-9 HEREIN SIGNATURE GUARANTEE (See Instruction 4) Certain Signatures Must be Guaranteed by an Eligible Institution (Name of Eligible Institution Guaranteeing Signatures) (Address (including zip code) and Telephone Number (including area code) of Firm) (Authorized Signature) (Title) (Printed Name) Date: , 1997 -6- BOX 3 TO BE COMPLETED BY ALL TENDERING HOLDERS PAYOR'S NAME: ----------------------------------- Part 1 Social Security Number or Employer Identification Number PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND CERTIFY ________________ BY SIGNING AND DATING BELOW /________________/ SUBSTITUTE Form W-9 Part 2 [_] Department of the Treasury, Internal Check the box if you are NOT subject to back-up Revenue Service withholding under the provisions of Section 2406(a)(1)(C) of the Internal Revenue Code because (1) you have not been notified that you are subject to back-up withholding as a result of failure to report all interest or dividends or (2) the Internal Revenue Service has notified you that you are no longer subject to back-up withholding. Payor's Request for Part 3 [_] Taxpayer Identification Number (TIN) Check if Awaiting TIN CERTIFICATION UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT THE INFORMATION PROVIDED ON THIS FORM IS TRUE, CORRECT AND COMPLETE. Signature: ____________________ Date: ________ YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9 CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (b) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number by the time of the exchange, 31 percent of all reportable payments made to me thereafter will be withheld until I provide a number. - ------------------------------- -------------------------------------- Signature Date -7- BOX 4 BOX 5 SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS (See Instructions 3 and 4) (See Instructions 3 and 4) To be completed ONLY if To be completed ONLY if certificates for certificates for Old Notes in a Old Notes in a principal amount not principal amount not exchanged, exchanged, or Exchange Notes, are to be or Exchange Notes, are to be sent to someone other than the person issued in the name of someone whose signature appears in Box 2 or to an other than the person whose address other than that shown in Box 1. signature appears in Box 2, or if Old Notes delivered by book-entry transfer that are not accepted for exchange are to be returned by credit to an account maintained at the Book-Entry Transfer Facility other than the account indicated above. Issue and deliver: Deliver: (check appropriate boxes) (check appropriate boxes) [_] Old Notes not tendered [_] Old Notes not tendered [_] Exchange Notes, to: [_] Exchange Notes, to: (Please Print) (Please Print) Name: Name: -------------------------- ----------------------------------- Address: Address: ----------------------- -------------------------------- - ------------------------------- ---------------------------------------- - ------------------------------- ---------------------------------------- Please complete the Substitute Please complete the Substitute Form W-9 Form W-9 at Box 3. at Box 3. Tax I.D. or Social Security Number: Tax I.D. or Social Security Number: -8- INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER 1. Delivery of this Letter and Certificates. Certificates for Old Notes or a ---------------------------------------- Book-Entry Confirmation, as the case may be, as well as a properly completed and duly executed copy of this Letter and any other documents required by this Letter, must be received by the Exchange Agent at one of its addresses set forth herein on or before the Expiration Date. The method of delivery of this Letter, certificates for Old Notes or a Book-Entry Confirmation, as the case may be, and any other required documents is at the election and risk of the tendering holder, but except as otherwise provided below, the delivery will be deemed made when actually received by the Exchange Agent. If delivery is by mail, the use of registered mail with return receipt requested, properly insured, is suggested. If tendered Old Notes are registered in the name of the signer of this Letter and the Exchange Notes to be issued in exchange therefor are to be issued (and any untendered Old Notes are to be reissued) in the name of the registered holder, the signature of such signer need not be guaranteed. In any other case, the tendered Old Notes must be endorsed or accompanied by written instruments of transfer in form satisfactory to the Company and duly executed by the registered holder and the signature on the endorsement or instrument of transfer must be guaranteed by a bank, broker, dealer, credit union, savings association, clearing agency or other institution (each an "Eligible Institution") that is a member of a recognized signature guarantee medallion program within the meaning of Rule 17Ad-15 under the Exchange Act. If the Exchange Notes and/or Old Notes not exchanged are to be delivered to an address other than that of the registered holder appearing on the note register for the Old Notes, the signature on this Letter must be guaranteed by an Eligible Institution. Any beneficial owner whose Old Notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender Old Notes should contact such holder promptly and instruct such holder to tender Old Notes