-----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, JVarpteLzs7Lgv4CbBatenRUJcYbLyMVgCW0HW1O2Ix62i2pa5QefgODG4IH+BP8 L0a484Q93abJZ2aec4AXJQ== 0001077604-99-000273.txt : 19991018 0001077604-99-000273.hdr.sgml : 19991018 ACCESSION NUMBER: 0001077604-99-000273 CONFORMED SUBMISSION TYPE: S-4/A PUBLIC DOCUMENT COUNT: 11 FILED AS OF DATE: 19991001 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-4/A SEC ACT: SEC FILE NUMBER: 333-82643 FILM NUMBER: 99721288 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 S-4/A 1 AMENDMENT #3 TO FORM S-4 As filed with the Securities and Exchange Commission on October 1, 1999 Registration No. 333-82643 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------- PRE-EFFECTIVE AMENDMENT NO. 3 to FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ----------- ICF KAISER INTERNATIONAL, INC. (Exact name of Registrant as specified in its charter) Delaware 8711 54-1437073 (State or other (Primary Standard (I.R.S. Employer jurisdiction of Industrial Identification No.) incorporation or Classification Code No.) organization) 9300 Lee Highway, Fairfax, Virginia 22031-1207 (703) 934-3600 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) James J. Maiwurm, President and Chief Executive Officer 9300 Lee Highway Fairfax, Virginia 22031-1207 (703) 934-3600 (Name, address, including zip code, & telephone number, including area code, of agent for service) Copy to: Jeffrey J. Margulies, Esq. Squire, Sanders & Dempsey L.L.P. 4900 Key Tower 127 Public Square Cleveland, Ohio 44114-1304 ----------------------------------- Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box: [_] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) 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 this Form is a post-effective amendment filed pursuant to Rule 462(d) 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: [_]
CALCULATION OF REGISTRATION FEE - ----------------------------------------------------------------------------------------------------------------------------- Title of Each Proposed Proposed Class of Maximum Maximum Amount of Securities To Amount To Be Offering Aggregate Registration Be Registered Registered (1) Price Per Unit (2) Offering Price (1) (2) Fee (3) - ----------------------------------------------------------------------------------------------------------------------------- Redeemable Convertible Preferred Stock 2,600,000 shares - ----------------------------------------------------------------------------------------------------------------------------- Common Stock, par value $.01 per 882,000 shares share (4) - ----------------------------------------------------------------------------------------------------------------------------- 15% Senior Notes due 2002 $25,000,000 - ----------------------------------------------------------------------------------------------------------------------------- Total $98,000,000 $98,000,000 $27,244 - -----------------------------------------------------------------------------------------------------------------------------
(1) Estimated solely for purposes of computing the registration fee pursuant to Rules 457(f) and (o) under the Securities Act of 1933. (2) Not specified as to each class of securities being registered, since each class of securities is to be offered as part of an exchange offer for outstanding debt. (3) This registration fee has been paid previously. (4) Represents common stock issuable in the exchange offer and upon conversion of redeemable convertible preferred stock to be issued in the exchange offer and being registered under this registration statement. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT THAT 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 SECTION 8(A), MAY DETERMINE. PROSPECTUS AND CONSENT SOLICITATION STATEMENT ICF KAISER INTERNATIONAL, INC.
Recapitalization Our recapitalization consists of an exchange offer, an asset sale offer and a consent solicitation, all of which are dependent upon each other. Exchange Offer Convertible Preferred Stock . We are offering to exchange for all 12% Senior . We will issue 2,600,000 shares of redeemable Subordinated Notes due 2003 that are outstanding convertible preferred stock, with an aggregate following the purchase of those old notes in an liquidation preference of $65 million, or $25 per asset sale offer: share, plus accrued interest on the old notes from . preferred stock with a liquidation preference of July 1, 1999 through the date of the closing of the $65 million plus accrued interest on the old recapitalization. notes from July 1, 1999 through the date of the . We will pay quarterly dividends on the preferred closing of the recapitalization, stock at a rate per year equal to 3.75% of the . common stock that will represent approximately liquidation preference through December 31, 2000 15% of our total common stock, and and 5.75% from January 1, 2001 through December . up to $25 million principal amount of 15% 31, 2001, increasing to 12% after December 31, 2001. Senior Notes due 2002, or the new notes. . The preferred stock will be convertible into our common stock at the holders' option on or after Asset Sale Offer December 31, 2001. . We may redeem the preferred stock, at our option, . In connection with the exchange offer, we are at any time. offering to purchase for cash at par on a pro rata basis a total of at least $35 million principal Common Stock amount of old notes. . We will issue an aggregate of 882,000 shares of Consent Solicitation common stock. . This common stock will represent approximately . We also are soliciting the holders of the old notes 15% of our total common stock after giving effect to for consents to remove most covenants in the a proposed reverse stock split. indenture governing the old notes. New Notes Market for Securities . The new notes will mature on December 31, 2002. . Our common stock is listed on the New York Stock . We will pay interest on the new notes at an initial Exchange under the trading symbol "ICF." We will annual rate of 15%, reducing to 13.5% when the apply to list the preferred stock and the common aggregate outstanding amount of new notes falls stock, including the common stock underlying the below $15 million and further reducing by 0.25% for preferred stock. The new notes will not be listed on each $1 million of further principal reduction, until any exchange. The NYSE has notified us that we the interest rate reaches 11%. currently do not meet its newly effective continued . Interest is payable twice a year beginning on listing criteria, but we believe our recapitalization is December 31, 1999. an important element in our efforts to remedy this . The new notes will be unsecured senior debt. situation. . We may, at our option, redeem the new notes at par plus accrued interest at any time. We are obligated to redeem the new notes in excess of $10 million from certain sources of excess cash.
_______________________________ See "Risk Factors" on page 13 of this prospectus for a discussion of risks to be considered in connection with your investment decision. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the preferred stock, common stock or new notes or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is October 1, 1999. TABLE OF CONTENTS
Page ---- SUMMARY............................................................... 1 The Recapitalization............................................... 1 Rationale for the Recapitalization................................. 2 Cautionary Note Regarding Forward-Looking Statements............... 2 The Convertible Preferred Stock.................................... 3 The Common Stock................................................... 4 The New Notes...................................................... 4 The Exchange Offer................................................. 5 The Asset Sale Offer............................................... 6 The Consent Solicitation........................................... 7 Possible Prepackaged Plan of Reorganization........................ 7 The Company........................................................ 8 Strategy........................................................... 8 Risk Factors....................................................... 9 Summary Financial Data............................................. 10 RISK FACTORS.......................................................... 13 CAPITALIZATION........................................................ 17 RATIO OF EARNINGS TO FIXED CHARGES.................................... 19 UNAUDITED PRO FORMA FINANCIAL STATEMENTS.............................. 20 NOTES TO THE PRO FORMA BALANCE SHEET.................................. 23 NOTES TO THE PRO FORMA INCOME STATEMENTS.............................. 27 OVERVIEW AND BACKGROUND OF THE RECAPITALIZATION....................... 29 THE EXCHANGE OFFER.................................................... 29 THE ASSET SALE OFFER.................................................. 32 THE CONSENT SOLICITATION.............................................. 33 POSSIBLE PREPACKAGED PLAN OF REORGANIZATION........................... 35 PROCEDURES FOR PARTICIPATING IN THE EXCHANGE OFFER, ASSET SALE OFFER AND CONSENT SOLICITATION........................................... 36 BUSINESS.............................................................. 39 MANAGEMENT............................................................ 44 UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS....................... 45 DESCRIPTION OF CONVERTIBLE PREFERRED STOCK............................ 51 DESCRIPTION OF COMMON STOCK........................................... 52 DESCRIPTION OF NEW NOTES.............................................. 59 WHERE YOU CAN FIND MORE INFORMATION................................... 82 INCORPORATION BY REFERENCE............................................ 82 EXPERTS............................................................... 83 LEGAL MATTERS......................................................... 83
SUMMARY The following summary highlights selected information from this prospectus and may not contain all of the information that is important to you. This prospectus includes specific terms of the preferred stock, common stock and new notes, as well as information regarding our business and detailed financial data. We encourage you to read this prospectus in its entirety. The Recapitalization Overview. The recapitalization will be completed in a series of simultaneous transactions, each of which is dependent upon consummation of the others. Assuming the conditions of the exchange offer are met: . we will purchase at least $35 million principal amount of tendered old notes at par in an asset sale offer; . for the remaining tendered old notes, we will exchange: . preferred stock with a liquidation preference of $65 million plus accrued interest on the old notes from July 1, 1999 through the date of the closing of the recapitalization, . common stock representing approximately 15% of our total common stock after giving effect to a proposed reverse stock split, and . up to $25 million principal amount of new notes; . holders of a majority of the outstanding old notes will consent to the amendment of the indenture governing the old notes; and . we will enter into a new credit facility. As a result of the recapitalization, holders of old notes will receive, for each $1,000 of old notes tendered in the asset sale offer and the exchange offer, at least $280 in cash, 20.8 shares of preferred stock, reflecting a liquidation preference of $25 per share plus a pro rata per share portion of the accrued interest on the old notes from July 1, 1999 through the date of the closing of the recapitalization, .034 shares of common stock, prior to completion of a proposed reverse stock split, and up to $200 principal amount of new notes. The terms of the recapitalization are the product of negotiations with an unofficial committee of holders of old notes owning in excess of 80% of the aggregate principal amount of the old notes. Asset Sale Offer. In general terms, the indenture governing the old notes requires us to use proceeds from asset sales to reduce senior indebtedness or reinvest in our business or make an asset sale offer to purchase the old notes at par, on a pro rata basis. As a result of the sale of our Consulting Group we have at least $35 million of available cash to fund an asset sale offer to holders of our old notes. Exchange Offer. We are offering preferred stock, common stock and new notes in exchange for all remaining tendered old notes not purchased in the asset sale offer. Our acceptance of old notes tendered in the exchange offer is conditioned on, among other things, holders of at least 95% of the principal amount of old notes accepting the exchange offer and our obtaining a new credit facility. In order to participate in the exchange offer, a holder of old notes must tender all of the old notes beneficially owned by the holder. Consent Solicitation. Simultaneously with the exchange offer we are seeking a consent from the holders of our old notes to remove substantially all restrictive covenants and some defined events of default from the indenture governing the old notes. In addition, we are requesting holders of the old notes to deliver an instruction to the trustee under the old notes indenture not to interfere with our recapitalization. A holder of old notes does not need to consent to the proposed amendments in order to tender its old notes in the exchange offer. New Credit Facility. We are in preliminary discussions with potential lenders with respect to a new credit facility. The closing of any new credit facility is conditioned on the successful completion of the recapitalization, and obtaining a new credit facility is a condition of completing the exchange offer. We anticipate that any new credit facility will provide for revolving credit availability and the issuance of letters of credit. We expect the availability of credit under the new credit facility will be a function of a borrowing base determined with reference 1 to eligible receivables. We further anticipate that borrowings under the new credit facility will be secured by substantially all of our assets. We do not expect to have available a new revolving credit facility until the completion of the recapitalization. Until that time, we will cash collateralize any letters of credit of the type often required to support contract performance obligations and we will utilize other available cash for working capital purposes. Rationale for the Recapitalization The amount of cash flow currently available from our remaining operations is insufficient to service the interest expense associated with our existing debt obligations. We are also significantly more leveraged than our competitors. Especially in the recent past, this has sometimes impaired our ability to win new business. Additionally, our current financial position has impaired and could in the future impair our ability to retain key personnel. A realignment of our capital structure through the recapitalization will substantially reduce our level of debt and associated interest expense, and we believe we will be better able to service remaining obligations after the recapitalization. We also believe the recapitalization will enhance our ability to win new business and retain and attract key employees. The completion of the recapitalization is a condition to our securing a new credit facility, which is necessary to support short-term liquidity needs and letters of credit. If the recapitalization is not consummated, we may continue to negotiate with the holders of the old notes and senior notes for a recapitalization, we may invest the proceeds from the sale of our Consulting Group in a related business investment or we may seek implementation of the recapitalization through a so-called "prepackaged" plan of reorganization. See "Possible Prepackaged Plan of Reorganization." If we were to seek implementation of a recapitalization through confirmation in a bankruptcy proceeding, no assurance can be given that the recapitalization would meet the requirements for confirmation under the U.S. Bankruptcy Code even if the requisite consents are received and the old notes subject to the consents are voted to accept the recapitalization. Cautionary Note Regarding Forward-Looking Statements This prospectus contains what we believe are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. They are statements about future performance or results such as statements including the words, "believe," "expect" and "anticipate" when Kaiser discusses its financial condition, results of operations and business. Forward-looking statements involve risks, assumptions and uncertainties. They are not guarantees of future performance. Factors may cause actual results to differ materially from those expressed in these forward-looking statements. These factors include those identified under the caption "Risk Factors" in this prospectus, as well as the factors identified under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in Kaiser's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1999 that is incorporated by reference into and delivered with this prospectus. We believe that the expectations reflected in our forward-looking statements are reasonable. However, we cannot assure you that these expectations will prove to be correct. You should consider the factors we have noted under the captions stated above as you read this prospectus. 2
- -------------------------------------------------------------------------------- The Convertible Preferred Stock Issuer...................... ICF Kaiser International, Inc. Securities Offered.......... We are offering 2,600,000 shares of redeemable convertible preferred stock in the exchange offer. Liquidation Preference...... The aggregate liquidation preference is $65 million, or $25 per share, plus accrued interest on the old notes from July 1, 1999 through the date of the closing of the recapitalization. The liquidation preference will increase at the end of each calendar quarter commencing December 31, 1999 at the rate of 6.25% per annum. Dividends................... Cumulative dividends on the preferred stock will be payable in cash on a quarterly basis at a rate per year equal to 3.75% of the liquidation preference per share through December 31, 2000 and 5.75% from January 1, 2001 through December 31, 2001. The dividend rate on the preferred stock will increase to 12% after December 31, 2001. If we fail for any reason to pay a dividend in cash in any quarter and if we fail to pay the delinquent dividend and the current dividend in the following quarter, holders of the preferred stock will have the right to appoint two additional directors for the two dividends missed and one additional director if any future dividend payment is missed, up to a maximum of three additional directors. The size of our Board of Directors will be expanded accordingly. The liquidation preference will be increased by 2% per annum for the time during which any dividend is delinquent. Conversion.................. The preferred stock will be convertible into our common stock at the option of the holder at any time on or after December 31, 2001. The number of shares of common stock into which each share of preferred stock will be converted will be determined by reference to the average closing price of our common stock for the 20 consecutive trading days preceding the conversion election. Redemption.................. We will have the option to redeem the preferred stock, in whole or in part, following the consummation of the exchange offer at: . 92% of the liquidation preference until December 31, 1999, . 91% of the liquidation preference from January 1, 2000 through March 31, 2000, . 89% of the liquidation preference from April 1, 2000 through June 30, 2000, . 88% of the liquidation preference from July 1, 2000 through September 30, 2000, . 86% of the liquidation preference from October 1, 2000 through December 31, 2000, . 85% of the liquidation preference from January 1, 2001 through March 31, 2001, . 84% of the liquidation preference from April 1, 2001 through June 30, 2001, . 85% of the liquidation preference from July 1, 2001 through September 30, 2001, . 83% of the liquidation preference from October 1, 2001 through December 31, 2001, and . 100% of the liquidation preference after December 31, 2001, - --------------------------------------------------------------------------------
3 - -------------------------------------------------------------------------------- plus any accumulated and unpaid dividends. If we fail to redeem the preferred stock on or before December 31, 2004, the preferred stock will become immediately convertible into a number of shares of common stock determined by reference to a price of $.01 per share, the holders of the preferred stock will be entitled to appoint two additional directors, and the dividend rate will immediately increase to 14%. Change of Control Offer..... We must offer to repurchase the preferred stock at 101% of the liquidation preference plus accumulated and unpaid dividends in connection with a change of control of Kaiser. If we fail to make the offer, the preferred stock will become immediately convertible into a number of shares of common stock determined by reference to a price of $.01 per share, the holders of the preferred stock will be entitled to appoint two additional directors, and the dividend rate will immediately increase to 14%. Voting Rights............... The holders of the preferred stock generally will be entitled to vote with holders of our common stock on all matters submitted to a vote of our shareholders. However, holders of preferred stock will have special voting rights as a class for the election of directors and special voting rights regarding mergers and liquidations in which they do not receive the liquidation preference. Each share of preferred stock will be entitled to one-fourth of a vote until the time it is convertible, at which point holders will be entitled to the number of votes corresponding to the number of shares into which the preferred stock may be converted. Prior to conversion and assuming a proposed reverse split of the common stock is implemented, the preferred stock will represent approximately 12% of the total voting power of the common and preferred stock. If Kaiser or any of its affiliates hold any preferred stock, they will not be entitled to vote that preferred stock on these matters. The terms of the preferred stock may only be amended with a two-thirds affirmative vote of the holders of preferred stock. The Common Stock Issuer...................... ICF Kaiser International, Inc. Securities Offered.......... We are offering as part of the exchange offer an aggregate of 882,000 shares of common stock, which will represent approximately 15% of our common stock after giving effect to a proposed reverse stock split. The New Notes Issuer...................... ICF Kaiser International, Inc. Securities Offered.......... We are offering up to $25 million aggregate principal amount of new notes. Maturity Date............... The new notes will mature on December 31, 2002. Interest Rate............... We will pay an initial annual rate of interest equal to 15%. The interest rate will reduce to 13.5% when the aggregate amount of outstanding new notes falls below $15 million. The interest will 4 - -------------------------------------------------------------------------------- further reduce by .25% for each $1 million of further principal reduction until the interest rate reaches 11%. Interest Payments........... We will make interest payments semi-annually, beginning on December 31, 1999. Ranking..................... The new notes will be unsecured senior debt. The new notes will rank senior in right of payment to any of our future subordinated debt and to any unexchanged old notes. However, the new notes will be effectively subordinated to our present and future secured obligations and to any indebtedness of those of our subsidiaries that have not guaranteed the new notes. Optional Redemption......... We may redeem the new notes at our option, in whole or in part, at any time and from time to time at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest. We are obligated to redeem outstanding new notes in excess of $10 million if we have cash available from reductions in cash collateral requirements for a specific construction project, and if permitted under our bank credit agreement, from unanticipated increases in joint venture distributions or in borrowing availability. Asset Sale Proceeds......... If we do not reinvest cash proceeds from any future sale of assets in our business, we may have to use these proceeds to offer to purchase some of the new notes at their face amount, plus interest. Restrictive Covenants....... The indenture governing the new notes will limit what we may do. The provisions of the indenture will limit our ability to: . incur more debt; . pay dividends, redeem stock, or make other distributions; . issue stock of subsidiaries; . make some investments; . create liens; . enter into sale/leaseback transactions; . enter into transactions with affiliates; . merge or consolidate; and . transfer or sell assets. These covenants are subject to a number of important exceptions. See "Description of New Notes." The Exchange Offer The Exchange Offer.......... We are offering to exchange preferred stock, common stock and new notes for all old notes outstanding after the asset sale offer. Minimum Tender Condition.... In order for us to consummate the exchange offer, holders of at least 95% of the outstanding old notes must have validly tendered their old notes. Conditions of the Exchange Offer.............. Our acceptance of the exchange offer is subject to the following conditions, among other things: - -------------------------------------------------------------------------------- 5
- -------------------------------------------------------------------------------- . the minimum tender condition of 95% must be met; . we must obtain the requisite consents from holders of the old notes; . our shareholders must approve the issuance of the preferred stock and common stock being offered in the exchange offer; and . we must obtain a new credit facility. At any time we can waive any condition to the exchange offer and accept all old notes tendered for exchange pursuant to the exchange offer. Additionally, we reserve the right at any time to terminate the exchange offer and not accept for exchange any old notes tendered for exchange. See "The Exchange Offer-Conditions of the Exchange Offer." Expiration Date............. The exchange offer, as well as the asset sale offer and consent solicitation, will expire at 5:00 p.m., New York City time, on November 1, 1999 unless we extend or earlier terminate them. We can extend the exchange offer and accept all old notes tendered for exchange or amend the terms of the exchange offer and any amendment will apply to the old notes tendered pursuant to the exchange offer. Tax Consequences of the Exchange.................... The exchange, taken together with the cash purchase of old notes pursuant to the asset sale offer, should qualify as a recapitalization under the Internal Revenue Code. If that is the case, a holder of old notes who participates in both the exchange and the asset sale offer will recognize taxable gain, but not loss, equal to the lesser of the cash plus the fair market value of the new notes received or the aggregate amount of gain realized on the exchange and cash purchase of old notes. However, if the Internal Revenue Service were to successfully claim that the exchange of old notes and the cash purchase of old notes pursuant to the asset sale offer should be treated independently of each other for federal income tax purposes, a holder of the old notes who participates in both the exchange and the asset sale offer would recognize taxable gain, but not loss, on the exchange equal to the lesser of the fair market value of the new notes received or the amount of gain realized on the exchange and would recognize taxable gain or loss on the purchase of the old notes pursuant to the asset sale offer. Further, if the Internal Revenue Service were to successfully claim that the exchange does not qualify as a recapitalization, the holders of old notes who participate in the exchange offer and/or the asset sale offer would be required to recognize taxable gain or loss on both the exchange and the cash purchase. See "United States Federal Income Tax Considerations." The Asset Sale Offer The Asset Sale Offer........ We will be offering to purchase at least $35 million of the old notes. All old notes tendered for purchase will be purchased on a pro rata basis. The offer to purchase will be made at the same time as the offer to exchange, and the purchase will be consummated immediately prior to consummation of the exchange offer. Conditions to Asset Sale Offer................ We will only consummate the asset sale offer if the conditions to the exchange offer are satisfied or waived and the exchange offer is consummated, the requisite number of consents is obtained, and the - --------------------------------------------------------------------------------
6 - -------------------------------------------------------------------------------- new credit facility is obtained. Tax Consequences of the Asset Sale Offer.......... The tax consequences for holders of old notes whose old notes are purchased in the asset sale offer for the old notes are summarized above under "Tax Consequences of the Exchange." The Consent Solicitation The Consent Solicitation.... In connection with the exchange offer, we are soliciting consents from the holders of the old notes to approve proposed amendments to the indenture governing the old notes. We also are requesting holders of the old notes to deliver an instruction to the trustee under the old notes indenture not to interfere with our recapitalization. The proposed amendments will not become operative unless the conditions of the exchange offer are met and will become effective immediately preceding the consummation of the exchange offer. Requisite Consents.......... Consents of registered holders of a majority of the outstanding aggregate principal amount of the old notes are required to approve the proposed amendments to the indenture. Proposed Amendments......... The proposed amendments to the indenture governing the old notes will eliminate substantially all of the restrictive covenants and some defined events of default in the old notes indenture. If the proposed amendments become effective, they will apply to all old notes issued under the old notes indenture, and each holder of old notes not tendered or accepted for exchange pursuant to the exchange offer will be bound by the proposed amendments regardless of whether the holder consented to the proposed amendments. Possible Prepackaged Plan of Reorganization Alternative Implementation of Recapitalization....... If holders of 95% of the outstanding old notes do not tender their old notes in the exchange offer but we obtain a substantial level of support for the recapitalization, we may elect to implement that recapitalization through a "prepackaged" plan of reorganization under Chapter 11 of the Bankruptcy Code having the same terms and conditions as regards the holders of old notes as contemplated by the recapitalization. This plan would not alter or impair the rights of our other creditors or equity security holders. In addition, this type of plan of reorganization would not affect Kaiser's operations, vendors or employees. Binding Effect of Plan...... If confirmed by the Bankruptcy Court, a prepackaged plan of reorganization would bind all holders of old notes, without regard to whether they tendered their old notes in the exchange offer or the asset sale offer. Effectiveness of Tenders of Old Notes...... Tenders of old notes and related documentation may not be withdrawn after delivery and may be counted as ballots in favor of a plan of reorganization in a Chapter 11 case. - -------------------------------------------------------------------------------- 7 The Company We are a global provider of engineering, construction management, and project and program management services. We also own a 50% interest in Kaiser- Hill Company, LLC, which serves as the integrated management contractor at the U.S. Department of Energy's Rocky Flats Environmental Technology Site. We completed the sale of our Environment and Facilities Management Group on April 9, 1999 for net cash proceeds, after a working capital adjustment, of $74 million and on June 30, 1999 we sold 90% of our Consulting Group for $64 million in cash, plus $6.6 million of interest bearing notes. These actions were taken in response to substantial losses incurred primarily in 1998 in connection with fixed price contracts to construct four nitric acid plants. We are now focused on serving clients in five major lines of business: . Transit and Transportation - Our transit and transportation services support the planning, design, engineering, and construction of heavy- and light-rail transit systems, high-speed rail, peoplemovers, bus systems, highways and bridges, and airport improvements. . Alumina/Aluminum - We provide design and construction services for expansion and modernization of some of the world's largest alumina and aluminum facilities in locations from Kentucky to the Middle East and Australia. . Facilities and Water/Wastewater - We provide engineering services to public-and private-sector clients who need to modernize or maintain facilities, to design and build new capacity for the future, or to improve existing operations and environmental conditions. Such facilities include, but are not limited to, water supply and wastewater treatment facilities. . Iron and Steel - We support the iron and steel industry by providing traditional services such as engineering, design, and project and construction management for plant expansions, modernizations, and greenfield development. . Microelectronics and Clean Technology - We also provide design/build services for the microelectronics, semiconductor, biotechnology, and telecommunication industries. Our business is global in nature with more than 30 offices worldwide. We own Kaiser-Hill Company, LLC equally with CH2M Hill Companies Ltd. We designate a majority of the members of Kaiser-Hill's Board of Managers. Kaiser-Hill currently serves as the integrated management contractor at the U.S. Department of Energy's Rocky Flats Environmental Technology Site near Denver, Colorado. The scope of Kaiser-Hill's contract with the DOE includes all elements of daily and long-term operation of the site, including stabilizing and safely storing more than 14 tons of plutonium, cleaning up areas contaminated with hazardous and radioactive waste, and restoring much of the 6,000-acre site for future use by the public. Kaiser-Hill's contract with the DOE currently expires in September 2000. On July 30, 1999, the DOE announced that it intends to negotiate with Kaiser-Hill for a new contract for services through the closure of the Rocky Flats site in 2006. Such negotiations are expected to begin in early October. The DOE has stated that if a new contract has not been entered into by November 30, 1999, it intends to conduct a competition for the new contract. We can provide no assurance as to Kaiser-Hill's ability to compete for or win a new contract if Kaiser-Hill is unable to enter into a new contract through negotiations. Strategy Our strategy is to grow the revenue base of our remaining operations and improve profitability. We will focus on new business development, cost reductions and stringent project and operating controls to achieve this goal. New Business Development. The realignment of our capital structure will enable us to focus on expanding our revenue base. We believe our expertise in our core lines of business and worldwide presence and recognition for quality service delivery can be leveraged into significant opportunities in 8 the future. We will seek additional contracts with our existing customers and utilize our expertise from our current projects to win business from new clients. Cost Reductions. Concurrently with the planning for the sales of the EFM and Consulting Groups, we identified approximately $20 million of cost reduction opportunities in our remaining operations. Upon elimination of these costs, we will have aligned our cost structure with our remaining revenue base. By changing the way we manage our business to a line of business focus with only two regions - North America and International - we have been able to eliminate a layer of overhead including personnel and facilities costs. In addition to reductions in overhead, reductions in technical personnel resulting in higher revenue per employee will improve profitability. As of September 30, 1999, we have effected approximately 95% of these cost reductions. Stringent Controls. Following the identification of our nitric acid plant related problems we, along with several outside consultants, thoroughly reviewed our policies and procedures in all phases of a contract lifecycle. As a result, we have implemented: . stronger financial and operating controls and project evaluation processes; . frequent senior management reviews of progress and profitability of each contract; and . a new project management reporting system that will allow us to more proactively manage profitable project execution. Our principal executive office is located at 9300 Lee Highway, Fairfax, Virginia 22031-1207 and our telephone number is (703) 934-3600. Risk Factors Before making an investment, you should consider carefully the information included in the "Risk Factors" section, as well as all other information set forth in this prospectus. 9 Summary Financial Data The following statement of operations, basic and diluted (loss) per share data, and balance sheet data, excluding the data for the six months ended and as of June 30, 1999, has been derived from Kaiser's audited financial statements. The information should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and with our consolidated financial statements and related notes, incorporated by reference in this prospectus. Effective January 1, 1999, the results of operations from the EFM and Consulting Groups were treated as discontinued operations and were excluded from the statement of operations data. Accordingly, the statement of operations data for the six months ended June 30, 1999 is not comparable to the data for the prior periods presented.
Year Ten Months Six Ended Ended Months February December Year ended December 31, Ended 28, 31, -------------------------------- June 30, 1995 1995 1996 1997 1998 1999 ---- ---- ---- ---- ---- ---- (in thousands, except per share data) (unaudited) Statement of Operations Data: Gross revenue.............. $861,518 $916,744 $1,248,443 $1,108,116 $1,210,421 $445,377 Service revenue (a)........ 459,786 425,896 532,116 426,086 345,462 127,433 Operating costs (b)....... 436,866 400,534 500,588 398,422 397,696 125,538 Depreciation and amortization 9,232 8,357 10,348 9,595 9,048 3,098 Severance and restructuring - charges................. - - - - 9,407 9,359 Other unusual charges...... - (500) - - 7,672 1,335 Operating income (loss).... 13,688 17,505 21,180 18,069 (78,361) (11,897) Income (loss) before income taxes, minority interest, extraordinary item and cumulative effect of accounting change....... 1,239 6,303 14,484 2,561 (97,101) (23,499) Net income (loss) before discontinued operations, extraordinary item and cumulative effect of (1,661) 2,252 5,834 (4,987) (93,442) (27,102) accounting change....... Basic and Diluted Earnings (Loss) Per Share: Continuing operations before extraordinary item and cumulative effect of accounting change....... $(0.18) $0.02 $0.17 $(0.22) $(3.87) $(1.13) Discontinued operations.... - - - - - 2.12 Extraordinary item......... - - - - (0.05) (0.03) Cumulative effect of accounting change, net of tax.............. - - - - (0.25) - -------- -------- ---------- ---------- ---------- -------- Total.......... $(0.18) $0.02 $0.17 $(0.22) $(4.17) $0.96 ======== ======== ========== ========== ========== ======== Weighted average common shares outstanding-basic 20,957 21,132 22,035 22,382 24,092 23,971 Weighted average common shares outstanding-diluted 20,957 21,606 22,057 22,382 24,092 23,971 Other Data: Minority interest (c)...... $ - $ 1,960 $ 6,043 $10,867 $ 7,698 $4,205 EBITDA (d)................. 22,920 23,402 25,485 16,797 (59,932) (2,310) Ratio of earnings to fixed charges (e)............. (e) 1.24 1.60 1.01 (e) (e) Balance Sheet Data (end of period): Cash and cash equivalents.. $28,233 $17,019 $20,250 $20,020 $15,267 $67,514 Total assets............... 281,422 370,179 369,462 399,288 429,053 364,434 Long-term debt (f)......... 126,733 120,112 156,519 141,004 137,488 137,730 Redeemable preferred stock. 19,617 19,787 - - - - Shareholders' equity (deficit) 27,624 28,427 34,892 27,327 (63,118) (39,849)
10 ________________ (a) Service revenue is calculated by deducting the costs of subcontracted services and other direct costs from the gross revenue and adding our share of the income or loss of joint ventures and affiliated companies. (b) Includes direct labor and fringe benefits, group overhead and corporate general and administrative expense. (c) Minority interest represents CH2M Hill's fifty-percent ownership of Kaiser- Hill. (d) EBITDA, as presented, includes operating income (loss) plus depreciation and amortization, severance and restructuring charges, and unusual charges and minus minority interest. We believe that EBITDA provides useful information regarding our ability to service our indebtedness, but should not be considered in isolation or as a substitute for operating income or cash flow from operations, in each case as determined in accordance with generally accepted accounting principles, as an indicator of our operating performance or as a measure of our liquidity. (e) Earnings for these periods are inadequate to cover fixed charges. The deficiency, calculated as the dollar amount of earnings required to attain a ratio of one-to-one, for the year ended February 28, 1995, December 31, 1998 and the six months ended June 30, 1999 was $2,848, $103,146 and $26,495, respectively. (f) Includes unamortized discounts. The following financial information represents the results from continuing operations for the three months ended June 30, 1999, as annualized and adjusted for the effects of the following: . the anticipated increase in our service revenue based upon internal management projections, as compared to the annualization of the results from continuing operations during the second three months of 1999; and . the full-year effect of our cost reduction plan as a result of the scheduled separation of approximately 245 employees. The results from continuing operations presented in the table exclude the operating results of our EFM and Consulting Groups, which were sold during the second quarter of 1999 and whose results were otherwise included in Kaiser's results from discontinued operations not presented in the table. We believe that the annualization of the continuing operating results for the three months ended June 30, 1999 is a reasonable basis upon which to present the effects of the adjustments noted above: . since that quarter's results, excluding nonrecurring charges, reflect the most recent actual results and may likely represent the near-term future recurring operating trends; and . since the cost reduction plan was largely designed, planned and executed based on the cost trends and operating results, excluding nonrecurring charges, experienced during that quarter. This financial data is provided for information purposes only and is not intended to project our results of operations or financial position for any future period or as of any future date. The information is based on our unaudited historical financial information for the three months ended June 30, 1999 and should be read in conjunction with the related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations," included in our quarterly report on Form 10-Q for the period ended June 30, 1999, that is incorporated by reference into this prospectus. 11
Adjusted Annualized Run Annualized Rate Adjustments Run Rate ----------------- ------------------ -------- Statement of Operations Data: Gross revenue $879,520 $ 2,424 $881,944 Service revenue (a) 253,096 2,424 255,520 Operating costs (b) 247,952 (15,040) 232,912 Depreciation and amortization 6,468 (1,968) 4,500 -------- -------- -------- Operating income (loss) before other unusual (1,324) 19,432 18,108 charges Other Data: Minority interest (c) $ 8,492 $ 8,492 EBITDA (d) (3,348) 14,116
(a) Service revenue is calculated by deducting the costs of subcontracted services and other direct costs from the gross revenue and adding our share of the income or loss of joint ventures and affiliated companies. (b) Severance and restructuring charges and other unusual charges incurred during the three months ended June 30, 1999 have not been included in the annualized run rate column as operating costs. (c) Minority interest represents CH2M Hill's fifty-percent ownership of Kaiser- Hill. (d) EBITDA, as presented above, includes operating income (loss), plus depreciation and amortization, severance and restructuring charges, and unusual charges and minus minority interest. Other unusual charges incurred during the three months ended June 30, 1999 have not been included in the annualized run rate column and have accordingly been excluded from this definition of EBITDA. We believe that EBITDA as presented here provides useful information regarding our ability to service our indebtedness, but should not be considered in isolation or as a substitute for operating income or cash flow from operations, in each case as determined in accordance with generally accepted accounting principles, as an indicator of our operating performance or as a measure of our liquidity. The assumed increase in service revenue and the assumed decrease in costs from the cost reduction plan are not predictions of actual future results. You should not assume that the increase in service revenue and the decrease in costs necessarily will occur. Accordingly, you should not use or rely on this information as an indication of actual future results. The foregoing projections constitute what we believe are forwarding-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks, assumptions and uncertainties. There can be no assurance that future developments will be in accordance with Kaiser's expectations. See "Cautionary Note Regarding Forward-Looking Statements." 12 RISK FACTORS An investment in the securities described in this prospectus involves a high degree of risk. You should consider carefully the following factors, in addition to the other information contained in this prospectus, before participating in the exchange offer. Specific factors related to our financial performance may adversely affect our ability to pay interest and principal on our debt. Sale of operating groups will reduce cash flow. During the first half of 1999, we sold our EFM and Consulting Groups. Prior to their sale, these groups had generated cash that was used to support Kaiser's operations and debt service. In the recent past, apart from Kaiser's interest in Kaiser-Hill Company, LLC, Kaiser's other operating units have not generated positive cash flow. We rely heavily on a plan to reduce expenses and increase cash flow, which may not be successful. Our success will be dependent, to a large extent, on our ability to execute promptly and effectively our plan to reduce operating expenses, increase margins and enhance cash flow from remaining operations. We are dependent on key customers, and the loss of any of them could materially affect us. Our future profitability is dependent, to a significant extent, on Kaiser-Hill's entering into a new contract with DOE. We have several other key clients, the loss of any of which would have a significant material adverse effect on our ability to return to profitability. The loss of a significant client could impair our ability to compete for new clients and have a significant negative impact on Kaiser's future growth. We intend to continue bidding and entering into fixed price contracts, which may not be completed profitably. Our recent history of financial losses is partially attributable to our failure to accurately bid on, and our inability to perform, fixed price contracts, specifically with respect to the nitric acid plants. Despite this performance history, the nature of our business is such that we believe it is necessary for us to continue to enter into fixed price contracts. Although we believe we have put appropriate controls in place such that we can successfully bid and perform fixed price contracts, we give no assurances that all future fixed price contracts will be completed profitably. The remaining operations may not be able to retain or attract the personnel needed for growth and profitability. Our future performance will depend to a significant extent upon the efforts and abilities of senior executives, line of business managers and other key employees. Our current financial circumstances make it more difficult to retain key managers, and the loss of the services of these managers could have a material adverse effect on us. In addition, because our remaining operations are service-oriented in nature, our ability to deliver these services in a cost-effective and high quality manner depends upon our ability to attract, retain, and properly manage a staff of qualified professionals with the necessary skills. The market for these professionals is quite competitive and our current financial circumstances make it more difficult to attract these professionals. The remaining operations may not grow and become profitable in their highly competitive markets. We compete with many other firms ranging from small firms to large multinational firms having substantially greater financial, management and marketing resources. Other competitive factors include quality of services, technical qualifications, reputation, geographic presence, price, and the availability of key professional personnel. In order for us to become profitable, we will have to successfully compete against these firms in order to generate additional backlog of service contracts, including an extension of the current contract or award of a new contract for Kaiser-Hill. Holders of old notes may have to surrender any payments received from Kaiser pursuant to the asset sale offer if the payments are found to be avoidable preferences under the U.S. Bankruptcy Code. In the event we were to file for relief under Chapter 11 of the U.S. Bankruptcy Code within 90 days or possibly one year of the payment date, the payments may be avoidable as a preference and could be subject to recovery by a trustee in bankruptcy, an official creditors' committee, or other representatives of creditors of Kaiser as a debtor in possession. If the 13 payments were successfully challenged as a preference, holders either would be required to return the funds received, together with interest in a rate determined by the court, or would be precluded from receiving any distribution on account of the holders' old notes. Our financial performance is significantly tied to Kaiser-Hill, which is subject to uncertainties that may adversely affect its and our operating results. If Kaiser-Hill does not successfully negotiate a new DOE contract, we will lose a significant portion of our cash flow and value. The contract with DOE under which Kaiser-Hill operates expires in September 2000. Although we believe DOE will enter into a new contract with Kaiser-Hill, it is possible that after negotiating with Kaiser-Hill, DOE will conduct a competition for a new contract. Kaiser-Hill may not be able to compete for or win a new contract if a competition is conducted by DOE. If Kaiser-Hill does not successfully negotiate or win a new contract in any competition that is held, we will lose a significant portion of our cash flow and value. There are special Federal regulations that could adversely affect Kaiser- Hill's DOE contract. Because Kaiser-Hill provides the Federal government with nuclear energy and defense- related services, it and a number of its employees are required to have and maintain security clearances from the Federal government. There can be no assurance that the required security clearances will be obtained and maintained in the future. In addition, Kaiser-Hill is subject to foreign ownership, control and influence regulations imposed by the Federal government and designed to prevent the release of classified information to contractors subject to foreign ownership, influence and control. There can be no assurance that foreign ownership, influence and control concerns will not affect the ability of Kaiser-Hill to secure and maintain its DOE contract. There are potential substantial liabilities and costs associated with Kaiser-Hill's DOE contract. Kaiser-Hill performs DOE's Performance Based Integrating Management Contract at DOE's Rocky Flats Environmental Technology Site near Denver, Colorado. Rocky Flats is a former DOE nuclear weapons production facility. Under the DOE contract, Kaiser-Hill is responsible for, and DOE will not pay for costs associated with, 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. If Kaiser-Hill were found liable for any of these reasons, the associated costs could be substantial. We face significant contingencies, which may adversely impact our ability to meet our obligations on our debt and preferred stock and our ability to fund continuing operations. We have retained obligations relating to the operating groups that were sold. We have indemnified the purchasers of the EFM and Consulting Groups we sold against breaches of representations and warranties and covenants included in the sale agreements. We also have retained some potential liabilities arising from the pre-closing operations of these operating groups. These retained liabilities relate primarily to potential liabilities arising out of ongoing federal government audits of certain activities of the operating groups prior to their sale. We have a potential liability from a contract with Bath Iron Works as to which we currently cannot estimate the outcome. In March 1998, we entered into a $197 million maximum price contract to construct a ship building facility for Bath Iron Works. In May 1998, we learned that estimated costs to perform the contract as reflected in actual proposed subcontracts were approximately $30 million higher than the cost estimates originally used as the basis for contract negotiation between us and our customer. After learning this, we advised the customer that we were not required to perform the contract in accordance with its terms as a result of a mutual mistake between us in negotiating that contract. In October 1998, our customer presented an initial draft of a claim against us requesting payment for estimated damages and entitlements pursuant to the terminated contract. No provision for loss from this matter has been included in our financial results to date as management does not believe that it has sufficient information to reasonably estimate the outcome as negotiation activity has not been significant to date. We have contingencies from a recent acquisition that could require us to use cash that might otherwise be available for debt service or operations. In March 1998, we acquired ICT Spectrum Constructors, Inc. by issuing common stock in exchange for the stock of ICT Spectrum. We guaranteed that the market value of each of the 1.5 million shares of common stock issued in the acquisition will reach $5.36 by March 1, 2001. In the event that the market value does not attain the guaranteed level, we are obligated to make up the shortfall either through the 14 payment of cash or by issuing additional shares of common stock with a total value equal to the shortfall, depending upon our preference. Under the terms of the agreement, however, the total number of contingently issuable shares of common stock cannot exceed an additional 1.5 million. Given recently quoted prices of our stock, the assumed issuance of an additional 1.5 million shares would not completely extinguish the purchase price contingency and we would be required to pay a cash fill-up to satisfy the contingency. Any future distribution of cash or common stock would be recorded as a charge to our paid- in-capital. Until the earlier of the resolution of the contingent purchase price or March 1, 2001, any additional shares assumed to be issued because of shortfalls in market value will be included in our diluted earnings per share calculations, unless they are antidilutive. The exchanged shares also contain restrictions preventing their sale prior to March 1, 2001. On March 29, 1999, one ex-ICT Spectrum shareholder, individually and on behalf of all others similarly situated, filed a class action lawsuit alleging false and misleading statements made in a private disclosure document, and asserting other claims, in connection with our acquisition of ICT Spectrum. We have filed a motion to dismiss the plaintiffs' amended complaint. There may be Y2K compliance issues associated with the remaining operations. During recent years, there has been significant global awareness raised regarding the potential disruption to business operations worldwide resulting from the inability of current computer software to process properly the change from the year 1999 to 2000. We have reviewed our data processing, operating and other computer-based systems, and we do not currently anticipate any material disruption in our operations as a result of any failure by us to achieve year 2000 compliance, but we cannot give any assurance to that effect. Even if our computer operations are unaffected by the year 2000, our business operations may be interrupted or adversely affected as a result of year 2000 complications experienced by our subcontractors, clients, vendors, or general business interruptions experienced domestically or internationally. See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Other Matters - Year 2000 Readiness" in the Quarterly Report on Form 10-Q for the quarter ended June 30, 1999 enclosed with this prospectus. There are significant financial risks associated with the preferred stock, common stock and new notes, which could adversely affect the value of the preferred stock, common stock and new notes. There may not be a trading market for the preferred stock and new notes. The preferred stock and new notes are new issues of securities for which there are currently no established trading markets. We cannot assure you that a trading market for the preferred stock or new notes will develop. The absence of a trading market adversely affects the liquidity of your shares of preferred stock and new notes and it may be difficult for you to sell these securities. We do not intend to apply for listing of the new notes on any national securities exchange or for quotation through any over-the-counter market and there is no assurance that we will be able to obtain listing or quotation of the preferred stock. If your shares of preferred stock or new notes are traded, they may trade at a substantial discount from their face or liquidation value. Any discount could depend upon a number of factors, including: . the market demand for the preferred stock or new notes, as the case may be; . the market for similar securities; . the financial condition and performance of Kaiser; . prevailing dividend and interest rates generally in the financial markets; and . general economic conditions. Our ability to pay the liquidation preference and dividends on the preferred stock depends on our financial condition at that time. Our obligations to the holders of our debt and other creditors take priority over our 15 obligations to the holders of the preferred stock. Under Delaware law, we may not redeem the preferred stock for its stated liquidation preference if at that time our remaining assets are not sufficient to pay our outstanding obligations or if that redemption would impair our capital. See "Description of Convertible Preferred Stock" on page 51 of this prospectus. Preferred stock could result in potential dilution and impair market price. To the extent that the preferred stock is converted into our common stock, our existing shareholders will experience dilution in their percentage ownership of Kaiser. So long as the preferred stock is exercisable, the holders of preferred stock will have the opportunity to profit from a rise in the price of our common stock. The additional shares of common stock available for sale in the market may have a negative impact on the price and liquidity of the common stock that is currently outstanding. Preferred stock and new notes may have an adverse impact on additional financing. The holders of the preferred stock are more likely to convert at a time when we may be able to obtain additional capital by an offering of our stock at a price higher than the conversion price of the preferred stock. This may make it more difficult to obtain additional financing at a time when additional financing may be necessary or desirable to sustain current or increased levels of operations. In addition, the new notes will represent new outstanding debt for Kaiser. Potential lenders may look unfavorably at our total debt level with this additional debt, making it more difficult for us to obtain additional financing. The repayment of new notes is not secured by our assets. Our obligation to make payments of principal and interest on the new notes is unsecured. As a result, holders of the new notes will not have any ability to use our assets as collateral for the repayment of these obligations. In addition, if we become subject to a bankruptcy or liquidation proceeding, the right of holders of the new notes to be repaid will be limited to the assets available after all of our secured creditors have been satisfied. These remaining assets will then be distributed among the remaining unsecured creditors, including trade creditors, as well as holders of the new notes. As a result, holders of the new notes may not recover their investment in these new notes. We are currently pursuing alternatives for a new secured credit facility. On a pro forma basis, assuming we are successful in obtaining that secured credit facility, the new notes would be effectively subordinated to up to $30 million of secured indebtedness. The new notes will be subordinated to liabilities of some of our subsidiaries. Substantially all of our operations are conducted, and substantially all of our assets are owned, by our subsidiaries. The new notes will effectively be subordinated to all existing and future liabilities of those of our subsidiaries that have not guaranteed the new notes. Any right we may have to participate in any distribution of the assets of any of our subsidiaries upon the subsidiary's liquidation, reorganization or insolvency, and any right the holders of the new notes may consequently have to participate in the distribution of those assets, will be subject to the claims of the creditors, including trade creditors, of the subsidiary. In addition, in the event we have valid claims as a creditor of a subsidiary that are recognized, these claims would be subordinated to any security interest in the assets of the subsidiary and any indebtedness of the subsidiary senior to that held by us. As of June 30, 1999, on a pro forma basis after giving effect to the recapitalization, the aggregate principal amount of indebtedness of our wholly-owned subsidiaries which would have effectively ranked senior to the new notes would have been approximately $114 million. Our common stock could be delisted from the New York Stock Exchange, which may adversely affect holders of our common stock. Our common stock is listed on the New York Stock Exchange. In order to continue to be listed on the NYSE, we must meet specific quantitative standards. On August 5, 1999, the NYSE notified us that we were "below criteria" regarding newly effective continued listing standards. This means we are subject to the NYSE's procedures under which the NYSE evaluates whether a listed company has a plan to bring it into conformity with the applicable continued listing criteria or whether a company should be delisted from the NYSE. We do not know whether our proposed recapitalization and other ongoing programs will be sufficient to bring us into conformity with the applicable continued listing criteria. Although we would have an opportunity to appeal any decision by the NYSE to delist our common stock, there can be no assurance that this appeal would be successful. If our common stock were delisted from the NYSE, we would seek to have the common stock listed on another exchange, such as AMEX or one of the regional exchanges, or quoted in the Nasdaq National or SmallCap markets. However, many of these exchanges and markets also have minimum quantitative standards that we may be unable to meet. If our common stock is delisted from the NYSE and we are unable to have our shares included on another exchange or in the over-the-counter market, shareholders may find it more difficult to dispose of the shares or to 16 obtain accurate quotations of the market value of the shares. In addition, the market price of the shares could decline, news coverage about us could decline, and we could find it more difficult to obtain financing in the future. Kaiser does not anticipate that it will pay any dividends on its common stock in the foreseeable future, which adversely affects the value of our common stock. We have never paid dividends on our common stock and anticipate retaining all earnings for use in our business rather than paying cash dividends in the foreseeable future. Our ability to pay cash dividends on our common stock has been substantially restricted under the indentures governing our outstanding debt. The new credit facility also will likely contain provisions prohibiting us from paying dividends without the consent of the lender. These contractual restrictions will limit our ability to pay dividends in the future. Issuance of shares to former holders of ICT Spectrum stock could cause significant dilution. As noted above, if we are required to issue shares to extinguish the ICT Spectrum purchase price contingency, there will be significant dilution to shareholders. If the recapitalization is completed, holders of old notes not tendered in the exchange offer or in the asset sale offer will have reduced rights under the governing indenture and may find it difficult to sell their old notes. The amendments to the indenture governing the old notes will have the effect of reducing the rights of the holders of old notes not tendered in the exchange offer or in the asset sale offer. Concurrent with the exchange offer, we propose to amend the indenture that governs the old notes by eliminating substantially all of the covenants that restrict our activities and those of our subsidiaries. Under the indenture governing the old notes, holders of the old notes currently have the right to enforce these covenants upon us. The market price of the old notes may decline. If the exchange offer is successful, the amount of old notes outstanding will be substantially reduced. As a result, it may become much more difficult for holders to sell their old notes. In addition, the reduced liquidity of old notes outstanding after the recapitalization could have the effect of reducing the market price at which the old notes may be sold. CAPITALIZATION The following table sets forth our capitalization as of June 30, 1999, pro forma to give effect to the purchase of the senior notes and certain other transactions subsequent to June 30, 1999 and adjusted to give effect to the consummation of the recapitalization as if it had occurred on June 30, 1999. The information set forth below should be read in conjunction with our audited financial statements and unaudited pro forma financial statements, together with the related notes, included and incorporated by reference in this prospectus. 17
June 30, 1999 (a) --------------------------------------------------- Pro Forma Pro Forma Before After Actual Recapitalization (c) Recapitalization (d) -------- ---------------- ---------------- (Dollars in thousands) Cash and Cash Equivalents (b) $ 90,368 $ 54,168 $ 16,668 ======== ======== ======== Long-term Debt (including current portion): Credit Facility $ - $ - $ - New Notes - - 18,903 12% Senior Notes 14,717 - - 12% Senior Subordinated Notes 123,013 123,013 - ------- ------- ------- Total Debt 137,730 123,013 18,903 Stockholders' Equity (Deficit) (39,849) (42,402) 22,075 -------- -------- ------- Total Capitalization $ 97,881 $ 80,611 $40,978 ======== ======== ======= - ----------------
(a) Assumes 100% participation by the noteholders. (b) Includes $22.9 million of restricted cash being used prior to recapitalization to collateralize letters of credit. (c) Pro forma to give effect to the settlement of the senior notes and certain other transactions occurring or anticipated to occur subsequent to June 30, 1999 and prior to the recapitalization. (d) Pro forma to give effect to the recapitalization, assuming $35 million in cash is used and $25 million of new notes are exchanged, and the quasi-reorganization. 18 RATIO OF EARNINGS TO FIXED CHARGES The following table sets forth our ratio of earnings to fixed charges for the five years ended December 31, 1998 and the six months ended June 30, 1999. The ratio of earnings to fixed charges has been calculated by dividing fixed charges into the sum of fixed charges and income from continuing operations before income tax expense and before equity in earnings or losses of less than fifty-percent owned companies. Fixed charges consist solely of interest costs.