on such beneficial owner's behalf. If such beneficial owner wishes to tender such Old Notes itself, such beneficial owner must, prior to completing and executing the Letter of Transmittal and delivering such Old Notes, either make appropriate arrangements to register ownership of the Old Notes in such beneficial owner's name or follow the procedures described in the immediately preceding paragraph. The transfer of record ownership may take considerable time. Holders whose Old Notes are not immediately available or who cannot deliver their Old Notes or a Book-Entry Confirmation, as the case may be, and all other required documents to the Exchange Agent on or before the Expiration Date may tender their Old Notes pursuant to the guaranteed delivery procedures set forth in the Prospectus. Pursuant to such procedures: (i) tender must be made by or through an Eligible Institution; (ii) prior to the Expiration Date, the Exchange Agent must have received from the Eligible Institution a properly completed and duly executed Notice of Guaranteed Delivery (by telegram, telex, facsimile transmission, mail or hand delivery) (x) setting forth the name and address of the holder, the description of the Old Notes and the principal amount of Old Notes tendered, (y) stating that the tender is being made thereby and (z) guaranteeing that, within five New York Stock Exchange trading days after the date of execution of such Notice of Guaranteed Delivery, this Letter together with the certificates representing the Old Notes or a Book-Entry Confirmation, as the case may be, and any other documents required by this Letter will be deposited by the Eligible Institution with the Exchange Agent; and (iii) the certificates for all tendered Old Notes or a Book-Entry Confirmation, as the case may be, as well as all other documents required by this Letter, must be received by the Exchange Agent within five New York Stock Exchange trading days after the date of execution of such Notice of Guaranteed Delivery, all as provided in the Prospectus under the caption "The Exchange Offer--How to Tender." The method of delivery of Old Notes and all other documents is at the election and risk of the holder. If sent by mail, it is recommended that registered mail, return receipt requested, be used, proper insurance be obtained, and the mailing be made sufficiently in advance of the Expiration Date to permit delivery to the Exchange Agent on or before the Expiration Date. -9- Unless an exemption applies under the applicable law and regulations concerning "backup withholding" of federal income tax, the Exchange Agent will be required to withhold, and will withhold, 31% of the gross proceeds otherwise payable to a holder pursuant to the Exchange Offer if the holder does not provide his or her taxpayer identification number (social security number or employer identification number) and certify that such number is correct. Each tendering holder should complete and sign the main signature form and the Substitute Form W-9 included as part of this Letter, so as to provide information and certification necessary to avoid backup withholding, unless an applicable exemption exists and is proved in a manner satisfactory to the Company and the Exchange Agent. If a holder desires to accept the Exchange Offer and time will not permit a Letter of Transmittal or Old Notes to reach the Exchange Agent before the Expiration Date, a tender may be effected if the Exchange Agent has received at its office listed on the front of this letter on or prior to the Expiration Date a letter, telegram or facsimile transmission from an Eligible Institution setting forth the name and address of the tendering holder, the principal amount of the Old Notes being tendered, the names in which the Old Notes are registered and, if possible, the certificate number of the Old Notes to be tendered, and stating that the tender is being made thereby and guaranteeing that within five New York Stock Exchange trading days after the date of execution of such letter, telegram or facsimile transmission by the Eligible Institution, the Old Notes, in proper form for transfer, will be delivered by such Eligible Institution together with a properly completed and duly executed Letter of Transmittal (and any other required documents). Unless Old Notes being tendered by the above- described method (or a timely Book-Entry Confirmation) are deposited with the Exchange Agent within the time period set forth above (accompanied or preceded by a properly completed Letter of Transmittal and any other required documents), the Company may, at its option, reject the tender. Copies of a Notice of Guaranteed Delivery which may be used by Eligible Institutions for the purposes described in this paragraph are available from the Exchange Agent. A tender will be deemed to have been received as of the date when the tendering holder's properly completed and duly signed Letter of Transmittal accompanied by the Old Notes (or a timely Book-Entry Confirmation) is received by the Exchange Agent. Issuances of Exchange Notes in exchange for Old Notes tendered pursuant to a Notice of Guaranteed Delivery or letter, telegram or facsimile transmission to similar effect (as provided above) by an Eligible Institution will be made only against deposit of the Letter of Transmittal (and any other required documents) and the tendered Old Notes (or a timely Book-Entry Confirmation). All questions as to the validity, form, eligibility (including time of receipt), acceptance and withdrawal of tendered Old Notes will be determined by the Company, whose determination will be final and binding. The Company reserves the absolute right to reject any or all tenders that are not in proper form or the acceptance of which, in the opinion of the Company's counsel, would be unlawful. The Company also reserves the right to waive any irregularities or conditions of tender as to particular Old Notes. All tendering holders, by execution of this Letter, waive any right to receive notice of acceptance of their Old Notes. The Company's interpretation of the terms and conditions of the Exchange Offer (including the Letter of Transmittal and the instructions thereto) will be final and binding. Neither the Company, the Exchange Agent nor any other person shall be obligated to give notice of defects or irregularities in any tender, nor shall any of them incur any liability for failure to give any such notice. 2. Partial Tenders; Withdrawals. If less than the entire principal amount of ---------------------------- any Old Note evidenced by a submitted certificate or by a Book-Entry Confirmation is tendered, the tendering holder must fill in the principal amount tendered in the fourth column of Box 1 above. All of the Old Notes represented by a certificate or by a Book-Entry Confirmation delivered to the Exchange Agent will be deemed to have been tendered unless otherwise indicated. A certificate for Old Notes not tendered will be sent to the holder, unless otherwise provided in Box 5, as soon as practicable after the Expiration Date, in the event that less than the entire principal amount of Old Notes represented by a submitted certificate is tendered (or, in the case of Old Notes tendered by book-entry transfer, such non-exchanged Old Notes will be credited to an account maintained by the holder with the Book-Entry Transfer Facility). -10- If not yet accepted, a tender pursuant to the Exchange Offer may be withdrawn prior to the Expiration Date. For a withdrawal to be effective, a written or facsimile transmission notice of withdrawal must be timely received by the Exchange Agent at its address set forth on the back cover of the Prospectus prior to the Expiration Date. Any such notice of withdrawal must specify the person named in the Letter of Transmittal as having tendered Old Notes to be withdrawn, the certificate numbers of Old Notes to be withdrawn, the principal amount of Old Notes to be withdrawn, a statement that such holder is withdrawing its election to have such Old Notes exchanged, and the name of the registered holder of such Old Notes, and must be signed by the holder in the same manner as the original signature on the Letter of Transmittal (including any required signature guarantees) or be accompanied by evidence satisfactory to the Company that the person withdrawing the tender has succeeded to the beneficial ownership of the Old Notes being withdrawn. The Exchange Agent will return the properly withdrawn Old Notes promptly following receipt of notice of withdrawal. All questions as to the validity of notices of withdrawals, including time of receipt, will be determined by the Company, and such determination will be final and binding on all parties. 3. Signatures on this Letter; Assignments; Guarantee of Signatures. If this --------------------------------------------------------------- Letter is signed by the holder(s) of Old Notes tendered hereby, the signature must correspond with the name(s) as written on the face of the certificate(s) for such Old Notes, without alteration, enlargement or any change whatsoever. If any of the Old Notes tendered hereby are owned by two or more joint owners, all owners must sign this Letter. If any tendered Old Notes are held in different names on several certificates, it will be necessary to complete, sign and submit as many separate copies of this Letter as there are names in which certificates are held. If this Letter is signed by the holder of record and (i) the entire principal amount of the holder's Old Notes are tendered; and/or (ii) untendered Old Notes, if any, are to be issued to the holder of record, then the holder of record need not endorse any certificates for tendered Old Notes, nor provide a separate bond power. In any other case, the holder of record must transmit a separate bond power with this Letter. If this Letter or any certificate or assignment is signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing and proper evidence satisfactory to the Company of their authority to so act must be submitted, unless waived by the Company. Signatures on this Letter must be guaranteed by an Eligible Institution, unless Old Notes are tendered: (i) by a holder who has not completed the Box entitled "Special Issuance Instructions" (Box 4) or "Special Delivery Instructions" (Box 5) on this Letter; or (ii) for the account of an Eligible Institution. In the event that the signatures on this Letter or a notice of withdrawal, as the case may be, are required to be guaranteed, such guarantees must be by an eligible guarantor institution that is a member of The Securities Transfer Agents Medallion Program (STAMP), The New York Stock Exchange Medallion Signature Program (MSP) or The Stock Exchanges Medallion Program (SEMP). If Old Notes are registered in the name of a person other than the signer of this Letter, the Old Notes surrendered for exchange must be endorsed by, or be accompanied by a written instrument or instruments of transfer or exchange, in satisfactory form as determined by the Company, in its discretion, duly executed by the registered holder with the signature thereon guaranteed by an Eligible Institution. 