Year ended Ten months ---------------------------------------- Six months Year Ended ended ended February 28, December 31, December 31, December 31, December 31, June 30, 1995 1995 1996 1997 1998 1999 ---- ---- ---- ---- ---- ---- (Dollars in thousands) Income (loss) before income taxes, minority interest or income or loss from equity investees, discontinued operations, extraordinary item and cumulative effect of accounting change $(2,848) $ 3,180 $10,469 $ 260 $(103,146) $(26,495) ======= ======= ======= ======= ========= ======== Total Fixed Charges: Interest expense $14,799 $13,255 $17,334 $18,276 $ 20,279 $ 12,209 ======= ======= ======= ======= ========= ======== Income (loss) before income taxes, minority interest or income or loss from equity investees, discontinued operations, extraordinary item and cumulative effect of accounting change plus fixed charges $11,951 $16,435 $27,803 $18,536 $ (82,867) $(14,286) ======= ======= ======= ======= ========= ======== Ratio of earnings to fixed charges (a) 1.24 1.60 1.01 (a) (a) ======= ======= ======= ======= ========= ========
(a) Earnings for these periods are inadequate to cover fixed charges. The deficiency, calculated as the dollar amount of earnings required to attain a ratio of one-to-one, for the year ended February 28, 1995, December 31, 1998 and the six months ended June 30, 1999 was $2,848, $103,146 and $26,495, respectively. 19 UNAUDITED PRO FORMA FINANCIAL STATEMENTS The following unaudited pro forma financial statements are derived from our historical financial statements incorporated by reference into this prospectus. . The unaudited pro forma statement of operations for the year ended December 31, 1998 reflects the sale of our EFM and Consulting Groups and the completion of the recapitalization described in this prospectus, as if these transactions had occurred on January 1, 1998. . The unaudited pro forma balance sheet at June 30, 1999 reflects the completion of the recapitalization described in this prospectus, as well as several other transactions, as described in the notes to the pro forma financial statements, as if they had occurred at June 30, 1999. . The unaudited pro forma statement of operations for the six months ended June 30, 1999 reflects the operating results of the EFM and Consulting Groups as discontinued operations. As a result, they have been excluded from gross revenue, service revenue, operating income (loss), other income (expense) and all information concerning continuing operations for that period. The unaudited pro forma financial statements should be read in conjunction with the related notes, with the "Management's Discussion and Analysis of Financial Condition and Results of Operations" and with our historical financial statements, including the related notes, incorporated by reference into this prospectus. The pro forma adjustments to give effect to the various events described above are based upon currently available information and upon assumptions that management believes are reasonable. The pro forma financial statements are provided for information purposes only and should not be construed to be indicative of our results of operations or financial position had the transactions described above been consummated on or as of the dates assumed, and are not intended to project our results of operations or financial position for any future period or as of any future date. 20 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES Unaudited Pro Forma Consolidated Balance Sheet As of June 30, 1999 (In Thousands)
Pro Forma Adjustments ---------------------------------------- Actual Other Pro Forma June 30, Significant June 30, 1999 Transactions Recapitalization 1999 --------------- --------------- ------------------ -------- Assets Current Assets Cash and cash equivalents $ 67,514 $ (36,200)(1,2,8) $ (14,646) (10,13,14) $ 16,668 Restricted cash 22,854 - (22,854) (10) - Contract receivables, net 204,758 - - 204,758 Prepaid expenses and other current assets 15,693 - - 15,693 Deferred income taxes - - - - --------------- ------------ -------------- ------------ Total Current Assets 310,819 (36,200) (37,500) 237,119 --------------- ------------ -------------- ------------ Fixed Assets Furniture, equipment, and leasehold improvements 17,182 - - 17,182 Less depreciation and amortization (13,244) - - (13,244) --------------- ------------ -------------- ------------ 3,938 - - 3,938 --------------- ------------ -------------- ------------ Other Assets Goodwill, net 21,687 (2,124) (3) - 19,563 Investments in and advances to affiliates 8,939 - - 8,939 Capitalized software development costs 2,046 - - 2,046 Notes receivable 6,550 - - 6,550 Other 10,455 (746) (6) (2,133) (12) 7,576 --------------- ------------ -------------- ------------ 49,677 (2,870) (2,133) 44,674 --------------- ------------ -------------- ------------ Total Assets $ 364,434 $ (39,070) $ (39,633) $ 285,731 =============== ============ ============== ============ Liabilities and Shareholders' (Deficit) Current Liabilities Accounts payable $ 165,983 $ (12,700) (2,7) $ - $ 153,283 Accrued salaries and benefits 35,447 - - 35,447 Other accrued expenses 22,959 - - 22,959 Accrued Interest 9,100 (9,100) (1) - - Deferred revenue 6,404 - - 6,404 Income taxes payable 4,307 - - 4,307 --------------- ------------ -------------- ------------ Total Current Liabilities 244,200 (21,800) - 222,400 Long-term Liabilities Long-term debt 137,730 (14,717) (4,5) (104,110)(10,11,12,15) 18,903 Revolving credit facility - - - - Other 17,699 - - 17,699 --------------- ------------ -------------- ------------ Total Liabilities 399,629 (36,517) (104,110) 259,002 --------------- ------------ -------------- ------------ Commitments and Contingencies Minority Interest 4,654 - - 4,654 Shareholders' Equity/(Deficit) Preferred Stock, par value $.01 per share: Authorized-3,100,000 shares Issued and outstanding - 2,600,000 shares - - 7 (11) 7
21 Common stock, par value $.01 per share: Authorized-90,000,000 shares Issued and outstanding - 23,822,657 shares (actual) and 28,029,797 share (pro forma) 238 - 42 (15) 280 Additional paid-in capital 75,127 - (49,829)(11,14,15,17) 23,363 Accumulated deficit (111,704) (2,553) (3,9) 114,257 (13,15) - Cumulative translation adjustment (3,510) - - (3,510) ------------ ------------ -------------- ------------ Total Shareholders' Equity (Deficit) (39,849) (2,553) 64,477 22,075 ------------ ------------ -------------- ------------ Total Liabilities and Shareholders' Equity $ 364,434 $ (39,070) $ (39,633) $ 285,731 ============ ============ ============== ============
22 NOTES TO THE PRO FORMA BALANCE SHEET Other Significant Transactions Several transactions completed subsequent to June 30, 1999 were deemed to be significant to presenting the pro forma effects of the exchange offer transaction described in this prospectus. Accordingly, such transactions have been included in the pro forma balance sheet presentations. 1. To record the payment, within the 30-day grace period on July 30, 1999, of $9.1 million of accrued interest on the senior notes and the old notes. 2. To pay $13.9 million in accounts payable. 3. To write-off the remaining carrying value of goodwill for a particular division. To record the anticipated settlement, prior to the recapitalization transaction discussed below, of the $15.0 million in senior notes with the following series of adjustments: 4. to record settlement of $15.0 million of senior notes ($15,000,000) 5. To write-off the unamortized original issue discount 283,000 6. To write-off the unamortized issuance costs 746,000 7. To expense and accrue the professional fees incurred to complete this restructuring 1,200,000 ----------- (12,771,000) 8. To record the payment of cash 13,200,000 ----------- 9. To record the loss on the debt restructuring ($ 429,000) =========== Recapitalization 10. To record the use of $35.0 million in cash, including $22.9 million in currently restricted cash, to pay off an equal amount of the old notes. The restricted cash balance is required to support uncollateralized letters of credit until Kaiser obtains access to a revolving line of credit that eliminates the cash collateral requirement. 11. To record the issuance of $65.0 million in newly issued preferred stock to extinguish an equivalent amount of the old notes. A total of 2,600,000 shares with a par value of $.01/share. 12. To write-off the remaining $2.1 million of unamortized carrying value of the costs incurred by Kaiser to issue the old notes. 13. To record the $2.0 million estimate of the costs, including professional fees, to be incurred for debt modification as part of this exchange offer. 14. To record the $0.5 million estimate of costs, including professional fees, to be incurred to issue the new preferred stock as a charge to paid-in capital. Quasi-Reorganization 15. To record the issuance of 4,207,140 shares (882,000 shares after a proposed reverse stock split in the ratio of 1-to-4.77) of common stock at $.47/share (an estimate of the fair market value per common share as of the closing of the recapitalization). 23 16. The "Weighted Average Shares for Basic and Fully Diluted Earnings (Loss) Per Share" as reported in the column(s) labeled "Actual Results for the six months (and year ended) June 30, 1999 (December 31, 1998)" have been restated to reflect the pro forma issuance of 4,207,140 shares of common stock. 17. To reclassify $116.3 million from paid-in capital to eliminate the balance of the accumulated deficit after the completion of the exchange offer transactions assuming shareholder approval. 24 ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES Pro Forma Consolidated Statement of Operations Year Ended December 31, 1998 (In thousands, except share amounts) (Unaudited)
Pro Forma Adjustments ----------------------------------------- Actual Results Other Pro Forma Results for the year ended Sale of Significant for the year ended December 31, 1998 EFM and CG Transactions Recapitalization December 31, 1998 ------------------ ---------- ------------ ---------------- ------------------ Gross Revenue $ 1,210,421 $ (210,529)(2) - $ - $ 999,892 Subcontract and direct material costs (794,794) 78,131 (2) - - (716,663) Provision for contract losses (76,210) - - (76,210) Equity in net income of unconsolidated subsidiaries 6,045 (600)(2) - - 5,445 ----------- ------------ ------------ ------------- ------------- Service Revenue 345,462 (132,998) - - 212,464 Operating Expenses Direct labor and fringe benefits 282,562 (64,225)(2) - - 218,337 Group overhead 92,151 (48,144)(2) - - 44,007 Corporate general and administrative 22,983 (5,970)(2) - - 17,013 Depreciation and amortization 9,048 (2,776)(2) (192)(8) (480)(7) 5,600 Severance and restructuring 9,407 - - - 9,407 Other unusual charges 7,672 - - - 7,672 ----------- ------------ ------------ ------------- ------------- Operating Income (Loss) (78,361) (11,883) 192 480 (89,572) Other Income (Expense) Debt restructuring costs - - - (2,000)(4) (2,000) Interest income 1,539 655 (3) - - 2,194 Interest expense (20,279) 1,944 (3) 1,950 (9) 7,175 (5) (9,210) ----------- ------------ ------------ ------------- ------------- Income (Loss) From Continuing Operations Before Income Taxes, Minority Interest, Extraordinary Item, and Cumulative Effect of Accounting Change (97,101) (9,284) 2,142 5,655 (98,588) Income tax benefit 11,357 - - - 11,357 ----------- ------------ ------------ ------------- ------------- Income (Loss) From Continuing Operations Before Minority Interest, Extraordinary Item, and Cumulative Effect of Accounting Change (85,744) (9,284) 2,142 5,655 (87,231) Minority interest in net income of subsidiaries (7,698) - - (7,698) ----------- ------------ ------------ ------------- ------------- Income (Loss) From Continuing Operations Before Extraordinary Item and Cumulative Effect of Accounting Change (93,442) (9,284) 2,142 5,655 (94,929) Gain on sale of discontinued operations (net of tax) - 55,642 (1) - - 55,642 ----------- ------------ ------------ ------------- ------------- Income (Loss) Before Extraordinary Item and Cumulative Effect of Accounting Change (93,442) 46,358 2,142 5,655 (39,287) Extraordinary Items (net of tax) (1,090) - (429)(10) - (1,519) ----------- ------------ ------------ ------------- ------------- Income (Loss) Before Cumulative Effect of Accounting Change (94,532) 46,358 1,713 5,655 (40,806) Cumulative effect of accounting change (net of tax) (6,000) - - - (6,000) ----------- ------------ ------------ ------------- ------------- Net Income (Loss) (100,532) 46,358 1,713 5,655 (46,806) Preferred Stock Dividends - - - (2,495)(6) (2,495) ----------- ------------ ------------ ------------- ------------- Net Income (Loss) Available for Common Shareholders $ (100,532) $ 46,358 $ 1,713 $ 3,160 $ (49,301) =========== ============ ============ ============= ============= Basic and Fully Diluted Earnings (Loss) Per Share:(16) Income (Loss) From Continuing Operations Before Discontinued Operations, Extraordinary Item and Cumulative Effect of Accounting Change $ (3.30) $ (.33) $ .08 $ .11 $ (3.44) Discontinued Operations - 1.97 - - 1.97 Extraordinary Item (.04) - (.02) - (.06) Cumulative Effect of Accounting Change (.21) - - - (.21) ----------- ------------ ------------ ------------- ------------- Net Income (Loss) Available to Common Shareholders $ (3.55) $ 1.64 $ .06 $ .11 $ (1.74) =========== ============ ============ ============= ============= Weighted Average Shares for Basic and Fully Diluted Earnings (Loss) Per Share (16) 28,299 28,299 28,299 28,299 28,299 =========== ============ ============ ============= =============
25
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES Pro Forma Consolidated Statement of Operations Six Months Ended June 30, 1999 (In thousands, except share amounts) (Unaudited) Pro Forma Adjustments ---------------------------------- Actual Results Pro Forma Results for the Other for the six months ended Sale of Significant six months ended June 30, 1999 EFM and CG Transactions Recapitalization June 30, 1999 ------------------ ------------ ------------ ---------------- --------------- Gross Revenue $ 445,377 $ - $ - $ - $ 445,377 Subcontract and direct material costs (320,940) - - - (320,940) Equity in net income of unconsolidated subsidiaries 2,996 - - - 2,996 --------- ----------- ------------- ------------- ------------- Service Revenue 127,433 - - - 127,433 Operating Expenses Direct labor and fringe benefits 97,310 - - - 97,310 Group overhead 20,089 - - - 20,089 Corporate general and administrative 8,139 - - - 8,139 Depreciation and amortization 3,098 - (60)/(8)/ (266)/(7)/ 2,772 Other unusual charges 1,335 - - - 1,335 Severance and restructuring 9,359 - - - 9,359 --------- ----------- ------------- ------------- ------------- Operating Income (Loss) (11,897) - 60 266 (11,571) Other Income (Expense) Debt restructuring costs - - - (2,000)/(4)/ (2,000) Interest income 607 327 /(3)/ - - 934 Interest expense (12,209) 2,570 /(3)/ 900 /(9)/ 3,639 /(5)/ (5,100) --------- ----------- ------------- ------------- ------------- Income (Loss) From Continuing Operations Before Income Taxes and Minority Interest (23,499) 2,897 960 1,905 (17,737) Income tax expense benefit 602 - - - 602 --------- ----------- ------------- ------------- ------------- Income (Loss) From Continuing Operations Before (22,897) 2,897 960 1,905 (17,135) Minority Interest Minority interest in net income of subsidiaries (4,205) - - - (4,205) --------- ----------- ------------- ------------- ------------- Income (Loss) From Continuing Operations (27,102) 2,897 960 1,905 (21,340) Discontinued Operations Income (Loss) from operations of discontinued operations (net of tax) 2,157 (2,157)/(2)/ - - - Gain on sale of discontinued operations (net of tax) 48,755 - - - 48,755 --------- ----------- ------------- ------------- ------------- Income (Loss) from Continuing Operations Before Extraordinary Item 23,810 740 960 1,905 27,415 Extraordinary Items(net of tax) (698) - (429)/(10)/ - (1,127) --------- ------------ ------------- ------------- ------------- Net Income (Loss) 23,112 740 531 1,905 26,288 Preferred Stock Dividends - - - (1,228)/(6)/ (1,228) --------- ----------- ------------- ------------- ------------- Net Income (Loss) Available for Common Shareholders $ 23,112 $ 740 $ 531 $ 677 $ 25,060 ========= =========== ============= ============= ============= Basic and Fully Diluted Earnings (Loss) Per Share: /(16)/ Income (Loss) From Continuing Operations $ (.96) $ .10 $ .03 $ .02 $ (.81) Discontinued Operations 1.80 (.08) $ - - 1.72 Extraordinary Item (.02) (.01) - (.03) --------- ------------ ------------- ------------- ------------- Net Income (Loss) Available to Common Shareholders $ .82 $ .02 $ .02 $ .02 $ .88 ========= =========== ============= ============= ============= Weighted Average Shares for Basic and Fully Diluted Earnings (Loss) Per Share /(16)/ 28,178 28,178 $ 28,178 28,178 28,178 ========= =========== ============= ============= =============
26 NOTES TO THE PRO FORMA INCOME STATEMENTS 1. Sale of EFM and the Consulting Group Sale of EFM ----------- On April 9, 1999, we sold specified assets and certain liabilities of EFM for $82.0 million, less $8.0 million in working capital, for total cash proceeds of $74.0 million. The gain, for purposes of the pro forma presentations, on the sale of EFM was calculated as follows, as if the transaction had taken place on:
January 1, 1998 January 1, 1999 --------------- --------------- Sale proceeds 74,000 74,000 Transaction fees (2,056) (2,056) ------ ------ Net sales price 71,944 71,944 Net assets of discontinued operations (31,016) (33,838) ------- ------- Gain 40,928 38,106 Tax provision (a) (26,391) (24,721) ------- ------- Gain on sale, net of tax $14,537 $13,385 ======= =======
Sale of the Consulting Group ---------------------------- On June 30, 1999, we sold 90% of our Consulting Group for $64 million in cash, $6.6 million of interest bearing notes and a $3.0 million working capital receivable. The gain, for purposes of the pro forma presentations, on the sale of the Consulting Group was calculated as follows, as if the transaction had taken place on:
January 1, 1998 January 1, 1999 ---------------- ---------------- Sale proceeds 73,550 73,550 Transaction fees (1,082) (1,082) ------ ------ Net sales price 72,468 72,468 Net assets of discontinued operations and other asset write-offs (20,568) (27,283) ------- ------- Gain 51,900 45,185 Tax provision (a) (10,795) (9,815) ------- ------ Gain on sale, net of tax $41,105 $35,370 ======= =======
(a) Assumes goodwill write-off is not deductible for tax purposes. 2. To remove the divestitures' results of operations for the respective periods (Effective January 1, 1999, the results of operations of EFM and the Consulting Group were reflected in the income statement as discontinued operations). 27 3. To reflect the pro forma reduction of $2.0 million and $2.6 million interest expense as if cash proceeds had been used to pay off the closing date revolving debt balance of $36.9 million as of the beginning of the period and to accrue $.6 million and $.3 million in interest income for the year ended December 31, 1998 and the six months ended June 30, 1999, respectively, on the $6.6 million of notes received as part of the sale of the Consulting Group. Recapitalization (assumes $35.0 million in cash is used and $25.0 million in new notes are exchanged) 4. To record the expenses of $2.0 million for professional fees estimated to be incurred to complete the exchange offer. 5. To reflect the following pro forma reduction of interest expense;
Year Ended Six Month Ended December 31, 1998 June 30, 1999 ----------------- ------------- . the reduction of 13% interest expense on the $125.0 million of old notes $ 16,200 $ 8,100 . to increase interest expense equal to 15% on the $25.0 million of new notes (3,750) (1,875) . to record the effective interest expense necessary to accrete the remaining $18.9 million carrying value of the old notes to the face value of the $25.0 million in new notes exchanged (5,275) (2,586) -------- ------- $ 7,175 $ 3,639 ======== =======
6. To reflect the pro forma effect of the accrual of dividends on the preferred stock as if it had been issued as of the beginning of the period. The adjustment assumes Kaiser accrues the dividends to the shareholders at the 3.75% annual dividend rate. 7. To reflect the pro forma reduction of amortization expense associated with the capitalized issue costs of the old notes. The remaining unamortized carrying value of the issue costs was reclassified as a reduction of the carrying value of the new notes. Other Significant Transactions 8. To reflect the pro forma reduction of amortization expense associated with the capitalized issue costs of the senior notes. 9. To reflect the pro forma reduction of interest expense on the senior notes. 10. To record the settlement of the $15.0 million senior notes as follows (dollars in millions): Principal $ 15.0 Less: Cash payment (13.2) Unamortized original issue discount (.3) Unamortized issuance costs (.7) Costs to complete transaction (1.2) ------ $ .4 28 OVERVIEW AND BACKGROUND OF THE RECAPITALIZATION Kaiser incurred losses during 1997, 1998 and the first six months of 1999 of an aggregate of approximately $129 million, largely as a result of significant cost overruns on fixed price contracts to construct four nitric acid plants. During the second half of 1998, Kaiser's Board of Directors formed a special committee of members of the Board to consider strategic alternatives for Kaiser. The special committee engaged a financial advisor and, with its assistance, evaluated various opportunities available to Kaiser, including the sale of one or more of Kaiser's operating groups. As a result of that process, Kaiser sold its EFM and Consulting Groups during 1999. Because of the cash drain and continuing obligations associated with Kaiser's nitric acid plants and other losses, the sales of the EFM and Consulting Groups were not enough to restore Kaiser's financial condition. Kaiser has lost the earning power associated with the sold operating groups and continues to have significant outstanding debt, principally $125 million of the old notes. The Board of Directors considered several alternative means of stabilizing Kaiser's financial condition. Among the alternatives considered was the use of the proceeds from the Consulting Group sale in an acquisition of a related business or simply reinvesting the proceeds from the Consulting Group sale into Kaiser's existing business activities. In considering these alternatives, the Board of Directors met several times, reviewed the recommendations of its financial, legal and other professional advisors, as well as the information provided by management, and closely analyzed the information available to it. The Board of Directors ultimately determined that the recapitalization described in this prospectus represents the most advisable approach to significantly improving Kaiser's financial position and future business prospects. As a result of the process of negotiating the terms of the recapitalization, Kaiser will purchase for cash all or substantially all of its outstanding 12% Senior Notes due 2003 on or about October 1, 1999. The purchase price to be paid by Kaiser for the $15 million outstanding principal amount of these notes is expected to be approximately $13.2 million plus accrued interest from June 30, 1999. As described in more detail below, the Board of Directors has approved a recapitalization that consists of an exchange offer, an asset sale offer and amendments to the indenture governing the old notes. If this recapitalization is not consummated, Kaiser may continue to negotiate with the holders of the old notes for a recapitalization, Kaiser may invest the proceeds in a related business investment or Kaiser may seek implementation of the recapitalization through a so-called "prepackaged" plan of reorganization. See "Possible Prepackaged Plan of Reorganization." If Kaiser were to seek confirmation of the recapitalization in a bankruptcy proceeding, no assurance can be given that the recapitalization would meet the requirements for confirmation under the U.S. Bankruptcy Code even if the requisite consents are received and the old notes subject to the consents are voted to accept the recapitalization. THE EXCHANGE OFFER Terms of the Exchange Offer Kaiser is offering to exchange preferred stock with a liquidation preference of $65 million plus accrued interest on the old notes from July 1, 1999 through the date of the closing of the recapitalization, common stock representing approximately 15% of our total common stock, and up to $25 million aggregate principal amount of new notes for all old notes that are outstanding after the asset sale offer and are properly tendered at or prior to the expiration date. As a result of the recapitalization, holders of old notes will receive, for each $1,000 of old notes tendered in the asset sale offer and the exchange offer, at least $280 in cash, 20.8 shares of preferred stock, reflecting a liquidation preference of $25 per share plus a pro rata per share portion of the accrued interest from July 1, 1999 through the date of the closing of the recapitalization, .034 shares of common stock, prior to completion of a proposed reverse stock split, and up to $200 principal amount of new notes. The exchange offer is conditioned upon, among other things, at least 95% of the outstanding principal amount of the old notes being tendered for exchange. If 95% of the total outstanding notes are not tendered, or any other condition to the exchange offer is not satisfied and the recapitalization is not consummated, then we may seek implementation of the recapitalization through a so-called "prepackaged" plan of reorganization. See "Possible Prepackaged Plan of Reorganization." 29 In order to participate in the exchange offer, the holder of old notes must tender all of the old notes beneficially owned by the holder. We can extend the exchange offer and accept all old notes tendered for exchange or amend the terms of the exchange offer and any amendment will apply to the old notes tendered pursuant to the exchange offer. Additionally, we reserve the right at any time to terminate the exchange offer and not accept for exchange any old notes tendered for exchange. Old notes tendered in the exchange offer may not be withdrawn by the holder once tendered. We shall be deemed to have accepted validly tendered old notes when, as and if we have given oral or written notice to the exchange/solicitation/paying agent. The exchange/solicitation/paying agent will act as agent for the tendering holders of old notes and for the purposes of receiving the preferred stock, common stock, new notes and cash from us. If any tendered old notes are not accepted for exchange because of an invalid tender, the occurrence of other events set forth in this prospectus or otherwise, certificates for any unaccepted old notes will be returned, without expense, to the tendering holder as promptly as practicable after the exchange expiration date. By agreeing to participate in the exchange and the asset sale offer, a holder of old notes also agrees to allocate the cash, preferred stock, common stock and new notes received for the old notes in the same manner in which we will make this allocation. We will allocate the cash paid pursuant to the asset sale offer to the principal amount of the old notes. Based on this allocation method, at least $35 million in cash will be allocated to the principal amount of the old notes. Exchange Expiration Date; Extensions; Waiver; Termination; Amendments The exchange expiration date will be November 1, 1999 at 5:00 p.m., New York City time, unless we, in our sole discretion, extend the exchange offer, in which case the exchange expiration date will be the latest date and time to which the exchange offer is extended. In order to extend the exchange offer, we will notify the exchange/solicitation/paying agent of any extension by oral followed by written notice and will make a public announcement. In either case we will do so prior to 9:00 a.m., New York City time, on the next business day after the previously scheduled exchange expiration date. We reserve the right, in our sole discretion: . to delay accepting any old notes, . to extend the expiration date and accept any old notes previously tendered, . to waive any condition to the exchange offer and accept any old notes tendered for exchange, . to terminate the exchange offer, whether or not any of the conditions set forth below under "Conditions of the Exchange Offer" shall have been satisfied, and . to amend the terms of the exchange offer in any manner by giving oral or written notice of this delay, extension, termination or modification to the exchange/solicitation/paying agent. Any amendment will apply to old notes tendered. If the exchange offer is amended in a manner determined by us to constitute a material change, we will promptly disclose these amendments by means of a public announcement or a supplement to this prospectus that will be distributed to the registered holders of the old notes. Conditions of the Exchange Offer The exchange offer is subject to the following conditions: 30 . the minimum 95% tender condition must be met; . holders of a majority of the old notes consent to the proposed amendments to the indenture governing the old notes; . we have obtained a new credit facility; . our shareholders have approved the issuance of the preferred stock and common stock being offered in the exchange offer; . no legal action or proceeding has been instituted or threatened with respect to the exchange offer or the consent solicitation, or which, in our sole judgment, may materially adversely affect our business, operations or financial condition; . there has not occurred . any material adverse development in any existing action or proceeding of any nature, . any general suspension of trading in, or limitation on prices for, securities on the New York Stock Exchange, . a declaration of a banking moratorium by United States authorities or any governmental agency in the United States, . the commencement of a war, armed hostilities or other international or national calamity directly or indirectly involving the United States, or . a material adverse change in general economic, political or financial conditions, if the effect of any economic, political or financial conditions on the financial markets of the United States, in our sole judgment, makes it impracticable to consummate the exchange offer; . there has not occurred any change, or development involving a prospective change, in or affecting our business or financial affairs which, in our sole judgment, would materially impair the contemplated benefits of the asset sale offer, the exchange offer or the consent solicitation; . no statute, rule or regulation has been proposed or enacted, or any action has been taken by any governmental authority, which, in our sole judgment, would or might prohibit, restrict or delay consummation of the exchange offer as presently proposed or materially impair the contemplated benefits of the asset sale offer, the exchange offer or the consent solicitation; and . there does not exist, in our sole judgment, any other actual or threatened legal impediment to the acquisition of the old notes in the asset sale offer, or the issuance of the preferred stock, common stock and new notes in the exchange offer. At any time, we can waive any condition to the exchange offer and accept all notes tendered for exchange pursuant to the exchange offer. Accounting Treatment Kaiser expects that the recapitalization will be accounted for as a troubled debt restructuring pursuant to Statement of Financial Accounting Standard No. 15 - Accounting by Debtors and Creditors for Troubled Debt Restructurings. The following accounting description is based on the assumption that the preferred stock to be issued in the exchange offer has a value of $65 million. In the event that the actual valuation of the 31 preferred stock, once completed, is significantly different, the accounting treatment afforded to the recapitalization could be different. . The face value of the old notes is $125 million. . The carrying amount of the old notes on the financial statements represents the face value of the old notes adjusted for the unamortized original issue discount and the unamortized debt issuance costs of the old notes. . The old notes will, in part, be purchased at face value for at least $35 million in cash and, in part, exchanged for preferred stock with a liquidation preference of $65 million plus the amount of accrued interest on the old notes from July 1, 1999 through the date of the closing of the recapitalization, 4,207,140 shares of common stock, 882,000 shares after a proposed reverse stock split in the ratio of 1-to-4.77, and up to $25 million principal amount of new notes. . The new notes will be exchanged for the remaining carrying value of the old notes. The difference between the remaining carrying value of the old notes and the face value of the new notes will be recognized as an addition to interest expense over the term of the new notes. The subsequent interest charges will be computed using an effective interest rate which equates the remaining carrying value of the old notes to the present value of the future principle and interest payments of the new notes. . The excess of the total value of the preferred stock and the common stock over their $.01 per share par values will be credited to paid in capital, net of any issuance costs. . The carrying value of any remaining original issue discount on the old notes will reduce the carrying value of the remaining old notes. . The carrying value of any remaining costs originally incurred to issue the old notes will reduce the carrying value of the remaining old notes. . The amount of any costs incurred to complete the restructuring of the old notes will be expensed. The following table summarizes the accounting for this transaction (dollars in thousands):
Face value of old notes $125,000 Less: Unamortized original issue costs (1,987) Unamortized fees (2,133) -------- Carrying value of the old notes prior to the exchange of cash and stock 120,880 Cash payment (35,000) Assumed valuation of preferred stock issued (65,000) Assumed market value of common stock issued (1,977) -------- Remaining carrying value of the old notes to be exchanged for up to $25 million of new notes $ 18,903 ========
THE ASSET SALE OFFER Simultaneously with the exchange offer, Kaiser will conduct an asset sale offer pursuant to the terms of the indenture governing the old notes. We will offer to purchase at least $35 million aggregate principal amount of old notes. We will make this asset sale offer to all holders of old notes. If the holders of old notes accept the asset sale offer in an amount greater than the aggregate amount we offer to purchase, we will purchase old notes tendered on a pro rata basis. Old notes tendered in the asset sale offer may not be withdrawn by the holder once tendered. 32 The cash to be used in the asset sale offer will consist primarily of the proceeds from our sale of our Consulting Group. In the event we were to file for relief under Chapter 11 of the U.S. Bankruptcy Code within 90 days, or possibly one year, of making the payments made in the asset sale offer, the payments may be avoidable as a preference and could be subject to recovery by a trustee in bankruptcy, an official creditors' committee, other representatives of our creditors, or Kaiser as a debtor in possession. If the payments were successfully challenged as preferences, holders either could be required to return the funds received, together with interest at a rate determined by the court, or could be precluded from receiving any distribution on account of the holders' old notes. The asset sale offer will expire at 5:00 p.m., New York City time, on November 1, 1999. The asset sale offer is made subject to satisfaction of all of the conditions to the exchange offer being satisfied or waived by us and the exchange offer not having been terminated by us. The asset sale offer will not be consummated unless the exchange offer also is consummated and the requisite consents are received. THE CONSENT SOLICITATION General In connection with the exchange offer, we are soliciting consents from the holders of the old notes to approve proposed amendments to the old notes indenture. We are also requesting holders of the old notes to deliver an instruction to the trustee under the old notes indenture not to interfere with our recapitalization. Consents of holders of a majority of the outstanding aggregate principal amount of the old notes are required to approve the proposed amendments to the old notes indenture. The proposed amendments will become effective only if the conditions of the exchange offer are satisfied or waived and will become effective immediately preceding the consummation of the exchange offer. Both our acceptance of the exchange offer and consummation of the asset sale offer are contingent upon our receipt of requisite consents from holders of the old notes. If the proposed amendments become effective with respect to the old notes indenture, they will apply to all old notes issued under that indenture. Proposed Amendments If the requisite consents are received from holders of the old notes, the old notes indenture will be amended by eliminating substantially all of the restrictive covenants governing the old notes. These proposed amendments will eliminate the following covenants and categories of events of default in the old notes indenture:
. Section 5.04 (Limitation on Additional Indebtedness) . Section 5.05 (Limits 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 5.10 (Restrictions on Sale of Stock of Subsidiaries) . Section 5.11 (Limitations on Guarantees) . Section 5.13 (Corporate Existence) . Section 5.14 (Stay, Extension and Usury Laws) . Section 5.15 (Insurance; Books and Records; Compliance with Law)
33
. Section 5.16 (Inspection and Confidentiality) . Section 6.01 (Limitations on Mergers and Consolidations) . Section 7.01 (Events of Default). The following categories of events of default will be eliminated: -- failure to comply with any covenant in the old notes indenture (Section 7.01(3)) -- failure to make debt payments in respect of outstanding debt exceeding $2,000,000 in total (Section 7.01(4)) -- default in respect of indebtedness exceeding $2,000,000 that results in repayment coming due before maturity (Section 7.01(5)) -- failure to pay final judgments or orders for money exceeding $2,000,000 (Section 7.01(6))
In addition, those events of default relating to bankruptcy (Section 7.01(7) and (8)) will be amended to eliminate action taken by, against or in respect of our subsidiaries in a bankruptcy context. The proposed amendments to the old notes indenture will also include other conforming amendments that comport with the changes outlined above. A holder of old notes need not consent to the proposed amendments in order to tender its old notes in the exchange offer. Conversely, each holder of old notes not tendered or accepted for exchange pursuant to the exchange offer will be bound by the proposed amendments if they become effective regardless of whether the holder consented to the proposed amendments. Upon effectiveness of the proposed amendments, a consenting holder's right to sell or transfer the old notes will be restricted, and each consenting holder will be required to hold their old notes in certificated form as opposed to holding them in "street name." See "The Solicitation-Restriction on Transfer of Old Notes; Issuance of Certificated Notes." The proposed amendments will be set forth in a supplemental indenture substantially in the form filed as exhibit 4(a)(10) to the registration statement of which this prospectus forms a part. Solicitation Expiration Date; Extensions; Amendments The consent solicitation will expire at 5:00 p.m., New York City time, on November 1, 1999, unless we, in our sole discretion, extend the period during which the consent solicitation is open, in which case the solicitation expiration date will be the latest date and time to which the consent solicitation is extended. In order to extend the solicitation expiration date, we will make a public announcement prior to 9:00 a.m., New York City time, on the next business day after the previously scheduled solicitation expiration date. We reserve the right, in our sole discretion, . to delay accepting any consents, . to extend the consent solicitation, . to terminate the consent solicitation, and . to amend the terms of the consent solicitation in any manner by giving oral or written notice of the delay, extension, termination or modification to the exchange/solicitation/paying agent. 34 If the consent solicitation is amended in a manner that we determine constitutes an adverse change to the holders of the old notes, we will promptly disclose the amendment by means of a public announcement or a supplement to this prospectus that will be distributed to the registered holders of the old notes. Waivers and Nonacceptance of Consents We reserve the absolute right to waive any defects or irregularities in the furnishing of the consents. If any consents are not accepted for any reason, the notes to which the consent relates will be returned without expense to the submitting holder as promptly as practicable after the expiration or termination of the consent solicitation. Restriction on Transfer of Old Notes; Issuance of Certificated Notes If the consents become effective on the solicitation expiration date, any holder of old notes that has furnished a consent will have agreed . not to transfer, sell, assign, encumber or otherwise dispose of the beneficial ownership of the holder's old notes, unless the holder provides evidence satisfactory to us that the holder's transferee, and, if different, the beneficial owner of the old notes so transferred, has agreed in writing in form and substance satisfactory to us that the transferred old notes are subject to the terms of the consent, and that the transferee, and, if different, the beneficial owner, has agreed to be bound by the terms of the consent, and . that any old notes subject to consents that are held through DTC will be reissued in certificated form. The restriction on transfer will be noted on the old notes with respect to which consents are received and none of these old notes may be transferred unless the holder delivers to us an opinion of counsel in form and substance satisfactory to us in our sole discretion that the transferee has agreed to and is bound by the proposed amendments. POSSIBLE PREPACKAGED PLAN OF REORGANIZATION It is possible that we will receive substantial support from holders of old notes for the recapitalization but not reach the 95% level of acceptance of the exchange offer required as a condition of the recapitalization. In that event, if the level of holder approval is sufficient, we may elect to implement the recapitalization through a so-called "prepackaged" plan of reorganization under Chapter 11 of the Bankruptcy Code. We would do so by filing a petition commencing a Chapter 11 bankruptcy case and asking the Bankruptcy Court to approve a plan of reorganization which would contain terms and conditions for the treatment of holders of old notes which are the same as the terms and conditions of the recapitalization. Aside from holders of old notes, the plan would not alter or impair the claims and interests of any of our other creditors or equity security holders. In addition, this type of plan of reorganization would not affect Kaiser's operations, vendors or employees. If we were to seek implementation of the recapitalization through a Chapter 11 plan of reorganization, no assurance can be given that the plan would meet the requirements for confirmation under the Bankruptcy Code, even if the plan received the required level of approval form the holders of the old notes. The requirement for plan approval by a impaired class of creditors is the affirmative vote of a majority in number and more than two-thirds in dollar amount of those voting to accept or reject the plan. If confirmed by the Bankruptcy Court, the plan would be binding on all holders of old notes, without regard to whether they voted in favor of the plan. If a holder of old notes executes the documents required to tender old notes in the exchange offer and the asset sale offer as contemplated in this prospectus, the tender of old notes, once delivered, may not be withdrawn, and the executed documentation will be counted, at our election, as ballots in favor of a Chapter 11 plan as described above. We reserve the right to commence a Chapter 11 case before expiration of the period provided for tender of old notes in the exchange offer and the asset sale offer and to count executed documentation received as ballots in favor of the Chapter 11 plan. 35 PROCEDURES FOR PARTICIPATING IN THE EXCHANGE OFFER, ASSET SALE OFFER AND CONSENT SOLICITATION General As previously discussed, the exchange offer, the asset sale offer and the consent solicitation are interdependent. However, you must make a separate decision as to each applicable transaction. The procedures for participating in each of the transactions are substantially similar and are described below. Procedures for Tendering Old Notes in the Exchange Offer, Tendering Old Notes in the Asset Sale Offer and Tendering Consents in the Consent Solicitation The tender of a holder's old notes or the tender of consents and its acceptance by Kaiser will constitute a binding agreement between the tendering holder and Kaiser upon the terms and subject to the conditions set forth in this prospectus and in the applicable letter of transmittal and consent form. Except as described below, a holder who wishes to tender old notes for exchange in the exchange offer or old notes for purchase in the asset sale offer or tender consents in the consent solicitation must transmit any tendered old notes, together with a properly completed and duly executed letter of transmittal and consent form, including all other documents required by the letter of transmittal and consent form to the exchange/solicitation/paying agent at the address set forth below in this prospectus prior to 5:00 p.m., New York City time, on the exchange/asset sale offer/consent solicitation expiration date. The method of delivery of old notes, letter of transmittal and consent form and all other required documents is at the election and risk of the holder. If the delivery is by mail, it is recommended that tendering holders use registered mail, properly insured, with return receipt requested. Instead of delivery by mail, it is recommended that the holder use an overnight or hand delivery service. In all cases, sufficient time should be allowed to assure timely delivery. Any financial institution that is a participant in The Depository Trust Company's book-entry transfer facility system may make book-entry delivery of the old notes by causing The Depository Trust Company to transfer these old notes into the exchange/solicitation/paying agent's account in accordance with The Depository Trust Company's procedures for this transfer. In connection with a book-entry transfer, a letter of transmittal and consent form need not be transmitted to the exchange/solicitation/paying agent, provided that the book- entry transfer procedure is completed prior to 5:00 p.m., New York City time, on the exchange/asset sale offer/consent solicitation expiration date. Each signature on a letter of transmittal and consent form or a notice of revocation, as the case may be, must be guaranteed except that they do not need to be guaranteed if the old notes surrendered for exchange are tendered: . by a registered holder of the old notes who has not completed either the box entitled "Special Issuance Instructions" or the box entitled "Special Delivery Instructions" in the letter of transmittal and consent form, or . by an eligible institution. In the event that a signature on a letter of transmittal and consent form or a notice of revocation, as the case may be, is required to be guaranteed, this guarantee must be by a firm which is a member of a registered national securities exchange or the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States or otherwise be an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934. If the letter of transmittal and consent form is signed by a person other than the registered holder of the old notes, the tendered old notes and consents must be endorsed by the registered holder, with the signature guaranteed by an eligible institution. All questions concerning the validity, form, eligibility, including time of receipt, acceptance, and revocation of consents, will be decided by us in our sole discretion, which decision shall be final and binding. We reserve the absolute right to reject any and all old notes or consents not properly tendered and to reject any old notes or consents which might, in our judgment or that of our counsel, be unlawful for us to accept. We also reserve the 36 absolute right to waive any defects or irregularities or conditions of the exchange offer as to particular old notes either before or after the exchange/asset sale offer/consent solicitation expiration date, including the right to waive the ineligibility of any holder who seeks to tender old notes in the exchange offer, old notes in the asset sale offer or consents in the consent solicitation, whether or not similar defects or irregularities are waived in the case of other holders. Our interpretation of the terms and conditions of the exchange offer, asset sale offer and consent solicitation, including the letter of transmittal and its instructions, shall be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of old notes for exchange or for purchase or tenders of consents must be cured within a period of time as we shall determine. Kaiser, the exchange/solicitation/paying agent, or any other person will not have any duty to give notification of defects or irregularities with respect to tenders of old notes and consents and will not incur any liability for failure to give this notification. Tenders of the old notes and consents will not be deemed to have been made until any irregularities have been cured or waived. If any letter of transmittal and consent form, endorsement, power of attorney or any other document required by the letter of transmittal and consent form is signed by a trustee, executor, corporation or other person acting in a fiduciary or representative capacity, this person should indicate when signing, and, unless waived by us, must submit proper evidence satisfactory to us, in our sole discretion, of this person's authority to act. Any beneficial owner of old notes whose notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wants to tender old notes in the exchange offer or in the asset sale offer or tender consents in the consent solicitation, should contact the registered holder promptly and instruct the registered holder to tender on the beneficial owner's behalf. If a beneficial owner wishes to tender directly, the beneficial owner must, prior to completing and executing the letter of transmittal and consent form and tendering old notes and consents, make appropriate arrangements to register ownership of the notes in the beneficial owner's name. Beneficial owners should be aware that the transfer of registered ownership may take considerable time. Guaranteed Delivery Procedures Holders who wish to tender their old notes and . whose old notes are not immediately available or . who cannot deliver their old notes or any other documents required by the letter of transmittal and consent form to the exchange/solicitation/paying agent prior to the exchange/asset sale offer/consent solicitation expiration date or complete the procedure for book-entry transfer on a timely basis, may tender their old notes according to the guaranteed delivery procedures described in the letter of transmittal and consent form. Pursuant to these procedures: . the tender must be made by or through an eligible institution and a notice of guaranteed delivery, as defined in the letter of transmittal and consent form, must be signed by the holder, . on or prior to the exchange/asset sale offer/consent solicitation expiration date, the exchange/solicitation/paying agent must have received from the holder and the eligible institution a properly completed and duly executed notice of guaranteed delivery by facsimile transmission, mail or hand delivery setting forth the name and address of the holder, the certificate number or numbers of the tendered old notes, and the principal amount of tendered old notes, stating that the tender is being made and guaranteeing that, within three business days after the date of delivery of the notice of guaranteed delivery, the tendered old notes, a duly executed letter of transmittal and consent form and any other required documents will be deposited by the eligible institution with the exchange/solicitation/paying agent, and . the properly completed and executed documents required by the letter of transmittal and the tendered old notes in proper form for transfer, or confirmation of a book-entry transfer of these old notes into the exchange/solicitation/paying agent's account at DTC, must be received by the exchange/solicitation/paying agent within three business days after the exchange/asset sale offer/consent solicitation expiration date. 37 Any holder who wishes to tender old notes pursuant to the guaranteed delivery procedures described above must ensure that the exchange/solicitation/paying agent receives the notice of guaranteed delivery and letter of transmittal relating to these old notes prior to 5:00 p.m., New York City time, on the exchange/asset sale offer/consent solicitation expiration date. Acceptance of Old Notes for Exchange or Purchase and Acceptance of Consents; Delivery of Preferred Stock, Common Stock and New Notes Upon satisfaction or waiver of all the conditions to the exchange offer, Kaiser will accept any and all old notes that are properly tendered in the exchange offer, old notes properly tendered in the asset sale offer and consents properly tendered in the consent solicitation prior to 5:00 p.m., New York City time, on the exchange/asset sale offer/consent solicitation expiration date. The preferred stock, common stock and new notes issued pursuant to the exchange offer will be delivered promptly after acceptance of the old notes. For purposes of the exchange offer, we will be deemed to have accepted validly tendered old notes, when, as, and if we have given oral followed by written notice to the exchange/solicitation/paying agent. Immediately prior to consummation of the exchange offer, we will consummate the asset sale offer and purchase for cash at par on a pro rata basis from the holders of old notes who elect to participate an aggregate of at least $35 million principal amount of old notes. Revocation of Consents We will process all properly completed and executed letters of transmittal and consent forms we receive, unless we receive from a holder a properly completed and duly executed notice of revocation at any time prior to the exchange/asset sale offer/consent solicitation expiration date. Until the exchange/asset sale offer/consent solicitation expiration date, any holder may revoke a consent as to any or all old notes if we receive notice of revocation. The Exchange/Solicitation/Paying Agent; Information Agent; Assistance The Bank of New York is the exchange/solicitation/paying agent. All tendered old notes and consents, executed letters of transmittal and consent forms and other related documents should be directed to the exchange/solicitation/paying agent as follows: Exchange/Solicitation/Paying Agent By Registered or Certified By Overnight Courier: By Hand: By Facsimile: Mail: The Bank of New York The Bank of New York The Bank of New York The Bank of New York Reorganization Department Attention: Reorganization Reorganization Department Attention: Jennifer Pedi Attention: Jennifer Pedi Corporate Trust Services Attention: Jennifer Pedi 101 Barclay Street, 7 East 101 Barclay Street, 7 East Window, Ground Level (212) 815-6339 New York, New York 10286 New York, New York 10286 101 Barclay Street, 7 East New York, New York 10286 Confirm by telephone: (212) 815-6331