4. Special Issuance and Delivery Instructions. Tendering holders should ------------------------------------------ indicate, in Box 4 or 5, as applicable, the name and address to which the Exchange Notes or certificates for Old Notes not exchanged are to be issued or sent, if different from the name and address of the person signing this Letter. In the case of issuance in a different name, the tax identification number of the person named also must be indicated. Holders tendering Old Notes by book- entry transfer may request that Old Notes not exchanged be credited to such account maintained at the Book-Entry Transfer Facility as such holder may designate. 5. Tax Identification Number. Federal income tax law requires that a holder ------------------------- whose tendered Old Notes are accepted for exchange must provide the Exchange Agent (as payor) with his or her correct taxpayer identification number ("TIN"), which, in the case of a holder who is an individual, is his or her social security number. If the -11- Exchange Agent is not provided with the correct TIN, the holder may be subject to a $50 penalty imposed by the Internal Revenue Service. In addition, delivery to the holder of the Exchange Notes pursuant to the Exchange Offer may be subject to back-up withholding. (If withholding results in overpayment of taxes, a refund may be obtained.) Exempt holders (including, among others, all corporations and certain foreign individuals) are not subject to these back-up withholding and reporting requirements. See the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 (the "Guidelines") for additional instructions. Under federal income tax laws, payments that may be made by the Company on account of Exchange Notes issued pursuant to the Exchange Offer may be subject to back-up withholding at a rate of 31%. In order to prevent back-up withholding, each tendering holder must provide his or her correct TIN by completing the "Substitute Form W-9" referred to above, certifying that the TIN provided is correct (or that the holder is awaiting a TIN) and that: (i) the holder has not been notified by the Internal Revenue Service that he or she is subject to back-up withholding as a result of failure to report all interest or dividends; (ii) the Internal Revenue Service has notified the holder that he or she is no longer subject to back-up withholding; or (iii) in accordance with the Guidelines, such holder is exempt from back-up withholding. If the Old Notes are in more than one name or are not in the name of the actual owner, consult the enclosed Guidelines for information on which TIN to report. 6. Transfer Taxes. The Company will pay all transfer taxes, if any, applicable -------------- to the transfer of Old Notes to it or its order pursuant to the Exchange Offer. If however, the Exchange Notes or certificates for Old Notes not exchanged are to be delivered to, or are to be issued in the name of, any person other than the record holder, or if tendered certificates are recorded in the name of any person other than the person signing this Letter, or if a transfer tax is imposed by any reason other than the transfer of Old Notes to the Company or its order pursuant to the Exchange Offer, then the amount of such transfer taxes (whether imposed on the record holder or any other person) will be payable by the tendering holder. If satisfactory evidence of payment of taxes or exemption from taxes is not submitted with this Letter, the amount of transfer taxes will be billed directly to the tendering holder. Except as provided in this Instruction 6, it will not be necessary for transfer tax stamps to be affixed to the certificates listed in this Letter. 7. Waiver of Conditions. The Company reserves the absolute the right to amend -------------------- or waive any of the specified conditions in the Exchange Offer in the case of any Old Notes tendered. 8. Mutilated, Lost, Stolen or Destroyed Certificates. Any holder whose ------------------------------------------------- certificates for Old Notes have been mutilated, lost, stolen or destroyed should contact the Exchange Agent at the address indicated above, for further instructions. 