Jefferies & Company, Inc. is the information agent. Questions and requests for assistance and requests for additional copies of the prospectus, a letter of transmittal and other related documents should be addressed to the information agent as follows: 38 Information Agent Jefferies & Company, Inc. Harborside Financial Center Plaza III, Suite 705 Jersey City, New Jersey 07311 Attn: Victor Polizzotto 212/336-7160 or 800/933-6656 212/336-7353 (fax) Financial Advisor to Kaiser We have engaged Jefferies & Company, Inc. to provide financial advisory services to us in connection with the proposed recapitalization. As part of such services, employees of Jefferies may solicit, on our behalf, holders of old notes to tender their old notes in the exchange offer and the asset sale offer and to deliver their consent to the proposed amendments to the indenture governing the old notes. As consideration for providing these services, we have agreed to pay Jefferies certain fees, to reimburse its reasonable out-of-pocket expenses and to indemnify it against liabilities, including liabilities they may incur under the Securities Act of 1933 or the Securities Exchange Act of 1934. Fees and Expenses In addition to the fees and expenses payable to Jefferies that are described above, we will pay all other fees and expenses incurred in connection with the recapitalization, including each of the following: . fees and disbursements of legal counsel and a financial advisor retained by the ad hoc committee of holders of old notes formed to participate with our representatives in the determination of the terms of the recapitalization, . fees and disbursements of our counsel and independent certified public accountants, . SEC registration and NYSE listing fees, and . customary fees and out-of-pocket expenses incurred by the exchange/solicitation/paying agent for their services in connection with the recapitalization. We will pay all transfer taxes, if any, applicable to the exchange of old notes pursuant to the exchange offer. If, however, a transfer tax is imposed for any reason other than the exchange of old notes pursuant to the exchange offer, then the amount of the transfer taxes, whether imposed on the registered holder or any other persons, will be payable by the tendering holder. If satisfactory evidence of payment of these taxes or exemption is not submitted with the letter of transmittal and consent form, the amount of these transfer taxes will be billed directly to the tendering holder. BUSINESS Kaiser is a global provider of engineering, construction management, and project and program management services. Kaiser also owns a 50% interest in Kaiser-Hill Company, LLC, which serves as the integrated management contractor at the U.S. Department of Energy's Rocky Flats Environmental Technology Site. Overview of Services and Markets Kaiser's activities are focused on serving clients in five major lines of business: transit and transportation; alumina/aluminum; facilities engineering and management, including wastewater treatment; iron and steel; and microelectronics and clean technology. 39 Transit and Transportation - Kaiser's transit and transportation services support the planning, design, engineering, and construction of heavy- and light- rail transit systems, high-speed rail, peoplemovers, bus systems, highways and bridges, and airport improvements. We are developing state-of-the- art transit systems for 20 cities worldwide and designing major highway projects throughout the United States and in selected international markets. Domestic growth is driven by the Federal Transportation Equity Act for the 21st Century. Passed in July 1998, the bill authorized $217 billion of spending during the next six years in transit and highway programs. Significant opportunities also exist internationally as developing countries seek to improve their transit systems. Current projects include transit systems in Seattle, Orlando, Los Angeles, the Philippines, and Turkey; an intercity freight and passenger rail line in Portugal; and multi-million dollar highway and bridge improvements in California, Florida, Massachusetts, and Oklahoma. Alumina/Aluminum - Kaiser provides design and construction services for expansion and modernization of some of the world's largest alumina and aluminum facilities in locations from Kentucky to the Middle East and Australia. Our areas of expertise include bauxite mining and handling; alumina refining; aluminum reduction; and fabrication and rolling. Domestic opportunities involve maintaining and retrofitting existing plants and replacing aging production capacity with newer, more efficient, and environmentally responsible facilities. Outside of the United States, there will be greater focus on building new facilities. Current projects include detailed design engineering, procurement, and construction management for the expansion of a $500 million alumina refinery in Western Australia, and engineering and design services for an aluminum expansion project in the mid-western United States. Facilities and Water/Wastewater - Kaiser provides engineering services to public- and private-sector clients who need to modernize or maintain facilities; design and build new capacity for the future; or improve existing operations and environmental conditions. Future growth in this area of activity will be based in part on the trend toward outsourcing by both private- and public-sector clients. Kaiser's largest project of this type involves serving, through Kaiser-Hill Company, LLC, as the integrating management contractor at the DOE Rocky Flats site, a former nuclear weapons production facility near Denver, Colorado. In another significant project, Kaiser serves as construction manager for the $3.4 billion Boston Harbor cleanup project that is currently scheduled to continue through December 31, 2002. Iron and Steel - Kaiser supports the iron and steel industry by providing traditional services such as engineering, design, and project and construction management for plant expansions, modernizations, and greenfield development. Kaiser is the sole U.S. domestic designer and builder of coke ovens and coke oven machinery, and is active in the development of mini-mills as an alternative, cost-effective method of making steel. For example, we are providing turnkey engineering and construction services for the new $262 million thin-slab casting mini-mill project for Nova Hut, a.s. in Ostrava, Czech Republic. Microelectronics and Clean Technology - Kaiser also provides design/build services for the microelectronics, semiconductor, biotechnology, and telecommunication industries. We have constructed or remodeled over seven million square feet of manufacturing, office, and other facilities, including more than 500,000 square feet of cleanrooms, from class 1 to class 10,000. Following a contraction over the past several years, this market is expected to experience growth over the next two years, driven primarily by the automotive industry and advanced technology manufacturers' needs for increased manufacturing capacity and capabilities. A major project is the $219 million semiconductor facility for Motorola in Arizona. Kaiser-Hill Company, LLC is equally owned by Kaiser and CH2M Hill Companies Ltd.; Kaiser designates a majority of the members of Kaiser-Hill's Board of Managers. The scope of Kaiser-Hill's contract with the DOE includes all elements of daily and long-term operation of the site, including stabilizing and safely storing more than 14 tons of plutonium, cleaning up areas contaminated with hazardous and radioactive waste, and restoring much of the 6,000-acre site for future use by the public. Kaiser-Hill's contract with the DOE currently expires in September 2000. On July 30, 1999, the DOE announced that it intends to negotiate with Kaiser-Hill for a new contract for services through the closure of the Rocky Flats site in 2006. Such negotiations are expected to begin in early October. The DOE has stated that if a new contract has not been entered into by November 30, 1999, it intends to conduct a competition for the new contract. We can provide no assurance as to Kaiser-Hill's ability to compete for or win a new contract if Kaiser-Hill is unable to enter into a new contract through negotiations. 40 General Information about Kaiser Competition and Contract Award Process The market for Kaiser's services is highly competitive. Kaiser competes with many other engineering and construction, program and project management services firms ranging from small firms to large multinational firms having substantially greater financial, management and marketing resources than Kaiser. Other competitive factors include quality of services, technical qualifications, reputation, geographic presence, price, and the availability of key professional personnel. Private-Sector Work. Competition for private-sector work generally is based on several factors, including quality of work, reputation, price and marketing approach. Kaiser'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. Public-Sector Work. Most of Kaiser'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 proposals that delineates the size and scope of the proposed contract. Proposals are evaluated by the government on the basis of technical merit, including responses to mandatory solicitation provisions, corporate and personnel qualifications, experience, and cost. Kaiser believes that its experience and ongoing work strengthen its technical qualifications and, thereby, enhance its ability to compete successfully for future government work. Teaming Arrangements and Joint Ventures. In both the private and public sectors, Kaiser, acting either as a prime contractor or as a subcontractor, may join with other firms to form a team or a joint venture that competes for a single contract or submits a single proposal. Because a team of firms or a joint venture almost always can offer a stronger set of qualifications than any firm standing alone, these arrangements often are very important to the success of a particular competition or proposal. Kaiser maintains a large network of business relationships with other companies and has drawn repeatedly upon these relationships to form winning teams. Contract Structure. Kaiser operates 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, Kaiser'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 Kaiser is paid at a specified fixed hourly rate for direct labor hours worked. Under fixed price contracts, Kaiser is paid a predetermined amount for all services provided as detailed in the design and performance specifications agreed to at the project's inception, and under which Kaiser retains more performance risk than under cost plus contracts. While these fixed price contracts can result in higher profit margins, they also can be costly if Kaiser experiences cost overruns that are not recoverable from the client. Customers Kaiser's domestic clients include the DOE and other federal departments and agencies; major corporations in the energy, transportation, chemical, steel, aluminum, mining, and manufacturing industries; utilities; and a variety of state and local government agencies throughout the United States. The DOE accounted for approximately 54% of Kaiser's consolidated gross revenue for the year ended December 31, 1998, approximately 56% for the year ended December 31, 1997, and approximately 69% for the year ended December 31, 1996. The DOE percentage will increase for fiscal 1999 since Kaiser has disposed of its EFM and Consulting Groups and continues to consolidate in its financial statements the results of Kaiser-Hill Company, LLC. Kaiser's international clients include both private firms and foreign government agencies. For the years ended December 31, 1998, 1997, and 1996, foreign clients accounted for approximately 10.1%, 14.2%, and 5.8% of Kaiser's consolidated gross revenue, respectively. Mainly due to the sales of the EFM and Consulting Groups, the Company currently expects this percentage to increase to approximately 35-40% in 1999. For information concerning gross revenue, operating income, and identifiable assets of Kaiser's business by geographic area during 41 1998, see note 12 to the consolidated financial statements included in Kaiser's 1998 Annual Report on Form 10-K for the year ended December 31, 1998, which is incorporated by reference into and delivered with this prospectus. Backlog Backlog refers to the aggregate amount of gross contract revenue remaining to be earned pursuant to signed contracts extending beyond one year. Kaiser ended 1998 with $3.2 billion in contract backlog. The reduction from $4.1 billion of backlog at December 31, 1997 is due primarily to the completion of another year of the Kaiser-Hill Rocky Flats contract, resulting in the conversion of approximately $632.6 million of the 1997 backlog into revenue in 1998. The backlog of the EFM and Consulting Groups totaled $659 million and $540 million, respectively, at December 31, 1998. Kaiser expects to work off 42% of the $2 billion engineering and construction and Kaiser-Hill backlog during 1999. Kaiser ended the second quarter of 1999 with approximately $900 million in contract backlog for its continuing operations; $650 million for Kaiser-Hill and $250 million for the Engineering and Construction Group. Kaiser believes that backlog is not a predictor of future gross or service revenue. Most of Kaiser's backlog relates to the Kaiser-Hill Rocky Flats contract. With the dispositions of the EFM and Consulting Groups, which were involved, to a significant extent, in providing services to the Federal government, backlog is less of an indicator of future revenue than was the case prior to those dispositions. Potential Liabilities Involving Clients and Third Parties In performing services for its clients, Kaiser 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. Under Kaiser-Hill's contract with the DOE, Kaiser-Hill is not responsible for, and the DOE pays 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 is responsible, but only for the incremental liability, expense, or remediation caused by Kaiser-Hill. The Kaiser-Hill contract further provides that Kaiser-Hill will be reimbursed for the reasonable cost of bonds and insurance allocable to the Rocky Flats contract and for liabilities and expenses incidental to these 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. Insurance Kaiser has a comprehensive risk management and insurance program that provides a structured approach to protecting Kaiser. Included in this program are coverages for: . general, automobile, pollution impairment, and professional liability; . workers' compensation; and . employers and property liability. Kaiser believes that the insurance it maintains, including self-insurance, is in amounts and protects against risks as is customarily maintained by similar businesses operating in comparable markets. At this time, Kaiser expects to 42 continue to be able to obtain 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 Kaiser. Kaiser has 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 Kaiser's environmental activities, however, if successful and of sufficient magnitude, could have a material adverse effect on Kaiser. Government Regulation In the past, Kaiser had a number of cost-reimbursement contracts with the U.S. government, the costs of which are subject to audit by the U.S. government. Most of these contracts were held by Kaiser's former EFM and Consulting Groups, but Kaiser has retained many of the liabilities associated with the pre-closing performance of these contracts. As a result of pending audits related to fiscal year 1986 forward, the government has asserted, among other things, that some costs claimed as reimbursable under government contracts either were not allowable or not allocated in accordance with federal procurement regulations. Kaiser is actively working with the government to resolve these issues. Kaiser has provided for its estimate of the potential effect of issues that have been quantified, including its estimate of disallowed costs for the periods currently under audit and for periods not yet audited. Many of the issues, however, have not been quantified by the government or Kaiser, and others are qualitative in nature, and their potential financial impact, if any, is not quantifiable by the government or Kaiser at this time. This provision will be reviewed periodically as discussions with the government progress. Kaiser 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. Kaiser 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 Kaiser by these agencies. Employees As of June 30, 1999 Kaiser had approximately 3,300 employees, and Kaiser believes that its relations with its employees are good. Of this total, approximately 1,700 persons are employed at Kaiser-Hill's Rocky Flats site in Colorado. Approximately 1,300 of the Rocky Flats employees are represented by the United Steelworkers of America, Local 8031. Almost all of the union employees are contracted out to other companies working at Rocky Flats. Kaiser believes that its relations with the union are good. Corporate History and Properties ICF Kaiser International, Inc. is a Delaware corporation incorporated 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 1998 Kaiser acquired the Kaiser Engineers business, which dates from 1914. In the near future, Kaiser plans to change its name to Kaiser Group International, Inc. and its ticker-symbol to "KSR." The name of its principal operating subsidiary in the United States will be changed to Kaiser Engineers, Inc. Kaiser's activities are carried out through operating subsidiaries and more than 30 offices throughout the world. Kaiser's headquarters are located at 9300 Lee Highway, Fairfax, Virginia 22031-1207, and its telephone number is (703) 934-3600. Kaiser's operations are organized into North American and International regions. The North American regional headquarters is located in Fairfax, Virginia, and the International regional headquarters is located at Q.V. 1 Building, George's Terrace, Perth WA 6000 Australia, telephone 61-89-366- 5366. Kaiser's operations are conducted in leased facilities or in facilities provided by the Federal government or other clients. Because Kaiser's operations generally do not require the maintenance of unique facilities, suitable office space is available for lease in all of the geographic areas currently served. Kaiser believes that adequate space to conduct its operations will be available for the foreseeable future. For information concerning an investment by Kaiser in Fairfax, Virginia land and buildings where Kaiser's headquarters are located, see notes 4 and 9 to the 43 consolidated financial statements included in Kaiser's 1998 Annual Report on Form 10-K for the year ended December 31, 1998, which is incorporated by reference into and delivered with this prospectus. Legal Proceedings In the course of Kaiser's normal business activities, various claims or charges have been asserted and litigation commenced against Kaiser 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 Kaiser in the event of litigation. See "Risk Factors" and note 7 to the consolidated financial statements included in Kaiser's Quarterly Report on Form 10-Q for the quarter ended June 30, 1999, which is incorporated by reference into and delivered with this prospectus for a description of certain pending legal proceedings. MANAGEMENT During 1999, Kaiser implemented certain changes in its executive management. These changes were made in light of the changes in Kaiser's business focus that resulted from its sale of the EFM and Consulting Groups, and in order to manage Kaiser's operations during what is expected to be a period of significant change, including the recapitalization described in this prospectus. The following individuals currently serve as the principal executive officers of Kaiser: James J. Maiwurm, 50, Chairman of the Board, President and Chief Executive Officer. Mr. Maiwurm has been President and Chief Executive Officer of Kaiser since April 19, 1999. Mr. Maiwurm was elected to, and as Chairman of, the Board of Directors of Kaiser on June 7, 1999. Mr. Maiwurm serves as Managing Member of the board of managing directors of Kaiser-Hill Company, LLC, the joint venture that conducts the performance based integrating management services at the Department of Energy's Rocky Flats Environmental Technology Site near Denver, Colorado. From August 1998 until elected as Kaiser's President and Chief Executive Officer, Mr. Maiwurm was a partner of Squire Sanders & Dempsey L.L.P., Washington, D.C., and prior to August 1998 was a partner of Crowell & Moring LLP, Washington, D.C. Both law firms served as counsel to Kaiser. Mr. Maiwurm is a member of the Board of Trustees of Davis Memorial Goodwill Industries, Washington, D.C., a non-profit entity, and is a member of the board of directors of Workflow Management, Inc., an integrated graphic arts company providing documents, envelopes and commercial printing to businesses in North America, the stock of which is traded on the Nasdaq National Market System. Mr. Maiwurm graduated from the College of Wooster (B.A.) and the University of Michigan Law School (J.D.). S. Robert Cochran, 46, Executive Vice President and President, North America. Mr. Cochran has been President, North America for ICF Kaiser International, Inc. since April 1999. Mr. Cochran serves on the board of managing directors of Kaiser-Hill Company, LLC, the joint venture that conducts the performance based integrating management services at the Department of Energy's Rocky Flats Environmental Technology Site near Denver, Colorado. Prior to that, he was Senior Vice President for Business Development for Kaiser's former EFM Group. Before joining Kaiser in 1995, Mr. Cochran was Senior Vice President of Hazwaste Industries, Inc. & Earth Technology Incorporated, focusing primarily on business development in the hazardous and radioactive site cleanup area. He was Senior Vice President and partner with Interface Incorporated; served as Vice President of PEI/IT; was senior project and geotechnical group manager with JRB/SAIC; and for Versar, Inc., worked as a senior project geologist. He received a B.S. in Geology from James Madison University and is a registered professional geologist. Richard A. Leupen, 45, has been Executive Vice President and President, International of Kaiser since April 1999. Prior thereto, he was President of the Engineers & Constructors Group of Kaiser from August 1998. Mr. Leupen has held senior management positions in Kaiser's former Engineers & Constructors Group since 1995. Prior to joining Kaiser, Mr. Leupen worked for Protech Pty. Ltd. Mr. Leupen also serves as Managing Director of KWP Kenwalt Australia Pty. Limited, and as a director of Weda Bay Minerals Ltd. (Calgary), Strand Mining Pte. Ltd. (Singapore) Pty. Limited, Strand Management Pty. Limited as well as serving as a director of a number of Kaiser subsidiaries and affiliates. Mr. Leupen graduated from the University of South Wales in Australia (B.S.). 44 Timothy P. O'Connor, 34, Executive Vice President and Chief Financial Officer. Mr. O'Connor has been Executive Vice President and Chief Financial Officer of ICF Kaiser International, Inc. since 1999. He had been Treasurer of Kaiser since May 1997 and has been employed by Kaiser in various financial positions since 1995. From 1990 until 1995, Mr. O'Connor was employed by Lockheed Martin Corporation of Bethesda, Maryland, where he held a number of financial positions. Prior to that, Mr. O'Connor worked for General Electric Company and Lazard Freres and Co. of New York. Mr. O'Connor, who is a Certified Cash Manager, graduated from the University of Delaware (B.S.). UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS The following discussion sets forth the opinion of Squire, Sanders & Dempsey L.L.P, counsel to Kaiser, regarding the material United States federal income tax consequences to holders of old notes resulting from the exchange, the cash purchase of the old notes pursuant to the asset sale offer, and the consent solicitation. The discussion assumes that holders hold the old notes, preferred stock, common stock and new notes as capital assets within the meaning of Section 1221 of the Internal Revenue Code of 1986, as amended. Further, this discussion assumes that the old notes are treated as debt and not equity for United States federal income tax purposes. This discussion does not purport to deal with all aspects of United States federal income taxation that may be relevant to holders who may be subject to special federal income tax laws, such as dealers in securities, financial institutions, life insurance companies, individuals who are not citizens or residents of the United States or corporations, partnerships or other entities that are not organized under the laws of the United States or any political subdivision, or persons that hold the old notes, the preferred stock, common stock, or the new notes as part of a hedge, conversion transaction, straddle or other risk reduction transaction. In addition, the following discussion does not consider the effect of any applicable foreign, state or local tax laws. The discussion below is based upon the current provisions of the Internal Revenue Code, existing and proposed Treasury Regulations promulgated under the Internal Revenue Code, rulings of the Internal Revenue Service and judicial decisions now in effect as of the date of this prospectus. Such authorities may be repealed, revoked or modified, possibly with retroactive effect, so as to result in United States federal income tax consequences different from those described below. As discussed below, the exchange, together with the cash purchase of old notes, should constitute a recapitalization under Section 368(a)(1)(E) of the Internal Revenue Code. However, Kaiser will not seek a ruling from the Internal Revenue Service regarding any of the tax issues described in this discussion, including the tax treatment of the exchange and cash purchase as a recapitalization. Moreover, as noted in the discussion, issues relevant to the federal income tax consequences of some matters are factual in nature, and other issues involve areas of law that are ambiguous or with respect to which legal authority is lacking and as to which limited guidance is available. It is possible, for example, that the Internal Revenue Service may challenge the treatment of the exchange and cash purchase of old notes as a recapitalization and assert either that the exchange and cash purchase must be treated independently for federal income tax purposes and/or that the exchange is a taxable transaction because the old notes do not constitute "securities" or because of other legal positions. Consequently, there can be no assurance that the Service will not challenge one or more of the tax consequences described below. This discussion does not purport to deal with all aspects of United States federal income taxation that, because of specific circumstances applicable to a holder, might be relevant to a holder's decision to participate in the exchange, the cash purchase of the old notes pursuant to the asset sale offer, or the consent solicitation or to the ownership and disposition of the preferred stock, common stock and new notes. Holders are urged to consult their tax advisors concerning the United States federal income tax considerations that may be specific to them as well as any tax consequences arising under the laws of any other taxing jurisdiction. Tax Consequences to the Holders Upon the Exchange and Cash Purchase of Old Notes Importance of Whether the Old Notes Constitute "Securities." The federal income tax consequences to the holders of old notes will depend, in part, on whether the old notes constitute "securities" for federal income tax purposes. The term "security" is not defined in the Internal Revenue Code or in the Treasury Regulations and has 45 not been clearly defined in court decisions. Although there are a number of factors that may affect the determination of whether a debt instrument is a "security," one of the most important factors is the original term of the instrument, or the length of time between the issuance of the instrument and its maturity. In general, instruments with an original term of more than ten years are likely to be treated as "securities," and instruments with an original term of less than five years are unlikely to be treated as "securities." Because the term of the old notes is between five and ten years, it is impossible to be certain regarding the treatment of such old notes as "securities." Nevertheless, although the issue is not free from doubt, the old notes should constitute "securities" for federal income tax purposes. BECAUSE THE ISSUE IS UNCERTAIN, HOLDERS ARE URGED TO CONSULT WITH THEIR TAX ADVISORS AS TO THE PROPER TREATMENT OF THE OLD NOTES. Treatment of the Exchange and the Purchase of Old Notes as a Recapitalization Under Internal Revenue Code Section 368. Assuming that the old notes are treated as securities, the exchange of old notes for preferred stock, common stock and new notes, and the purchase by Kaiser of old notes for cash, should be treated together as a recapitalization under Section 368(a)(1)(E) of the Internal Revenue Code. The new notes likely will not be considered "securities" for federal income tax purposes. If the exchange and purchase together qualify as a recapitalization, a holder that both exchanges old notes for preferred stock, common stock and new notes and sells old notes pursuant to the asset sale offer by Kaiser will recognize gain, but not loss, generally equal to the lesser of: . the amount of cash received in the purchase of old notes and the fair market value of new notes received in the exchange, or . the amount of gain realized in the purchase and exchange, which is the excess, if any, of . the sum of the cash received in the purchase of old notes plus the total of the fair market values of the preferred stock, common stock and new notes received in the exchange over . the holder's aggregate adjusted tax basis in the old notes purchased and exchanged. A holder that only exchanges old notes for preferred stock, common stock and new notes will recognize gain, but not loss, generally equal to the lesser of: . the fair market value of the new notes received in the exchange, or . the amount of gain realized in the exchange, which is the excess, if any, of . the total of the fair market values of the preferred stock, common stock and new notes received in the exchange over . the holder's aggregate adjusted tax basis in the old notes exchanged. Any recognized gain will generally be treated as capital gain and will be long-term capital gain if the holder held the old notes for more than 12 months. If, however, a holder purchased the old notes at a market discount within the meaning of Internal Revenue Code Section 1278, any gain recognized will be treated as ordinary income to the extent of the accrued market discount on the old notes. A holder who participates in the purchase and exchange will generally have a tax basis in the preferred stock and common stock received in the exchange equal to the holder's adjusted tax basis in the old notes purchased and exchanged, decreased by the sum of the amount of cash received in the purchase and the fair market value of the new notes received in the exchange, and increased by the amount of gain, if any, recognized in the purchase and exchange. That basis will be allocated between the preferred stock and common stock in proportion to their relative fair market values. A holder will have a basis in the new notes equal to their fair market value at the time of the exchange. A holder's holding period for the preferred stock and common stock will include the holding period for the old notes exchanged. A holder's holding period for the new notes will begin on the day following the day of the exchange. 46 A holder who participates only in the exchange will generally have a tax basis in the preferred stock and common stock received in the exchange equal to the holder's adjusted tax basis in the old notes exchanged, decreased by the fair market value of the new notes received in the exchange, and increased by the amount of gain, if any, recognized in the exchange. That basis will be allocated between the preferred stock and common stock in proportion to their relative fair market values on the date of the exchange. A holder will have a basis in the new notes equal to their fair market value at the time of the exchange. A holder's holding period for the preferred stock and common stock will include the holding period for the old notes exchanged. A holder's holding period for the new notes will begin on the day following the day of the exchange. Treatment of the Exchange as a Recapitalization Under Internal Revenue Code Section 368 But Treatment of the Purchase of Old Notes as a Separate Transaction. It is possible that the Internal Revenue Service could successfully claim that the purchase of old notes and the exchange must be treated independently of each other for federal income tax purposes. In that event, if the exchange qualifies as a recapitalization, a holder that exchanges old notes for preferred stock, common stock and new notes will recognize gain, but not loss, generally equal to the lesser of: . the fair market value of the new notes received in the exchange, or . the amount of gain realized in the exchange, which is the excess, if any, of . the total of the fair market values of the preferred stock, common stock and new notes received in the exchange over . the holder's aggregate adjusted tax basis in the old notes exchanged. The holder's aggregate tax basis in the preferred stock and common stock received in the exchange will generally be equal to the holder's adjusted tax basis in the old notes exchanged, decreased by the fair market value of the new notes received in the exchange, and increased by the amount of gain, if any, recognized in the exchange. That basis will be allocated between the preferred stock and common stock in proportion to their relative fair market values on the date of the exchange. A holder will have a basis in the new notes equal to their fair market value at the time of the exchange. A holder's holding period for the preferred stock and common stock will include the holding period for the old notes exchanged. A holder's holding period for the new notes will begin on the day following the day of the exchange. Further, if the Internal Revenue Service successfully claims that the purchase of old notes and the exchange must be treated independently of each other for federal income tax purposes, a holder whose old notes are purchased will recognize an amount of gain or loss generally equal to the amount of cash received minus the holder's adjusted tax basis in the old notes purchased. Subject to the market discount rules discussed above, any recognized gain or loss would generally be treated as capital gain or loss and would be long-term capital gain or loss if the holder held the old notes for more than 12 months. Treatment of the Exchange as a Taxable Exchange. Assuming that the old notes constitute "securities" for federal income tax purposes, the purchase of old notes and the exchange should constitute a recapitalization under Internal Revenue Code Section 368 resulting in the federal income tax consequences discussed above under "Treatment of the Exchange and Purchase of Old Notes as a Recapitalization Under Internal Revenue Code Section 368." However, Kaiser will not seek a ruling from the Internal Revenue Service regarding the treatment of the old notes as "securities," and it is possible that the Internal Revenue Service may challenge this treatment. If this challenge were successful, the exchange would be considered a taxable exchange with the likely result that a holder would recognize gain or loss upon the exchange, in addition to any gain or loss recognized on the purchase, generally equal to the difference between: . the sum of the fair market values of the preferred stock, common stock and new notes received in the exchange, and . the holder's adjusted tax basis in the old notes exchanged. 47 Subject to the market discount rules discussed above, any recognized gain or loss would generally be treated as capital gain or loss and would be long- term capital gain or loss if the holder held the old notes for more than 12 months. A holder's tax basis in the preferred stock, common stock and new notes would equal their respective fair market values, and their holding period would begin on the day following the day of the exchange. Payment of Accrued Interest on Old Notes. Regardless of the treatment of the purchase and exchange as described above, a holder, in addition to any gain recognized as a result of the purchase and exchange, will recognize ordinary income attributable to any consideration received as payment for accrued interest on the old notes that was not previously included in the holder's income. Holders that have already included the accrued interest in income will not recognize any additional income as a result of the consideration received as payment for the accrued interest on the old notes. For federal income tax purposes, it is unclear how much, if any, of the cash payment in the purchase and the preferred stock, common stock and new notes issued in the exchange should be allocated to accrued interest. Consistent with the form of the transaction to be consummated as part of the solicitation, Kaiser intends to take the position for tax and accounting purposes, and for purposes of backup withholding and information reporting, that an amount of the preferred stock equal in value to the accrued interest on the old notes will be issued in the exchange to holders as payment for accrued interest on the old notes. By participating in the purchase and/or exchange, a holder agrees to allocate the cash, preferred stock, common stock and new notes received for the principal amount of the old notes and accrued and unpaid interest in the same manner in which Kaiser will make this allocation. In calculating the amount of gain or loss recognized on the purchase or exchange as described above, the amount of preferred stock allocated to accrued interest will not be taken into account. Economic Accrual of Redemption Premium on Preferred Stock. The preferred stock will be redeemable, in whole or in part, at the option of Kaiser at any time following the exchange. In addition, upon the occurrence of a change of control, Kaiser is required to offer to purchase the preferred stock. The issue price of such preferred stock is generally the stock's fair market value as of the issue date. For federal income tax purposes, if a corporation issues preferred stock that may be redeemed at a price that is more than a de minimis amount higher than its issue price, the difference is treated as a "redemption premium" that is taxable to the holder on an annual economic accrual basis, which is commonly referred to as a constant-yield-to-maturity basis. In such event, the holder's tax basis in the preferred stock will increase by the amount included in the holder's gross income as accrued redemption premium. Where as in this case the preferred stock is optionally redeemable by Kaiser at any time, is subject to a mandatory purchase offer upon a change of control, and is subject to mandatory redemption on December 31, 2004, the determination of the redemption premium and the period over which that redemption premium is accrued and taxable to the holder is determined based on the date that redemption is most likely to occur, provided redemption is more likely than not to occur at some time. Kaiser believes that the most likely date of redemption of the preferred stock is December 30, 2001, at which time the preferred stock will be redeemable at 95% of its liquidation preference. Accordingly, the redemption premium will be the excess of 95% of the liquidation preference of the preferred stock over the fair market value of that stock on its date of issuance. Kaiser is required to and will provide information relating to the accrual of redemption premium to the Internal Revenue Service and make this information available to holders. A holder is required to report the accrued redemption premium for federal income tax purposes consistently with this information unless the holder explicitly discloses to the Internal Revenue Service that its determination of accrued redemption premium differs from that of Kaiser. 48 Original Issue Discount on New Notes. The new notes may have "original issue discount." Original issue discount is the excess of the stated redemption price at maturity of the new notes over their issue price. The issue price of the new notes will equal: . their fair market value if the new notes are treated as traded on an established market within the meaning of the Treasury Regulations, . the excess of the fair market value of the old notes over the fair market value of the preferred stock and common stock issued in the exchange, but only if the new notes are not treated as traded on an established market and the old notes, preferred stock and common stock are treated as so traded, or . the stated principal amount of the new notes, if neither of the previous two alternatives applies. For federal income tax purposes, original issue discount that exceeds a de minimis amount accrues to a holder of a new note over the period to maturity based on the constant yield to maturity method, compounded semi-annually, or over such shorter permitted compounding interval selected by the holder. With respect to an original holder of a new note, the portion of original issue discount that accrues during the period such holder owns the new note: . is includable in that holder's gross income for federal income tax purposes and . is added to that holder's tax basis for purposes of determining gain or loss on the maturity, redemption, prior sale or other disposition of that new note. Disposition of Preferred Stock, Common Stock, or New Notes. A holder generally will recognize gain or loss upon the sale, exchange, redemption or other disposition of the preferred stock, common stock, or new notes equal to the difference between the amount realized on the disposition and the holder's adjusted tax basis in the preferred stock, common stock, or new notes, as applicable. The gain or loss recognized on such a disposition generally will be capital gain or loss and will be long-term capital gain or loss if the holder's holding period for the preferred stock, common stock, or new notes, as applicable, is more than 12 months. However, an amount of gain up to the amount of accrued market discount, if any, on the old notes at the time of the exchange will be treated as ordinary income, assuming the exchange was treated as a recapitalization under Internal Revenue Code Section 368. Exercise of Conversion Option. A holder generally will not recognize gain or loss upon the conversion of shares of preferred stock into shares of common stock. However, any common stock attributable to dividend arrearages on the preferred stock at the time of the conversion will generally be treated as a taxable dividend to the holder. A holder's tax basis in the common stock will generally equal the holder's adjusted tax basis in the preferred stock converted. A holder's holding period for the common stock will include the holding period for the preferred stock converted. Solicitation of the Consents of Holders Concurrently with the exchange offer, Kaiser will solicit the consents of the holders of the old notes to remove most of the covenants in the old notes indenture. The federal income tax consequences to holders will depend upon whether removal or amendment of the covenants results in a deemed exchange of "modified" notes for the "original" notes. Treasury Regulations promulgated under Section 1001 of the Internal Revenue Code provide that such a deemed exchange occurs if a "significant modification," as described in the Treasury Regulations, in the terms of the debt instrument has occurred, taking into account all relevant facts and circumstances. The Treasury Regulations provide that a modification to a debt instrument that adds, deletes, or alters customary accounting or financial covenants is not a significant modification giving rise to a deemed exchange. Based on these Regulations, the removal of the covenants from the old notes indenture will not constitute a significant modification of the old notes. Accordingly, the removal of the covenants from the old notes indenture will not result in a taxable exchange of the old notes under Internal Revenue Code Section 1001. 49 Backup Withholding and Information Reporting Under some circumstances, a holder may be subject to backup withholding at a 31% rate on payments received in the purchase or exchange and with respect to the preferred stock, common stock and new notes issued in the exchange. This withholding generally applies only if the holder: . fails to furnish the holder's social security or other taxpayer identification number, . furnishes an incorrect taxpayer identification number, . is notified by the Internal Revenue Service that the holder has failed to report payment of interest and dividends properly and the Internal Revenue Service has notified Kaiser that the holder is subject to backup withholding, or . fails, under some circumstances, to provide a certified statement, signed under penalties of perjury, that the taxpayer identification number provided is the holder's correct number and that the holder is not subject to backup withholding. Any amount withheld from a payment to a holder under the backup withholding rules is allowable as a credit against the holder's federal income tax liability, provided that the required information is furnished to the Internal Revenue Service. Some holders, such as corporations and financial institutions, are not subject to backup withholding. Holders should consult their tax advisors as to their qualification for exemption from backup withholding and the procedure for obtaining this exemption. Because the purchase and exchange should be treated as a recapitalization under Internal Revenue Code Section 368, holders will be required to file information regarding the purchase and exchange in connection with filing their federal income tax returns for the period in which the purchase and exchange occur. Tax Consequences to Kaiser Upon the Purchase and Exchange of Old Notes Discharge of Indebtedness. The principal amount of Kaiser's aggregate outstanding indebtedness will be reduced upon the cash purchase and exchange of the old notes. Generally, the cancellation or other discharge of indebtedness triggers ordinary income to a debtor unless payment of the liability would have given rise to a deduction. The amount of the discharge of indebtedness income generally will be equal to the excess of the adjusted issue price, as defined in Treasury Regulation Section 1.1275-1(b), of the indebtedness discharged over the aggregate value of cash and other property, including the preferred stock, common stock and new notes, transferred in satisfaction of the indebtedness. However, Kaiser may not realize taxable income from discharge of indebtedness if the discharge of indebtedness occurs while Kaiser is "insolvent," as defined in Internal Revenue Code Section 108(d)(3), or if the discharge occurs while Kaiser is under the jurisdiction of a court in a bankruptcy proceeding under title 11 of the United States Code and the discharge of indebtedness is granted by the court or is pursuant to a plan approved by the court. If the discharge occurs while Kaiser is insolvent, to the extent that the amount of the discharge of indebtedness does not exceed the amount by which Kaiser is insolvent, certain tax attributes, including net operating losses, otherwise available to Kaiser will be reduced, generally by the amount that would otherwise be included as ordinary income. These attribute reductions will generally have the effect of increasing Kaiser's federal income tax liability in subsequent taxable years. The extent, if any, to which Kaiser is insolvent is determined for this purpose immediately before the discharge of indebtedness. If the discharge occurs while Kaiser is in a title 11 case, the entire amount of the discharge (which would otherwise be included as ordinary income) will be applied to reduce tax attributes, including net operating losses, that would be otherwise be available to Kaiser. These attribute reductions will generally have the effect of increasing Kaiser's federal income tax liability in subsequent taxable years. 50 DESCRIPTION OF CONVERTIBLE PREFERRED STOCK General. We are offering 2,600,000 shares of redeemable convertible preferred stock in the exchange offer. Liquidation Preference. The preferred stock will have an aggregate base liquidation preference of $65 million, or $25 per share, plus accrued interest on the 12% Senior Subordinated Notes due 2003 from July 1, 1999 through the date of the closing of the exchange offer. The liquidation preference will increase at the end of each calendar quarter commencing December 31, 1999 at the rate of 6.25% per annum. This means that, if Kaiser is liquidated, dissolved or wound up, each holder of a share of preferred stock will be entitled to be paid the per share liquidation preference. Holders of preferred stock will not be entitled to any further payment. If the assets remaining after distribution to holders of debt and other obligations are insufficient to pay all of the holders of preferred stock, any remaining assets will be distributed on a proportionate basis to the holders of preferred stock. In a liquidation, holders of preferred stock must be paid before any holders of Kaiser's common stock and other junior securities receive any payments for their shares. Rank. The preferred stock will rank ahead of Kaiser's common stock. It is not expected that there will be other classes of preferred stock immediately after the recapitalization. The Kaiser board of directors could at any time after the recapitalization authorize the issuance of preferred stock that ranks equal with the preferred stock. However, it may not authorize the issuance of preferred stock that ranks senior to the preferred stock or the issuance of some types of additional debt without the consent of holders of two-thirds of the preferred stock or the unanimous consent of the directors elected by holders of the preferred stock. Dividends. Cumulative dividends on the preferred stock will be payable in cash on a quarterly basis at a rate per year equal to 3.75% of the liquidation preference per share through December 31, 2000 and 5.75% from January 1, 2001 through December 31, 2001. The dividend rate on the preferred stock will increase to 12% after December 31, 2001. If we fail for any reason to pay a dividend in cash in any quarter and if we fail to pay the delinquent dividend and the current dividend in the following quarter, holders of the preferred stock will have the right to appoint two additional directors for the two dividends missed and one additional director if any future dividend payment is missed, up to a maximum of three additional directors. The size of our board of directors will be expanded accordingly. The liquidation preference will be increased by 2% per annum for the time during which any dividend is delinquent. Conversion. The preferred stock will be convertible into our common stock at the option of the holder at any time on or after December 31, 2001. The number of shares of common stock into which each share of preferred stock will be converted will be determined by reference to the average closing price of our common stock for the 20 consecutive trading days preceding the conversion election. Redemption. We will have the option to redeem the preferred stock, in whole or in part, following the consummation of the exchange offer at: . 