9. Requests for Assistance or Additional Copies. Questions relating to the -------------------------------------------- procedure for tendering, as well as requests for additional copies of the Prospectus or this Letter, may be directed to the Exchange Agent. IMPORTANT: This Letter (together with certificates representing tendered Old Notes or a Book-Entry Confirmation and all other required documents) must be received by the Exchange Agent on or before the Expiration Date (as defined in the Prospectus). -12- EX-99.B 28 EXHIBIT 99(B) EXHIBIT 99(b) ICF KAISER INTERNATIONAL, INC. NOTICE OF GUARANTEED DELIVERY of 12% Senior Notes due 2003, Series A As set forth in the Prospectus dated ______, 1997 (the "Prospectus") of ICF Kaiser International, Inc. (the "Company") under "The Exchange Offer--How to Tender" and in the Letter of Transmittal for 12% Senior Notes due 2003, Series A (the "Letter of Transmittal"), this form or one substantially equivalent hereto must be used to accept the Exchange Offer (as defined below) of the Company if: (i) certificates for the above-referenced Notes (the "Old Notes") are not immediately available; (ii) time will not permit all required documents to reach the Exchange Agent (as defined below) on or prior to the Expiration Date (as defined in the Prospectus); or (iii) the procedures for book-entry transfer cannot be completed on or prior to the Expiration Date (as defined below). Such form may be delivered by hand or transmitted by telegram, facsimile transmission or letter to the Exchange Agent. To: Bankers Trust Company (the "Exchange Agent") By Facsimile: (212) 250-6961 or (212) 250-6392 By Mail: Bankers Trust Company Corporate Trust and Agency Group Reorganization Department P.O. Box 1458 Church Street Station New York, New York 10008-1458 Hand/Overnight Delivery: Bankers Trust Company Corporate Trust and Agency Group Receipt & Delivery Window 123 Washington Street, 1st Floor New York, New York 10006 Delivery of this instrument to an address other than as set forth above or transmittal of this instrument to a facsimile number other than as set forth above does not constitute a valid delivery. Ladies and Gentlemen: The undersigned hereby tenders to the Company, upon the terms and conditions set forth in the Prospectus and the Letter of Transmittal (which together constitute the "Exchange Offer"), receipt of which are hereby acknowledged, the principal amount of Old Notes set forth below pursuant to the guaranteed delivery procedures described in the Prospectus and the Letter of Transmittal. The undersigned understands and acknowledges that the Exchange Offer will expire at 5:00 p.m., New York City time, on _______, 1997, unless extended by the Company. With respect to the Exchange Offer, "Expiration Date" means such time and date, or if the Exchange Offer is extended, the latest time and date to which the Exchange Offer is so extended by the Company. All authority herein conferred or agreed to be conferred by this Notice of Guaranteed Delivery shall survive the death or incapacity of the undersigned and every obligation of the undersigned under this Notice of Guaranteed Delivery shall be binding upon the heirs, personal representatives, executors, administrators, successors, assigns, trustees in bankruptcy and other legal representatives of the undersigned. SIGNATURES Principal amount of Old Notes Exchanged: _____________________________________ $____________________________________________ Signature of Owner _____________________________________ Certificates Nos. of Old Notes (if available) Signature of Owner (if more than one) Dated: _______________, 1997 _____________________________________________ _____________________________________________ Name(s): ____________________________ IF OLD NOTES WILL BE DELIVERED BY BOOK- _____________________________________ ENTRY TRANSFER, PROVIDE THE DEPOSITORY TRUST COMPANY ("DTC") ACCOUNT NO: Address:_____________________________ (Include Zip Code) Account No.: __________________________________ Area Code and Telephone No.:_________ Capacity (full tile), if signing in a representative capacity: ____________ Taxpayer Identification or Social Security No: ________________________
GUARANTEE OF DELIVERY (Not to be used for signature guarantee) The undersigned, a member of a recognized signature guarantee medallion program within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended, hereby guarantees that certificates representing the principal amount of Old Notes tendered hereby in proper form for transfer, or timely confirmation of the book-entry transfer of such Old Notes into the Exchange Agent's account at The Depository Trust Company, in either case with delivery of a properly completed and duly executed Letter of Transmittal (or facsimile thereof) and any other required documents, is being made within five New York Stock Exchange trading days after the date of execution hereof. ____________________________________ ______________________________________ Name of Firm Authorized Signature ____________________________________ Number and Street or P.O. Box Title:________________________________ ----- ____________________________________ City State Zip Code Date:_________________________________ ---- Tel. No.: __________________________ Fax No.: ___________________________ NOTE: DO NOT SEND CERTIFICATES REPRESENTING OLD NOTES WITH THIS NOTICE. OLD NOTES SHOULD BE SENT TO THE EXCHANGE AGENT TOGETHER WITH A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL. EX-99.C 29 EXHIBIT 99(C) EXHIBIT 99(c) ICF KAISER INTERNATIONAL, INC. Offer to Exchange $1,000 in principal amount of 12% Senior Notes due 2003, Series B, for each $1,000 in principal amount of outstanding 12% Senior Notes due 2003, Series A, that were issued and sold in a transaction exempt from registration under the Securities Act of 1933, as amended To Securities Dealers, Commercial Banks, Trust Companies and Other Nominees: Enclosed for your consideration is a Prospectus dated ______, 1997 (as the same may be amended or supplemented from time to time the "Prospectus") and a form Letter of Transmittal (the "Letter of Transmittal") relating to the offer (the "Exchange Offer") by ICF Kaiser International, Inc. (the "Company") to exchange up to $15,000,000 in aggregate principal amount of its 12% Senior Notes due 2003, Series B (the "Exchange Notes"), for up to $15,000,000 aggregate principal amount of its outstanding 12% Senior Notes due 2003, Series A, that were issued and sold in a transaction exempt from registration under the Securities Act of 1933, as amended (the "Old Notes"). We are asking you to contact your clients for whom you hold Old Notes registered in your name or in the name of your nominee. In addition, we ask you to contact your clients who, to your knowledge, hold Old Notes registered in their own name. The Company will not pay any fees or commissions to any broker, dealer or other person in connection with the solicitation of tenders pursuant to the Exchange Offer. You will, however, be reimbursed by the Company for customary mailing and handling expenses incurred by you in forwarding any of the enclosed materials to your clients. The Company will pay all transfer taxes, if any, applicable to the tender of Old Notes to it or its order, except as otherwise provided in the Prospectus and the Letter of Transmittal. Enclosed are copies of the following documents: 1. The Prospectus; 2. A Letter of Transmittal for your use in connection with the exchange of Old Notes and for the information of your clients (facsimile copies of the Letter of Transmittal may be used to exchange Old Notes); 3. A form of letter that may be sent to your clients for whose accounts you hold Old Notes registered in your name or the name of your nominee, with space provided for obtaining the clients' instructions with regard to the Exchange Offer; 4. A Notice of Guaranteed Delivery; 5. Guidelines of the Internal Revenue Service for Certification of Taxpayer Identification Number on Substitute Form W-9; and 6. A return envelope addressed to Bankers Trust Company, the Exchange Agent. Your prompt action is requested. The Exchange Offer will expire at 5:00 p.m., New York City time, on _______, _________, 1997, unless extended (the "Expiration Date"). Old Notes tendered pursuant to the Exchange Offer may be withdrawn, subject to the procedures described in the Prospectus, at any time prior to the Expiration Date. To tender Old Notes, certificates for Old Notes or a Book-Entry Confirmation, a duly executed and properly completed Letter of Transmittal or a facsimile thereof, and any other required documents, must be received by the Exchange Agent as provided in the Prospectus and the Letter of Transmittal. If holders of Old Notes wish to tender, but it is impracticable for them to forward their certificate for Old Notes prior to the expiration of the Exchange Offer or to comply with the book-entry transfer procedures on a timely basis, a tender may be effected by following the guaranteed delivery procedures described in the Prospectus under "The Exchange Offer -- How to Tender." Questions and requests for assistance with respect to the Exchange Offer or for additional copies of the enclosed material may be directed to the Exchange Agent at its address set forth in the Prospectus or at (800) 735-7777. Very truly yours, ICF KAISER INTERNATIONAL, INC. NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY PERSON AS AN AGENT OF THE COMPANY OR THE EXCHANGE AGENT, OR ANY AFFILIATE THEREOF, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENTS OR USE ANY DOCUMENT ON BEHALF OF ANY OF THEM WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR THE ENCLOSED DOCUMENTS AND THE STATEMENTS EXPRESSLY MADE IN THE PROSPECTUS AND THE LETTER OF TRANSMITTAL. EX-99.D 30 EXHIBIT 99(D) EXHIBIT 99(d) ICF KAISER INTERNATIONAL, INC. Offer to Exchange $1,000 in principal amount of 12% Senior Notes due 2003, Series B, for each $1,000 in principal amount of outstanding 12% Senior Notes due 2003, Series A, that were issued and sold in a transaction exempt from registration under the Securities Act of 1933, as amended To Our Clients: Enclosed for your consideration is a Prospectus dated _________, 1997 (as the same may be amended or supplemented from time to time the "Prospectus") and a form of Letter of Transmittal (the "Letter of Transmittal") relating to the offer (the "Exchange Offer") by ICF Kaiser International, Inc. (the "Company") to exchange up $15,000,000 in aggregate principal amount of its 12% Senior Notes due 2003, Series B (the "Exchange Notes"), for up to $15,000,000 in aggregate principal amount of its outstanding 12% Senior Notes due 2003, Series A, that were issued and sold in a transaction exempt from registration under the Securities Act of 1933, as amended (the "Old Notes"). The material is being forwarded to you as the beneficial owner of the Old Notes carried by us for your account or benefit but not registered in your name. A tender of any Old Notes may be made only by us as the registered holder and pursuant to your instructions. Accordingly, we request instructions as to whether you wish us to tender any or all Old Notes, pursuant to the terms and conditions set forth in the Prospectus and Letter of Transmittal. We urge you to read carefully the Prospectus and