92% of the liquidation preference until December 31, 1999, . 91% of the liquidation preference from January 1, 2000 through March 31, 2000, . 89% of the liquidation preference from April 1, 2000 through June 30, 2000, . 88% of the liquidation preference from July 1, 2000 through September 30, 2000, . 86% of the liquidation preference from October 1, 2000 through December 31, 2000, . 85% of the liquidation preference from January 1, 2001 through March 31, 2001, . 84% of the liquidation preference from April 1, 2001 through June 30, 2001, 51 . 85% of the liquidation preference from July 1, 2001 through September 30, 2001, . 83% of the liquidation preference from October 1, 2001 through December 31, 2001, and . 100% of the liquidation preference after December 31, 2001, plus in each case accumulated and unpaid dividends. If we fail to redeem the preferred stock on or before December 31, 2004, the preferred stock will become immediately convertible into a number of shares of common stock determined by reference to $.01 per share, the holders of the preferred stock will be entitled to appoint two additional directors, and the dividend rate will immediately increase to 14%. Change of Control Offer. We must offer to repurchase the preferred stock at 101% of the liquidation preference plus accumulated and unpaid dividends in connection with a change of control of Kaiser. If we fail to make the offer, the preferred stock will become immediately convertible into a number of shares of common stock determined by reference to $.01 per share, the holders of the preferred stock will be entitled to appoint two additional directors, and the dividend rate will immediately increase to 14%. Voting Rights. The holders of the preferred stock generally will be entitled to vote with holders of the common stock on all matters submitted to a vote of our shareholders. However, holders of preferred stock will have special voting rights as a class for the election of directors and special voting rights regarding mergers and liquidations in which they do not receive the liquidation preference. Each share of preferred stock will be entitled to one-fourth of a vote for each preferred share until the time it is convertible, at which point holders will be entitled to the number of votes corresponding to the number of shares into which the preferred stock may be converted. Prior to conversion and assuming the proposed reverse split of the common stock is implemented, the preferred stock will represent approximately 12% of the total voting power of the common and preferred stock. If Kaiser or any of its affiliates holds any preferred stock, they will not be entitled to vote that preferred stock on these matters. The terms of the preferred stock may only be amended with a two-thirds affirmative vote of the holders of preferred stock. If the shareholders of Kaiser do not approve the "shareholder democracy" amendments to Kaiser's certificate of incorporation and bylaws at the 1999 Annual Meeting of Shareholders, Kaiser intends to include a proposal on the agenda for the 2000 Annual Meeting of Shareholders seeking the approval of the "shareholder democracy" amendments. Under the terms of the preferred stock to be issued pursuant to the exchange offer, the holders of preferred stock will be entitled to vote on this proposal at the 2000 Annual Meeting of Shareholders that number of shares of common stock into which the preferred stock will be convertible, as if the preferred stock had been converted. See "Description of Common Stock Summary of Proposed Amendments to Kaiser's Certificate of Incorporation and Bylaws." Protective Provisions. Kaiser may not issue senior preferred stock or some types of additional indebtedness without the consent of holders of two-thirds of the preferred stock or the unanimous consent of the directors elected by the preferred stock. DESCRIPTION OF COMMON STOCK Description of Kaiser's Capital Stock Kaiser's Board of Directors has submitted proposals to its shareholders that some terms and provisions of the Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws that govern the terms, rights and preferences of Kaiser's capital stock be amended. If these proposals are adopted, the rights attributable to holders of Kaiser common stock would be altered. A summary of the substance of those proposals is included under "Summary of Proposed Amendments to Kaiser's Certificate of Incorporation and Bylaws" below. The following summary does not give effect to the adoption of any of these proposals. 52 The authorized capital stock of Kaiser consists of 90,000,000 shares of common stock, par value $0.01 per share, and 2,000,000 shares of preferred stock, par value $0.01 per share. As of September 1, 1999, the outstanding capital stock of Kaiser consisted of 24,833,890 shares of common stock and no shares of preferred stock. Common Stock Each share of common stock has one vote per share on all matters submitted to a vote of shareholders. Kaiser's Amended and Restated Certificate of Incorporation provides that no action may be taken by the holders of shares of common stock by written consent in lieu of holding a meeting of shareholders. Kaiser has never paid cash dividends on its common stock. The Board of Directors anticipates that for the foreseeable future no cash dividends will be paid on its common stock and that Kaiser's earnings will be retained for use in the business. The Board of Directors determines Kaiser's common stock dividend policy based on Kaiser's results of operations, payment of dividends on preferred stock, if any is outstanding, financial condition, capital requirements, and other circumstances. Kaiser's debt agreements currently do not permit dividends to be paid on its common stock. Holders of common stock have no preemptive or other rights to subscribe for additional shares of capital stock. Upon liquidation, dissolution, or winding up of Kaiser, each share of common stock will share equally in assets legally available for distribution to shareholders. The transfer agent and registrar for the common stock is First Chicago Trust Company of New York, c/o Equiserve, P.O. Box 2500, Jersey City, New Jersey 07303-2500. The shareholder relations telephone number at First Chicago is (201) 324-0498, and the First Chicago Web site address is http://www.equiserve.com. Since September 14, 1993, the common stock has been traded on the New York Stock Exchange under the symbol "ICF." From December 14, 1989, to September 13, 1993, the common stock was traded on the Nasdaq National Market. The number of holders of record of Kaiser common stock was approximately 1,500 as of September 9, 1999. On September 9, 1999, the closing price per share of Kaiser common stock on the NYSE was $0.43. Included in Kaiser's 1998 Annual Report to its shareholders, which is incorporated by reference into and delivered with this prospectus, is information concerning the high and low sales prices of Kaiser common stock during each of the fiscal quarters during 1997 and 1998. The table below sets forth this price information, as reported by NYSE, for each of the quarterly periods ended since December 31, 1998. 1999 High Low - --------------- ------ ----- First Quarter $1.500 $.813 Second Quarter $ .813 $.250 Third Quarter (through September 1, 1999) $ .500 $.406 Preferred Stock Preferred stock is available for issuance from time to time at the discretion of the Board of Directors of Kaiser and without shareholder approval. No shares are currently outstanding. For each series of preferred stock it establishes, the Board of Directors has authority to prescribe the number of shares in that series and the dividend rate. In addition, the Board of Directors has authority to prescribe the voting rights, conversion privileges, redemption, sinking fund provisions and liquidation rights, if any, and any other rights, preferences and limitations of the particular series. The issuance of preferred stock could decrease the amount of earnings and assets available for distribution to the holders of common stock or adversely affect the rights and powers, including voting rights, of the holders of common stock. Additionally, the issuance of preferred stock could have the effect of delaying, deferring or preventing a change in control of Kaiser without further action by the shareholders. Kaiser's debt agreements currently do not permit dividends to be paid on its preferred stock if any shares of preferred stock were to be issued. 53 Senior Debt Warrants Issued in 1996 A total of 105,000 Senior Debt Warrants were issued by Kaiser under a warrant agreement dated as of December 23, 1996, between Kaiser and The Bank of New York, a New York banking corporation, as warrant agent. Each 1996 Warrant entitles the holder to acquire one share of common stock of Kaiser, upon payment of the exercise price of $2.30, subject to adjustment as described below. All outstanding 1996 Warrants terminate and become void on December 31, 1999. The 1996 Warrants are subject to the terms contained in the 1996 Warrant Agreement; capitalized terms that are not otherwise defined below are used as defined in the 1996 Warrant Agreement. The common stock issuable upon exercise of the 1996 Warrants has been registered with the Securities and Exchange Commission and listed on the New York Stock Exchange. Non-Surviving Combination. If Kaiser proposes to enter into a transaction ------------------------- that would constitute a Non-Surviving Combination if consummated, Kaiser must give written notice to the holders 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. As used herein, a "Non-Surviving Combination" means any merger, consolidation, or other business combination by Kaiser with one or more persons other than a wholly owned subsidiary of Kaiser in which Kaiser is not the survivor, or a sale of all or substantially all of the assets of Kaiser to one or more of the other persons, if, in connection with any of the foregoing, consideration other than consideration which includes common stock or securities convertible into, or exercisable or exchangeable for, common stock or rights or options to acquire common stock or other securities is distributed to holders of common stock in exchange for all or substantially all of their equity interest in Kaiser. In a Non-Surviving Combination, the surviving entity will be obligated to distribute or pay to each holder of the 1996 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 common stock if the holder's 1996 Warrants had been exercised immediately prior to the Non-Surviving Combination or, if applicable, the record date. Following the consummation of a Non-Surviving Combination, the 1996 Warrants will represent only the right to receive these shares of stock or other property from the survivor upon payment of the purchase price prior to the expiration date. No transaction is presently in progress or under negotiation that would constitute a Non-Surviving Combination. Adjustment. The number of shares of common stock issuable upon the ---------- exercise of each 1996 Warrant and the purchase price are subject to adjustment in some circumstances, including: . a dividend or distribution on Kaiser's common stock in shares of its common stock or a combination, subdivision, reorganization, or reclassification of common stock, . the issuance of shares of common stock for a consideration per share less than the market price per share at the time of issuance, . the issuance of rights, warrants, or options for the purchase of common stock or for the purchase of securities convertible into or exchangeable for common stock where the aggregate amount of consideration, taking into account the consideration received for the issuance of the right, warrant, or option plus any consideration to be received upon the exercise and including, in the case of a right, warrant, or option to purchase a convertible or exchangeable security, any consideration to be received upon the eventual conversion or exchange of the security for common stock per share of common stock received or receivable by Kaiser, is less than the market price per share at the time of issuance of the right, warrant, or option, . the issuance of any securities convertible into or exchangeable for common stock where the aggregate amount of consideration taking into account the consideration received for the issuance of the convertible or exchangeable security and the consideration to be received upon the conversion or exchange per share of common stock received or receivable by Kaiser is less than the market price per share of common stock on the date of issuance of the convertible or exchangeable security, and 54 . a dividend or distribution on Kaiser's common stock of cash, evidences of its indebtedness, other securities, or other properties or assets other than any cash dividend which, when aggregated with all other cash dividends paid in the year prior to the declaration of the cash dividend, does not exceed 10% of the market price per share of common stock on the date of this declaration. If the terms of any of Kaiser's outstanding rights, warrants, or options for the purchase of common stock or securities convertible into or exchangeable for common stock change, in each case where the issuance caused an adjustment in the terms of the 1996 Warrants, including by way of expiration of the securities but excluding by way of antidilution provisions triggering an adjustment of the terms upon the occurrence of an event that would cause an adjustment of the terms of the 1996 Warrant, then the purchase price and the number of shares of common stock issuable upon the exercise of each 1996 Warrant shall be readjusted to take account of the change. Notwithstanding the foregoing, no adjustment in the purchase price or the number of shares of common stock issuable upon exercise of 1996 Warrants will be required: . until cumulative adjustments would result in an adjustment of at least one percent in the purchase price, . for the granting, in a transaction which would otherwise trigger an adjustment, of any rights, warrants, or options or the issuance of any common stock to officers, directors, or employees of, or consultants or advisors to, Kaiser where the issuances are registered with the Securities and Exchange Commission on Form S-8 and do not, in the aggregate exceed five percent of the number of shares of common stock outstanding assuming the exercise of the options so granted and all rights, warrants, options, and convertible securities then outstanding, or . the issuance of common stock pursuant to any dividend reinvestment plan where the purchase price of common stock is no less than 95% of the market price on the date of issuance. Shareholder Rights Plan On January 13, 1992, the Board of Directors of Kaiser declared a dividend distribution to shareholders of record at the close of business on January 31, 1992 of one right for each outstanding share of common stock. Each right entitles the registered holder of common stock to purchase from Kaiser a unit consisting of one preferred stock unit (1/100th of a share of Series 4 Junior Preferred Stock) at a purchase price of $50.00 per preferred stock unit, subject to adjustment. The rights also are subject to antidilution adjustments. The description of the rights is set forth in a rights agreement between Kaiser and the rights agent. The rights agent is First Chicago Trust Company of New York. A distribution date for the rights will occur upon the earlier of: . 10 business days following a "Stock Acquisition Date," which is the public announcement that a person or group of affiliated or associated persons has acquired, or obtained the right to acquire, beneficial ownership of 20% or more of the outstanding shares of common stock or . 10 business days following the commencement of a tender offer or exchange offer that would if consummated result in a person or group becoming an acquiring person. On July 2, 1999, the Board of Directors amended the definition of acquiring person within the rights agreement so that it now means any person or group of affiliated or associated persons that has acquired, or obtained the right to acquire, beneficial ownership of 20% or more of the outstanding shares of Kaiser's common stock other than as a result of a "Permitted Offer." Following a further amendment by the Board of Directors on September 15, 1999, the rights agreement defines a "Permitted Offer" as: . a tender or exchange offer which is for all outstanding common stock and on terms determined to be adequate and in the best interests of Kaiser and its stockholders by at least a majority of the Board of 55 Directors who are not officers or employees of Kaiser and who are not acquiring persons or affiliates, associates, nominees or representatives of an acquiring person, . a cash tender offer for all outstanding common stock after July 31, 2000, and . the offer and acquisition of the common stock and preferred stock, including the underlying common stock, issuable in exchange for the old notes as described in this prospectus. The rights are not exercisable until the distribution date and will expire at the close of business on January 13, 2002, unless earlier redeemed by Kaiser as described below. Until the distribution date: . the rights will be evidenced by the common stock certificates and will be transferred with and only with these certificates and . the surrender for transfer of any certificates for common stock outstanding will also constitute the transfer of the rights associated with the common stock represented by the certificate. In the event that, at any time following the distribution date, a person becomes an acquiring person, then each holder of a right other than the acquiring person will have the right to receive: . upon exercise and payment of the purchase price, common stock or, in some circumstances, cash, property or other securities of Kaiser having a value equal to two times the purchase price of the right, or . at the discretion of the Board of Directors, upon exercise and without payment of the purchase price, common stock or, in some circumstances, cash, property or other securities of Kaiser having a value equal to the purchase price of the right. In the event that, at any time following the Stock Acquisition Date: . Kaiser is acquired in a merger or other business combination transaction in which Kaiser is not the surviving corporation, . Kaiser is the surviving corporation in a merger with any person, as defined in the rights agreement, and its common stock is changed into or exchanged for stock or other securities of any other person or cash or any other property, or . 50% or more of Kaiser's assets or earning power is sold or transferred, each holder of a right, except rights held by an acquiring person or which previously have been exercised as set forth above shall have the right to receive, upon exercise, common stock of the acquiring company having a value equal to two times the purchase price of the right. The events set forth in this paragraph and in the immediately preceding paragraph are referred to as the "Triggering Events." As noted above, following the occurrence of any of the events described above, all rights that are, or under some circumstances specified in the rights agreement were, beneficially owned by any acquiring person will be null and void. The purchase price payable, and the number of preferred stock units or other securities or property issuable upon exercise of the rights, are subject to amendment from time to time to prevent dilution: . in the event of a stock dividend on, or a subdivision, combination or reclassification of, the Series 4 Preferred Stock, 56 . if holders of the Series 4 Preferred Stock are granted rights or warrants to subscribe for Series 4 Preferred Stock or convertible securities at less than the current market price of the Series 4 Preferred Stock, or . upon the distribution to holders of the Series 4 Preferred Stock of evidences of indebtedness or assets, excluding regular quarterly cash dividends, or of subscription rights or warrants other than those referred to above. With exceptions, no adjustment in the purchase price will be required until cumulative adjustments amount to at least one percent of the purchase price. In addition, to the extent that Kaiser does not have sufficient shares of common stock issuable upon exercise of the rights following the occurrence of a Triggering Event, Kaiser may, under some circumstances, reduce the purchase price. No fractional preferred stock units will be issued and an adjustment in cash will be made. In general, Kaiser may redeem the rights in whole, but not in part, at a price of $0.01 per right payable in cash, common stock or other consideration deemed appropriate by the Board of Directors, at any time until 10 business days following the Stock Acquisition Date. After the redemption period has expired, Kaiser's right of redemption may be reinstated if an acquiring person reduces its beneficial ownership to less than 10% of the outstanding shares of common stock in a transaction or series of transactions not involving Kaiser and there are no other acquiring persons. Immediately upon the action of the Board of Directors ordering redemption of the rights, and without any notice to the holder of these rights prior to the redemption, the rights will terminate and the only right of the holders of rights will be to receive the $0.01 redemption price. Until a right is exercised, the holder will have no rights as a shareholder of Kaiser, including, without limitation, the right to vote or to receive dividends. Other than those provisions relating to the principal economic terms of the rights, except with respect to increasing the purchase price under some circumstances described in the rights agreement, any of the provisions of the rights agreement may be amended by the Board of Directors of Kaiser prior to the distribution date. After the distribution date, the provisions of the rights agreement may be amended by the Board in order to cure any ambiguity, to make changes which do not adversely affect the interests of holders of rights, excluding the interests of any acquiring person, or to shorten or lengthen any time period under the rights agreement. However, no amendment to adjust the time period governing redemption shall be made when the rights are not redeemable. One right will be distributed to shareholders of Kaiser for each share of common stock owned of record by them at the close of business on the record date. Until the distribution date, Kaiser will issue a right with each share of common stock so that all shares of common stock will have attached rights. The rights may be deemed to have anti-takeover effects. The rights generally may cause substantial dilution to a person or group that attempts to acquire Kaiser under circumstances not approved by the Board of Directors of Kaiser. The rights should not interfere with any merger or other business combination approved by the Board of Directors of Kaiser since the Board of Directors may, at its option, at any time prior to the close of business on the earlier of: . the tenth business day following the Stock Acquisition Date or . January 13, 2002, redeem all but not less than all of the then outstanding rights at $0.01 per right. Provisions Affecting Changes of Control and Extraordinary Transactions In addition to the shareholder rights plan, some provisions of Kaiser's Certificate of Incorporation and By-laws and other agreements could have the effect of delaying, deferring, or preventing a change in control of Kaiser or other extraordinary corporate transaction. 57 Kaiser's Amended and Restated Certificate of Incorporation and Bylaws provide for classification of the Board of Directors into three classes, as nearly equal in number as possible, with one class of directors being elected each year for three-year terms. Under Delaware law, members of a classified board may be removed only for cause. Thus, at least two years would be required to effect a change of control in the Board of Directors, unless a shareholder had sufficient voting power to amend or repeal the Certificate of Incorporation and Bylaw provisions relating to classification of the Board of Directors. In addition, the Certificate of Incorporation imposes supermajority voting requirements for some corporate transactions that apply if a majority of the Board of Directors has not served in the positions for at least 12 months. Under those circumstances, the approval of two-thirds of the voting power of Kaiser's capital stock would be required in order for Kaiser to: . merge with or consolidate into any other entity, other than a subsidiary of Kaiser, . sell, lease or assign all or substantially all of the assets or properties of Kaiser, or . amend the voting provisions of the Certificate of Incorporation. Other Certificate of Incorporation provisions of the type referred to above include: . the denial of the right of holders of common stock to take action by written consent in lieu of a shareholders' meeting and . the ability of the Board of Directors to determine the rights and preferences, including voting rights, of Kaiser's authorized but unissued preferred stock, and then to issue this stock. Relevant Bylaw provisions include those that: . require advance nomination of directors, . require advance notice of business to be conducted at shareholders' meetings, and . provide that shareholders owning at least 50% of the voting power of the capital stock are required to call a special meeting of shareholders. With the exception of the provision that authorizes the Board of Directors to fix the terms of and issue authorized but unissued shares of preferred stock, the approval of the holders of at least two-thirds of the voting power of Kaiser's capital stock is required to amend, alter, or repeal, or to adopt provisions inconsistent with, the Certificate of Incorporation and Bylaw provisions described above, regardless of whether a majority of the members of the Board of Directors has served in such positions for more than 12 months at the time of the action. Delaware Takeover Statute Section 203 of the Delaware General Corporation Law applies to Delaware corporations with a class of voting stock listed on a national securities exchange, authorized for quotation on an inter-dealer quotation system, or held of record by 2,000 or more persons, and restricts transactions which may be entered into by such a corporation and certain of its shareholders. The Delaware takeover statute provides, in essence, that a stockholder acquiring more than 15% of the outstanding voting shares of a corporation subject to the statute, but less than 85% of the shares, may not engage in certain "Business Combinations" with the corporation for a period of three years subsequent to the date on which the stockholder became an Interested Stockholder, unless: . prior to the date the corporation's board of directors approved either the Business Combination or the transaction in which the stockholder became an Interested Stockholder or 58 . the Business Combination is approved by the corporation's board of directors and authorized by a vote of at least 66 2/3% of the outstanding voting stock of the corporation not owned by the Interested Stockholder. The Delaware takeover statute defines the term "Business Combination" to encompass a wide variety of transactions with or caused by an Interested Stockholder in which the Interested Stockholder receives or could receive a benefit on other than a pro rata basis with other stockholders, including mergers, some asset sales, some issuances of additional shares to the Interested Stockholder, transactions with the corporation which increase the proportionate interest of the Interested Stockholder, or transactions in which the Interested Stockholder receives some other benefits. Summary of Proposed Amendments to Kaiser's Certificate of Incorporation and Bylaws The 1999 Annual Meeting of Shareholders of Kaiser will be held on Thursday, November 4, 1999, at 10:00 a.m. At the annual meeting, Kaiser's shareholders will be asked to vote upon, among other things, proposals to: . approve the issuance of shares of the preferred stock and common stock in connection with the exchange offer; . approve a reverse stock split of Kaiser's common stock; . approve the "shareholder democracy" amendments to Kaiser's certificate of incorporation and bylaws to: . eliminate the requirement that holders of 66 2/3% of the outstanding capital stock approve specified transactions following a change in the majority of directors within 12 months; . provide for an annual election of directors rather than staggered, three-year terms; . permit shareholders to fill vacancies on the board of directors; . provide that shareholders owning at least 20% of the voting power of the outstanding capital stock could require a special meeting of shareholders to be called; and . eliminate the requirement that holders of 66 2/3% of the outstanding capital stock approve specified amendments to the certificate of incorporation and bylaws; . approve an amendment to Kaiser's certificate of incorporation and bylaws to provide that no new shareholder rights plan, sometimes referred to as a "poison pill," shall be adopted without the approval of the shareholders; . approve an amendment to Kaiser's certificate of incorporation to eliminate provisions related to the terms of series of preferred stock that are obsolete and no longer outstanding; . approve an amendment to Kaiser's stock incentive plan to increase the number of shares of common stock available for issuance under the plan, to permit the transfer of options granted under the incentive plan to immediate family members of plan participants and to provide greater flexibility to Kaiser's board of directors to make future amendments to the plan; and . approve a quasi-reorganization of Kaiser's capital accounts to eliminate its accumulated retained earnings deficit. If the shareholders approve one or more of the foregoing proposals, the above description of the common stock and shareholder rights plan would be altered accordingly. DESCRIPTION OF NEW NOTES The following is only a summary of the terms of the new notes. We urge you to read the indenture and the exhibits to the indenture for a complete description of the terms of the new notes, copies of which are available upon request from Kaiser. The terms of the new notes include those stated in the indenture and those made part of the indenture by reference to the Trust Indenture Act of 1939 as in effect on the date of the indenture. The definitions of some terms used here are set forth in "Certain Definitions" below. The terms of the new notes may differ in material respects from the terms of the old notes. Holders of old notes should review this section carefully. General Kaiser will issue the new notes in partial exchange for the old notes under an indenture between itself and Bank of New York, as trustee (the "Trustee"). 59 The new notes: . are general unsecured obligations of Kaiser; . are limited to an aggregate principal amount of up to $25 million; . bear interest at an initial rate of 15% per annum, which rate will reduce to 13.5% when the aggregate outstanding amount of new notes falls below $15 million, and will further reduce by .25% for each $1 million in additional principal reduction until the interest rate reaches 11%; . will have interest payable on June 30 and December 31 of each year, commencing on December 31, 1999, to holders of record at the close of business on the preceding June 15 or December 15, as the case may be; . mature on December 31, 2002; and . are issued only in registered form, without coupons, in denominations of $1,000 and its integral multiples. The new notes may be presented for registration of transfer and/or exchange and the principal and interest on the new notes is payable at the corporate trust office of the Trustee at 101 Barclay Street, 7 East, New York, New York 10286, or at an office or agency maintained by Kaiser in the City of New York, New York. Methods of Making Payments on the New Notes Payments are made by check mailed to the registered addresses of the holders of record of the new notes. Holders must surrender their notes to the paying agent to collect principal payments. Kaiser may require payment of a sum sufficient to cover any transfer tax or other governmental charge payable in connection with transfers or exchanges of the new notes. Initially, the Trustee acts as the paying agent and the registrar under the indenture. Kaiser or any of its subsidiaries subsequently may act as the paying agent and the registrar and Kaiser may change any paying agent and any registrar without prior notice to the holders of the new notes. Ranking The new notes are senior unsecured obligations of Kaiser. The new notes will rank equal in right of payment with all of our current and future senior unsecured obligations. We are currently pursuing alternatives for a new secured credit facility. The new notes would be effectively subordinated to the rights of the lender under this credit facility. Kaiser's operations are conducted primarily through its subsidiaries. The new notes will be effectively subordinated to the current and future obligations of Kaiser's subsidiaries. As of June 30, 1999, on a pro forma basis after giving effect to the recapitalization, the aggregate principal amount of indebtedness of the wholly-owned subsidiaries which would have effectively ranked senior to the new notes would have been approximately $114 million. Kaiser is a holding company that derives substantially all of its income from its subsidiaries. Kaiser must rely on dividends or other intercompany transfers from its subsidiaries to generate the funds necessary to meet its debt service and other obligations, including payment of principal and interest on the new notes. The ability of its subsidiaries to pay these dividends or other intercompany transfers is subject to the laws of the jurisdictions where the subsidiaries are located. Claims of creditors against these subsidiaries generally have priority as to the assets of the subsidiaries over Kaiser's equity interests and the holders of Kaiser's indebtedness. See "Capitalization." 60 Optional and Mandatory Redemption of the New Notes Kaiser may choose to redeem the new notes in whole or in part, at any time, at a redemption price equal to 100% of the aggregate principal amount of the new notes, plus accrued and unpaid interest. Kaiser is obligated to use particular sources of cash, on a quarterly basis, to reduce the aggregate outstanding balance of the new notes to $10 million. The cash sources to be used to make those reductions are from reductions in cash collateralization requirements for Kaiser's Nova Hut construction project and, if permitted by Kaiser's bank credit agreement, from unexpected increases in joint venture distributions to Kaiser or from borrowing capacity above that needed for Kaiser's projected operations. The Trustee selects the new notes to be redeemed from among the outstanding new notes on a pro rata basis, by lot or by any other method permitted in the indenture, if less than all of the new notes are to be redeemed at any time. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each holder whose new notes are to be redeemed at the registered address of the holder. Interest will cease to accrue on the new notes or portions called for redemption on and after the redemption date. Sinking Fund There is no mandatory sinking fund for the new notes. Mandatory Offers to Purchase the New Notes The indenture requires Kaiser to offer to purchase a portion of the outstanding new notes under some circumstances. See "Certain Covenants Limitations on Asset Sales and "Certain Covenants Change of Control." Certain Covenants Change of Control. Upon any sale of all or substantially all of Kaiser's assets, or the acquisition of a majority of Kaiser's equity securities by a person or group, or Kaiser's approval of a plan of liquidation, or changes in the majority of Kaiser's board of directors, Kaiser is obligated to repurchase all outstanding new notes. The purchase price equals 101% of the principal balance of outstanding new notes, plus accrued interest to the date of purchase. Limitations on Additional Indebtedness. Kaiser 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 any indebtedness, other than Junior Subordinated Indebtedness or indebtedness between Kaiser and its wholly-owned Restricted Subsidiaries, and Kaiser will not permit its Restricted Subsidiaries to issue Capital Stock having a liquidation preference, unless it is able to demonstrate that, for the four quarterly periods preceding the incurrence of this debt or issuance of that stock, its Consolidated Fixed Charge Coverage Ratio was at least 2.50 to 1.0. Notwithstanding the foregoing limitations, Kaiser and its Restricted Subsidiaries may incur indebtedness: . under the Bank Credit Agreement up to $60,000,000; . not otherwise permitted so long as the total amount of that indebtedness does not exceed 7.5% of Kaiser's Consolidated Tangible Assets; and . Refinancing Indebtedness. In addition, 61 . Kaiser subsidiaries that are not wholly-owned Restricted Subsidiaries may incur indebtedness if in compliance with the covenant described under "Limitations on Subsidiary Debt and Preferred Stock"; . Single Purpose Subsidiaries may incur non-recourse indebtedness; and . Kaiser and its wholly-owned subsidiaries may guarantee the indebtedness of Kaiser-Hill Company, LLC and Kaiser-Hill Financing Company, L.L.C. Limitations on Subsidiary Debt and Preferred Stock. Kaiser 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 any indebtedness, which, with respect to any Restricted Subsidiary, includes preferred stock of the Restricted Subsidiary, except for the following: . guarantees by any Restricted Subsidiary of the payment of indebtedness incurred pursuant to the Bank Credit Agreement and in compliance with the covenant described under "Limitations on Additional Indebtedness" and with the covenant described under "Limitations on Guarantees"; . Indebtedness issued to and held by Kaiser or a wholly-owned Restricted Subsidiary, except that any subsequent issue or transfer of any Capital Stock that results in any wholly-owned Restricted Subsidiary ceasing to be a wholly-owned Restricted Subsidiary or any transfer of Indebtedness, other than to a wholly-owned Restricted Subsidiary, is deemed, in each case, to constitute the incurrence of Indebtedness by the Restricted Subsidiary; . Indebtedness to Kaiser or any of its 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 but which are engaged only in Permitted Businesses and the management and operations of which is controlled by Kaiser, not to exceed 5% of Consolidated Tangible Assets; and . Non-recourse indebtedness incurred by a Single Purpose Subsidiary. Limitations on Restricted Payments. Kaiser will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, make any Restricted Payment if, at the time of a potential Restricted Payment, any of the following conditions exist: . a Default or Event of Default has occurred and is continuing or will occur as a consequence; . Kaiser is 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 . the amount of the Restricted Payment, when added to the aggregate amount of all Restricted Payments, other than those made pursuant to the exceptions described in the following paragraph, made after the date of the indenture, exceeds the sum of: . 50% of Kaiser's Consolidated Net Income accrued during the period since the date of the indenture for the new notes or, if that aggregate Consolidated Net Income is a deficit, minus 100% of the aggregate deficit; plus . the net reduction in Investments attributable to Designated Investments by Kaiser or its subsidiaries after December 31, 1999. The monetary limitations described in the immediately preceding paragraph will not prevent the following: 62 . Kaiser or any wholly-owned Restricted Subsidiary from making investments in subsidiaries, in an aggregate amount not to exceed $4 million, pursuant to contractual obligations in existence on the date of the indenture for the new notes or directly related to projects in existence on the date of the indenture for the new notes; . Kaiser from paying any dividend, including dividends on dividends, within 60 days after the date of its declaration if this dividend could have been paid on the date of its declaration without violation of this covenant; . Kaiser from purchasing or redeeming and retiring any shares of capital stock of Kaiser, and paying accrued and unpaid dividends on these shares at the time of this repurchase or redemption, in exchange for, or out of the net proceeds of a substantially concurrent sale, other than to a subsidiary of Kaiser or an employee stock ownership plan, of shares of Qualified Capital Stock of Kaiser; . Kaiser or any subsidiary from making: . investments pursuant to the provisions of employee benefit plans of Kaiser or any of its subsidiaries in an aggregate amount not to exceed $500,000 in a fiscal year, or . making loans to officers of Kaiser approved by a majority of the independent members of the Board of Directors of Kaiser, provided that the aggregate amount of investments and loans under this clause may not exceed $1 million in any fiscal year; . Kaiser or any wholly-owned Restricted Subsidiary from making Designated Investments: . 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 the third clause of the covenant described under "Limitations on Subsidiary Debt and Preferred Stock", not to exceed 5% of Consolidated Tangible Assets after December 31, 1999 or . in Joint Ventures in an aggregate amount not to exceed 5% of Consolidated Tangible Assets after December 31, 1999, provided that: . the person in whom the investment is made is engaged only in Permitted Businesses; . Kaiser, directly or through wholly-owned Restricted Subsidiaries of Kaiser, controls, under an operating management agreement or otherwise, the day-to-day management and operation of this Person or otherwise has the right to exercise significant influence over the management and operation of this Person in all material respects, including without limitation the right to control or veto any material act or decision; and . after giving effect to this Investment, the aggregate amount of indebtedness and investments made by Kaiser and its subsidiaries in this Person after December 31, 1999 does not exceed $5 million; or . Kaiser or any wholly-owned Restricted Subsidiary from making Designated Investments in subsidiaries that are not wholly-owned Restricted Subsidiaries or in Joint Ventures, as long as these Designated Investments are made solely from: . the net proceeds of a substantially concurrent sale, other than to a subsidiary of Kaiser or an employee stock ownership plan, of shares of Qualified Capital Stock of Kaiser, . 50% of Kaiser's Consolidated Net Income accrued during the period after December 31, 1999, 63 . the aggregate amount of net reductions in investments, not to exceed the aggregate amount of the Designated Investments, made by Kaiser or any Subsidiary after December 31, 1999, . Kaiser or any wholly-owned Restricted Subsidiary from making Investments in Kaiser-Hill Company, LLC or its affiliates, as long as such Investments are determined by Kaiser Board of Directors to be necessary or appropriate and that such investments are proportional to simultaneous investments made by the other equity owners, . Kaiser from redeeming the shares of the preferred stock, . Kaiser from issuing equity securities or making payments in respect of equity securities previously issued to former shareholders of ICT Spectrum Constructors, Inc., . Kaiser from making payments to redeem rights outstanding under Kaiser's Rights Agreement dated January 13, 1992, or . Kaiser from paying dividends on the preferred stock. Limitations on Restrictions on Distributions from Subsidiaries. Kaiser 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 the following: . any Payment Restriction contained in Existing Indebtedness or existing contracts to which Kaiser or any of its Restricted Subsidiaries are parties; . any Payment Restriction under any agreement evidencing any Acquired Indebtedness that was permitted to be incurred pursuant to the indenture, as long as the Payment Restriction only applies to assets that were subject to these restrictions and encumbrances prior to the acquisition of these assets by Kaiser or its Restricted Subsidiaries; and . any Payment Restriction arising in connection with Refinancing Indebtedness, as long as any Payment Restrictions that arise under the Refinancing Indebtedness are not, taken as a whole, more restricted than those under the agreement creating or evidencing the Indebtedness being refunded or refinanced. Limitations on Transactions with Affiliates. Kaiser 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 Kaiser or any of its subsidiaries, each of which is an "Affiliate Transaction," except for the following: . Affiliate Transactions in the ordinary course of business and consistent with past practice that are fair to Kaiser or the Restricted Subsidiary and are on terms at least as favorable as would have been obtainable at that time from an unaffiliated party; . the Board of Directors of Kaiser or the Restricted Subsidiary pursuant to a Board Resolution reasonably and in good faith determines that the Affiliate Transaction is fair to Kaiser or the Restricted Subsidiary and is on terms at least as favorable as would have been obtainable at that time from an unaffiliated party; . for any Affiliate Transaction or series of Affiliate Transactions involving or having a value of more than $1 million, unless a majority of the members of the Board of Directors of Kaiser who are not affiliated with any other party to the Affiliate Transaction reasonably and in good faith determined that the Affiliate Transaction or series of Affiliate Transactions is fair to Kaiser or the Restricted 64 Subsidiary, and is on terms at least as favorable as would have been obtainable at that time from an unaffiliated party; and . for any Affiliate Transaction or series of Affiliate Transactions involving or having a value of more than $5 million, unless Kaiser or the Restricted Subsidiary received an opinion from an Independent Financial Advisor to the effect that the financial terms of the Affiliate Transaction are fair to Kaiser or the Restricted Subsidiary from a financial point of view. The limitations described in the foregoing paragraph do not apply to: . transactions exclusively between or among Kaiser and any of its wholly- owned Restricted Subsidiaries or exclusively between or among any of Kaiser's wholly-owned Restricted Subsidiaries, as long as these transactions are not otherwise prohibited by the indenture; . arms-length transactions between Kaiser or any of its wholly-owned Restricted Subsidiaries and the other owners of any subsidiary or Joint Venture that is not under control of and does not have capital stock or indebtedness held by Kaiser or its affiliates; and . reasonable compensation, indemnification and other benefits paid or made available to officers, directors and employees of Kaiser or any Subsidiary for services rendered in this Person's capacity as an officer, director or employee. Limitations on Asset Sales. Kaiser will not, and will not permit any of its Restricted Subsidiaries to, consummate any Asset Sale unless: . Kaiser or its Restricted Subsidiaries receive consideration at the time of the Asset Sale at least equal to the fair market value of the assets or Capital Stock included in the Asset Sale; . the aggregate fair market value of the consideration from the Asset Sale, other than consideration in the form of assumption of Indebtedness of Kaiser or one or more of its Restricted Subsidiaries from which Kaiser or the Restricted Subsidiaries are released, that is not in the form of cash or Cash Equivalents is not, when aggregated with the fair market value of all other non-cash or non-Cash Equivalent consideration received by Kaiser and its Restricted Subsidiaries from all previous Asset Sales since the date of the indenture for the new notes that have not yet been converted into cash or Cash Equivalents, exceed 5% of Consolidated Tangible Assets of Kaiser at the time of the Asset Sale; and . the Asset Sale has been approved by Kaiser's Board of Directors if the aggregate fair market value of the assets or Capital Stock to be sold in the Asset Sale exceeds $3 million. Within six months after consummation of any Asset Sale, Kaiser will, or will cause the applicable Restricted Subsidiary to: . reinvest the cash and Cash Equivalent portion of the Net Proceeds of the Asset Sale in a manner that would constitute a Related Business Investment; . apply the cash and Cash Equivalent portion of the Net Proceeds of the Asset Sale to repay outstanding Senior Indebtedness of Kaiser or any Restricted Subsidiary, as long as any repayment of Indebtedness under any revolving credit facility or similar agreement results in a permanent reduction in its lending commitment in an amount equal to the principal amount repaid; or . apply the cash and Cash Equivalent portion of the Net Proceeds of the Asset Sale that is neither reinvested nor applied to the repayment of Senior Indebtedness to the purchase of new notes tendered to Kaiser at a purchase price equal to 100% of its principal, plus accrued interest to the date of 65 purchase, pursuant to an Asset Sale Offer to purchase made by Kaiser as set forth below, except that Kaiser may defer the Asset Sale Offer until this amount is at least $5 million. However, 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 the Net Proceeds 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 as the applicable local law will not permit repatriation to the United States and, once this repatriation of any of the affected Net Proceeds is permitted under the applicable local law, this repatriation will be immediately effected and the repatriated Net Proceeds will be applied in the manner set forth in this covenant; and . the Board of Directors determines 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 affected may be retained by the applicable Foreign Subsidiary for so long as this material adverse tax event would continue. Each Asset Sale Offer must: . be mailed to the record holders of the new notes as shown on the register of holders of new notes, with a copy to the Trustee; . specify the purchase date, which must be between 30 days and 60 days from the date the notice is mailed and not later than 240 days after the date of the Asset Sale giving rise to the Asset Sale Offer; and . otherwise comply with the procedures set forth in the indenture. Upon receiving notice of an Asset Sale Offer, holders of new notes may elect to tender their new 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, new notes of tendering holders will be repurchased on a pro rata basis, based on amounts tendered. Kaiser will comply with the requirements of Section 14(e) under the Exchange Act and any other securities laws and regulations to the extent these laws and regulations are applicable in connection with the repurchase of new notes pursuant to any Asset Sale Offer. Restrictions on Sale of Stock of Subsidiaries. Kaiser may not sell or otherwise dispose of any of the Capital Stock of any Restricted Subsidiary of Kaiser unless: . Kaiser either retains ownership of more than 50% of the common stock of the Restricted Subsidiary or sells all of the Capital Stock of the Restricted Subsidiary and the net proceeds from this sale or disposition are treated in a manner consistent with the treatment of Asset Sale proceeds; or . Kaiser elects to treat the amount of its remaining investment in the Restricted Subsidiary that has become a Joint Venture as a result of the sale or disposition as an Investment in the Joint Venture subject to the provisions described under "Limitations on Restricted Payments." Limitations on Mergers and Certain Other Transactions. Kaiser will not: . in a single transaction or a series of related transactions, 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 new notes or the indenture, to any Person, or 66 . adopt a Plan of Liquidation unless, in either case: . the Person formed by or surviving the consolidation or merger, if other than Kaiser, or to which the sale, lease, conveyance or other disposition or assignment is made, or, in the case of a Plan of Liquidation, the Person to which assets are transferred, each of which is referred to as a "Successor," is a domestic corporation and the Successor assumes by supplemental indenture in a form satisfactory to the Trustee all of the obligations of Kaiser under the new notes and the indenture; . immediately prior to and immediately after and giving effect to the transaction and the assumption of the obligations as set forth in the preceding clause above and the incurrence of any Indebtedness, no Default or Event of Default will have occurred and be continuing; and . immediately after and giving effect to the transaction and the assumption of the obligations as set forth in the first clause above and the incurrence of any Indebtedness, and the use of its net proceeds on a pro forma basis: . the Consolidated Tangible Net Worth of Kaiser or the Successor would be at least equal to the Consolidated Tangible Net Worth of Kaiser immediately prior to the transaction and . Kaiser or the Successor could incur at least $1.00 of additional Senior Indebtedness under the covenant described under "Limitations on Additional Indebtedness." In addition, Kaiser will not permit any Single Purpose Subsidiary that has outstanding Indebtedness to consolidate or merge with any other Person other than a Person whose activities are limited to ownership of a portion of the same project in which the merging Single Purpose Subsidiary owns an interest. The foregoing provisions of the indenture will not prohibit a transaction whose sole purpose, as determined in good faith by the Board of Directors and evidenced by a Board Resolution, is to change the state of incorporation of Kaiser or a Single Purpose Subsidiary and the transaction does not have as one of its purposes the evasion of the limitations described above. Limitations on Guarantees. Kaiser will not permit any of its Restricted Subsidiaries to guarantee any Indebtedness, other than guarantees of indebtedness under the Bank Credit Agreement permitted under the provisions of the covenant described under "Limitations on Subsidiary Debt and Preferred Stock" by subsidiaries of Kaiser who have delivered similar guarantees prior to the date of the indenture, unless Kaiser causes each Subsidiary to execute and deliver to the Trustee a supplemental indenture, pursuant to which the Subsidiary unconditionally guarantees the payment of principal and interest on the new notes. Any guarantee will be subordinated in right of payment to the guarantee by the Subsidiary pursuant to the Bank Credit Agreement. Events of Default An "Event of Default" is defined in the indenture to include any of the following: . failure by Kaiser to pay interest on any of the new notes when it becomes due and payable and the continuance of any failure for 30 days; . failure by Kaiser to pay the principal of the new notes when it becomes due and payable, whether at stated maturity, upon redemption, upon acceleration or otherwise, including failure to make payment pursuant to an Asset Sale Offer; . failure by Kaiser to comply with any covenant in the indenture and continuance of the failure for 60 days after notice of the failure has been given to Kaiser by the Trustee or by the holders of at least 25% of the aggregate principal amount of the new notes then outstanding; 67 . failure by Kaiser or any of its subsidiaries to make any payment when due or during any applicable grace period, and the continuation of the failure for seven days, with respect to any indebtedness of Kaiser or any of its subsidiaries, other than Non-Recourse Indebtedness of a Single Purpose Subsidiary, that has an aggregate outstanding principal amount of $2 million or more; . a default under any indebtedness, other than Non-Recourse Indebtedness of a Single Purpose Subsidiary, if: . the default results in the holder or holders of the indebtedness causing the indebtedness to become due prior to its stated maturity and . the principal amount of the indebtedness, together with the principal amount of any other indebtedness, which maturity has been accelerated, aggregates $2 million or more at any one time outstanding; . a court or courts of competent jurisdiction have entered one or more final judgments or orders against Kaiser or any of its subsidiaries for payment of amounts which exceed $2 million in the aggregate and the judgment or judgments have not been satisfied, stayed, annulled or rescinded within 60 days of being entered; and . some events of bankruptcy, insolvency or reorganization involving Kaiser or any of its subsidiaries. If an Event of Default, other than an Event of Default resulting from bankruptcy, insolvency or reorganization involving Kaiser, has occurred and is continuing under the indenture, the Trustee by written notice to Kaiser, or the holders of at least 25% in aggregate principal amount of the new notes then outstanding by written notice to Kaiser and the Trustee, may declare all amounts owing under the new notes to be due and payable immediately. Upon declaration of acceleration, the aggregate principal and interest on the outstanding notes will immediately become due and payable. If an Event of Default results from bankruptcy, insolvency or reorganization involving Kaiser, all outstanding notes will become due and payable without any further action or notice. In some cases, the holders of a majority in aggregate principal amount of the new notes then outstanding may waive an existing Default or Event of Default and its consequences, except a default in the payment of principal and interest on the new notes. The holders of new notes may not directly enforce the provisions of the indenture or the new notes except as provided in the indenture. Subject to some limitations, holders of a majority in principal amount of the new notes then outstanding may direct the Trustee in its exercise of any trust or power, as long as the direction does not conflict with the terms of the indenture. The Trustee may withhold from the holders of new notes notice of any continuing Default or Event of Default, except any Default or Event of Default in payment of principal and interest on the new notes, if the Trustee determines that withholding the notice is in the holders' interest. Kaiser is required to deliver to the Trustee annually a statement regarding compliance with the indenture and, upon any Officer of Kaiser becoming aware of any Default or Event of Default, a statement specifying the Default or Event of Default and what action Kaiser is taking or proposes to take with respect to the Default or Event of Default. Discharge of Indenture The indenture will permit Kaiser to terminate all of its obligations under the indenture, other than the obligation to pay the principal and interest on the new notes, and some other obligations at any time by taking the following actions: . depositing in trust with the Trustee, under an irrevocable trust agreement, money or U.S. government obligations in an amount sufficient to pay principal and interest on the new notes to their maturity or redemption and 68 . complying with some 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 of new notes will not recognize income, gain or loss for federal income tax purposes as a result of Kaiser's exercise of the 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. Transfer and Exchange A holder of new notes will be able to register the transfer of or exchange of his new notes only in accordance with the provisions of the indenture. 