Letter of Transmittal before instructing us to tender your Old Notes. Your instructions to us should be forwarded as promptly as possible in order to permit us to tender Old Notes on your behalf in accordance with the provisions of the Exchange Offer. The Exchange Offer will expire at 5:00 p.m., New York City time, on _____, __________, 1997, unless extended (the "Expiration Date"). Old Notes tendered pursuant to the Exchange Offer may be withdrawn, subject to the procedures described in the Prospectus, at any time prior to the Expiration Date. Your attention is directed to the following: 1. The Exchange Offer is for the exchange of $1,000 principal amount of the Exchange Notes for each $1,000 principal amount of the Old Notes, of which $15,000,000 aggregate principal amount of the Old Notes was outstanding as of ________, 1997. The terms of the Exchange Notes are substantially identical (including principal amount, interest rate, maturity, security and ranking) to the terms of the Old Notes, except that the Exchange Notes (i) are freely transferrable by holders thereof (except as provided in the Prospectus) and (ii) are not entitled to certain registration rights and certain additional interest provisions that are applicable to the Old Notes under a Registration Rights Agreement dated as of December 23, 1996 (the "Registration Rights Agreement") between the Company and BT Securities Corporation, as initial purchaser. 2. THE EXCHANGE OFFER IS SUBJECT TO CERTAIN CONDITIONS, SEE "THE EXCHANGE OFFER--CONDITIONS TO THE EXCHANGE OFFER" IN THE PROSPECTUS. 3. The Exchange Offer and withdrawal rights will expire at 5:00 p.m., New York City time, on __________, 1997, unless extended. 4. The Company has agreed to pay the expenses of the Exchange Offer except as provided in the Prospectus and the Letter of Transmittal. 5. Any transfer taxes incident to the transfer of Old Notes from the tendering holder to the Company will be paid by the Company, except as provided in the Prospectus of the Letter of Transmittal. The Exchange Offer is not being made to nor will exchange be accepted from or on behalf of holders of Old Notes in any jurisdiction in which the making of the Exchange Offer or the acceptance thereof would not be in compliance with the laws of such jurisdiction. If you wish to have us tender any or all of your Old Notes held by us for your account or benefit, please so instruct us by completing, executing and returning to us the instruction form that appears below. The accompanying Letter of Transmittal is furnished to you for informational purposes only and may not be used by you to tender Old Notes held by us and registered in our name for your account or benefit. INSTRUCTIONS The undersigned acknowledge(s) receipt of your letter and the enclosed material referred to therein relating to the Exchange Offer of ICF Kaiser International, Inc., including the Prospectus and the Letter of Transmittal. This form will instruct you to exchange the aggregate principal amount of Old Notes indicated below (or, if no aggregate principal amount is indicated below, all Old Notes) held by you for the account or benefit of the undersigned, pursuant to the terms and conditions set forth in the Prospectus and Letter of Transmittal. Aggregate Principal Amount of Old Notes to be exchanged: $ * -------------------- *I (we) understand that if I (we) sign these instruction --------------------------------------------- forms without indicating an aggregate principal amount of --------------------------------------------- Old Notes in the space above, Signature(s) all Old Notes held by you for my (our) accounts will be exchanged. ---------------------------------------- (Please print name(s) and address above) Dated: , 1997 ---------------------------- (Area Code & Telephone Number) --------------------------------------------------- (Taxpayer Identification or Social Security Number) EX-99.E 31 EXHIBIT 99(E) EXHIBIT 99(e) GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 Guidelines for Determining the Proper Identification Number to Give the Payer-- Social Security numbers have nine digits separated by two hyphens: i.e. 000-00- 000. Employer identification numbers have nine digits separated by only one hyphen: i.e. 00-0000000. The table below will help determine the number to give the payer.
Give the Give the EMPLOYER SOCIAL SECURITY For this type IDENTIFICATION For this type of account: number of-- of account: number of-- ---------------- -------------- 1. An individual's The individual 9. A valid The legal account trust, entity (Do not estate, or furnish the pension trust identifying number of the representative or trustee unless the legal entity itself is not designated in the account title) (5) 2. Two or more The actual owner individuals (joint of the account account) or, if combined funds, any one of the individuals (1) 3. Husband and wife The actual owner 10. Corporate The corporation (joint account) of the account account or, if joint funds, either person (1) 4. Custodian account of a The minor (2) 11. Religious, The organization minor (Uniform Gift to charitable, Minors Act) or educational organization account 5. Adult and minor The adult or, if 12. Partner- The partnership (joint account) the minor is the ship account only held in the contributor, the name of the minor (1) business 6. Account in the name of The ward, minor, 13. Associa- The guardian or committee for or incompetent tion organiza- a designated ward, minor, person(3) tion club, or or incompetent person other tax-exempt organization 7a. The usual revocable The 14. A broker The broker or savings trust account grantor-trustee or registered nominee (grantor is also trustee) (1) nominee