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. Without the prior consent of Kaiser, the Trustee is not required: . to register the transfer or exchange of any new note selected for redemption; . to register the transfer or exchange of any new note for a period of 15 days before a selection of new notes to be redeemed; or . to register the transfer or exchange of a new note between a record date and the next succeeding interest payment date. The holder of a new note will be treated as the owner of a new note for all purposes. Amendment, Supplement and Waiver Subject to some exceptions, the indenture or the new 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 new 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 the principal or interest on the new notes or that resulted from the failure to comply with the covenant described under "Change of Control," 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 new notes then outstanding. Without the consent of any holder, Kaiser and the Trustee may amend or supplement the indenture or the new notes to cure any ambiguity, defect or inconsistency, to provide for uncertificated new notes in addition to or in place of certificated new notes, to provide for the assumption of Kaiser'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. Kaiser may not, without the consent of each affected holder of new notes: . extend the maturity of any new note; . affect the terms of any scheduled payment of interest on or principal of the new notes, including without limitation any redemption provisions; . reduce the percentage of holders necessary to consent to an amendment, supplement or waiver to the indenture. The right of any holder of new notes to participate in any consent required or sought pursuant to any provision of the indenture, and the obligation of Kaiser to obtain this consent otherwise required from the holder, may be subject to the requirement that the holder be the holder of record of any new notes with respect to which the consent is required or sought as of a date identified by the Trustee in a notice furnished to holders in accordance with the terms of the indenture. 69 Concerning the Trustee The indenture contains some limitations on the rights of the Trustee, should it become a creditor of Kaiser, to obtain payment of claims in some cases, or to realize on some property received in respect of any claim as security or otherwise. The Trustee will be permitted to engage in other transactions; however, if it acquires any conflicting interest, as defined in the indenture, it must eliminate this conflict or resign. The holders of a majority in principal amount of the then outstanding new notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee, subject to some exceptions. The indenture provides that, in case an Event of Default occurs and is not cured, the Trustee will be 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 these provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the indenture at the request of any holder of new notes, unless the holder has offered to the Trustee security and indemnity satisfactory to the Trustee. Definitions Set forth below is a summary of the most significant defined terms used in the indenture. Reference is made to the indenture for the full definition of all the terms included within the indenture. "Acquired Indebtedness" means: . with respect to any Person that becomes a direct or indirect Subsidiary of Kaiser after the date of the indenture, Indebtedness of this Person and its subsidiaries existing at the time this Person becomes a Subsidiary of Kaiser that was not incurred in connection with, or in contemplation of, this Person becoming a Subsidiary of Kaiser; and . with respect to Kaiser or any of its subsidiaries, any Indebtedness assumed by Kaiser or any of its subsidiaries in connection with the acquisition of an asset from another Person that was not incurred by this other Person in connection with, or in contemplation of, the acquisition. "Affiliate" of any person means any Person: . which directly or indirectly controls or is controlled by, or is under direct or indirect common control with, the referent Person, . which beneficially owns or holds 10% or more of any class of the Voting Stock of the referent Person or . 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 means the power to direct the management and policies of this Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise. However, the term "Affiliate" does not include, with respect to Kaiser or any wholly- owned Restricted Subsidiary of Kaiser, . any wholly-owned Subsidiary of Kaiser or . any Subsidiary of Kaiser that is not a wholly-owned Subsidiary or any Joint Venture, as long as the 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 Kaiser. "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 70 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 the Person, whether by the Person or by the Subsidiary, whether owned on the date of the indenture or subsequently acquired, excluding: . any sale, lease, transfer or other disposition between Kaiser and any of its wholly-owned Restricted Subsidiaries; . any transfer of assets of Kaiser or any of its Restricted Subsidiaries that constitutes and is treated as a Designated Investment; . any transfer of assets of Kaiser or any of its Restricted Subsidiaries that constitutes a Change of Control and that is governed by and effected in accordance with the covenants described under "Limitations on Mergers and Certain Other Transactions" and "Change in Control"; and . 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 of $1 million or less, as long as no Default or Event of Default exists at the time of this sale. "Bank Credit Agreement" means Kaiser's principal credit agreement providing for a revolving line of credit and/or the issuance of letters of credit, as in effect from time to time among Kaiser and some of its subsidiaries and one or more banks, financial institutions or other lenders, as such agreement may be amended, restated, supplemented or otherwise modified from time to time, and includes any substitute or successor credit agreement. "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 this Person. "Cash Equivalents" means: . obligations issued or unconditionally guaranteed by the United States of America or any agency or obligations issued by any agency or instrumentality and backed by the full faith and credit of the United States of America; . 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 its creation; and . readily marketable direct obligations issued by any state of the United States of America or any political subdivision having one of the two highest rating categories obtainable from either Moody's Investors Service, Inc. or Standard & Poor's Corporation. "Consolidated Depreciation Expense" of any Person for any period means the depreciation expense of the Person and its Restricted Subsidiaries for any period, to the extent included in the computation of Consolidated Net Income of this 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: . EBITDA for this Person's prior four full fiscal quarters for which financial results have been reported immediately preceding the determination date to . the aggregate Fixed Charges of this Person for four fiscal quarters; except that if any calculation of Kaiser's Consolidated Fixed Charge Coverage Ratio requires the use of any quarter beginning prior to January 1, 2000, this calculation will be made without regard to such quarter and, instead, shall be 71 based on the lesser number of full fiscal quarters completed after January 1, 2000; and except that if any 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 Kaiser or any of its Restricted Subsidiaries, this calculation will be made on a pro forma basis, giving effect to each Asset Sale, incurrence of Indebtedness or acquisition, as the case may be, and the use of any proceeds, as if the same had occurred at the beginning of the four-quarter period used to make this calculation. "Consolidated Net Income" of any Person for any period means the net income, or loss, of the relevant Person and its Restricted Subsidiaries for a period determined on a consolidated basis in accordance with GAAP; except that there will be excluded from the net income, without duplication: . the net income, or loss, of any Person, other than a Restricted Subsidiary of the relevant Person, in which any Person other than the relevant Person has an ownership interest, except to the extent that any of this income is appropriately accounted for under generally accepted accounting principles; . except to the extent includable in the consolidated net income of the relevant Person pursuant to the foregoing clause, the net income, or loss, of any Person that accrued prior to the date that . this Person becomes a Restricted Subsidiary of the relevant Person or is merged into or consolidated with the relevant Person or any of its Restricted Subsidiaries or . the assets of this Person are acquired by the relevant Person or any of its Restricted Subsidiaries; . the net income, or loss, of any Restricted Subsidiary of the relevant Person to the extent that the declaration or payment of dividends or similar distributions by the 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 the period, as long as the amount of loss excluded pursuant to this clause will not exceed that amount of net income excluded pursuant to this clause; . any gain, but not loss, together with any related provisions for taxes on any such gain, realized during the period by the relevant Person or any of its Restricted Subsidiaries upon . the acquisition of any securities, or the extinguishment of any Indebtedness, of the relevant Person or any of its Restricted Subsidiaries or . any Asset Sale by the relevant Person or any of its Restricted Subsidiaries; . in the case of a successor to this Person by consolidation, merger or transfer of its assets, any earnings of the successor prior to the merger, consolidation or transfer of assets. "Consolidated Net Tangible Assets" of any Person as of any date means the Consolidated Tangible Assets of this Person and its Restricted Subsidiaries less the total current liabilities of this Person and its Restricted Subsidiaries, on a consolidated basis as of this date. "Consolidated Tangible Assets" of any Person as of any date means the total assets of this Person and its Restricted Subsidiaries, excluding any assets that would be classified as "intangible assets" under GAAP, on a consolidated basis at this date, determined in accordance with GAAP, less all write-ups subsequent to December 31, 1999 in the book value of any asset owned by this 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 this Person and its Restricted Subsidiaries, excluding any equity adjustment for foreign currency translation for any period subsequent to December 31, 1999 and any assets that would be classified as "intangible assets" under GAAP, on a consolidated 72 basis at this date, as determined in accordance with GAAP, less all write-ups subsequent to December 31, 1999 in the book value of any asset owned by this Person or any of its Restricted Subsidiaries. "Continuing Director" of Kaiser as of any date means a member of the Board of Directors of Kaiser who: . was a member of the Board of Directors of Kaiser on December 31, 1999 or . was nominated for election or elected to the Board of Directors of Kaiser with the affirmative vote of at least a majority of the directors who were Continuing Directors at the time of the 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 December 31, 1999 in: . any Subsidiary of Kaiser that is not a wholly-owned Restricted Subsidiary or . any Joint Venture, as long as this 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 to it 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 its issuer or any of its subsidiaries, whether or not at the option of its holder, 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 new notes, except that Kaiser's preferred stock will not constitute Disqualified Stock. "EBITDA" means, with respect to any Person for any period, without duplication, the sum of the amounts for the period of: . Consolidated Net Income, . Consolidated Income Tax Expense, . Consolidated Amortization Expense, but only to the extent not included in Fixed Charges, . Consolidated Depreciation Expense, . Fixed Charges and . all other noncash items reducing the Consolidated Net Income of this Person and its Restricted Subsidiaries, in each case determined on a consolidated basis in accordance with GAAP, except that the amounts set forth in all but the first clause of this definition will be included only to the extent the amounts reduce Consolidated Net Income, less the aggregate amount of all noncash items, determined on a consolidated basis, to the extent the items increase Consolidated Net Income. "Exchange Act" means the Securities Exchange Act of 1934. "Existing Indebtedness" means all of the Indebtedness of Kaiser and its Restricted Subsidiaries that is outstanding on January 1, 2000. "Fixed Charges" means, with respect to any Person for any period, the aggregate amount of: 73 . interest, whether expensed or capitalized, paid, accrued or scheduled to be paid or accrued during the period, except to the extent accrued in a prior period, in respect of all Indebtedness of this Person and its Restricted Subsidiaries, including . original issue discount on any Indebtedness, and . the interest portion of all deferred payment obligations, calculated in accordance with the effective interest method, in each case to the extent attributable to the period, and . dividend requirements on preferred stock of this 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 the period, except to the extent accrued in a prior period, and excluding items eliminated in consolidation. For purposes of this definition, . interest on a Capitalized Lease Obligation will be deemed to accrue at the rate of interest implicit in the Capitalized Lease Obligation in accordance with GAAP, . interest on Indebtedness that is determined on a fluctuating basis will be deemed to have accrued at a fixed rate per annum equal to the rate of interest of the Indebtedness in effect on the last day of the period with respect to which Fixed Charges are being calculated, . 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, will be deemed to have been based upon the rate actually chosen, or, if none, then based upon the optional rate chosen as this Person may designate and . Fixed Charges will be increased or reduced by the net cost, including without limitation amortization of discount, or benefit associated with Hedging Obligations attributable to this period. For purposes of the second clause above, dividend requirements, other than dividends payable solely in shares of Qualified Capital Stock, will be increased to an amount representing the pretax earnings that would be required to cover the dividend requirements; accordingly, the increased amount will be equal to a fraction, the numerator of which is the dividend requirements and the denominator of which is 1 minus the applicable actual combined Federal, state, local and foreign income tax rate of this 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. "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, as in effect from time to time. "Hedging Obligations" of any Person means the obligations of this 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: . all liabilities, contingent or otherwise, of this Person or borrowed money, whether or not the recourse of the lender is to the whole of the assets of this Person or only to a portion of the assets; 74 . all obligations of this Person evidenced by bonds, debentures, notes or other similar instruments; . all obligations of this 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, this Person in the ordinary course of business to the extent the letters of credit are not drawn upon; . all obligations of this Person to pay the deferred and unpaid purchase price of property or services, except trade payables and accrued expenses incurred by this 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 the payable is being contested in good faith; . the maximum fixed repurchase price of all Disqualified Stock of this Person; . all Capitalized Lease Obligations of this Person; . all Indebtedness of others secured by a Lien on any asset of this Person, whether or not the Indebtedness is assumed by this Person, other than a pledge by a Single Purpose Subsidiary of the Capital Stock of an Unrestricted Subsidiary or Joint Venture of the Single Purpose Subsidiary to secure Indebtedness of the Unrestricted Subsidiary or Joint Venture incurred to finance a project constituting one or more Permitted Businesses; . all Indebtedness of others guaranteed by, or otherwise the Liability of, this Person to the extent of this guarantee or Liability; and . all Attributable Indebtedness. The amount of Indebtedness of any Person at any date will be the outstanding balance at the date of all unconditional obligations as described above, the maximum liability of this Person for any contingent obligations at that date and, in the case of the eighth clause, 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, the "maximum fixed repurchase price" of any Disqualified Stock that does not have a fixed repurchase price will be calculated in accordance with the terms of the Disqualified Stock as if the Disqualified Stock were purchased on any date on which Indebtedness will be required to be determined pursuant to the indenture, and if the price is based upon, or measured by, the fair market value of the Disqualified Stock, or any equity security for which it may be exchanged or converted, the fair market value will be determined in good faith by the Board of Directors of this Person, which determination will be evidenced by a Board Resolution. "Investments" of any Person means: . all investments by this Person in any other Person in the form of loans, advances or capital contributions or similar credit extensions constituting Indebtedness of this Person, and any guarantee of Indebtedness of any other Person, . all purchases, or other acquisitions for consideration, by this Person of Indebtedness, Capital Stock or other securities of any other Person and . 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 this Person prepared in accordance with GAAP; except 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 75 past practice and in accordance with normal industry practice, will not be deemed to constitute Investments. "Joint Venture" means: . a corporation of which less than a majority of the aggregate voting power of all classes of the Common Equity is owned by Kaiser or its Restricted Subsidiaries and . any entity other than a corporation in which Kaiser and its Restricted Subsidiaries own less than a majority of the Common Equity of this entity. "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, or any jurisdiction. "Net Proceeds" with respect to any Asset Sale by any Person means the aggregate net proceeds received by this Person from the Asset Sale, including without limitation the amount of cash applied to repay Indebtedness secured by any asset involved in the Asset Sale or otherwise received as consideration for the assumption or incurrence of liabilities incurred in connection with or in anticipation of this Asset Sale, after . provision for all income or other taxes measured by or resulting from the Asset Sale or the transfer of the proceeds of the Asset Sale to this Person and . payment of all brokerage commissions and the underwriting and other fees and expenses related to the Asset Sale, whether the proceeds are in cash or property, valued at the fair market value at the time of receipt as determined in good faith by the Board of Directors of this Person, which determination will be evidenced by a Board Resolution. "Non-Recourse Indebtedness" of a Single Purpose Subsidiary means Indebtedness for which: . as to the Single Purpose Subsidiary, the sole legal recourse for collection of principal and interest on this Indebtedness is against . the specific property identified in the instruments evidencing or securing this Indebtedness and the property was acquired with the proceeds of this Indebtedness or this Indebtedness was incurred within 90 days of the acquisition of this property, . the Capital Stock of the Single Purpose Subsidiary, or . contract rights or specified revenues of the Single Purpose Subsidiary. . if the Single Purpose Subsidiary is a Restricted Subsidiary, no assets of the Single Purpose Subsidiary, other than the assets identified in the first clause of this definition, may be realized upon in collection of principal or interest on this Indebtedness and . neither Kaiser nor any Restricted Subsidiary of Kaiser, other than the Single Purpose Subsidiary, is directly or indirectly liable to make any payment, has made any guarantee of payment or performance of this Indebtedness or has pledged or granted any lien or encumbrances on any assets as collateral or security with respect to this Indebtedness, other than the Capital Stock of the Single Purpose Subsidiary. 76 "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: . this Subsidiary to . pay dividends or make other distributions on its Capital Stock or make payments on any obligation, liability or Indebtedness owed to this Person or any other Subsidiary of this Person, . make loans or advances to this Person or any other Subsidiary of this Person or . transfer any of its properties or assets to this Person or any other Subsidiary of this Person or . this Person or any other Subsidiary of this Person to receive or retain any . dividends, distributions or payments, . loans or advances or . transfer of properties or assets. "Permitted Businesses" means the businesses of providing engineering, construction, construction or project management or related services to public and private sector clients including the ownership of an equity interest in any such business. "Permitted Investments" means: . direct obligations of the United States of America or any of its agencies, or obligations guaranteed by the United States of America or any of its agencies, in each case maturing within 180 days of the date of the acquisition . certificates of deposit or Eurodollar deposits, due within 180 days of the date of the acquisition, with a commercial bank which is organized under the laws of the United States of America or any state having capital funds of at least $500 million or more; and . commercial paper given the highest rating by two established national credit rating agencies and maturing not more than 180 days from the date of the acquisition. "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: . the sale, lease, conveyance or other disposition of all or substantially all of the assets of this Person otherwise than as an entirety or substantially as an entirety; and . the distribution of all or substantially all of the proceeds of this sale, lease, conveyance or other disposition and all or substantially all of the remaining assets of this Person to holders of Capital Stock of this Person. "Qualified Capital Stock" means Capital Stock that is not Disqualified Stock. "Refinancing Indebtedness" means Indebtedness of Kaiser or a Restricted Subsidiary of Kaiser 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, or constituting an amendment, modification or supplement to or a deferral or renewal of any Indebtedness of Kaiser or 77 any of its Restricted Subsidiaries existing immediately after the original issuance of the new notes or incurred pursuant to the provisions of the covenant described under "Limitations on Additional Indebtedness" in a principal amount not in excess of the principal amount of the Indebtedness so refinanced, as long as: . the Refinancing Indebtedness is the obligation of the same Person, and is subordinated to the new notes, if at all, to the same extent, as the Indebtedness being repaid; . the Refinancing Indebtedness is scheduled to mature either . no earlier than the Indebtedness being repaid or . after the maturity date of the new notes; and . the portion, if any, of the Refinancing Indebtedness that is scheduled to mature on or prior to the maturity date of the new notes has a Weighted Average Life to Maturity at the time the 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 new notes. "Related Business Investment" means any Investment directly by Kaiser or one or more of its wholly-owned Restricted Subsidiaries in any business that is closely related to or complements the business of Kaiser and its subsidiaries as this business exists on the date of the Investment. "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 Kaiser or a Subsidiary of Kaiser, 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 Kaiser that is subordinate in right of payment to the new notes other than a Restricted Debt Payment made with the proceeds of a substantially concurrent sale, other than to a Subsidiary of Kaiser or an employee stock ownership plan, of Kaiser's Qualified Capital Stock, as long as all Indebtedness so purchased, redeemed, defeased or otherwise acquired or retired for value promptly is surrendered for cancellation to the Trustee for this Indebtedness. "Restricted Investment," with respect to any Person, means any Investment by this Person in any of its Affiliates or in any Person other than a wholly- owned Restricted Subsidiary other than: . a Permitted Investment or . an Investment made with the proceeds of a substantially concurrent sale, other than to a Subsidiary of Kaiser or an employee stock ownership plan, of Kaiser's Qualified Capital Stock. "Restricted Payment" means with respect to any Person: . 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 this Person's Capital Stock, except that a dividend payable solely in Qualified Capital Stock of this Person will not constitute a Restricted Payment, for purposes of this clause, the declaration of any dividend, or the making of any other distribution, by any Restricted Subsidiary will only constitute a Restricted Payment to the extent of the amounts paid or payable to Persons other than Kaiser or a wholly-owned Restricted Subsidiary; . any payment on account of the purchase, redemption, retirement or other acquisition for value of this Person's Capital Stock or any other payment or distribution made, either directly or indirectly, other than a payment solely in Qualified Capital Stock; . any Restricted Investment; or 78 . any Restricted Debt Payment. "Restricted Subsidiary" means each of the subsidiaries of Kaiser which, as of the determination date, is not an Unrestricted Subsidiary of Kaiser. "Single Purpose Subsidiary" of any Person means a Subsidiary of this Person which has no subsidiaries other than Unrestricted Subsidiaries and the activities of which are limited to: . ownership of all or a portion of the interests in a single project, either directly or through the ownership of the Capital Stock of another Person, and . the development, engineering, design, project management, construction or operation of this project. "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; Kaiser Leasing Corporation, Inc., a Delaware corporation; Cygna Consulting Engineers and Project Management, Inc., a California corporation; ICF Kaiser Engineers Eastern Europe, Inc., a Delaware corporation; ICF Kaiser Netherlands, B.V., a Netherlands corporation; Kaiser Hunters Branch Leasing, Inc. (formerly ICF Kaiser Hunters Branch Leasing, Inc.); Kaiser DPI Holding Co., Inc. (formerly ICF Kaiser DPI Holding Co., Inc.), a Delaware corporation; Kaiser Engineers Eastern Europe, Inc. (formerly ICF Kaiser Engineers Eastern Europe, Inc.); Kaiser K-H Holdings, Inc., a Delaware corporation; and each of the other subsidiaries of Kaiser so designated by a resolution adopted by the Board of Directors of Kaiser 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 this Subsidiary, to Kaiser or a Restricted Subsidiary other than a Lien on the Capital Stock of this Unrestricted Subsidiary, except that: . no Subsidiary may be an Unrestricted Subsidiary if it owns any Capital Stock of a Restricted Subsidiary and . the Board of Directors of Kaiser will be prohibited after December 31, 1999 from designating as an Unrestricted Subsidiary any Subsidiary existing on December 31, 1999. The Board of Directors of Kaiser may designate an Unrestricted Subsidiary to be a Restricted Subsidiary, . except that any designation will be deemed to be an incurrence by Kaiser and its Restricted Subsidiaries of the Indebtedness, if any, of the designated Subsidiary for purposes of the Limitations on Additional Indebtedness covenant in the indenture as of the date of the designation, and . as long as immediately after giving effect to the designation and the incurrence of any additional Indebtedness, Kaiser and its Restricted Subsidiaries could incur $1.00 of additional Senior Indebtedness pursuant to the Consolidated Fixed Charge Coverage Ratio set forth in the Limitations on Additional Indebtedness covenant described above. Any designation or redesignation by the Board of Directors will be evidenced to the Trustee by the filing with the Trustee of a certified copy of the Resolution of Kaiser's Board of Directors giving effect to the designation or redesignation and an officer's certificate certifying that the designation or redesignation complied with the foregoing conditions and setting forth the underlying calculations of the certificate and upon which certificate the Trustee will conclusively rely without any investigation whatsoever. "Voting Stock," with respect to any Person, means securities of any class of Capital Stock of this Person entitling the holders, 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 this Person. 79 "Weighted Average Life to Maturity," when applied to any Indebtedness at any date, means the number of years obtained by dividing . the sum of the products obtained by multiplying . 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 . the number of years, calculated to the nearest one-twelfth, that will elapse between this date and the making of the payment by . the then-outstanding principal amount of the Indebtedness. "Wholly-Owned Restricted Subsidiary" of Kaiser means a Restricted Subsidiary of Kaiser, of which 100% of the Common Equity, except for directors' qualifying shares or certain minority interests owned by other Persons solely due to local tax considerations or local law requirements that there be more than one stockholder, but which interest is not in excess of what is required for this purpose, is owned directly by Kaiser or through one or more wholly- owned Restricted Subsidiaries of Kaiser. Satisfaction and Discharge of Indebtedness The indenture is discharged and canceled upon payment of all the principal and interest on the new notes, redemption of all the new notes or deposit with the Trustee of funds or obligations issued or guaranteed by the United States sufficient for this payment or redemption. The Trustee The Trustee is Bank of New York. The Trustee performs only those duties as are specifically set forth in the indenture, except during the continuance of an Event of Default. During the existence of an Event of Default, the Trustee exercises those rights and powers vested in it under the indenture and uses the same degree of care and skill in its exercise as a prudent person would exercise under the circumstances in the conduct of the person's own affairs. The holders of a majority in outstanding amount of the new notes will have the right, during the continuance of an Event of Default, to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee. Subject to these provisions, the Trustee is under no obligation to exercise any of its rights or powers under the indenture at the request of any of the holders of new notes, unless they offer to the Trustee security or indemnity satisfactory to it. The indenture and provisions of the Trust Indenture Act of 1939 incorporated by reference into the indenture contain limitations on the rights of the Trustee, should it become a creditor of Kaiser, to obtain payment of claims in some cases, or to realize on property received in respect of any of these claims as security or otherwise. The Trustee is permitted to engage in other transactions with Kaiser, except that if it acquires any conflicting interest within the meaning of the Trust Indenture Act of 1939, it must eliminate this conflict or resign. Book-Entry, Delivery and Form The new notes are initially issued in the form of one global new note. The global new note is deposited on the date of the consummation of the exchange offer with the Trustee as custodian for The Depository Trust Company and registered in the name of Cede & Co., as nominee of the DTC. The DTC is a limited-purpose trust company that was created to hold securities for its participating organizations and to facilitate the clearance and settlement of transactions in securities between participants through electronic book-entry changes in accounts of its participants. The DTC's participants include securities brokers and dealers, banks and trust companies, clearing corporations and some other organizations. Access to the DTC's system is also available to other entities such as banks, brokers, dealers and trust companies that clear through or 80 maintain a custodial relationship with a participant, either directly or indirectly. Persons who are not participants may beneficially own securities held by or on behalf of the DTC only through the DTC's participants or indirect participants. Kaiser expects that pursuant to procedures established by the DTC: . upon deposit of the global new note, the DTC credits the accounts of participants exchanging old notes for new notes with portions of the principal amount of the global new note and . ownership of the notes evidenced by the global new note is shown on, and the transfer of ownership is effected only through, records maintained by the DTC, with respect to the interests of the DTC's participants and the DTC's indirect participants. Holders of new notes are advised that the laws of some states require that some persons take physical delivery in definitive form of securities that they own. Consequently, the ability to transfer notes evidenced by the global new note will be limited to this extent. So long as the holder of the global new note is the registered owner of any new notes, the global new note holder is considered the sole holder under the indenture of any notes evidenced by the global new note. Beneficial owners of new notes evidenced by the global new note are considered the owners or holders under the indenture for any purpose, including with respect to the giving of any directions, instructions or approvals to the Trustee. Neither Kaiser nor the Trustee has any responsibility or liability for any aspect of the records of the depository or for maintaining, supervising or reviewing any records of the depository relating to the new notes. Payments in respect of the principal and interest, if any, on any new notes registered in the name of the global new note holder on the applicable record date is payable by the Trustee to or at the direction of the global new note holder in its capacity as the registered holder under the indenture. Under the terms of the indenture, Kaiser and the Trustee may treat the persons in whose names new notes, including the global new note, are registered as the owners for the purpose of receiving these payments. Consequently, neither Kaiser nor the Trustee has any responsibility or liability for the payment of these amounts to beneficial owners of new notes. Kaiser believes, however, that it is currently the policy of the DTC to immediately credit the accounts of the relevant participants with these payments, in amounts proportionate to their respective holdings of beneficial interests in the relevant security as shown on the records of the DTC. Payments by the DTC's participants and the DTC's indirect participants to the beneficial owners of new notes is governed by standing instructions and customary practice and is the responsibility of the DTC's participants or the DTC's indirect participants. Certificated Notes. Any beneficial owner of new notes evidenced by the global new note may obtain notes in the form of registered certificated new notes. If Kaiser notifies the Trustee in writing that the DTC is no longer willing or able to act as a depository and Kaiser is unable to locate a qualified successor within 90 days then, upon surrender by the global new note holder of its global new note, new notes in this form will be issued to each person that the global new note holder and the DTC identify as being the beneficial owner of the related new notes. Neither Kaiser nor the Trustee is liable for any delay by the global new note holder or the DTC in identifying the beneficial owners of notes and Kaiser and the Trustee may conclusively rely on, and is protected in relying on, instructions from the global new note holder or the DTC for all purposes. Same-Day Settlement and Payment. The indenture requires that payments for the notes represented by the global new note, including principal, interest and liquidated damages, if any, be made by wire transfer of immediately available funds to the accounts specified by the global new note holder. With respect to certificated new notes, Kaiser makes all payments of principal and interest by wire transfer of immediately available funds to the accounts specified by the holders or, if no account is specified, by mailing a check to each holder's registered address. Secondary trading in long-term notes and debentures of corporate issuers is generally settled in clearing-house or next-day funds. In contrast, the notes represented by the global new note are expected to trade in the DTC's same-day funds settlement system, and any permitted secondary market trading activity in these notes will, therefore, be required by the DTC to be settled in immediately available funds. Kaiser expects that secondary trading in the certificated new notes will also be settled in immediately available funds. 81 WHERE YOU CAN FIND MORE INFORMATION Kaiser files annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission. You may read and copy any reports, statements or other information we file at the Securities and Exchange Commission's public reference room at the following location: Public Reference Room 450 Fifth Street, N.W. Room 1024 Washington, D.C. 20549 Please call the Securities and Exchange Commission at 1-800-SEC-0330 for further information on the operation of the public reference room. Our Securities and Exchange Commission filings are also available to the public from commercial document retrieval services and at the web site maintained by the Securities and Exchange Commission at http://www.sec.gov. In addition, our ------------------ filings can be inspected at the office of the New York Stock Exchange, 20 Broad Street, New York, New York 10005. We have filed a registration statement on Form S-4 with the Securities and Exchange Commission to register the preferred stock, common stock and new notes proposed to be issued in the exchange offer described in this prospectus and the common stock underlying the preferred stock. This prospectus is a part of that registration statement. As permitted by the rules of the Securities and Exchange Commission, this prospectus does not contain all of the information included in the registration statement and the accompanying exhibits and schedules. The registration statement, together with the related exhibits and schedules, is available at the public reference room or through the web site of the Securities and Exchange Commission. You should rely only on the information contained or incorporated by reference in this prospectus. We have not authorized anyone to provide you with information that is different from or in addition to what is contained in this prospectus. Therefore, if anyone does give you information of this sort, you should not rely on it. If you are in a jurisdiction where it is unlawful to offer to exchange or sell or to ask for offers to exchange or buy the securities offered by this prospectus, or if you are a person to whom it is unlawful to direct those activities, then the offer presented in this prospectus does not extend to you. The information contained in this prospectus speaks only as of its date unless the information specifically indicates that another date applies. INCORPORATION BY REFERENCE The Securities and Exchange Commission allows us to "incorporate by reference" information into this prospectus, which means that we can disclose important information to you by referring you to other information we have filed with the Securities and Exchange Commission. The information incorporated by reference is deemed to be part of this prospectus, except for any information superseded by information in this prospectus. This prospectus incorporates by reference the documents set forth below that we have previously filed with the Securities and Exchange Commission. All of the documents listed below as incorporated by reference into this prospectus also are being delivered to you with this prospectus. You should read this prospectus together with the information incorporated by reference. . 1998 Annual Report to our shareholders . Quarterly Reports on Form 10-Q and 10-Q/A for the quarter ended March 31, 1999 and on Form 10-Q for the quarter ended June 30, 1999 . Current Reports on Form 8-K dated March 10, 1999, April 9, 1999, May 12, 1999, June 10, 1999, July 6, 1999, July 7, 1999 and July 16, 1999 . Proxy Statement dated October 1, 1999 relating to the 1999 Annual Meeting of Shareholders The following information contained in our 1998 Annual Report to our shareholders is included among the information incorporated by reference into this prospectus: 82 . description of segments, classes of similar products and services, foreign and domestic operations and export sales (note 12 of notes to consolidated financial statements); . selected financial data (Item 6); . supplementary financial information (Item 8 and note 15 of notes to consolidated financial statements); . management's discussion and analysis of financial condition and results of operations (Item 7); . changes in and disagreements with accountants on accounting and financial disclosures (Item 9); and . quantitative and qualitative information about market risk (Item 7a). We also are incorporating by reference additional documents that we file with the Securities and Exchange Commission between the date of this prospectus and the consummation of the exchange offer described in this prospectus. You can request an additional free copy of any or all of these documents, including exhibits that are specifically incorporated by reference into these documents, by writing or calling: Shaun M. Martin, Senior Vice President, Treasurer and Secretary ICF Kaiser International, Inc. 9300 Lee Highway Fairfax, Virginia 22031-1207 (703) 934-3600 If you would like to request documents from us, please do so by October 22, 1999 to receive the documents before the consummation of the exchange offer. EXPERTS The consolidated financial statements incorporated in this prospectus by reference to the 1998 Annual Report to shareholders have been incorporated by reference in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of that firm as experts in accounting and auditing. LEGAL MATTERS Squire, Sanders & Dempsey L.L.P. will pass upon the validity of the preferred stock, common stock and new notes to be issued in the exchange offer and the common stock underlying the preferred stock. 83 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 20. Indemnification of directors and officers. Under the Delaware General Corporation Law (the "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 such costs the court deems proper in spite of liability adjudication. The sections of the Company's Restated Certificate of Incorporation and Amended and Restated Bylaws 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. ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) Exhibits EXHIBIT NO. DESCRIPTION OF EXHIBIT - ----------- ---------------------- 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) 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) 4(a)(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) 4(a)(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) II-1 4(a)(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(a)(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) 4(a)(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(a)(6) Sixth Supplemental Indenture dated as of December 3, 1997 (Incorporated by reference to Exhibit No. 4(a)(6) to Annual Report on Form 10-K (Registrant No. 1-12248) for fiscal year 1997 filed with the Commission on March 31, 1998) 4(a)(7) Seventh Supplemental Indenture dated as of August 13, 1998 (Incorporated by reference to Exhibit No. 4(a)(7) to Quarterly Report on Form 10-Q (Registrant No. 1-12248) for the third quarter of fiscal 1997 filed with the Commission on November 16, 1998) 4(a)(8) Eighth Supplemental Indenture dated as of April 9, 1999 (Incorporated by reference to Exhibit No. 4(a)(8) to Quarterly Report on Form 10-Q (Registrant No. 1-12248) for the first quarter of fiscal 1999 filed with the Commission on May 17, 1999) 4(a)(9) Ninth Supplemental Indenture dated as of June 25, 1999 4(a)(10) Form of Tenth Supplemental Indenture with respect to the 12% Senior Subordinated Notes due 2003 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) 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; and (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(d) 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 (Incorporated by reference to Exhibit No. 4(g) to Registration Statement on Form S-1 Registration No. 333- 19519 filed with the Commission on January 10, 1997) 4(d)(1) First Supplemental Indenture dated as of December 3, 1997 (Incorporated by reference to Exhibit No. 4(a)(6) to Annual Report on Form 10-K (Registrant No. 1-12248) for fiscal year 1997 filed with the Commission on March 31, 1998) 4(d)(2) Second Supplemental Indenture dated as of August 13, 1998 (Incorporated by reference to Exhibit No. 4(g)(2) to Quarterly Report on Form 10-Q (Registrant No. 1-12248) for the third quarter of fiscal 1997 filed with the Commission on November 16, 1998) II-2 4(d)(3) Third Supplemental Indenture dated as of April 9, 1999 (Incorporated by reference to Exhibit 4(f)(3) to Quarterly Report on Form 10-Q (Registrant No. 1-12248) for the first quarter of fiscal 1999 filed with the Commission on May 17, 1999) 4(d)(4) Fourth Supplemental Indenture dated as of June 25, 1999 4(e) Form of 12% Senior Note due 2003, Series B (Incorporated by reference to Exhibit No. 4(g) to Quarterly Report on Form 10-Q (Registrant No. 1-12248) for the first quarter of fiscal 1999 filed with the Commission on May 17, 1999) 4(f) Warrant Agreement dated as of December 23, 1996, between ICF Kaiser International, Inc. and The Bank of New York, as Warrant Agent (Incorporated by reference to Exhibit No. 4(j) to Registration Statement on Form S-1 Registration No. 333-19519 filed with the Commission on January 10, 1997) 4(g) Form of Warrant expiring December 31, 1999 issued under Warrant Agreement dated as of December 23, 1996 (Incorporated by reference to Exhibit No. 4(k) to Registration Statement on Form S-1 Registration No. 333-19519 filed with the Commission on January 10, 1997) 4(h) Form of Certificate of Designation regarding Redeemable Convertible Preferred Stock that is registered by and issuable in exchange offer described in this registration statement 4(i) Intentionally Omitted 4(j) Form of Indenture regarding 12% Senior Notes due 2002 registered by and issuable in exchange offer described in this registration statement, including the form of senior note 5 Opinion of Squire, Sanders & Dempsey L.L.P. regarding securities being registered 8 Opinion of Squire, Sanders & Dempsey L.L.P. regarding tax consequences 10(a) Loan and Security Agreement dated as of December 18, 1998, with Madeleine L.L.C. as agent (Incorporated by reference to Exhibit No. 10(a) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on April 15, 1999) 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) 10(b)(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) 10(b)(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) 10(b)(3) Amendment No. 3 dated December 13, 1996 (Incorporated by reference to Exhibit No. 10(b)(3) to Registration Statement on Form S-1 Registration No. 333-19519 filed with the Commission on January 10, 1997) II-3 10(c) Trust Agreement with Vanguard Fiduciary Trust Company dated as of August 31, 1995, for ICF Kaiser International, Inc. Employee Stock Ownership Plan (Incorporated by reference to Exhibit No. 10(c) to Registration Statement on Form S-1 Registration 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) 10(d)(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) 10(d)(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) 10(d)(3) Amendment No. 3 dated December 13, 1996 (Incorporated by reference to Exhibit No. 10(d)(3) to Registration Statement on Form S-1 Registration No. 333-19519 filed with the Commission on January 10, 1997) 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 Registration No. 33-64655 filed with the Commission on November 30, 1995) 10(f) Consolidated, Amended and Restated Deed of Lease Agreement between HMCE Associates Limited Partnership R.L.L.P. (as Landlord) and ICF Kaiser Hunters Branch Leasing, Inc. (as Tenant), dated November 12, 1997, for the lease of the Registrant's headquarters in Fairfax, Virginia known as Hunters Branch--Phase I (Incorporated by reference to Exhibit No. 10(g) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on March 25, 1997) 10(g) Consolidated, Amended and Restated Deed of Lease Agreement between HMCE Associates Limited Partnership R.L.L.P. (as Landlord) and ICF Kaiser Hunters Branch Leasing, Inc. (as Tenant), dated November 12, 1997, for the lease of space in the building adjacent to the Registrant's headquarters in Fairfax, Virginia known as Hunters Branch--Phase II (Incorporated by reference to Exhibit No. 10(h) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on March 25, 1997) 10(h) Contribution Agreement by and among HMCE Associates Limited Partnership R.L.L.P.; ICF Kaiser Hunters Branch Leasing, Inc.; and IFA Nutley Partners, LLC dated November 3, 1997 (Incorporated by reference to Exhibit No. 10(i) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on March 25, 1997) 10(i) 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) II-4 10(j) 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(j) WAS FILED IN PAPER ON MAY 23, 1995, ON FORM SE PURSUANT TO A CONTINUING HARDSHIP EXEMPTION and is incorporated herein by reference thereto) 10(j)(1) Modifications 1 to 40 to Contract #DE-AC3495RF00825 (Incorporated by reference to Exhibit No. 10(p)(l) to Registration Statement on Form S-1 Registration No. 333-16937 filed with the Commission on November 27, 1996) 10(j)(2) Modifications 42 to 46 to Contract #DE-AC3495RF00825 (Modification 41 not received) (Incorporated by reference to Exhibit No. 10(p)(2) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on March 25, 1997) 10(j)(3) Modifications 47 to 81 to Contract #DE-AC3495RF00825 (Modifications 72 and 78 not received) (Incorporated by reference to Exhibit No. 10(j)(3) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on April 15, 1999) 10(k) 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) for the second quarter of fiscal 1994 filed with the Commission on October 15, 1993) 10(k)(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) 10(k)(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) 10(k)(3) Amendment No. 3 dated December 13, 1996 (Incorporated by reference to Exhibit No. 10(q)(3) to Registration Statement on Form S-1 Registration No. 333-19519 filed with the Commission on January 10, 1997) 10(l) 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) Agreement dated as of May 19, 1997 with James O. Edwards, Chairman and Chief Executive Officer of the Registrant (Incorporated by reference to Exhibit No. 10(ll) to Quarterly Report on Form 10-Q (Registrant No. 1- 12248) for the second quarter of fiscal 1997 filed with the Commission on August 14, 1997) 10(aa)(1) Agreement dated as of November 6, 1998, terminating Mr. Edwards' employment agreement (Incorporated by reference to Exhibit No. 10(aa)(1) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on April 15, 1999) II-5 10(bb) ICF Kaiser International, Inc. 1998 Compensation (IC) Plan for Senior Executives (adopted by the Board of Directors on February 27, 1998) (Incorporated by reference to Exhibit No. 10(bb) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on March 25, 1997) 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 dated as of May 19, 1997 with Marc Tipermas, President and Chief Operating Officer of the Registrant (Incorporated by reference to Exhibit No. 10(mm) to Quarterly Report on Form 10-Q (Registrant No. 1- 12248) for the second quarter of fiscal 1997 filed with the Commission on August 14, 1997) 10(dd)(1) Agreement dated as of August 7, 1998, terminating Dr. Tipermas' employment agreement (Incorporated by reference to Exhibit No. 10(dd)(1) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on April 15, 1999) 10(ee) 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, as further amended through May 1, 1997 (Incorporated by reference to Exhibit No. 10(ee) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on March 25, 1997) 10(ff) Employment Agreement with Thomas P. Grumbly, Executive Vice President of the Registrant, effective as of April 7, 1997 (Incorporated by reference to Exhibit No. 10(ff) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on April 15, 1999) 10(ff)(1) Letter dated March 15,1999, amending Mr. Grumbly's employment agreement (Incorporated by reference to Exhibit No. 10(ff)(1) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on April 15, 1999) 10(gg) ICF Kaiser International, Inc. Consultants, Agents and Part-Time Employees Stock Plan dated as of June 23, 1995 (Incorporated by reference to Exhibit No. 99 to Registration Statement on Form S- 8 Registration No. 33-60665 filed with the Commission on June 28, 1995) 10(hh) 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(ii) Amended Employment Agreement dated as of December 1, 1996, with David Watson, Executive Vice President and President, ICF Kaiser Engineers and Constructors Group of the Registrant (Incorporated by reference to Exhibit No. 10(kk) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on March 25, 1997) 10(ii)(1) Agreement and Mutual Release dated August 17, 1998, terminating Mr. Watson's employment agreement (Incorporated by reference to Exhibit No. 10(ii)(1) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on April 15, 1999) 10(jj) Intentionally Omitted II-6 10(kk) Employment Agreement with Michael F. Gaffney, Executive Vice President of the Registrant, effective as of January 1, 1997 (Incorporated by reference to Exhibit No. 10(kk) to Annual Report on Form 10-K (Registrant No. 1-12248) for fiscal year 1997 filed with the Commission on March 31, 1998) 10(kk)(1) Agreement dated March 8, 1999, terminating Mr. Gaffney's employment agreement (Incorporated by reference to Exhibit No. 10(kk)(1) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on April 15, 1999) 10(ll) Letter Agreement with Cowen Incorporated and Jarrod M. Cohen, dated as of March 13, 1998 (Incorporated by reference to Exhibit No. 10(ll) to Annual Report on Form 10-K (Registrant No. 1- 12248) for fiscal year 1997 filed with the Commission on March 31, 1998) (Incorporated by reference to Exhibit No. 10(mm) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on March 25, 1997) 10(mm) ICF Kaiser International, Inc. Non-employee Directors Compensation and Phantom Stock Plan as adopted by the Board of Directors on February 28, 1997, with an effective date of March 1, 1997 (Incorporated by reference to Exhibit No. 10(mm) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on April 15, 1999) 10(nn) Letter Agreement with Tennenbaum & Co., L.L.C. and Michael E. Tennenbaum, dated as of March 13, 1998 (Incorporated by reference to Exhibit No. 10(nn) to Annual Report on Form 10-K (Registrant No. 1-12248) for fiscal year 1997 filed with the Commission on March 31, 1998) 10(oo) Employment Agreement with Keith M. Price, President and Chief Executive Officer of the Registrant, effective as of August 27, 1998 (Incorporated by reference to Exhibit No. 10(oo) to Quarterly Report on Form 10-Q (Registrant No. 1-12248) for the third quarter of 1998 filed with the Commission on November 16, 1998) 10(oo)(1) Terms of Promotion for Mr. Price effective as of November 4, 1998 (Incorporated by reference to Exhibit No. 10(oo)(1) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on April 15, 1999) *10(oo)(2) Agreement dated April 27, 1999, terminating Mr. Price's employment agreement *10(pp) Employment Agreement with James J. Maiwurm, President and Chief Executive Officer of the Registrant, effective as of June 1, 1999 *10(qq) Employment Agreement with S. Robert Cochran, Executive Vice President and President, North America of the Registrant, effective as of June 1, 1999 *10(rr) Employment Agreement with Timothy P. O'Connor, Executive Vice President and Chief Financial Officer of the Registrant, effective as of June 1, 1999 *10(ss) Employment Agreement with Richard A. Leupen, Executive Vice President and President, International of the Registrant, effective as of June 1, 1999. *12 Statement regarding computation of ratio of earnings to fixed charges *21 Consolidated subsidiaries of the Registrant as of July 9, 1999 II-7 23(a) Consent of Squire, Sanders & Dempsey L.L.P. (included in opinions filed as Exhibits 5 and 8) 23(b) Consent of PricewaterhouseCoopers LLP 24 Power of Attorney (included as part of the signature page to this Form S-4 Registration Statement) 25 Statement of Eligibility and Qualification on Form T-1 of Trustee 99 Form of Letter of Transmittal and Consent Form and related documents for the 12% Senior Subordinated Notes due 2003 _____________ * Previously filed. ITEM 22. UNDERTAKINGS (1) Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Securities Act") 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 Securities Act and is, therefore, unenforceable. In the event that 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 of whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. (2) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the registrant's annual report pursuant to Section 23(a) or Section 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the registration statement 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) The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. (4) The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. (5) The undersigned registrant hereby undertakes: (a) To file, during any period in which offers and sales are being made, a post-effective amendment to this registration statement: II-8 (i) To include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) To reflect in the prospectus any facts or events 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 and 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 20 percent change in the maximum aggregate offering price set forth in "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; provided, however, that paragraphs (a)(i) and (a)(ii) do not apply if the registration statement is on Form S-3, Form S-8 or Form F-3, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to Section 13 of 15(d) of the Exchange Act that are incorporated by reference in the registration statement. (b) That for the purposes of determining any liability under the Securities Act, 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. (c) 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. II-9 SIGNATURES Pursuant to the requirements of the 1933 Act, the registrant has duly caused this amendment to its registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Fairfax, Virginia on October 1, 1999. ICF KAISER INTERNATIONAL, INC. By: /s/ James J. Maiwurm -------------------- Name: James J. Maiwurm Title: Chairman, President and Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, this Amendment to Registration Statement on Form S-4 has been signed below by the following persons in the capacities and on the dates indicated. (1) Principal executive officer Date: October 1, 1999 By /s/ James J. Maiwurm ------------------------------ James J. Maiwurm Chairman, President and Chief Executive Officer (2) Principal financial and accounting officer Date: October 1, 1999 By /s/ Timothy P. O'Connor ------------------------------- Timothy P. O'Connor Executive Vice President and Chief Financial Officer (3) The Board of Directors Date: October 1, 1999 By * ----------------------------- Jarrod M. Cohen Director Date: October 1, 1999 By * ----------------------------- James O. Edwards Director Date: October __, 1999 By ----------------------------- Thomas C. Jorling Director Date: October 1, 1999 By * ----------------------------- James J. Maiwurm Director Date: October __, 1999 By ----------------------------- Hazel R. O'Leary Director S-1 Date: October 1, 1999 By * ----------------------------- Keith M. Price Director Date: October 1, 1999 By * ----------------------------- James T. Rhodes Director Date: October 1, 1999 By * ----------------------------- Michael E. Tennenbaum Director * By: /s/ James J. Maiwurm --------------------- Attorney-in-Fact S-2 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION OF EXHIBIT - ----------- ---------------------- 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) 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) 4(a)(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) 4(a)(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) 4(a)(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(a)(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) 4(a)(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(a)(6) Sixth Supplemental Indenture dated as of December 3, 1997 (Incorporated by reference to Exhibit No. 4(a)(6) to Annual Report on Form 10-K (Registrant No. 1-12248) for fiscal year 1997 filed with the Commission on March 31, 1998) 4(a)(7) Seventh Supplemental Indenture dated as of August 13, 1998 (Incorporated by reference to Exhibit No. 4(a)(7) to Quarterly Report on Form 10-Q (Registrant No. 1-12248) for the third quarter of fiscal 1997 filed with the Commission on November 16, 1998) 4(a)(8) Eighth Supplemental Indenture dated as of April 9, 1999 (Incorporated by reference to Exhibit No. 4(a)(8) to Quarterly Report on Form 10-Q (Registrant No. 1-12248) for the first quarter of fiscal 1999 filed with the Commission on May 17, 1999) 4(a)(9) Ninth Supplemental Indenture dated as of June 25, 1999 4(a)(10) Form of Tenth Supplemental Indenture with respect to the 12% Senior Subordinated Notes due 2003 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) 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; and (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(d) 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 (Incorporated by reference to Exhibit No. 4(g) to Registration Statement on Form S-1 Registration No. 333-19519 filed with the Commission on January 10, 1997) 4(d)(1) First Supplemental Indenture dated as of December 3, 1997 (Incorporated by reference to Exhibit No. 4(a)(6) to Annual Report on Form 10-K (Registrant No. 1-12248) for fiscal year 1997 filed with the Commission on March 31, 1998) 4(d)(2) Second Supplemental Indenture dated as of August 13, 1998 (Incorporated by reference to Exhibit No. 4(g)(2) to Quarterly Report on Form 10-Q (Registrant No. 1-12248) for the third quarter of fiscal 1997 filed with the Commission on November 16, 1998) 4(d)(3) Third Supplemental Indenture dated as of April 9, 1999 (Incorporated by reference to Exhibit 4(f)(3) to Quarterly Report on Form 10-Q (Registrant No. 1-12248) for the first quarter of fiscal 1999 filed with the Commission on May 17, 1999) 4(d)(4) Fourth Supplemental Indenture dated as of June 25, 1999 4(e) Form of 12% Senior Note due 2003, Series B (Incorporated by reference to Exhibit No. 4(g) to Quarterly Report on Form 10-Q (Registrant No. 1-12248) for the first quarter of fiscal 1999 filed with the Commission on May 17, 1999) 4(f) Warrant Agreement dated as of December 23, 1996, between ICF Kaiser International, Inc. and The Bank of New York, as Warrant Agent (Incorporated by reference to Exhibit No. 4(j) to Registration Statement on Form S-1 Registration No. 333-19519 filed with the Commission on January 10, 1997) 4(g) Form of Warrant expiring December 31, 1999 issued under Warrant Agreement dated as of December 23, 1996 (Incorporated by reference to Exhibit No. 4(k) to Registration Statement on Form S-1 Registration No. 333-19519 filed with the Commission on January 10, 1997) 4(h) Form of Certificate of Designation regarding Redeemable Convertible Preferred Stock that is registered by and issuable in exchange offer described in this registration statement 4(i) Intentionally Omitted 4(j) Form of Indenture regarding 12% Senior Notes due 2002 registered by and issuable in exchange offer described in this registration statement, including the form of senior note 5 Opinion of Squire, Sanders & Dempsey L.L.P. regarding securities being registered 8 Opinion of Squire, Sanders & Dempsey L.L.P. regarding tax consequences 10(a) Loan and Security Agreement dated as of December 18, 1998, with Madeleine L.L.C. as agent (Incorporated by reference to Exhibit No. 10(a) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on April 15, 1999) 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) 10(b)(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) 10(b)(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) 10(b)(3) Amendment No. 3 dated December 13, 1996 (Incorporated by reference to Exhibit No. 10(b)(3) to Registration Statement on Form S-1 Registration No. 333-19519 filed with the Commission on January 10, 1997) 10(c) Trust Agreement with Vanguard Fiduciary Trust Company dated as of August 31, 1995, for ICF Kaiser International, Inc. Employee Stock Ownership Plan (Incorporated by reference to Exhibit No. 10(c) to Registration Statement on Form S-1 Registration 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) 10(d)(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) 10(d)(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) 10(d)(3) Amendment No. 3 dated December 13, 1996 (Incorporated by reference to Exhibit No. 10(d)(3) to Registration Statement on Form S-1 Registration No. 333-19519 filed with the Commission on January 10, 1997) 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 Registration No. 33-64655 filed with the Commission on November 30, 1995) 10(f) Consolidated, Amended and Restated Deed of Lease Agreement between HMCE Associates Limited Partnership R.L.L.P. (as Landlord) and ICF Kaiser Hunters Branch Leasing, Inc. (as Tenant), dated November 12, 1997, for the lease of the Registrant's headquarters in Fairfax, Virginia known as Hunters Branch--Phase I (Incorporated by reference to Exhibit No. 10(g) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on March 25, 1997) 10(g) Consolidated, Amended and Restated Deed of Lease Agreement between HMCE Associates Limited Partnership R.L.L.P. (as Landlord) and ICF Kaiser Hunters Branch Leasing, Inc. (as Tenant), dated November 12, 1997, for the lease of space in the building adjacent to the Registrant's headquarters in Fairfax, Virginia known as Hunters Branch--Phase II (Incorporated by reference to Exhibit No. 10(h) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on March 25, 1997) 10(h) Contribution Agreement by and among HMCE Associates Limited Partnership R.L.L.P.; ICF Kaiser Hunters Branch Leasing, Inc.; and IFA Nutley Partners, LLC dated November 3, 1997 (Incorporated by reference to Exhibit No. 10(i) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on March 25, 1997) 10(i) 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(j) 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(j) WAS FILED IN PAPER ON MAY 23, 1995, ON FORM SE PURSUANT TO A CONTINUING HARDSHIP EXEMPTION and is incorporated herein by reference thereto) 10(j)(1) Modifications 1 to 40 to Contract #DE-AC3495RF00825 (Incorporated by reference to Exhibit No. 10(p)(l) to Registration Statement on Form S-1 Registration No. 333-16937 filed with the Commission on November 27, 1996) 10(j)(2) Modifications 42 to 46 to Contract #DE-AC3495RF00825 (Modification 41 not received) (Incorporated by reference to Exhibit No. 10(p)(2) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on March 25, 1997) 10(j)(3) Modifications 47 to 81 to Contract #DE-AC3495RF00825 (Modifications 72 and 78 not received) (Incorporated by reference to Exhibit No. 10(j)(3) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on April 15, 1999) 10(k) 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) for the second quarter of fiscal 1994 filed with the Commission on October 15, 1993) 10(k)(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) 10(k)(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) 10(k)(3) Amendment No. 3 dated December 13, 1996 (Incorporated by reference to Exhibit No. 10(q)(3) to Registration Statement on Form S-1 Registration No. 333-19519 filed with the Commission on January 10, 1997) 10(l) 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) Agreement dated as of May 19, 1997 with James O. Edwards, Chairman and Chief Executive Officer of the Registrant (Incorporated by reference to Exhibit No. 10(ll) to Quarterly Report on Form 10-Q (Registrant No. 1- 12248) for the second quarter of fiscal 1997 filed with the Commission on August 14, 1997) 10(aa)(1) Agreement dated as of November 6, 1998, terminating Mr. Edwards' employment agreement (Incorporated by reference to Exhibit No. 10(aa)(1) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on April 15, 1999) 10(bb) ICF Kaiser International, Inc. 1998 Compensation (IC) Plan for Senior Executives (adopted by the Board of Directors on February 27, 1998) (Incorporated by reference to Exhibit No. 10(bb) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on March 25, 1997) 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 dated as of May 19, 1997 with Marc Tipermas, President and Chief Operating Officer of the Registrant (Incorporated by reference to Exhibit No. 10(mm) to Quarterly Report on Form 10-Q (Registrant No. 1- 12248) for the second quarter of fiscal 1997 filed with the Commission on August 14, 1997) 10(dd)(1) Agreement dated as of August 7, 1998, terminating Dr. Tipermas' employment agreement (Incorporated by reference to Exhibit No. 10(dd)(1) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on April 15, 1999) 10(ee) 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, as further amended through May 1, 1997 (Incorporated by reference to Exhibit No. 10(ee) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on March 25, 1997) 10(ff) Employment Agreement with Thomas P. Grumbly, Executive Vice President of the Registrant, effective as of April 7, 1997 (Incorporated by reference to Exhibit No. 10(ff) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on April 15, 1999) 10(ff)(1) Letter dated March 15,1999, amending Mr. Grumbly's employment agreement (Incorporated by reference to Exhibit No. 10(ff)(1) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on April 15, 1999) 10(gg) ICF Kaiser International, Inc. Consultants, Agents and Part-Time Employees Stock Plan dated as of June 23, 1995 (Incorporated by reference to Exhibit No. 99 to Registration Statement on Form S-8 Registration No. 33-60665 filed with the Commission on June 28, 1995) 10(hh) 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(ii) Amended Employment Agreement dated as of December 1, 1996, with David Watson, Executive Vice President and President, ICF Kaiser Engineers and Constructors Group of the Registrant (Incorporated by reference to Exhibit No. 10(kk) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on March 25, 1997) 10(ii)(1) Agreement and Mutual Release dated August 17, 1998, terminating Mr. Watson's employment agreement (Incorporated by reference to Exhibit No. 10(ii)(1) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on April 15, 1999) 10(jj) Intentionally Omitted 10(kk) Employment Agreement with Michael F. Gaffney, Executive Vice President of the Registrant, effective as of January 1, 1997 (Incorporated by reference to Exhibit No. 10(kk) to Annual Report on Form 10-K (Registrant No. 1-12248) for fiscal year 1997 filed with the Commission on March 31, 1998) 10(kk)(1) Agreement dated March 8, 1999, terminating Mr. Gaffney's employment agreement (Incorporated by reference to Exhibit No. 10(kk)(1) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on April 15, 1999) 10(ll) Letter Agreement with Cowen Incorporated and Jarrod M. Cohen, dated as of March 13, 1998 (Incorporated by reference to Exhibit No. 10(ll) to Annual Report on Form 10-K (Registrant No. 1-12248) for fiscal year 1997 filed with the Commission on March 31, 1998) (Incorporated by reference to Exhibit No. 10(mm) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on March 25, 1997) 10(mm) ICF Kaiser International, Inc. Non-employee Directors Compensation and Phantom Stock Plan as adopted by the Board of Directors on February 28, 1997, with an effective date of March 1, 1997 (Incorporated by reference to Exhibit No. 10(mm) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on April 15, 1999) 10(nn) Letter Agreement with Tennenbaum & Co., L.L.C. and Michael E. Tennenbaum, dated as of March 13, 1998 (Incorporated by reference to Exhibit No. 10(nn) to Annual Report on Form 10-K (Registrant No. 1-12248) for fiscal year 1997 filed with the Commission on March 31, 1998) 10(oo) Employment Agreement with Keith M. Price, President and Chief Executive Officer of the Registrant, effective as of August 27, 1998 (Incorporated by reference to Exhibit No. 10(oo) to Quarterly Report on Form 10-Q (Registrant No. 1-12248) for the third quarter of 1998 filed with the Commission on November 16, 1998) 10(oo)(1) Terms of Promotion for Mr. Price effective as of November 4, 1998 (Incorporated by reference to Exhibit No. 10(oo)(1) to Annual Report on Form 10-K (Registrant No. 1-12248) filed with the Commission on April 15, 1999) *10(oo)(2) Agreement dated April 27, 1999, terminating Mr. Price's employment agreement *10(pp) Employment Agreement with James J. Maiwurm, President and Chief Executive Officer of the Registrant, effective as of June 1, 1999 *10(qq) Employment Agreement with S. Robert Cochran, Executive Vice President and President, North America of the Registrant, effective as of June 1, 1999 *10(rr) Employment Agreement with Timothy P. O'Connor, Executive Vice President and Chief Financial Officer of the Registrant, effective as of June 1, 1999 *10(ss) Employment Agreement with Richard A. Leupen, Executive Vice President and President, International of the Registrant, effective as of June 1, 1999. *12 Statement regarding computation of ratio of earnings to fixed charges *21 Consolidated subsidiaries of the Registrant as of July 9, 1999 23(a) Consent of Squire, Sanders & Dempsey L.L.P. (included in opinions filed as Exhibits 5 and 8) 23(b) Consent of PricewaterhouseCoopers LLP 24 Power of Attorney (included as part of the signature page to this Form S-4 Registration Statement) 25 Statement of Eligibility and Qualification on Form T-1 of Trustee 99 Form of Letter of Transmittal and Consent Form and related documents for the 12% Senior Subordinated Notes due 2003 ______________ * Previously filed. EX-4.(A)(9) 2 NINTH SUPPLEMENTAL INDENTURE Exhibit 4(a)(9) =============================================================================== ICF KAISER INTERNATIONAL, INC., Issuer and CYGNA CONSULTING ENGINEERS AND PROJECT MANAGEMENT, INC., Guarantor ICF KAISER GOVERNMENT PROGRAMS, INC., Guarantor SYSTEMS APPLICATIONS INTERNATIONAL, INC., Guarantor EDA, INCORPORATED, Guarantor GLOBAL TRADE & INVESTMENT, INC., Guarantor ICF KAISER EUROPE, INC., Guarantor ICF KAISER / GEORGIA WILSON, INC., Guarantor ICF KAISER OVERSEAS ENGINEERING, INC., Guarantor ICF KAISER ENGINEERS PACIFIC, INC., Guarantor ICF KAISER ADVANCED TECHNOLOGY, INC., Guarantor TO THE BANK OF NEW YORK, Trustee _______________ Ninth Supplemental Indenture Dated as of June 25, 1999 to Indenture dated as of January 11, 1994 _______________ $125,000,000 12% Senior Subordinated Notes due 2003 =============================================================================== THIS NINTH SUPPLEMENTAL INDENTURE, dated as of June 25, 1999, is entered into by and among ICF KAISER INTERNATIONAL, INC., a Delaware corporation (the "Company"), THE BANK OF NEW YORK, a New York banking corporation (the "Trustee"), and the following GUARANTORS (the "Subsidiary Guarantors"): Cygna Consulting Engineers and Project Management, Inc., a Delaware corporation ("Cygna"); ICF Kaiser Government Programs, Inc., a Delaware corporation ("ICFK-GP"); Systems Applications International, Inc., a Delaware corporation ("SAI") EDA, Incorporated, a Maryland corporation ("EDA"); Global Trade & Investment, Inc., a Delaware corporation ("Global"); ICF Kaiser Europe, Inc., a Delaware corporation ("ICFK Europe"); ICF Kaiser / Georgia Wilson, Inc., a Delaware corporation ("ICFK/GW"); ICF Kaiser Overseas Engineering, Inc., a Delaware corporation ("ICFK Overseas"); ICF Kaiser Engineers Pacific, Inc., a Delaware corporation ("ICFK Pacific");and ICF Kaiser Advanced Technology, Inc., an Idaho Corporation ("Advanced Tech"). WITNESSETH: WHEREAS, the Company and the Trustee have heretofore executed and delivered an Indenture dated as of January 11, 1994 (as amended and supplemented to date, the "Indenture"), for the purpose of issuing $125,000,000 of 12% Senior Subordinated Notes due 2003 (the "Notes"); WHEREAS, the Company has entered into an Recapitalization Agreement with ICF Consulting Group Holdings, LLC and Clement International Corporation, dated May 21, 1999 providing for the sale of the stock of certain subsidiaries included in, the Company's Consulting Group (the "Consulting Agreement"); WHEREAS, the Consulting Agreement provides for the sale, among other things, of the stock of Systems Applications International, Inc., a Delaware corporation ("SAI"), which is a Subsidiary Guarantor; WHEREAS, the terms of the Consulting Agreement require that SAI be released from its obligations as a Subsidiary Guarantor under the Indenture; WHEREAS, the Company and its Restricted Subsidiaries intend to use the proceeds of the transaction contemplated by the Consulting Agreement in a manner consistent with Section 5.09 of the Indenture; WHEREAS, the execution and delivery of this Ninth Supplemental Indenture has been duly authorized by the Board of Directors of the Company on May 7, 1999; WHEREAS, the Company and the Subsidiary Guarantors have determined that it is desirable to enter into this Ninth Supplemental Indenture and have requested the Trustee to join with them in the execution of this Ninth Supplemental Indenture; and WHEREAS, the Trustee has accepted the trusts created by this Ninth Supplemental Indenture and in evidence thereof has joined in the execution hereof; NOW, THEREFORE, THIS NINTH SUPPLEMENTAL INDENTURE WITNESSETH, that, in consideration of the premises and of acceptance by the Trustee of the trusts created hereby and by the Indenture, and also for and in consideration of the sum of One Dollar to the Company duly paid by the Trustee at or before the execution and delivery of this Supplemental Indenture, the receipt of which is hereby acknowledged, IT IS HEREBY COVENANTED AND AGREED, by and among the Company, the Subsidiary Guarantors, and the Trustee, as follows: 1. Terms defined in the Indenture are used herein as therein defined. 2. Effective upon the closing of the transactions contemplated by the Consulting Agreement, SAI is hereby, and shall be, without further action of, or the execution and delivery of any further documents or instruments by, the Company, the Subsidiary Guarantors of the Trustee, released from the Guarantee dated June 24, 1996 to which it is a party. 3. The following sundry provisions shall be a part of this Ninth Supplemental Indenture: Section 4.01. Effect of Supplemental Indenture. Upon the execution and -------------------------------- delivery of this Ninth Supplemental Indenture by the Company, the Subsidiary Guarantors and the Trustee, the Indenture shall be supplemented in accordance herewith, and this Ninth Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Notes heretofore or hereafter authenticated and delivered under the Indenture shall be bound thereby. Section 4.02. Indenture Remains in Full Force and Effect. Except as ------------------------------------------ supplemented hereby and by the First through Eighth Supplemental Indentures, all provisions in the Indenture shall remain in full force and effect. Section 4.03. Indenture and Supplemental Indentures Construed Together. -------------------------------------------------------- This Ninth Supplemental Indenture is an Indenture supplemental to and in implementation of the Indenture, and the Indenture and all Supplemental Indentures shall henceforth be read and construed together. Section 4.04. Confirmation and Preservation of Indenture. The Indenture as ------------------------------------------ supplemented by the First through Eighth Supplemental Indentures is in all respects confirmed and preserved. Section 4.05 Conflict with Trust Indenture Act. If any provision of this --------------------------------- Ninth Supplemental Indenture limits, qualifies, or conflicts with any provision of the Trust Indenture Act that is required under such Act to be part of and govern any provision of this Ninth Supplemental Indenture, the 2 provision of such Act shall control. If any provision of this Ninth Supplemental Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the provision of such Act shall be deemed to apply to the Indenture as so modified or to be excluded by this Ninth Supplemental Indenture, as the case may be. Section 4.06 Separability Clause. In case any provision in this Ninth ------------------- Supplemental Indenture 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 4.07 Terms Defined in the Indenture. All capitalized terms not ------------------------------ otherwise defined herein shall have the meanings ascribed to them in the Indenture. Section 4.08 Effect of Headings. The Article and Section headings herein ------------------ are for convenience only and shall not affect the construction hereof. Section 4.09 Benefits of Ninth Supplemental Indenture, Etc. Nothing in this ---------------------------------------------- Ninth Supplemental Indenture, the Indenture, or the Notes, express or implied, shall give to any Person, other than the parties hereto and thereto and their successors hereunder and thereunder and the Holders of the Notes, any benefit of any legal or equitable right, remedy, or claim under the Indenture, the First through Ninth Supplemental Indentures, or the Notes. Section 4.10 Successors and Assigns. All covenants and agreements in this ---------------------- Ninth Supplemental Indenture by the Company and the Subsidiary Guarantors shall bind their successors and assigns, whether so expressed or not. Section 4.11 Trustee Not Responsible for Recitals. The recitals contained ------------------------------------ herein shall be taken as the statements of the Company and the Subsidiary Guarantors, and the Trustee assumes no responsibility for their correctness. Section 4.12 Certain Duties and Responsibilities of the Trustee. In -------------------------------------------------- entering into this Ninth Supplemental Indenture, the Trustee shall be entitled to the benefit of every provision of the Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee, whether or not elsewhere herein so provided. Section 4.13 Governing Law. This Ninth Supplemental Indenture shall be ------------- governed by and construed in accordance with the laws of the State of New York, without regard to the conflicts of law principles thereof. Section 4.14 Counterparts. This Ninth Supplemental Indenture may be ------------ executed in counterparts, each of which, when so executed, shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. 3 IN WITNESS WHEREOF, the parties hereto have caused this Ninth Supplemental Indenture to be duly executed, and the Company, the Subsidiary Guarantors, and the Trustee have caused their respective corporate seals to be hereunto affixed and attested, all as of June 25, 1999. ICF KAISER INTERNATIONAL, INC. By: _______________________________________ [Seal] Name: Timothy P. O'Connor Title: Senior Vice President and Chief Financial Officer ATTEST: ____________________________ Assistant Secretary THE BANK OF NEW YORK, as Trustee By: _________________________________________ Name: _________________________________________ Title: _________________________________________ CYGNA CONSULTING ENGINEERS AND PROJECT MANAGEMENT, INC. By: ________________________________________ [Seal] Name: Timothy P. O'Connor Title: Assistant Treasurer ATTEST: ____________________________ Assistant Secretary ICF KAISER GOVERNMENT PROGRAMS, INC. By: _________________________________________ [Seal] Name: Timothy P. O'Connor Title: Assistant Treasurer ATTEST: ____________________________ Assistant Secretary 4 SYSTEMS APPLICATIONS INTERNATIONAL, INC. By: _________________________________________ [Seal] Name: Timothy P. O'Connor Title: Assistant Treasurer ATTEST: _____________________________ Assistant Secretary EDA, INCORPORATED By: _________________________________________ [Seal] Name: Timothy P. O'Connor Title: Assistant Treasurer ATTEST: _____________________________ Assistant Secretary GLOBAL TRADE & INVESTMENT, INC. By: _________________________________________ [Seal] Name: Timothy P. O'Connor Title: Assistant Treasurer ATTEST: ____________________________ Assistant Secretary ICF KAISER EUROPE, INC. By: _________________________________________ [Seal] Name: Timothy P. O'Connor Title: Assistant Treasurer ATTEST: ____________________________ Assistant Secretary 5 ICF KAISER / GEORGIA WILSON, INC. By: _________________________________________ [Seal] Name: Timothy P. O'Connor Title: Assistant Treasurer ATTEST: ____________________________ Assistant Secretary ICF KAISER OVERSEAS ENGINEERING, INC. By: _________________________________________ [Seal] Name: Timothy P. O'Connor Title: Assistant Treasurer ATTEST: ____________________________ Assistant Secretary ICF KAISER ENGINEERS PACIFIC, INC. By: _________________________________________ [Seal] Name: Timothy P. O'Connor Title: Assistant Treasurer ATTEST: ___________________________ Assistant Secretary ICF KAISER ADVANCED TECHNOLOGY, INC. By: _________________________________________ [Seal] Name: Timothy P. O'Connor Title: Assistant Treasurer ATTEST: ___________________________ Assistant Secretary 6 EX-4.(A)(10) 3 TENTH SUPPLEMENTAL INDENTURE Exhibit 4(a)(10) =============================================================================== ICF KAISER INTERNATIONAL, INC., Issuer and CYGNA CONSULTING ENGINEERS AND PROJECT MANAGEMENT, INC., Guarantor KAISER GOVERNMENT PROGRAMS, INC., Guarantor EDA, INCORPORATED, Guarantor GLOBAL TRADE & INVESTMENT, INC., Guarantor KAISER EUROPE, INC., Guarantor ICF KAISER / GEORGIA WILSON, INC., Guarantor ICF KAISER OVERSEAS ENGINEERING, INC., Guarantor ICF KAISER ENGINEERS PACIFIC, INC., Guarantor ICF KAISER ADVANCED TECHNOLOGY, INC., Guarantor TO THE BANK OF NEW YORK, Trustee _______________ Tenth Supplemental Indenture Dated as of _________ __, 1999 to Indenture dated as of January 11, 1994 _______________ $125,000,000 12% Senior Subordinated Notes due 2003 =============================================================================== This TENTH SUPPLEMENTAL INDENTURE, dated as of _____ __, 1999, is entered into by and among ICF Kaiser International, Inc., a Delaware corporation (the "Company"), The Bank of New York, a New York banking corporation (the "Trustee"), and each of the following guarantors: Cygna Consulting Engineers and Project Management, Inc., a Delaware corporation; Kaiser Government Programs, Inc., a Delaware corporation formerly named ICF Kaiser Government Programs, Inc.; EDA, Incorporated, a Maryland corporation; Global Trade & Investment, Inc., a Delaware corporation; Kaiser Europe, Inc., a Delaware corporation formerly named ICF Kaiser Europe, Inc.; ICF Kaiser / Georgia Wilson, Inc., a Delaware corporation; ICF Kaiser Overseas Engineering, Inc., a Delaware corporation; ICF Kaiser Engineers Pacific, Inc., a Delaware corporation; and ICF Kaiser Advanced Technology, Inc., an Idaho Corporation (collectively, the "Guarantors"). WITNESSETH: WHEREAS, the Company and the Trustee are parties to an Indenture dated as of January 11, 1994 (the "Indenture"), relating to the Company's 12% Senior Subordinated Notes due 2003 (the "Notes"); WHEREAS, the Company has filed with the SEC a registration statement on Form S-4 (Registration No. 333-82643) (as amended or supplemented, the "Registration Statement"), relating, among other things, to Company's offer to purchase for cash at par on a pro rata basis a total of up to $40,000,000 principal amount of the Notes (the "Asset Sale Offer"); WHEREAS, in order to effectuate such Asset Sale Offer, it is necessary, advisable and desirable to amend and delete certain provisions of the Indenture; WHEREAS, Section 10.02 of the Indenture provides that the Company and the Trustee may amend the 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; WHEREAS, the Company has obtained the written consents of a majority the Holders approving the transactions contemplated by the Registration Statement, including such Asset Sale Offer, and the amendment and deletion of certain provisions of the Indenture as set forth below; WHEREAS, in accordance with Section 10.02 of the Indenture, the Board of Directors of the Company has authorized the execution and delivery of this Tenth Supplemental Indenture and the Company has filed with the Trustee evidence of the consent of the Holders; WHEREAS, the Company, the Guarantors, and the Trustee have determined that this Tenth Supplemental Indenture complies with Section 10.02 of the Indenture, and, on the basis of the foregoing, the Trustee, having received the documents described in Section 10.06 of the Indenture, has determined that this Tenth Supplemental Indenture is in form satisfactory to it; and WHEREAS, the Trustee has accepted the trusts created by the Indenture, as supplemented and amended by this Tenth Supplemental Indenture, and in evidence thereof has joined in the execution hereof; NOW, THEREFORE, in consideration of the premises and of the acceptance by the Trustee of the trusts created hereby and by the Indenture, and also for and in consideration of the sum of One Dollar to the Company duly paid by the Trustee at or before the execution and delivery of this Supplemental Indenture, the receipt of which is hereby acknowledged, it is hereby covenanted and agreed, by and among the Company, the Guarantors, and the Trustee, as follows: ARTICLE 1 AMENDMENTS TO INDENTURE Section 1.01 Amendments. Effective on the date hereof, the ---------- Indenture is hereby amended as follows: (a) Sections 5.04 through 5.08, inclusive, 5.10, 5.11, 5.13 through 5.16, inclusive, and 6.01, are hereby deleted in their entirety. (b) Section 5.09 is hereby renumbered to be Section 5.04, Section 5.12 is renumbered to be Section 5.05, Section 5.17 is renumbered to be Section 5.06, and Section 6.02 is hereby renumbered to be Section 6.01. (c) Section 5.04 (as renumbered in accordance with Section 1.01(b) above) is amended as follows: (i) The reference to Section 5.09 in clause (iii) of paragraph (b) of Section 5.04 is changed to be a reference to Section 5.04. (ii) A new paragraph (d) is inserted at the end of Section 5.04 to read as follows: "(d) Notwithstanding any provision contained in this Indenture, the consummation of the transactions contemplated by the Company's Registration Statement filed with the SEC on October 1, 1999 (Registration No. 333-82643), as amended or supplemented from time to time, relating, among other things, to the asset sale offer described therein, shall be expressly permitted under this Indenture and shall not be deemed to constitute a breach, violation or other contravention of any provision contained in this Indenture." (d) The reference to Section 5.12 in paragraph (b) of Section 5.06 (as renumbered in accordance with Section 1.01(b) above) is changed to be a reference to Section 5.05. 2 (e) The phrase "in accordance with Section 6.01" in Section 6.01(a) (as renumbered in accordance with Section 1.01(b) above) is hereby deleted. (f) Section 7.01 is amended by deleting clause numbers (3) through (6), inclusive, and renumbering clause numbers (7) and (8) to be clause numbers (3) and (4), respectively. In addition, (i) clause (3) (as - renumbered in accordance with the immediately preceding sentence) of Section 7.01 is amended by deleting the words "or any of its Subsidiaries" immediately after the words "the Company" and (ii) clause (4) (as -- renumbered in accordance with the immediately preceding sentence) of Section 7.01 is amended by deleting the words "or any of its Subsidiaries" in each of the four places where those words appear in subclauses (a), (b) and (c). (g) References to clauses (7) and (8) of Section 7.01 contained in (i) - Section 7.02, (ii) Section 7.04, and (iii) the last paragraph of Section -- --- 8.06, are hereby amended to be references to clauses (3) and (4), respectively, of such Section 7.01. ARTICLE 2 MISCELLANEOUS Section 2.01 Effect of Supplemental Indenture. On the date hereof, -------------------------------- the Indenture shall be supplemented in accordance herewith, and this Tenth Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Notes heretofore or hereafter authenticated and delivered under the Indenture shall be bound thereby. Section 2.02 Indenture Remains in Full Force and Effect. Except as ------------------------------------------ supplemented hereby and by the First through Ninth Supplemental Indentures, all provisions in the Indenture shall remain in full force and effect. Section 2.03 Indenture and Supplemental Indentures Construed ----------------------------------------------- Together. All provisions of this Tenth Supplemental Indenture shall be deemed to be incorporated in, and made a part of, the Indenture; and the Indenture, as supplemented and amended by this Tenth Supplemental Indenture, shall be read, taken and construed as one and the same instrument. Section 2.04 Confirmation and Preservation of Indenture. The ------------------------------------------ Indenture, as supplemented and amended by the First through Tenth Supplemental Indentures, is in all respects, including the Company's agreement to indemnify the Trustee pursuant to Section 8.06 of the Indenture, confirmed and preserved. Section 2.05 Conflict with Trust Indenture Act. If any provision of --------------------------------- this Tenth Supplemental Indenture limits, qualifies, or conflicts with any provision of the Trust Indenture Act that is required under such Act to be part of and govern any provision of this Tenth Supplemental Indenture, the provision of such Act shall control. If any provision of this Tenth Supplemental Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the provisions of such Act shall be deemed to apply to the Indenture as so modified or to be excluded by this Tenth Supplemental Indenture, as the case may be. 3 Section 2.06 Separability Clause. In case any provision in this ------------------- Tenth Supplemental Indenture 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 2.07 Terms Defined in the Indenture. All capitalized terms ------------------------------ not otherwise defined herein (including capitalized terms used in the Recitals hereto) shall have the meanings ascribed to them in the Indenture. Section 2.08 Effect of Headings. The Article and Section headings in ------------------ this Tenth Supplemental Indenture are for convenience only and shall not affect the construction hereof. Section 2.09 Benefits of Tenth Supplemental Indenture. Nothing in ---------------------------------------- this Tenth Supplemental Indenture, the Indenture, or the Notes, express or implied, shall give to any Person, other than the parties hereto and thereto and their successors hereunder and thereunder and the Holders, any benefit of any legal or equitable right, remedy, or claim under the Indenture, the First through Tenth Supplemental Indentures, or the Notes. Section 2.10 Successors and Assigns. All covenants and agreements in ---------------------- this Tenth Supplemental Indenture by the Company and the Guarantors shall bind their successors and assigns, whether so expressed or not. Section 2.11 Trustee Not Responsible for Recitals. The recitals ------------------------------------ contained herein shall be taken as the statements of the Company and the Guarantors, and the Trustee assumes no responsibility for their correctness. Section 2.12 Certain Duties and Responsibilities of the Trustee. In -------------------------------------------------- entering into this Tenth Supplemental Indenture, the Trustee shall be entitled to the benefit of every provision of the Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee, whether or not elsewhere herein so provided. Section 2.13 GOVERNING LAW. THIS TENTH SUPPLEMENTAL INDENTURE SHALL ------------- BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES THEREOF. Section 2.14 Counterparts. This Tenth Supplemental Indenture may be ------------ executed in any number of counterparts, each of which, when so executed, shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. 4 IN WITNESS WHEREOF, the parties hereto have caused this Tenth Supplemental Indenture to be duly executed, and the Company, the Guarantors, and the Trustee have caused their respective corporate seals to be hereunto affixed and attested, all as of ______________, 1999. ICF KAISER INTERNATIONAL, INC. By: ---------------------------------------- Name: Timothy P. O'Connor Title: Executive Vice President and Chief Financial Officer THE BANK OF NEW YORK, as Trustee By: ---------------------------------------- Name: Title: CYGNA CONSULTING ENGINEERS AND PROJECT MANAGEMENT, INC. By: ---------------------------------------- Name: Timothy P. O'Connor Title: Treasurer KAISER GOVERNMENT PROGRAMS, INC. (formerly ICF Kaiser Government Programs, Inc.) By: ---------------------------------------- Name: Timothy P. O'Connor Title: Treasurer EDA, INCORPORATED By: ---------------------------------------- Name: Timothy P. O'Connor Title: Treasurer GLOBAL TRADE & INVESTMENT, INC. By: ---------------------------------------- Name: Timothy P. O'Connor Title: Treasurer KAISER EUROPE, INC. (formerly ICF Kaiser Europe, Inc.) By: ---------------------------------------- Name: Timothy P. O'Connor Title: Treasurer ICF KAISER / GEORGIA WILSON, INC. By: ---------------------------------------- Name: Timothy P. O'Connor Title: Treasurer ICF KAISER OVERSEAS ENGINEERING, INC. By: ---------------------------------------- Name: Timothy P. O'Connor Title: Treasurer ICF KAISER ENGINEERS PACIFIC, INC. By: ---------------------------------------- Name: Timothy P. O'Connor Title: Treasurer ICF KAISER ADVANCED TECHNOLOGY, INC. By: ---------------------------------------- Name: Timothy P. O'Connor Title: Treasurer EX-4.(D)(4) 4 FOURTH SUPPLEMENTAL INDENTURE THIS FOURTH SUPPLEMENTAL INDENTURE, dated as of June __, 1999, is entered into by and among ICF KAISER INTERNATIONAL, INC., a Delaware corporation (the "Company"), THE BANK OF NEW YORK, a New York banking corporation (the "Trustee"), and the following GUARANTORS (the "Subsidiary Guarantors"): Cygna Consulting Engineers and Project Management, Inc., a Delaware corporation ("Cygna"); ICF Kaiser Government Programs, Inc., a Delaware corporation ("ICFK-GP"); Systems Applications International, Inc., a Delaware corporation "(SAI") EDA, Incorporated, a Maryland corporation ("EDA"); Global Trade & Investment, Inc., a Delaware corporation ("Global"); ICF Kaiser Europe, Inc., a Delaware corporation ("ICFK Europe"); ICF Kaiser / Georgia Wilson, Inc., a Delaware corporation ("ICFK/GW"); ICF Kaiser Overseas Engineering, Inc., a Delaware corporation ("ICFK Overseas"); ICF Kaiser Engineers Pacific, Inc., a Delaware corporation ("ICFK Pacific"); and ICF Kaiser Advanced Technology, Inc., an Idaho Corporation ("Advanced Tech"). WITNESSETH: WHEREAS, the Company and the Trustee have heretofore executed and delivered an Indenture dated as of December 23, 1996 (as amended and supplemented to date, the "Indenture"), for the purpose of issuing $15,000,000 of 12% Senior Notes due 2003 (the "Notes"); WHEREAS, the Company has entered into an Recapitalization Agreement with ICF Consulting Group Holdings, LLC and Clement International Corporation dated May 21, 1999 providing for the sale of stock of certain subsidiaries included in, the Company's Consulting Group (the "Consulting Agreement"); WHEREAS, the Consulting Agreement provides for the sale, among other things, of the stock of Systems Applications International, Inc., a Delaware corporation ("SAI"), which is a Subsidiary Guarantor; WHEREAS, the terms of the Consulting Agreement require that SAI be released from its obligations as a Subsidiary Guarantor under the Indenture; WHEREAS, the Company and its Restricted Subsidiaries intend to use the proceeds of the transaction contemplated by the Consulting Agreement in a manner consistent with Section 5.09 of the Indenture; WHEREAS, the execution and delivery of this Fourth Supplemental Indenture has been duly authorized by the Board of Directors of the Company on May 7, 1999; WHEREAS, the Company and the Subsidiary Guarantors have determined that it is desirable to enter into this Fourth Supplemental Indenture and have requested the Trustee to join with them in the execution of this Fourth Supplemental Indenture; and WHEREAS, the Trustee has accepted the trusts created by this Fourth Supplemental Indenture and in evidence thereof has joined in the execution hereof; NOW, THEREFORE, THIS FOURTH SUPPLEMENTAL INDENTURE WITNESSETH, that, in consideration of the premises and of acceptance by the Trustee of the trusts created hereby and by the Indenture, and also for and in consideration of the sum of One Dollar to the Company duly paid by the Trustee at or before the execution and delivery of this Supplemental Indenture, the receipt of which is hereby acknowledged, IT IS HEREBY COVENANTED AND AGREED, by and among the Company, the Subsidiary Guarantors, and the Trustee, as follows: 1. Terms defined in the Indenture are used herein as therein defined. 2. Effective upon the closing of the transactions contemplated by the Consulting Agreement, SAI is hereby, and shall be, without further action of, or the execution and delivery of any further documents or instruments by, the Company, the Subsidiary Guarantors of the Trustee, released from the Guarantee dated December 23, 1996 to which it is a party. 3. The following sundry provisions shall be a part of this Fourth Supplemental Indenture: Section 4.01. Effect of Supplemental Indenture. Upon the execution and -------------------------------- delivery of this Fourth Supplemental Indenture by the Company, the Subsidiary Guarantors and the Trustee, the Indenture shall be supplemented in accordance herewith, and this Fourth Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Notes heretofore or hereafter authenticated and delivered under the Indenture shall be bound thereby. Section 4.02. Indenture Remains in Full Force and Effect. Except as ------------------------------------------ supplemented hereby and by the First and Third Supplemental Indentures, all provisions in the Indenture shall remain in full force and effect. Section 4.03. Indenture and Supplemental Indentures Construed Together. -------------------------------------------------------- This Fourth Supplemental Indenture is an Indenture supplemental to and in implementation of the Indenture, and the Indenture and all Supplemental Indentures shall henceforth be read and construed together. Section 4.04. Confirmation and Preservation of Indenture. The Indenture as ------------------------------------------ supplemented by the First and Third Supplemental Indentures is in all respects confirmed and preserved. Section 4.05 Conflict with Trust Indenture Act. If any provision of this --------------------------------- Fourth Supplemental Indenture limits, qualifies, or conflicts with any provision of the Trust Indenture Act that is required under such Act to be part of and govern any provision of this Fourth Supplemental 2 Indenture, the provision of such Act shall control. If any provision of this Fourth Supplemental Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the provision of such Act shall be deemed to apply to the Indenture as so modified or to be excluded by this Fourth Supplemental Indenture, as the case may be. Section 4.06 Separability Clause. In case any provision in this Fourth ------------------- Supplemental Indenture 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 4.07 Terms Defined in the Indenture. All capitalized terms not ------------------------------ otherwise defined herein shall have the meanings ascribed to them in the Indenture. Section 4.08 Effect of Headings. The Article and Section headings herein ------------------ are for convenience only and shall not affect the construction hereof. Section 4.09 Benefits of Fourth Supplemental Indenture, Etc. Nothing in ----------------------------------------------- this Fourth Supplemental Indenture, the Indenture, or the Notes, express or implied, shall give to any Person, other than the parties hereto and thereto and their successors hereunder and thereunder and the Holders of the Notes, any benefit of any legal or equitable right, remedy, or claim under the Indenture, the First through Fourth Supplemental Indentures, or the Notes. Section 4.10 Successors and Assigns. All covenants and agreements in this ---------------------- Fourth Supplemental Indenture by the Company and the Subsidiary Guarantors shall bind their successors and assigns, whether so expressed or not. Section 4.11 Trustee Not Responsible for Recitals. The recitals contained ------------------------------------ herein shall be taken as the statements of the Company and the Subsidiary Guarantors, and the Trustee assumes no responsibility for their correctness. Section 4.12 Certain Duties and Responsibilities of the Trustee. In -------------------------------------------------- entering into this Fourth Supplemental Indenture, the Trustee shall be entitled to the benefit of every provision of the Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee, whether or not elsewhere herein so provided. Section 4.13 Governing Law. This Fourth Supplemental Indenture shall be ------------- governed by and construed in accordance with the laws of the State of New York, without regard to the conflicts of law principles thereof. Section 4.14 Counterparts. This Fourth Supplemental Indenture may be ------------ executed in counterparts, each of which, when so executed, shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. 3 IN WITNESS WHEREOF, the parties hereto have caused this Fourth Supplemental Indenture to be duly executed, and the Company, the Subsidiary Guarantors, and the Trustee have caused their respective corporate seals to be hereunto affixed and attested, all as of June __, 1999. ICF KAISER INTERNATIONAL, INC. By: ----------------------------------- [Seal] Name: Timothy P. O'Connor Title: Senior Vice President and Chief Financial Officer ATTEST: - ---------------------------- Assistant Secretary THE BANK OF NEW YORK, as Trustee By: ----------------------------------- Name: --------------------------------- Title: -------------------------------- CYGNA CONSULTING ENGINEERS AND PROJECT MANAGEMENT, INC. By: ----------------------------------- [Seal] Name: Timothy P. O'Connor Title: Assistant Treasurer ATTEST: - ---------------------------- Assistant Secretary ICF KAISER GOVERNMENT PROGRAMS, INC. By: ----------------------------------- [Seal] Name: Timothy P. O'Connor Title: Assistant Treasurer ATTEST: - ---------------------------- Assistant Secretary 4 SYSTEMS APPLICATIONS INTERNATIONAL, INC. By: ----------------------------------- [Seal] Name: Timothy P. O'Connor Title: Assistant Treasurer ATTEST: - ---------------------------- Assistant Secretary EDA, INCORPORATED By: ----------------------------------- [Seal] Name: Timothy P. O'Connor Title: Assistant Treasurer ATTEST: - ---------------------------- Assistant Secretary GLOBAL TRADE & INVESTMENT, INC. By: ----------------------------------- [Seal] Name: Timothy P. O'Connor Title: Assistant Treasurer ATTEST: - ---------------------------- Assistant Secretary ICF KAISER EUROPE, INC. By: ----------------------------------- [Seal] Name: Timothy P. O'Connor Title: Assistant Treasurer ATTEST: - ---------------------------- Assistant Secretary 5 ICF KAISER / GEORGIA WILSON, INC. By: ----------------------------------- [Seal] Name: Timothy P. O'Connor Title: Assistant Treasurer ATTEST: - ---------------------------- Assistant Secretary ICF KAISER OVERSEAS ENGINEERING, INC. By: ----------------------------------- [Seal] Name: Timothy P. O'Connor Title: Assistant Treasurer ATTEST: - ---------------------------- Assistant Secretary ICF KAISER ENGINEERS PACIFIC, INC. By: ----------------------------------- [Seal] Name: Timothy P. O'Connor Title: Assistant Treasurer ATTEST: - ---------------------------- Assistant Secretary ICF KAISER ADVANCED TECHNOLOGY, INC. By: ----------------------------------- [Seal] Name: Timothy P. O'Connor Title: Assistant Treasurer ATTEST: - ---------------------------- Assistant Secretary 6 EX-4.(H) 5 CERTIFICATE OF DESIGNATION Exhibit 4(h) ICF KAISER INTERNATIONAL, INC. CERTIFICATE OF DESIGNATION ______________________ Pursuant to Section 151 of the General Corporation Law of the State of Delaware ______________________ ICF Kaiser International, Inc. (the "Corporation"), a corporation organized and existing under the laws of the State of Delaware, HEREBY CERTIFIES that pursuant to the provisions of Section 151 of the General Corporation Law of the State of Delaware (the "DGCL") the following resolution was duly adopted by the Board of Directors of the Corporation (the "Board of Directors"), pursuant to authority conferred upon the Board of Directors by the provisions of the Restated Certificate of Incorporation, as amended, of the Corporation (the "Certificate of Incorporation") and pursuant to authority conferred upon the Board of Directors by Section 151(g) of the DGCL, by the Certificate of Incorporation, by Article III, Section 3.05 of the By-Laws of the Corporation (the "By-Laws") and by the resolutions of the Board of Directors described herein, at a meeting of Board of Directors duly held on __________ __, 1999: WHEREAS, the Board of Directors is authorized, within the limitations and restrictions stated in the Certificate of Incorporation, to fix, by resolution or resolutions for each series of Preferred Stock (the "Preferred Stock"), the number of shares constituting such series and the voting powers and designations, preferences and relative, participating, optional or other special rights and qualifications, limitations or restrictions thereof, including, without limiting the generality of the foregoing, such provisions as may be desired concerning voting, redemption, dividends, dissolution or the distribution of assets, conversion or exchange, and such other subjects or matters as may be fixed by resolution or resolutions of the Board of Directors under the DGCL; WHEREAS, the Board of Directors on ________ __, 1999 adopted a resolution authorizing the designation of up to 2,600,000 shares in one or more series of the Preferred Stock, including without limitation the exercise of the powers set forth in the resolution to the fullest extent permitted by Section 151(g) of the DGCL and Section 4.01(B) of the Certificate of Incorporation; WHEREAS, the Board of Directors on ________ __, 1999 adopted a resolution fixing the voting powers and designations, preferences and relative, participating, optional or other special rights and qualifications, limitations or restrictions of such 2,600,000 shares of Preferred Stock as set forth in paragraphs (1) through (7), inclusive, below; and WHEREAS, it is the desire of the Board of Directors, pursuant to the authority conferred upon the Board of Directors by Section 151(g) of the DGCL, by Section 4.01(B) of the Certificate of Incorporation, and by the resolution of the Board of Directors dated ________ __, 1999, to fix the number of shares constituting a series of Preferred Stock and the voting powers and designations, preferences and relative, participating, optional or other special rights and qualifications, limitations and restrictions of such series as set forth in paragraphs (1) through (7), inclusive, below; NOW, THEREFORE, BE IT RESOLVED, that there is hereby authorized such series of Preferred Stock on the terms and with the provisions herein set forth: 1. Designation. The designation of the series of Preferred Stock ----------- authorized by this resolution shall be "Series 5 Redeemable Cumulative Convertible Preferred Stock" (the "Series 5 Convertible Preferred Stock") consisting of 2,600,000 shares. The par value of the Series 5 Convertible Preferred Stock shall be $.01 per share, which value does not represent a determination by the Board of Directors for the purposes of the capital accounts. 2. Rank. The Series 5 Convertible Preferred Stock shall, with ---- respect to dividend rights and rights on liquidation, winding up and dissolution, rank prior to the Common Stock, par value $0.01 per share, of the Corporation (the "Common Stock"). (All equity securities of the Corporation to which the Series 5 Convertible Preferred Stock ranks prior, including the Common Stock, are collectively referred to herein as the "Junior Securities," all equity securities of the Corporation with which the Series 5 Convertible Preferred Stock ranks on a parity are collectively referred to herein as the "Parity Securities" and all equity securities of the Corporation (other than convertible debt securities) to which the Series 5 Convertible Preferred Stock ranks junior, whether with respect to dividends or upon liquidation, dissolution, winding-up or otherwise, are collectively referred to herein as the "Senior Securities.") The Series 5 Convertible Preferred Stock shall be subject to the creation of Junior Securities, Parity Securities and Senior Securities. 3. Dividends. --------- (a) Subject to the adjustments set forth in Section 4, the holders of the shares of Series 5 Convertible Preferred Stock shall be entitled to receive, out of funds legally available for the payment of dividends, cumulative dividends paid in cash at the initial rate of 3.75% of the Liquidation Preference Per Share (as defined in Section 4(a)). Such dividends shall be payable in quarterly payments in arrears on March 31, June 30, September 30 and December 31 of each year commencing on the Transaction Date (as defined in Section 5(a)) (each such date, a "dividend payment 2 record date"), in preference to dividends on the Junior Securities. Such dividends shall be payable to the holders of the Series 5 Convertible Preferred Stock who are holders of record on the record date fixed by the Board of Directors (each such date, a "dividend payment record date"). Except as provided in Section 3(c), each of such quarterly dividends shall be fully cumulative and shall accrue (whether or not declared), without interest, from the previous dividend payment date. Dividends payable for the first dividend period and any partial dividend period shall be calculated on the basis of a 360-day year and the actual number of days elapsed in the period for which payable. The dividend rate is subject to following adjustments: (a) from and after January 1, 2001 - through December 31, 2001, the dividend rate payable in cash shall be 5.75% of the Liquidation Preference Per Share, (b) from and after January 1, 2002, the - dividend rate payable in cash shall increase to 12.0% of the Liquidation Preference Per Share; (c) if not redeemed on December 31, 2004, the dividend - rate shall increase to 14.0% of the Liquidation Preference Per Share thereafter; and (d) if the Corporation shall fail to make a Change of Control - Offer (as defined in Section 5(c)), the dividend rate shall increase to 14% from and after the quarter next following a Change of Control (as defined in Section 5(c)). (b) All dividends paid with respect to shares of the Series 5 Convertible Preferred Stock pursuant to Section 3(a) shall be paid pro rata to --- ---- the holders entitled thereto. (c) If any dividends are not paid in full upon the shares of the Series 5 Convertible Preferred Stock and any other Parity Securities, all dividends declared and paid upon shares of the Series 5 Convertible Preferred Stock and any other Parity Securities shall be declared and paid pro rata so --- ---- that the amount of dividends declared per share of the Series 5 Convertible Preferred Stock and such Parity Securities shall in all cases bear to each other the same ratio that accrued dividends per share on the Series 5 Convertible Preferred Stock and such Parity Securities bear to each other. (d) (i) Holders of shares of the Series 5 Convertible Preferred Stock shall be entitled to receive the dividends provided for in Section 3(a) hereof in preference to and in priority over any dividends upon any of the Junior Securities. (ii) So long as any shares of the Series 5 Convertible Preferred Stock are outstanding, the Board of Directors shall not declare, and the Corporation shall not pay, or set apart for payment, any dividend on any of the Junior Securities, or call for or pay, or set apart for payment money for a sinking or other similar fund, for the repurchase, redemption or other retirement of, any Junior Securities or any warrants, rights or options exercisable for or convertible into any of the Junior Securities (other than (a) - purchases or redemptions pursuant to or in accordance with employee benefit plans, employee stock subscriptions and stock option agreements entered into between the Corporation and certain of its or its subsidiaries' directors, officers and employees, (b) the repurchase, redemption or other retirement of - any Series 5 Convertible Preferred Stock made pursuant to the requirements of Section 5(a) hereof and (c) the repurchase, redemption or other retirement of - debentures or other debt securities that are convertible into or exchangeable for any of the Junior Securities or Parity Securities), or make any distribution in respect of the Junior Securities, either directly or indirectly, and whether in cash, obligations or other property (other than distributions or dividends in Junior Securities to the holders of Junior Securities), and shall not permit any corporation or other entity directly or indirectly controlled by the Corporation to purchase or redeem any of the Junior Securities or any warrants, rights, calls or options exercisable for or convertible into any of the Junior Securities (other than (x) purchases or redemptions pursuant to or in accordance - with employee 3 benefit plans, employee stock subscriptions and stock option agreements entered into between the Corporation and certain of its or its subsidiaries' directors, officers and employees and (y) the repurchase, - redemption or other retirement of debentures or other debt securities that are convertible or exchangeable into any of the Junior Securities or Parity Securities) unless prior to or concurrently with such declaration, payment, setting apart for payment, repurchase, redemption or other retirement or distribution, as the case may be, all accrued and unpaid dividends on shares of the Series 5 Convertible Preferred Stock not paid on the dates provided for in Section 3(a) hereof (including accrued dividends not paid by reason of the terms and conditions of Section 3(a) or Section 3(c) hereof) shall have been or be paid. (e) Holders of shares of the Series 5 Convertible Preferred Stock at the close of business on a dividend payment record date shall be entitled to receive the dividend payable on such shares unless such shares shall have been converted or redeemed prior to such dividend payment date. 4. Liquidation Preference. ---------------------- (a) In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, the holders of shares of Series 5 Convertible Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders an amount in cash equal to Liquidation Preference Per Share for each share outstanding. For purposes of this Certificate of Designation, the "Liquidation Preference Per Share" shall mean an amount in cash per share equal to the sum of (i) $25.00, (ii) the interest - -- accrued and unpaid, if any, on the Corporation's 12% Senior Subordinated Notes due 2003, at the rate set forth therein, for the period commencing July 1, 1999 and ending on the date immediately preceding the Transaction Date, and (iii) all --- accrued but unpaid dividends thereon to the date of redemption, repurchase, conversion, liquidation, dissolution or winding up before any payment shall be made or any assets distributed to the holders of any of the Junior Securities, provided that the Liquidation Preference Per Share shall increase at a rate per annum equal to 6.25%, computed as of the end of each calendar quarter, commencing on December 31, 1999 and continuing until December 31, 2001, and thereafter remain fixed at such increased amount. If the assets of the Corporation are not sufficient to pay in full the liquidation payments payable to the holders of outstanding shares of the Series 5 Convertible Preferred Stock and any Parity Securities, then the holders of all such shares shall share ratably in such distribution of assets in accordance with the amount which would be payable on such distribution if the amounts to which the Holders of outstanding shares of Series 5 Convertible Preferred Stock and the holders of outstanding shares of such Parity Securities are entitled were paid in full. Except as provided in this Section 4(a), holders of the Series 5 Convertible Preferred Stock shall not be entitled to any distribution in the event of liquidation, dissolution or winding up of the affairs of the Corporation. (b) For the purposes of this Section 4, neither the voluntary sale, conveyance, lease, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all of the property or assets of the Corporation nor the consolidation or merger of the Corporation with or into one or more other corporations nor the consolidation or merger of 4 one more corporations with or into the Corporation shall be deemed to be a voluntary or involuntary liquidation, dissolution or winding up. 5. Redemption; Repurchase Upon Change of Control. --------------------------------------------- (a) Voluntary Redemption by the Corporation. The Corporation may --------------------------------------- redeem at its option the Series 5 Convertible Preferred Stock, at any time in whole or from time to time in part after the Transaction Date (as defined in this Section 5(a)), at the redemption price per share (expressed as a percentage of the Liquidation Preference Per Share) set forth below, to the extent the Corporation shall have funds legally available for such payment. If redeemed during any of the periods set forth below, the redemption price per share shall be as follows: Period Redemption Price Per Share ------ -------------------------- Transaction Date through December 31, 1999.... 92.00% January 1, 2000 through March 31, 2000........ 91.00% April 1, 2000 through June 30, 2000........... 89.00% July 1, 2000 through September 30, 2000....... 88.00% October 1, 2000 through December 31, 2000..... 86.00% January 1, 2001 through March 31, 2001........ 85.00% April 1, 2001 through June 30, 2001........... 84.00% July 1, 2001 through September 30, 2001....... 85.00% October 1, 2001 through December 31, 2001..... 83.00% January 1, 2002 and thereafter................ 100.00% As used herein, the term "Transaction Date" shall mean the date of initial issuance of the Series 5 Convertible Preferred Stock. (b) Redemption Pro Rata, etc. (i) So long as any shares of the ------------------------ Series 5 Convertible Preferred Stock are outstanding, any repurchase, redemption or other retirement of any Parity Securities or any warrants, rights or options exercisable for or convertible into any of the Parity Securities (other than the repurchase, redemption or other retirement of debentures or other debt securities that are convertible or exchangeable into any Parity Securities) must be made on a pro rata basis with the Series 5 Convertible Preferred Stock so -------- that the total redemption prices of the shares redeemed of Series 5 Convertible Preferred Stock and such Parity Securities shall in all cases bear to each other the same ratio that the total redemption prices of all shares outstanding on the applicable date of Series 5 Convertible Preferred Stock and such Parity Securities bear to each other, unless prior to or concurrently with such repurchase, redemption or other retirement, as the case may be, all accrued and unpaid dividends on shares of the Series 5 Convertible Preferred Stock not paid on the dates provided for in Section 3(a) hereof (including accrued dividends not paid by reason of the terms and conditions of Section 3(a) or Section 3(c) hereof) shall have been or be paid. 5 (ii) Shares of Series 5 Convertible Preferred Stock that have been issued and reacquired in any manner, including shares purchased or redeemed or exchanged or converted, shall (upon compliance with any applicable provisions of the laws of the State of Delaware) have the status of authorized and unissued shares of the class of Preferred Stock undesignated as to series and may be redesignated and reissued as part of any series of the Preferred Stock. (iii) In the event that fewer than all the outstanding shares of Series 5 Convertible Preferred Stock are to be redeemed, the number of shares to be redeemed shall be determined by the Board of Directors and the shares to be redeemed shall be selected pro rata, except that in any redemption of fewer than --- ---- all the outstanding shares of Series 5 Convertible Preferred Stock, the Corporation may redeem all shares held by any holders of a number of shares not to exceed 100, including all shares held by holders who, after giving effect to such redemption, would hold less than 100 shares, as may be specified by the Corporation. (iv) In the event the Corporation shall redeem shares of Series 5 Convertible Preferred Stock, written notice of such redemption shall be given by first class mail, postage prepaid mailed not less than 30 days nor more than 60 days prior to the redemption date, to each holder of record of the shares to be redeemed at such holder's address as the same appears on the stock register of the Corporation; provided, however, that no failure to give such notice nor any -------- ------- defect therein shall affect the validity of the proceeding for the redemption of any shares of Series 5 Convertible Preferred Stock to be redeemed except as to the holder to whom the Corporation has failed to give said notice or except as to the holder whose was defective. Each such notice shall state: (i) the - redemption date; (ii) the number of shares of Series 5 Convertible Preferred -- Stock to be redeemed and, if less than all the shares held by such holder are to be redeemed from such holder, the number of shares to be redeemed from such holder or the method by which the number of shares to be redeemed will be determined; (iii) the redemption price; (iv) the place or places where --- -- certificates for such shares are to be surrendered for payment of the redemption price; and (v) that dividends on the shares to be redeemed will cease to accrue - on such redemption date. The Board of Directors shall be authorized to establish such other reasonable procedures for redemption and payment of the redemption price that are not inconsistent with the foregoing provisions. (v) Notice having been mailed as aforesaid, from and after the redemption date (unless default shall be made by the Corporation in providing money for the payment of the redemption price of the shares called for redemption) dividends on the shares of Series 5 Convertible Preferred Stock so called for redemption shall cease to accrue and said shares shall no longer be deemed to be outstanding and shall have the status of authorized but unissued shares of Preferred Stock, undesignated as to series, and all rights of the holders thereof as stockholders of the Corporation (except the right to receive from the Corporation the redemption price and any accrued and unpaid dividends) shall cease. Upon surrender in accordance with said notice of the certificates for any shares to redeemed (properly endorsed or assigned for transfer, if the Board of Directors shall so require and the notice shall so state), such shares shall be redeemed by the Corporation at the redemption price aforesaid plus any accrued and unpaid dividends. In case fewer than all the shares represented by any such certificate are 6 redeemed, a new certificate shall be issued representing the unredeemed shares without cost to the holder hereof. (c) Repurchase in Connection with a Change of Control. (i) If a ------------------------------------------------- Change of Control (as defined below) shall occur, each holder of Series 5 Convertible Preferred Stock shall have the right to require the Corporation to repurchase all or any part (but not any fractional shares) of that holder's Series 5 Convertible Preferred Stock pursuant to the offer described below (the "Change of Control Offer"). In the Change of Control Offer, the Corporation shall offer a payment in cash equal to 101% of the Liquidation Preference Per Share repurchased (the "Change of Control Payment"). Within 30 days following any Change of Control, the Corporation shall mail a notice to each holder of Series 5 Convertible Preferred Stock describing the transaction or transactions that constitute the Change of Control and offering to repurchase Series 5 Convertible Preferred Stock on the date specified in such notice, which date shall be no earlier than 30 days and no later than 60 days from the date such notice is mailed (the "Change of Control Payment Date"), pursuant to the procedures required by this Certificate of Designation and described in such notice. The Corporation shall comply with the requirements of federal and state securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of the Series 5 Convertible Preferred Stock as a result of a Change of Control. To the extent that the provisions of any securities laws or regulations conflict with this Section 5(c), the Corporation shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 5(c) by virtue of such conflict. On the Change of Control Payment Date, the Corporation shall, to the extent lawful: (x) accept for payment all - Series 5 Convertible Preferred Stock or portions thereof properly tendered pursuant to the Change of Control Offer; (y) deposit with the persons appointed - by the Corporation to act as the paying agent (the "Paying Agent") an amount equal to the Change of Control Payment in respect of all Series 5 Convertible Preferred Stock or portions thereof so tendered; and (z) deliver or cause to be - delivered to an agent appointed by the Corporation (the "Transfer Agent") the Series 5 Convertible Preferred Stock so accepted together with an officers' certificate stating the Liquidation Preference Per Share or portions thereof being purchased by the Corporation. The Paying Agent shall promptly mail to each holder of Series 5 Convertible Preferred Stock so tendered the Change of Control Payment for such Series 5 Convertible Preferred Stock, and the Transfer Agent shall promptly authenticate and mail (or cause to be transferred by book- entry) to each holder of Series 5 Convertible Preferred Stock a new certificate representing the Series 5 Convertible Preferred Stock equal in Liquidation Preference Per Share to any unpurchased portion of the Series 5 Convertible Preferred Stock surrendered, if any. The Corporation shall publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. The Corporation shall not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Certificate of Designation applicable to a Change of Control Offer made by the Corporation and purchases all Series 5 Convertible Preferred Stock validly tendered and not withdrawn under such Change of Control Offer. Notwithstanding the provisions of this Section 5(c), nothing in this Section 5(c) shall operate (or be deemed to operate) to prevent the Corporation from redeeming in accordance with the provisions of Section 5(a) any shares of Series 5 Convertible Preferred Stock in advance of 7 any Change of Control, or following any Change of Control, with respect to any shares not tendered pursuant to this Section 5(c). (ii) For purposes of Section 5(c), "Change of Control" means the occurrence of any of the following: (v) the sale, lease, conveyance or other - disposition of all or substantially all of the Corporation'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 taking place after the issuance of the Series 5 Convertible Preferred Stock, provided that a transaction where the holders of all classes of -------- Common Equity of the Corporation 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; (w) the acquisition by the - Corporation and any of its Subsidiaries of 50% or more of all classes of Common Equity of the Corporation in one transaction or a series of related transactions; (x) the approval by the Corporation of a Plan of Liquidation of - the Corporation; (y) any transaction or series of transactions taking place - after the Transaction Date (as a result of a tender offer, merger, consolidation or otherwise) that results in, or that is in connection with, (I) 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 Corporation 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 Corporation, or (II) less than 50% -- (measured by the aggregate voting power of all classes) of the Corporation's Common Equity being registered under section 12(b) or 12(g) of the Exchange Act; or (z) a majority of the Board of Directors not being comprised of Continuing - Directors. (iii) For purposes of Section 5(c), the following terms shall have the respective meanings as follow: "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. "Common Equity" of any Person means all Capital Stock of such Person that is generally entitled to (x) vote in the election of directors of such - Person or (y) 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. "Continuing Director" of the Corporation as of any date means a member of the Board of Directors who (x) was a member of the Board of Directors on - November 15, 1999 or (y) was nominated for election or elected to the Board of - Directors with the affirmative vote of at least a majority of the directors who were Continuing 8 Directors at the time of such nomination or election or elected or appointed by the holders of the Series 5 Convertible Preferred Stock pursuant to Section 7(b) and, as the case may be, Section 7(c). "Exchange Act" means the Securities Exchange Act of 1934, as amended. "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): (x) 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 (y) 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. "Subsidiary" of any Person means (x) 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 (y) 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. 6. Conversion. ---------- (a) Upon the terms and in the manner set forth in this Section 6 and subject to prior redemptions, if any, of Series 5 Convertible Preferred Stock made in accordance with Section 5, each share of the Series 5 Convertible Preferred Stock shall be convertible, at the option of the holder thereof at any time (x) on and after December 31, 2001 and (y) if the Corporation shall fail to - - make a Change of Control Offer in accordance with Section 5(c)(i), in each case, upon surrender to the Corporation of the certificates for the shares to be converted, into a number of fully paid and nonassessable shares of Common Stock equal to Liquidation Preference Per Share divided by the Current Market Price ---------- (as defined below) (the "Conversion Ratio"); provided, however, that the right -------- ------- to convert shares of Series 5 Convertible Preferred Stock that have been called for redemption pursuant to Section 5 shall terminate at the close of business on the business day immediately preceding the redemption date with respect to such shares, unless the Corporation shall default in making payment of the amount payable upon such redemption. (b) In order to convert shares of the Series 5 Convertible Preferred Stock, the holder thereof shall (i) deliver a properly completed and duly - executed written notice of election to convert to the Corporation at its principal office or at the office of the agency which may be 9 maintained for such purpose (the "Conversion Agent") specifying in such notice the number (in whole shares) of shares of the Series 5 Convertible Preferred Stock to be converted and the name or names in which such holder wishes the certificate or certificates for shares of Common Stock to be issued, (ii) -- surrender the certificate for such shares of Series 5 Convertible Preferred Stock to the Corporation or the Conversion Agent, accompanied, if so required by the Corporation or the Conversion Agent, by a written instrument or instruments of transfer in form reasonably satisfactory to the Corporation or the Conversion Agent duly executed by the holder or his attorney duly authorized in writing, and (iii) pay any transfer or similar tax required by law. --- (c) (i) Conversion shall be deemed to have been effected at the close of business on the date (the "Conversion Date") on which the Corporation or the Conversion Agent shall have received the notice of election to convert, the surrendered certificate, any required payments and all other required documents. Immediately upon conversion, the rights of the holders of converted shares of Series 5 Convertible Preferred Stock shall cease and the persons entitled to receive the shares of Common Stock upon the conversion of such shares of Series 5 Convertible Preferred Stock shall be treated for all purposes as having become the beneficial owners of such shares of Common Stock. Conversion shall be at the Conversion Ratio in effect at such time on such date, unless the stock transfer books of the Corporation shall be closed on that date, in which event such person or persons shall be deemed to have become such holder or holders of record of the Common Stock at the close of business on the next succeeding day on which such stock transfer books are open, but such conversion shall be at the Conversion Ratio in effect on the date upon which such shares shall have been surrendered and such notice and any required payments received by the Corporation. (ii) As promptly as practicable after the Conversion Date, the Corporation shall deliver or cause to be delivered at the office or agency of the Conversion Agent, to or upon the written order of the holder of the surrendered shares of Series 5 Convertible Preferred Stock, a certificate or certificates representing the number of fully paid, nonassessable shares of Common Stock into which such shares of Series 5 Convertible Preferred Stock have been converted in accordance with the provisions of this Section 6, and any cash payable in respect of fractional shares as provided in Section 6(d). (iii) Upon the surrender of a certificate representing shares of Series 5 Convertible Preferred Stock that is converted in part, the Corporation shall issue or cause to be issued for the holder a new certificate representing shares of Series 5 Convertible Preferred Stock equal in number to the unconverted portion of the shares of Series 5 Convertible Preferred Stock represented by the Certificate so surrendered. (d) No fractional shares or scrip representing fractional shares of Common Stock shall be issued upon the conversion of any shares of Series 5 Convertible Preferred Stock. Instead of any fractional interest in a share of Common Stock which would otherwise be deliverable upon the conversion of a share of Series 5 Convertible Preferred Stock, the Corporation shall pay to the holder of such share (a "Fractional Shareholder") an amount in cash (computed to the nearest cent) equal to the Current Market Price (as defined below) thereof on the business day next preceding the day of conversion multiplied by such ---------- fractional interest. If more than one share shall be surrendered for conversion at the time by the same holder, the 10 number of full shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate stated value of the shares of Series 5 Convertible Preferred Stock so surrendered. (e) Subject to the final sentence of this Section 6(e), for purposes of any computation under Sections 6(a) and 6(d)(i), the "Current Market Price" at any date shall be deemed to be the average daily closing price of Common Stock for the 20 consecutive trading days ending on the trading day prior to the date in question. The closing price for each day shall be (x) if the Common - Stock is listed or admitted to trading on a national securities exchange, the closing price on the New York Stock Exchange Consolidated Tape (or any successor composite tape reporting transactions on national securities exchanges) or, if such a composite tape shall not be in use or shall not report transactions in the Common Stock, the last reported sales price regular way on the principal national securities exchange on which the Common Stock is listed or admitted to trading (which shall be the national securities exchange on which the greatest number of shares of Common Stock has been traded during such 20 consecutive trading days), or, if there is no transaction on any such day in any such situation, the mean of the bid and asked prices on such day, or (y) if the - Common Stock is not listed or admitted to trading on any such exchange, the closing price, if reported, or, if the closing price is not reported, the average of the closing bid and asked prices as reported by the National Association of Securities Dealers Automated Quotation System (NASDAQ) or a similar source selected from time to time by the Corporation for the purpose. In the event such closing prices are unavailable, the Current Market Price shall be deemed to be the fair market value as determined in good faith by the Board of Directors, on the basis of such relevant factors as it in good faith considers, in the reasonable judgment of the Board of Directors, appropriate. All calculations under this Section 6(e) shall be made to the nearest one-hundredth of a cent or to the nearest one-hundredth of a share, as the case may be. At any time after a Change of Control or December 31, 2004, the Current Market Price shall be conclusively deemed to be $.01 per share. (f) The Conversion Ratio shall be subject to adjustment as follows: (i) If, during the 20 consecutive trading day period during which the determination of the Conversion Ratio occurs, the Corporation shall (v) declare or pay a dividend on its outstanding Common Stock in shares of - Common Stock or make a distribution to all holders of its Common Stock in shares of Common Stock, (w) subdivide its outstanding shares of Common - Stock into a greater number of shares of Common Stock, (x) combine its - outstanding shares of Common Stock into a smaller number of shares of Common Stock, (y) issue by reclassification of its shares of Common Stock other - securities of the Corporation or (z) issue or sell shares of Common Stock (or - securities convertible into or exchangeable for Common Stock) without consideration or for a consideration per share of Common Stock the fair market value of which as of the date of such issuance or sale is less than the Current Market Price as of such date, then the Conversion Ratio in effect immediately prior thereto shall be adjusted appropriately by the Board of Directors so that the holder of any shares of Series 5 Convertible Preferred Stock thereafter converted shall be entitled to receive the number and kind of shares of Common Stock of other securities that the holder would have owned or have been entitled to receive after the happening of any of the events described above had such shares of Series 5 Convertible Preferred Stock been converted immediately prior to the happening of such 11 event or any record date with respect thereto. An adjustment made pursuant to this Section 6(f)(i) shall be applied by the Board of Directors in its reasonable judgment, and shall become effective on the date of the dividend payment, subdivision, combination, issuance or sale retroactive to the record date with respect thereto, if any, for such event. Such adjustment shall be made successively. (ii) Notwithstanding the foregoing, no adjustments of any kind under this Section 6(f)(ii) shall be made with respect to the sale and issuance by the Corporation of any shares of Common Stock, rights, options, warrants or convertible or exchangeable securities containing the right to subscribe for or purchase shares of Common Stock in connection with either (x) an underwritten public offering or (y) any transaction as to which the - - Corporation has received a written opinion of a nationally recognized investment bank stating that the transaction is fair to the Corporation from a financial point of view. (iii) No adjustment in the Conversion Ratio shall be required unless such adjustment would require an increase or decrease of at least 1% of such price; provided, however, that any adjustments which by reason ----------------- of this Section 6(f)(iii) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 6(f) shall be made to the nearest one-hundredth of a cent or to the nearest one-hundredth of a share, as the case may be. 7. Voting Rights. ------------- (a) Generally. The holders of record of shares of Series 5 --------- Convertible Preferred Stock shall not be entitled to any voting rights except as hereinafter provided in this Section 7 or as otherwise provided by law. (b) Election of Series 5 Convertible Preferred Stock Directors. The ---------------------------------------------------------- holders of Series 5 Convertible Preferred Stock shall have the exclusive right, voting separately as a class, to elect three (3) members of the Board of Directors (the "Series 5 Convertible Preferred Stock Directors") at each meeting of stockholders held for the purpose of electing directors or by the written consent of the holders of Series 5 Convertible Preferred Stock pursuant to Section 228 of the General Corporation Law of the State of Delaware. The initial Series 5 Convertible Preferred Stock Directors shall be designated in writing by the holders of a majority of the outstanding shares of Series 5 Convertible Preferred Stock, and shall be reasonably satisfactory to the Corporation. The initial Series 5 Convertible Preferred Stock Directors shall hold such positions until their respective successors shall be elected and qualified at the second annual meeting of stockholders of the Corporation or at a special meeting of the holders of Series 5 Convertible Preferred Stock, called as hereinafter provided, or in accordance with Section 228 of the General Corporation Law of the State of Delaware. (c) Election of Additional Directors. In addition to the right to -------------------------------- elect the Series 5 Convertible Preferred Stock Directors set forth in the preceding Section 7(b), the holders of Series 5 Convertible Preferred Stock shall have the exclusive right, voting separately as a class, to appoint under the conditions specified below, the number of additional directors set forth in the following subsection 7(c)(i) through (iv), inclusive (such additional directors, the "Series 5 Convertible Preferred Stock Additional Directors"): 12 (i) Failure to Pay Dividends. If at any time or times the Corporation ------------------------ shall fail for any reason to pay any quarterly dividend in cash on the Series 5 Convertible Preferred Stock in accordance with the provisions of Section 3(a), then the number of directors constituting the Board of Directors, without further action, shall be increased by two (2), and the holders of Series 5 Convertible Preferred Stock shall have the exclusive right, voting separately as a class, to elect two additional directors of the Corporation to fill such newly created directorships, the remaining directors (other than the Series 5 Convertible Preferred Stock Directors and, as the case may be, any Series 5 Convertible Preferred Stock Additional Directors appointed pursuant to this Section 7(c)) to be elected by the other class or classes of stock entitled to vote therefor, at a special meeting of the holders of Series 5 Convertible Preferred Stock or, if within 90 days thereof, at each annual meeting of the Corporation's stockholders held for the purpose of electing directors (unless such failure to pay the quarterly dividend shall have occurred one time only in any four quarter period, the Corporation brings current the dividend arrearage in the following quarter and the Corporation timely pays the dividend payable in the immediately following quarter); provided that (X) the holders of Series 5 -------- - Convertible Preferred Stock shall be entitled to elect one (1) additional director in accordance with this Section 7(c) if the Corporation shall fail to pay any dividend payment in any subsequent quarter when due, and (Y) the holders - of Series 5 Convertible Preferred Stock shall not have the right to elect more than three (3) directors of the Corporation pursuant to this Section 7(c)(i). (ii) Failure to Redeem Prior to December 31, 2001. If the -------------------------------------------- Corporation shall fail to redeem the all of the then outstanding Series 5 Convertible Preferred Stock prior to December 31, 2001, then the number of directors constituting the Board of Directors shall be increased, without further action, by such number as would be necessary to give the holders of Series 5 Convertible Preferred Stock a majority of members of the Board of Directors (including the Series 5 Convertible Preferred Stock Directors and the Series 5 Convertible Preferred Stock Additional Directors, if any), and the holders of Series 5 Convertible Preferred Stock shall have the exclusive right, voting separately as a class, to elect such number of directors of the Corporation to fill such newly created directorships, the remaining directors (other than the Series 5 Convertible Preferred Stock Directors and, as the case may be, any Series 5 Convertible Preferred Stock Additional Directors appointed pursuant to this Section 7(c)) to be elected by the other class or classes of stock entitled to vote therefor, at a special meeting of the holders of Series 5 Convertible Preferred Stock or, if within 90 days thereof, at each annual meeting of the Corporation's stockholders held for the purpose of electing directors. (iii) Failure to Make Change of Control Offer. If the Corporation --------------------------------------- shall fail to make a Change of Control Offer in accordance with Section 5(d)(i), the number of directors constituting the Board of Directors, without further action, shall be increased by two (2) and the holders of Series 5 Convertible Preferred Stock shall have the exclusive right, voting separately as a class, to elect two directors of the Corporation to fill such newly created directorships, the remaining directors (other than the Series 5 Convertible Preferred Stock Directors and, as the case may be, any Series 5 Convertible Preferred Stock Additional Directors appointed pursuant to this Section 7(c)) to be elected by the other class or classes of stock entitled to vote therefor, at a special meeting of the holders of Series 5 Convertible Preferred 13 Stock or, if within 90 days thereof, at each annual meeting of the Corporation's stockholders held for the purpose of electing directors. (iv) Failure to Redeem on December 31, 2004. If the Corporation -------------------------------------- shall fail to redeem the then outstanding Series 5 Convertible Preferred Stock on December 31, 2004, then the number of directors constituting the Board of Directors, without further action, shall be increased by two (2), and the holders of Series 5 Convertible Preferred Stock shall have the exclusive right, voting separately as a class, to elect two directors, of the Corporation to fill such newly created directorships, the remaining directors (other than the Series 5 Convertible Preferred Stock Directors and, as the case may be, any Series 5 Convertible Preferred Stock Additional Directors appointed pursuant to this Section 7(c)) to be elected by the other class or classes of stock entitled to vote therefor, at each meeting of the Corporation's stockholders held for the purpose of electing directors. (v) General Provisions Concerning Election of Additional Directors. -------------------------------------------------------------- (A) Except with respect to the appointment of the initial Series 5 Convertible Preferred Stock Directors pursuant to Section 7(b), whenever any voting right pursuant to Section 7(b) or 7(c)(i) (iv) shall have vested, such right may be exercised initially either at a special meeting of the holders of Series 5 Convertible Preferred Stock, called as hereinafter provided, or at any annual meeting of stockholders held for the purpose of electing directors, and thereafter at such meetings or by the written consent of the holders of Series 5 Convertible Preferred Stock pursuant to Section 228 of the General Corporation Law of the State of Delaware. Such voting right shall continue until such time as (I) in the case of any voting right vesting pursuant - to Section 7(c)(i), all cumulative dividends accumulated on all outstanding Series 5 Convertible Preferred Stock shall have been paid in full or declared and set aside for payment in full, (II) in the case of any voting right vesting -- pursuant to Section 7(c)(ii) or (iv), the Corporation shall have redeemed all of the then outstanding Series 5 Convertible Preferred Stock, and (III) in the case --- of any voting right vesting pursuant to Section 7(c)(iii), a Change of Control Offer shall have been made and completed, at which time (in the case of each of the immediately preceding (I), (II) and (III)), such voting right of the holders of Series 5 Convertible Preferred Stock shall terminate, subject, in the case of any voting right vesting pursuant to Section 7(c)(i) only, to revesting in the event of each and every subsequent failure of the Corporation to pay cash dividends in any quarter as described above. (B) At any meeting held for the purpose of electing directors, a quorum shall be the number of shares of Series 5 Convertible Preferred Stock, present in person or represented by proxy. At any meeting held for purposes other than the election of directors where shares of the Series 5 Convertible Preferred Stock are entitled to a separate vote, the affirmative vote of a majority of the then outstanding shares of the Series 5 Convertible Preferred Stock, present in person or represented by proxy, shall be required to take action. At any such meeting or adjournment thereof (x) the absence of a - quorum of the holders of Series 5 Convertible Preferred Stock shall not prevent the election of directors other than those to be elected by the holders of stock of such class and the absence of a quorum or quorums of the holders of capital stock entitled to elect such other directors shall not prevent the election of directors to be elected by the holders of Series 5 Convertible Preferred Stock and (y) in the - 14 absence of a quorum of the holders of shares of Series 5 Convertible Preferred Stock, a majority of such holders present in person or represented by proxy shall have the power to adjourn the meeting for the election of directors which the holders of shares of Series 5 Convertible Preferred Stock may be entitled to elect, from time to