b. So-called trust The actual owner 15. Account The public account that is not a (1) with the entity legal or valid trust Department of under State law Agriculture in the name of a public entity (such as a State or local government, school district, or prison) that receives agricultural program payments 8. Sole proprietorship The owner (4) account (1) List first and circle the name of the person whose number you furnish. (2) Circle the minor's name and furnish the minor's social security number. (3) Circle the ward's, minor's or incompetent person's name and furnish such person's social security number. (4) Show the name of the owner. (5) List first and circle the name of the legal trust, estate, or pension trust. Note: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed. GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 Page 2 Obtaining a Number If you don't have a taxpayer identification number or you don't know your number, obtain Form SS-5, Application for a Social Security Number Card, or Form SS-4, Application for Employer Identification Number, at the local office of the Social Security Administration or the Internal Revenue Service and apply for a number. Payees Exempt from Backup Withholding Payees specifically exempted from backup withholding on ALL payments include the following: . A corporation. . An organization exempt from tax under section 501(a), or an individual retirement plan. . The United States or any agency or instrumentality thereof. . A State, the District of Columbia, a possession of the United States, or any subdivision or instrumentality thereof. . A foreign government, a political subdivision of a foreign government, or any agency or instrumentality thereof. . An international organization or any agency, or instrumentality thereof. . A registered dealer in securities or commodities registered in the U.S. or a possession of the U.S. . A real estate investment trust. . A common trust fund operated by a bank under section 584(a). . An exempt charitable remainder trust, or a nonexempt trust as described in section 4947(a)(1). . An entity registered at all times under the Investment Company Act of 1940. . A foreign central bank of issue. Payments of dividends and patronage dividends not generally subject to backup withholding include the following: . Payments to nonresident aliens subject to withholding under section 1441. . Payments to partnerships not engaged in a trade or business in the U.S. and which have at least one nonresident partner. . Payments of patronage dividends where the amount received is not paid in money. . Payments made by certain foreign organizations. Payments of interest not generally subject to backup withholding include the following: . Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and you have not provided your correct taxpayer identification number to the payer. . Payments of tax-exempt interest (including exempt-interest dividends under section 852). Payments described in section 6049(b)(5) to non-resident aliens. Payments on tax-free covenant bonds under section 1451. . Payments made by certain foreign organizations. . Payments made to a nominee. Exempt payees described above should file Form W-9 to avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM. Certain payments other than interest, dividends, and patronage dividends, that are not subject to information reporting are also not subject to backup withholding. For details, see the regulations under section 6041, 6041A(a), 6045, and 6050A. Privacy Act Notice--Section 6109 requires most recipients of dividends, interest or other payments to give taxpayer identification numbers to payers who must report the payments to IRS. IRS uses the numbers for identification purposes. Payers must be given the numbers whether or not recipients are required to file tax returns. Beginning January 1, 1993, payers must generally withhold 31% of taxable interest, dividend, and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply. Penalties (1) Penalties for Failure to Furnish Taxpayer Identification Number.--If you fail to furnish your taxpayer identification number to a payee, you are subject to a penalty of $50 for each such failure unless your failure is due to a reasonable cause and not to willful neglect. (2) Failure to Report Certain Dividend and Interest Payments.--If you fail to include any portion of an includible payment for interest, dividends, or patronage dividends in gross income, such failure will be treated as being due to negligence and will be subject to a penalty of 5% on any portion of an under- payment attributable to that failure unless there is clear and convincing evidence to the contrary. (3) Civil Penalty for False Information With Respect to Withholding.--If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500. (4) Criminal Penalty for Falsifying Information.--Falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE. -----END PRIVACY-ENHANCED MESSAGE-----