time, without notice (except as required by law) other than announcement at the meeting, until a quorum shall be present. (C) The term of office of all directors elected by the holders of Series 5 Convertible Preferred Stock pursuant to Section 7(b) and 7(c)(i)-(iv) in office at any time when the aforesaid voting rights are vested in the holders of Series 5 Convertible Preferred Stock shall terminate upon the election of their successors at any meeting of stockholders for the purpose of electing directors. Upon any termination of the aforesaid voting rights in accordance with Section 7(c)(v)(A), the term of office of all directors elected by the holders of Series 5 Convertible Preferred Stock pursuant to Section 7(c)(i), (ii), (iii), or (iv) then in office shall thereupon terminate and upon such termination the number of directors constituting the Board of Directors shall, without further action, be reduced, (I) in the case of Series 5 - Convertible Preferred Stock Additional Directors elected pursuant to Section 7(c)(i), by two (2) or, as the case may be, three (3), (II) in the case of -- Series 5 Convertible Preferred Stock Additional Directors elected pursuant to Section 7(c)(ii), by two (2) or such greater number by which the number of directors constituting the Board of Directors shall have been increased pursuant to Section 7(c)(ii), and, (III) in the case of Series 5 Convertible Preferred --- Stock Additional Directors elected pursuant to Section 7(c)(iii) or (iv), by two (2), subject always to the increase of the number of directors pursuant to Section 7(c)(i) in case of the future right of the holders of Series 5 Convertible Preferred Stock to elect directors as provided herein. (D) In case of any vacancy occurring among the directors so elected, the remaining director who shall have been so elected may appoint a successor to hold office for the unexpired term of the director whose place shall be vacant. If all directors so elected by the holders of Series 5 Convertible Preferred Stock shall cease to serve as directors before their terms shall expire, the holders of Series 5 Convertible Preferred Stock then outstanding may, at a special meeting of the holders called as provided above, elect successors to hold office for the unexpired terms of the directors whose places shall be vacant. (E) Any special meeting called for the purpose of electing directors pursuant to Section 7(c)(i), 7(c)(ii), 7(c)(iii), or 7(c)(iv), shall be held as promptly as possible in compliance with applicable law, rules and regulations and the Corporation's Certificate of Incorporation and By-Laws. In lieu of the special meeting referred to in the immediately preceding sentence, a majority of the Series 5 Convertible Preferred Stock Directors and Series 5 Convertible Preferred Stock Additional Directors, if any, may fill the newly created directorships provided in the foregoing Section 7(c)(i), 7(c)(ii), 7(c)(iii), and 7(c)(iv) in accordance with DGCL (S) 223 and in the manner provided in the Corporation's By-Laws. (d) Authorization of Senior Securities. So long as any shares of ---------------------------------- the Series 5 Convertible Preferred Stock are outstanding (except when notice of the redemption of all outstanding shares of Series 5 Convertible Preferred Stock has been given pursuant to Section 5 and funds have been deposited in trust for such redemption), the Corporation shall not, without (x) the affirmative vote or - consent of the holders of at least 66-2/3% of the shares of Series 5 15 Convertible Preferred Stock at the time outstanding, or (y) the unanimous - consent of directors elected by the holders of Series 5 Convertible Preferred Stock pursuant to Section 7(b) and (c), given in person or by proxy, either in writing or by resolution adopted at an annual or special meeting called for the purpose, at which the holders of Series 5 Convertible Preferred Stock shall vote separately as a class, or such directors, as the case may be, authorize any new class of Senior Securities or Additional Indebtedness. For purposes of this Section 7(d), "Additional Indebtedness" means indebtedness that is not permitted to be incurred under the indenture, dated as of ____________, 1999 (the "New Senior Notes Indenture"), relating to the Corporation's $25,000,000 15% Senior Notes due 2002 (the "New Senior Notes"), except that for this purpose the definition of "Refinancing Indebtedness" (as defined in the New Senior Notes Indenture) shall not include the proviso thereto and shall include indebtedness that refinances the New Senior Notes in whole or in part. (e) Authorization of Other Securities, Changes in Capital, etc. ---------------------------------------------------------- Except as set forth in Section 7(d) above, (x) the creation, authorization or - issuance of any shares of any Junior Securities, Parity Securities or Senior Securities, (y) the creation of any indebtedness of any kind of the Corporation, - or (z) the increase or decrease in the amount of authorized capital stock of any - class, including Preferred Stock, shall not require the consent of the holders of Series 5 Convertible Preferred Stock and shall not be deemed to affect materially and adversely the rights, preferences, privileges or voting rights of shares of Series 5 Convertible Preferred Stock. (f) Changes in Designations of Series 5 Convertible Preferred Stock. --------------------------------------------------------------- So long as any shares of the Series 5 Convertible Preferred Stock are outstanding (except when notice of the redemption of all outstanding shares of Series 5 Convertible Preferred Stock has been given pursuant to Section 5 and funds have been deposited in trust for such redemption), the Corporation shall not, without the affirmative vote or consent of the holders of at least 66-2/3% of the shares of Series 5 Convertible Preferred Stock at the time outstanding, given in person or by proxy, either in writing or by resolution adopted at an annual or special meeting called for the purpose, at which the holders of Series 5 Convertible Preferred Stock shall vote separately as a class, amend the Certificate of Designation so as to affect materially and adversely the specified rights, preferences, privileges or voting rights of shares of Series 5 Convertible Preferred Stock. (g) Mergers and Liquidations. So long as any shares of the Series 5 ------------------------ Convertible Preferred Stock are outstanding (except when notice of the redemption of all outstanding shares of Series 5 Convertible Preferred Stock has been given pursuant to Section 5 and funds have been deposited in trust for such redemption), the Corporation shall not, without the affirmative vote or consent of the holders of at least two-thirds of the shares of Series 5 Convertible Preferred Stock at the time outstanding, given in person or by proxy, either in writing or by resolution adopted at an annual or special meeting called for the purpose, at which the holders of Series 5 Convertible Preferred Stock shall vote separately as a class, consummate a voluntary sale, conveyance, lease, exchange or transfer of all or substantially all of the property or assets of the Corporation or a consolidation, merger or plan of liquidation where the holders of Series 5 Convertible Preferred Stock will receive, in accordance with the terms of such sale, conveyance, lease, exchange or transfer, or consolidation, merger or plan of liquidation, less than the Liquidation Preference Per Share in cash. (h) Matters Submitted to Vote of Stockholders. (i) Each holder of ----------------------------------------- Series 5 Convertible Preferred Stock shall be entitled to vote on all matters submitted to a vote of the holders of Common Stock. Each share of Series 5 Convertible Preferred Stock shall entitle the holder thereof to one-fourth of a vote at any annual or special meeting of the Corporation's 16 stockholders; provided, however, that, from and after December 31, 2001 or -------- ------- at such earlier time as the Series 5 Convertible Preferred Stock becomes convertible, each share of Series 5 Convertible Preferred Stock shall entitle the holder thereof to the number of votes equal to the number of shares of Common Stock into which such share of Series 5 Convertible Preferred Stock may be converted from time to time on the record date for determining the stockholders entitled to vote. (ii) Neither the Corporation nor any of its direct or indirect subsidiaries will be permitted to vote the shares of Series 5 Convertible Preferred Stock that either the Corporation or such subsidiaries may hold from time to time, on any matters submitted to a vote of stockholders of the Corporation. (iii) Notwithstanding the provisions of the preceding Section 7(h)(i), if at the 1999 Annual Meeting of Stockholders, the stockholders of the Corporation shall not have voted by the necessary majority to approve the Board of Directors' proposal to amend the Certificate of Incorporation and, where applicable, the bylaws (x) to eliminate provisions that (I) require the - - affirmative vote of holders of 66 2/3% of the outstanding capital stock to approve certain transactions following a change in the majority of directors within twelve months, (II) provide for staggered three-year terms for the -- Board of Directors, (III) prohibit stockholders from filling vacancies on the --- Board of Directors and (IV) require the affirmative vote of 66 2/3% of the -- outstanding capital stock to approve certain amendments to the Certificate of Incorporation and bylaws, (y) to provide that stockholders owning at least 20% - of the voting power of the outstanding capital stock could require a special meeting of stockholders to be call, and (z) to prohibit any new stockholder - rights plan to be adopted without the approval of the Corporation's stockholders, then each share of Series 5 Convertible Preferred Stock shall entitle the holder thereof to vote on such proposal at the 2000 Annual Meeting of Stockholders that number of shares of Common Stock into which the Series 5 Convertible Preferred Stock would be converted in accordance with Section 6 (notwithstanding the date from and after which the Series 5 Convertible Preferred Stock becomes convertible pursuant to such Section 6). 8. Limitations. Except as may otherwise be required by law, the ----------- shares of Series 5 Convertible Preferred Stock shall not have any powers or designations, preferences or relative, participating, optional or other special rights or qualifications, limitations or restrictions other than those specifically set forth in this resolution (as such resolution may be amended from time to time) or otherwise in the Certificate of Incorporation. [Remainder of page intentionally blank.] 17 IN WITNESS WHEREOF, the undersigned does make and file this Certificate of Designation, under penalties of perjury, and hereby declares and certifies that this Certificate of Designation is the act and deed of the Corporation, and that the facts stated herein are true, and, accordingly, has hereunto set his hand this ____ day of _________, 1999. ------------------------------------ Name: Title: EX-4.(J) 6 FORM OF INDENTURE Exhibit 4(j) ICF KAISER INTERNATIONAL, INC., as Issuer and THE BANK OF NEW YORK, as Trustee INDENTURE Dated as of ______________, 1999 $25,000,000 15% Senior Notes due 2002 CROSS-REFERENCE TABLE* Trust Indenture Act Section Indenture 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. TABLE OF CONTENTS
Page ---- ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE.................................................. 1 Section 1.01 Definitions................................................... 1 Section 1.02 Other Definitions............................................. 17 Section 1.03 Incorporation by Reference of Trust Indenture Act............. 17 Section 1.04 Rules of Construction......................................... 18 ARTICLE 2 THE NOTES..................................................... 18 Section 2.01 Form and Dating............................................... 18 Section 2.02 Execution and Authentication.................................. 19 Section 2.03 Registrar and Paying Agent.................................... 19 Section 2.04 Paying Agent to Hold Money in Trust........................... 20 Section 2.05 Registration of Transfer and Exchange......................... 20 Section 2.06 Replacement Notes............................................. 24 Section 2.07 Outstanding Notes............................................. 24 Section 2.08 Treasury Notes................................................ 25 Section 2.09 Temporary Notes............................................... 25 Section 2.10 Cancellation.................................................. 25 Section 2.11 Defaulted Interest............................................ 25 Section 2.12 CUSIP Numbers................................................. 26 Section 2.13 Book-Entry Provisions for Global Notes........................ 26 ARTICLE 3 ASSET SALE OFFER.............................................. 27 Section 3.01 Notices to Trustee............................................ 27 Section 3.02 Notices to Holders............................................ 27 Section 3.03 Deposit of Purchase Price..................................... 28 Section 3.04 Asset Sale Offer.............................................. 29 ARTICLE 4 OPTIONAL AND MANDATORY REDEMPTION............................. 30 Section 4.01 Redemption Date; Redemption Price............................. 30 Section 4.02 Notices to Trustee and Paying Agent........................... 30 Section 4.03 Selection of Notes to be Redeemed............................. 30 Section 4.04 Notice to Holders............................................. 31 Section 4.05 Effect of Notice of Redemption................................ 32 Section 4.06 Deposit of Redemption Price................................... 32 Section 4.07 Notes Redeemed in Part........................................ 32 ARTICLE 5 COVENANTS..................................................... 32 Section 5.01 Payment of Notes.............................................. 32 Section 5.02 Maintenance of Office or Agency............................... 33 Section 5.03 Change of Control............................................. 33 Section 5.04 Limitations on Additional Indebtedness........................ 36 Section 5.05 Limitations on Subsidiary Debt and Preferred Stock............ 37
i Section 5.06 Limitations on Restricted Payments............................ 37 Section 5.07 Limitations on Restrictions on Distributions from Subsidiaries 40 Section 5.08 Limitations on Transactions With Affiliates................... 40 Section 5.09 Limitations on Asset Sales.................................... 41 Section 5.10 Restrictions on Sale of Stock of Subsidiaries................. 42 Section 5.11 Limitations on Guarantees..................................... 43 Section 5.12 SEC Reports................................................... 43 Section 5.13 Corporate Existence........................................... 44 Section 5.14 Stay, Extension and Usury Laws................................ 44 Section 5.15 Insurance; Books and Records; Compliance with Law............. 44 Section 5.16 Inspection and Confidentiality................................ 45 Section 5.17 Compliance Certificate........................................ 45 ARTICLE 6 SUCCESSORS.................................................... 46 Section 6.01 Limitations on Mergers and Consolidations..................... 46 Section 6.02 Successor Corporation Substituted............................. 47 ARTICLE 7 DEFAULTS AND REMEDIES......................................... 47 Section 7.01 Events of Default............................................. 47 Section 7.02 Acceleration.................................................. 49 Section 7.03 Other Remedies................................................ 49 Section 7.04 Waiver of Past Defaults....................................... 49 Section 7.05 Control by Majority........................................... 50 Section 7.06 Limitations on Suits.......................................... 50 Section 7.07 Rights of Holders to Receive Payment.......................... 50 Section 7.08 Collection Suit by Trustee.................................... 50 Section 7.09 Trustee May File Proofs of Claim.............................. 51 Section 7.10 Priorities.................................................... 51 Section 7.11 Undertaking for Costs......................................... 52 Section 7.12 Restoration of Rights and Remedies............................ 52 ARTICLE 8 TRUSTEE....................................................... 52 Section 8.01 Duties of Trustee............................................. 52 Section 8.02 Rights of Trustee............................................. 53 Section 8.03 Individual Rights of Trustee.................................. 54 Section 8.04 Trustee's Disclaimer.......................................... 54 Section 8.05 Notice of Defaults............................................ 54 Section 8.06 Compensation and Indemnity.................................... 54 Section 8.07 Replacement of Trustee........................................ 55 Section 8.08 Successor Trustee by Merger, etc.............................. 56 Section 8.09 Eligibility; Disqualification................................. 56 Section 8.10 Reports by Trustee to Holders................................. 56 ARTICLE 9 DISCHARGE OF INDENTURE........................................ 57 Section 9.01 Termination of Company's Obligations.......................... 57 Section 9.02 Application of Trust Money.................................... 58
ii Section 9.03 Repayment to Company.......................................... 58 Section 9.04 Reinstatement................................................. 59 ARTICLE 10 AMENDMENTS.................................................... 59 Section 10.01 Without Consent of Holders.................................... 59 Section 10.02 With Consent of Holders....................................... 60 Section 10.03 Compliance with Trust Indenture Act........................... 61 Section 10.04 Revocation and Effect of Consents............................. 61 Section 10.05 Notation on or Exchange of Notes.............................. 62 Section 10.06 Trustee to Sign Amendments, etc............................... 62 ARTICLE 11 MISCELLANEOUS................................................. 62 Section 11.01 Trust Indenture Act Controls.................................. 62 Section 11.02 Notices....................................................... 62 Section 11.03 Certificate and Opinion as to Conditions Precedent............ 63 Section 11.04 Statements Required in Certificate or Opinion................. 64 Section 11.05 Rules by Trustee and Agents................................... 64 Section 11.06 Legal Holidays................................................ 64 Section 11.07 No Recourse Against Others.................................... 64 Section 11.08 Governing Law................................................. 65 Section 11.09 No Adverse Interpretation of Other Agreements................. 65 Section 11.10 Successors.................................................... 65 Section 11.11 Severability.................................................. 65 Section 11.12 Counterpart Originals......................................... 65 Section 11.13 Trustee as Paying Agent and Registrar......................... 65 Section 11.14 Table of Contents, Headings, etc.............................. 66 SIGNATURES..... 66
EXHIBIT A [INTENTIONALLY DELETED] EXHIBIT B FORM OF 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 iii INDENTURE dated as of ______________, 1999, 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 15% Senior Notes due 2002, (the "Notes"), to be issued 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, the valid and binding obligations of the Company, and to make this Indenture a valid and binding agreement of the Company, 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's 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 Company's principal credit agreement providing for a revolving line of credit and/or the issuance of letters of credit as in effect from time to time among the Company and certain of its Subsidiaries and one or more banks, financial institutions or other lenders, as such agreement may be amended, restated, supplemented or otherwise modified from time to time, and includes any substitute or successor 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. 2 "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 taking place after the issuance of the Company's Series 5 Redeemable Convertible Preferred Stock, 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 taking place after the issuance of the Company's Series 5 Redeemable Convertible Preferred Stock (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) 3 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 would require the use of any quarter beginning prior to January 1, 2000, such calculation shall be made without regard to any such quarter and, instead, shall be based on the lesser number of full fiscal quarters completed since January 1, 2000; 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. 4 "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 is appropriately accounted for in accordance with GAAP; (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; and (v) 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. "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 December 31, 1999 in the book value of any asset owned by such Person or any of its Restricted Subsidiaries. 5 "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 December 31, 1999 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 December 31, 1999 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 December 31, 1999 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 December 31, 1999 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 (provided, however, that the Company's Series 5 Redeemable Convertible Preferred Stock shall not constitute Disqualified Stock). 6 "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 January 1, 2000. "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 net 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 7 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 from time to time. "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" means 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" means 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 8 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 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; (v) the maximum fixed repurchase price of all Disqualified Stock of such Person; (vi) all Capitalized Lease Obligations of such Person; (vii) 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; (viii) all Indebtedness of others guaranteed by, or otherwise the liability of, such Person to the extent of such guarantee or liability; and (ix) 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 (vii), 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. "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. 9 "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 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 10 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) as to such Single Purpose Subsidiary, 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, (b) the Capital Stock of such Single Purpose Subsidiary, or (c) contract rights, accounts or specified revenues of such Single Purpose Subsidiary; (ii) if such Single Purpose Subsidiary is a Restricted Subsidiary, no assets of such Single Purpose Subsidiary, other than those assets identified in clause (i) 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 15% Senior Notes due 2002 of the Company issued pursuant to 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 any other authorized representative designated by the Board of Directors of the Company. "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. 11 "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, engineering, construction, construction or project management or related services to public and private sector clients, including the ownership of an equity interest in any such business. "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 12 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 Notes in the form set forth on Exhibit B. "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. "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, 13 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 14 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. "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, 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, Kaiser Leasing Corporation, Inc., a Delaware corporation, Cygna Consulting Engineers and Project Management, Inc., a California corporation, ICF Kaiser Engineers Eastern Europe, Inc., a Delaware 15 corporation, ICF Kaiser Netherlands, B.V., a Netherlands corporation, Kaiser Hunters Branch Leasing, Inc., (formerly ICF Kaiser Hunters Branch Leasing, Inc.), Kaiser DPI Holding Co., Inc. (formerly ICF Kaiser DPI Holding Co., Inc.), a Delaware corporation, Kaiser Engineers Eastern Europe, Inc. (formerly ICF Kaiser Engineers Eastern Europe, Inc.), Kaiser K-H Holdings, Inc., a Delaware 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 December 31, 1999 from designating as an Unrestricted Subsidiary any Subsidiary existing on December 31, 1999. 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. 16 "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 tax considerations or 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 tax considerations or 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 Defined Term 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. 17 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 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 B, 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 B (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 B 18 (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 Notes from time to time for issue only in exchange for a like principal amount of Notes, in each case upon the receipt of a Company Order. The aggregate principal amount of Notes outstanding at any time may not exceed $25,000,000, 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. 19 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 20 (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 21 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 22 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 23 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. 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. 24 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. 25 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. 26 (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; 27 (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. 28 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. 29 (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 AND MANDATORY REDEMPTION Section 4.01 Redemption Date; Redemption Price The Notes will be redeemable at the option of the Company, in whole or in part, at 100% percent of their principal amount, together with accrued and unpaid interest thereon to the redemption date. The Company shall be obligated, on a quarterly basis, to redeem up to that amount of Notes necessary to reduce the aggregate outstanding principal balance of Notes then outstanding to $10,000,000; provided, that any such mandatory redemption shall be made from available Cash of the Company only to the extent that (i) the cash collateralization requirements of the Company's Nova Hut project are reduced from the requirements as of the date of this Indenture as a result of amendments to the agreements governing such project or as a result of reductions in cash collateralization requirements in the Bank Credit Agreement; or (ii) subject to any restrictions or limitations contained in the Bank Credit Agreement, (x) if the Company receives Cash distributions from joint ventures which are materially greater than those forecast by the Company as of the date of this Indenture, or (y) the Company has borrowing capacity for such purpose under the Bank Credit Agreement which is materially greater than the Company's requirements as forecast as of the date of this Indenture. 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 30 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 31 (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. 32 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 33 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; 34 (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 information regarding such Persons' 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 35 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 December 31, 1999: (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 2.50 to 1, 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; (iii) incur 36 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), (B) Single Purpose Subsidiaries of the Company may incur Non- Recourse Indebtedness to the extent permitted by Section 5.05(iv) and (C) guarantee the Indebtedness of Kaiser-Hill Company, LLC, a Colorado limited liability company, and Kaiser-Hill Funding Company, L.L.C., a Delaware limited liability company, so long as the Company or its Wholly Owned Subsidiaries owns equity interests therein. 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 37 made pursuant to the provisions 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 (including dividends on dividends) 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 38 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, 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 following December 31, 1999 or (2) in Joint Ventures in an aggregate amount not to exceed 5% of Consolidated Tangible Assets following December 31, 1999, 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 following December 31, 1999 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 December 31, 1999 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 39 the aggregate amount of such Designated Investments) made by the Company or any Subsidiary subsequent to December 31, 1999; (G) the Company or any Wholly Owned Restricted Subsidiary from making Investments in Kaiser-Hill Company, LLC or its Affiliates, provided that such Investments are (1) determined by the Company's Board of Directors to be necessary or appropriate in connection with the activities of Kaiser-Hill Company, LLC or its Affiliates and (2) in proportion to similar and substantially simultaneous Investments made by other equity owners of Kaiser-Hill Company, LLC or its Affiliates, as the case may be; (H) the Company from redeeming for cash any or all of the outstanding shares of the Company's Series 5 Redeemable Convertible Preferred Stock; (I) the Company from issuing shares of Capital Stock and from making payments with respect to Capital Stock previously issued, in either case to former shareholders of JCT Spectrum Constructors; (J) the Company from making payments to the holders of its Capital Stock and to the extent necessary to redeem the rights outstanding under the Company's Rights Agreement, dated as of January 13, 1992, as amended; or (K) the Company from (1) making all regular quarterly dividends on the outstanding shares of the Company's Series 5 Redeemable Convertible Preferred Stock; and (2) making all payments of any dividends on the aggregate unpaid amount of any regular quarterly dividend on the outstanding shares of the Company's Series 5 Redeemable Convertible Preferred Stock from the date such regular quarterly dividend should have been paid to the date of the payment of such dividend. 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 contained in Existing Indebtedness or existing contracts to which the Company or any of its Restricted Subsidiaries are parties, (ii) 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 40 Company or its Restricted Subsidiaries, and (iii) 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. 41 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 42 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) 43 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. 44 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 45 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; 46 (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. 47 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, 48 (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, 49 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 50 (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. 51 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. 52 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. 53 (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. 54 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. 55 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 56 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 (S) 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 (S) 313(a). The Trustee also shall comply with TIA (S) 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: 57 (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. 58 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. 59 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. 60 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. 61 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, 62 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 (S) 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: Office of 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. 63 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; 64 (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. 65 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: -------------------------- THE BANK OF NEW YORK Trustee By: -------------------------- 66 EXHIBIT B [FORM OF NOTE] ICF KAISER INTERNATIONAL, INC. 15% SENIOR NOTE DUE 2002 CUSIP No. _____________ 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, 2002. 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) B-1 Trustee's Certificate of Authentication This is one of the Notes referred to in the within-mentioned Indenture. Dated: THE BANK OF NEW YORK as Trustee By: ---------------------------------- Authorized Signatory B-2 [REVERSE OF SECURITY] 15% SENIOR NOTE DUE 2002 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 15%; provided, that (i) the rate of interest shall be reduced to 13.5% from and after the date on which the aggregate outstanding principal balance of all Notes falls below $15,000,000; and (ii) the rate of interest shall be further reduced by .25% for each additional reduction of $1,000,000 in the aggregate outstanding principal of the Notes, until the rate of interest has been reduced to 11%. 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 December 31, 1999. 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 ______________, 1999 (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 B-3 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 $25,000,000 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 and Mandatory Redemption. The Notes will be redeemable, at the option of the Company, in whole or in part, at any time, at 100% percentage of principal amount, together with accrued and unpaid interest, if any, thereon to the redemption date. The Company shall be obligated to redeem up to the amount of outstanding Notes in excess of $10,000,000, from available Cash of the Company, to the extent that (i) the cash collateralization requirements of the Company's Nova Hut project are reduced as a result of amendments to the agreements governing such project or amendments to the Bank Credit Agreement; or (ii) subject to any restrictions or limitations contained in the Bank Credit Agreement, (x) if the Company receives Cash distributions from joint ventures which are materially greater than those forecast by the Company, or (y) the Company has borrowing capacity for such purpose under the Bank Credit Agreement which is materially greater than the capital requirements forecast by the Company. 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 B-4 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. 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 B-5 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 B-6 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 B-7 ASSIGNMENT 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: B-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: B-9 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. C-1 EXHIBIT D CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF NOTES Re: 15% Senior Notes due 2002 (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. D-1 __ /__/ 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. D-2 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 the 15% Senior Notes due 2002 ----------------------------- ---------------------- Ladies and Gentlemen: In connection with our proposed purchase of the 15% Senior Notes due 2002, 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 E-1 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] E-2 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 the 15% Senior Notes due 2002 (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 F-1 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] F-2 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 as of ______________, 1999, 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 G-1 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; G-2 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 G-3 EX-5 7 OPINION REGARDING SECURITIES Exhibit 5 [LETTERHEAD OF SQUIRE, SANDERS & DEMPSEY L.L.P. APPEARS HERE] September 30, 1999 ICF Kaiser International, Inc. 9300 Lee Highway Fairfax, Virginia 22031 Re: ICF Kaiser International, Inc. Registration Statement on Form S-4 Registration No. 333-82643 -------------------------- Ladies and Gentlemen: Reference is made to the Registration Statement on Form S-4 (Registration No. 333-82643) (the "Registration Statement") filed by ICF Kaiser International, Inc., a Delaware corporation (the "Company"), with the Securities and Exchange Commission under the Securities Act of 1933, as amended, with respect to (i) redeemable convertible preferred stock (the "Preferred Stock"), (ii) common stock, par value $.01 per share (the "Common Stock"), including Common Stock issuable upon the conversion of the Preferred Stock, and (iii) 15% senior notes due December 31, 2002 (the "New Notes"). The Preferred Stock, the Common Stock and the New Notes will be issuable pursuant to an exchange offer (the "Exchange Offer") to be made by the Company, in exchange for the Company's outstanding 12% Senior Subordinated Notes due 2003 (the "Old Notes"), all as described in the Registration Statement. We have reviewed the Registration Statement and the related exhibits, including the form of Certificate of Designation relating to the Preferred Stock and the form of Indenture under which the New Notes will be issuable. In addition, we have examined originals, or copies authenticated to our satisfaction, of such corporate records, certificates and other documents, and such matters of law, as we have deemed necessary or appropriate for purposes of this opinion. We have relied upon certificates of officers of the Company as to various factual matters contained in those certificates. In our examination of all of the foregoing, we have assumed the genuineness of all signatures, the legal capacity of natural persons executing documents, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified or photostatic copies and the authenticity of the originals of such copies. We have assumed the final forms of the Certificate of Designation and the Indenture will not differ materially from the forms filed as exhibits to the Registration Statement. Based on the foregoing, we are of the opinion that: 1. When (a) the Board of Directors of the Company (the "Board") has taken all necessary action to authorize the issuance and fix the terms of the Preferred Stock pursuant to the authority conferred upon the Board in the Company's Restated Certificate of Incorporation and the Company's By-Laws, (b) the Company's stockholders have approved the issuance of the Preferred Stock to be issued in the Exchange Offer, (c) a Certificate of Designation relating to the Preferred Stock has been filed with the Secretary of State of the State of Delaware, and (d) the Preferred Stock has been issued by the Company in accordance with the terms of the Exchange Offer as contemplated in the Registration Statement, the Preferred Stock will be validly issued, fully paid and nonassessable. 2. When (a) the Board has taken all necessary action to authorize the issuance of the Common Stock to be issued in the Exchange Offer, (b) the Company's stockholders have approved the issuance of the Common Stock to be issued in the Exchange Offer, and (c) the Common Stock has been issued by the Company in accordance with the terms of the Exchange Offer as contemplated in the Registration Statement, the Common Stock will be validly issued, fully paid and nonassessable. 3. When (a) the Board has taken all necessary corporate action to authorize the shares of the Common Stock to be issued upon the conversion of the Preferred Stock in accordance with the terms of the Preferred Stock, and (b) shares of Common Stock are issued upon conversion of the Preferred Stock in accordance with the terms of the Preferred Stock, assuming there is a sufficient number of authorized shares of Common Stock at the time of all such issuances of Common Stock upon such conversion, such shares of Common Stock will be validly issued, fully paid and nonassessable. 4. When the New Notes have been (a) executed by the Company and authenticated by the trustee for the New Notes in accordance with the provisions of the Indenture governing the New Notes, and (b) delivered by the Company in accordance with the terms of the Exchange Offer as contemplated in the Registration Statement, the New Notes will be valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, except as may be limited by applicable bankruptcy, insolvency, moratorium, reorganization, fraudulent transfer or similar laws relating to or affecting the enforcement of creditors' rights generally and subject to general principles of equity (whether considered in a proceeding at law or in equity). We 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. We consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to our firm under the caption "Legal Matters" in the prospectus contained in the Registration Statement. In giving such consent, we do not admit we come within the category of persons whose consent is required by the Securities Act of 1933 or the rules under that Act. Respectfully submitted, /s/ Squire, Sanders & Dempsey L.L.P. EX-8 8 OPINION REGARDING TAX CONSEQUENCES Exhibit 8 [LETTERHEAD OF SQUIRE, SANDERS & DEMPSEY L.L.P. APPEARS HERE] September 30, 1999 ICF Kaiser International, Inc. 9300 Lee Highway Fairfax, Virginia 22031 Re: ICF Kaiser International, Inc. ------------------------------ Ladies and Gentlemen: We have acted as counsel to ICF Kaiser International, Inc., a Delaware corporation ("Kaiser") in connection with a proposed recapitalization that is comprised of (i) an offer to purchase for cash a portion of the outstanding $125 million aggregate principal amount of 12% Senior Subordinated Notes Due 2003 (the "Old Notes"), (ii) an exchange offer of redeemable convertible preferred stock, common stock, and senior notes for the balance of the Old Notes outstanding following the offer to purchase, and (iii) solicitation of the holders of the Old Notes for consents to remove certain covenants in the indenture for the Old Notes (collectively, the "Transaction") and have been asked by you to render our opinion as to the federal income tax consequences of the Transaction. We have reviewed the Registration Statement on Form S-4 (Registration No. 333-82643) filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, in connection with the Transaction, together with Pre-Effective Amendment Nos. 1, 2 and 3 thereto (collectively, the "Registration Statement"). In addition, we have examined such other documents and materials and considered such matters of law as we have deemed necessary or appropriate for purposes of rendering this opinion. Based upon the foregoing, we are of the opinion that the material United States federal income tax consequences of the Transaction are as set forth under the caption "United States Federal Income Tax Considerations" in the prospectus that is a part of the Registration Statement, including such qualifications and assumptions as are set forth in the discussion under that caption. The foregoing opinion is based on the facts set forth in the Registration Statement, as well as on the Internal Revenue Code, related Treasury Regulations, and administrative and judicial interpretations of such Code and Regulations, all as they exist as of the date of this opinion. No assurance can be given that any of the foregoing authorities will not be revoked, modified, or otherwise revised after the date of this opinion, nor that any such changes if made would not adversely affect our opinion. No assurance can be given that the Internal Revenue Service will not take a contrary position to the conclusions expressed in this opinion. We disclaim any undertaking or other responsibility on our part to advise you of any changes in any of such authorities occurring after the date of this opinion. We consent to the reference to our firm under the caption "United States Federal Income Tax Considerations" in the prospectus that is part of the Registration Statement and to the filing of this opinion as an exhibit to the Registration Statement. In giving such consent, we do not admit we come within the category of persons whose consent is required by the Securities Act of 1933 or the rules under that Act. Respectfully submitted, /s/ Squire, Sanders & Dempsey L.L.P. EX-23.(B) 9 CONSENT OF PRICEWATERHOUSECOOPERS EXHIBIT 23(b) CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in this Registration Statement on Form S-4 of ICF Kaiser International, Inc. and its subsidiaries of our report dated April 15, 1999 relating to the consolidated financial statements and financial statement schedule which appear in the 1998 Annual Report to Shareholders. We also consent to the references to us under the heading "Experts" in such Registration Statement. PricewaterhouseCoopers LLP McLean, Virginia October 1, 1999 EX-25 10 STATEMENT OF ELIGIBILITY Exhibit 25 =============================================================================== 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.) One 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.) 9300 Lee Highway Fairfax, Virginia 22031-1207 (Address of principal executive offices) (Zip code) _____________ 15% Senior Notes due 2002 (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 10005
(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. 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 17 C.F.R. 229.10(d). 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.) 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. 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 28th day of September, 1999. THE BANK OF NEW YORK By: /s/ MARY LAGUMINA ---------------------------------------- Name: MARY LAGUMINA Title: ASSISTANT VICE PRESIDENT Consolidated Report of Condition of THE BANK OF NEW YORK of One Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business June 30, 1999, 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 depository institutions: Noninterest-bearing balances and currency and $ 5,597,807 coin........................................... Interest-bearing balances....................... 4,075,775 Securities: Held-to-maturity securities..................... 785,167 Available-for-sale securities................... 4,159,891 Federal funds sold and Securities purchased under agreements to resell...................... 2,476,963 Loans and lease financing receivables: Loans and leases, net of unearned income..............................38,028,772 LESS: Allowance for loan and lease losses...........................568,617 LESS: Allocated transfer risk reserve.................................16,352 Loans and leases, net of unearned income, allowance, and reserve......................... 37,443,803 Trading Assets................................... 1,563,671 Premises and fixed assets (including capitalized leases)......................................... 683,587 Other real estate owned............................ 10,995 Investments in unconsolidated subsidiaries and associated companies............................ 184,661 Customers' liability to this bank on acceptances outstanding..................................... 812,015 Intangible assets................................ 1,135,572 Other assets..................................... 5,607,019 ----------- Total assets..................................... $64,536,926 ===========
LIABILITIES Deposits: In domestic offices............................. $26,488,980 Noninterest-bearing................. 10,626,811 Interest-bearing.................... 15,862,169 In foreign offices, Edge and Agreement subsidiaries, and IBFs......................... 20,655,414 Noninterest-bearing................. 156,471 Interest-bearing.................... 20,498,943 Federal funds purchased and Securities sold under agreements to repurchase.................. 3,729,439 Demand notes issued to the U.S.Treasury.......... 257,860 Trading liabilities.............................. 1,987,450 Other borrowed money: With remaining maturity of one year or less..... 496,235 With remaining maturity of more than one year through three years............................ 465 With remaining maturity of more than three years 31,080 Bank's liability on acceptances executed and outstanding..................................... 822,455 Subordinated notes and debentures................ 1,308,000 Other liabilities................................ 2,846,649 ------------ Total liabilities................................ 58,624,027 ============ EQUITY CAPITAL Common stock..................................... 1,135,284 Surplus.......................................... 815,314 Undivided profits and capital reserves........... 4,001,767 Net unrealized holding gains (losses) on available-for-sale securities................... ( 7,956) Cumulative foreign currency translation adjustments..................................... ( 31,510) -------------- Total equity capital............................. 5,912,899 -------------- Total liabilities and equity capital............. $64,536,926 ==============
I, Thomas J. Mastro, 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. Thomas J. Mastro 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. -- Thomas A. Reyni | Directors Alan R. Griffith | Gerald L. Hassell | -- EX-99 11 FORM OF LETTER OF TRANSMITTAL DOCUMENTS [LETTERHEAD OF ICF KAISER INTERNATIONAL, INC. APPEARS HERE] October 1, 1999 To Holders of our $125 Million Senior Subordinated Notes Due 2003 This is a bulky and complicated but very important package of materials relating to the restructuring of ICF Kaiser's $125 million senior subordinated notes due 2003. The purposes of this letter are to summarize the transaction being presented to you and briefly describe the enclosed documents. To accept ICF Kaiser's proposal, it is necessary for you to complete the Letter of Transmittal and Consent Form that immediately follows this letter and return it, together with any senior subordinated notes held by you and being tendered, to the Bank of New York in the enclosed envelope. If you have any questions concerning the Company's proposal, including how to complete the form properly, please call our information agent, Jefferies & Company, at 1-800-933-6656 or (212) 336-7160 and ask for Victor Polizzotto. Background - ---------- During 1998, ICF Kaiser suffered approximately $100 million of losses, primarily as a result of cost overruns on fixed price contracts to construct four nitric acid plants. In response to these losses, and the cash drain they represented, the Company's Board of Directors engaged in a thorough review of strategic alternatives for ICF Kaiser and its operating groups. As a result of that review, ICF Kaiser sold its Environment and Facilities Management Group in April 1999 for a cash purchase price of $74 million. At the end of June, we sold 90% of our Consulting Group for $64 million of cash plus a $6.6 million note. These sales were not enough to restore ICF Kaiser to an acceptable financial condition. The Company had lost the earnings power associated with the sold operating groups, had $140 million of outstanding 13% notes, and was unable to obtain a bank credit facility until it took steps to bring its debt load into balance with its remaining business. The issue facing the Company was how to best use the approximately $50 million of cash available following completion of the dispositions to reduce its debt. Restructuring Proposal - ---------------------- During the summer of 1999 the Company engaged in extended negotiations with representatives of its $125 million senior subordinated notes and its $15 million senior notes. As a result of those discussions, the Company agreed to repurchase for cash all of its $15 million senior notes for a discount price equal to 88% of par value ($13.2 million) plus accrued interest from June 30, 1999. That purchase is taking place on or about October 1, 1999. The Company also entered into an agreement in principal concerning the restructuring of its $125 million senior subordinated notes due 2003. That restructuring involves several simultaneous transactions, each of which is dependent upon consummation of the others. Assuming applicable conditions are met: . We will purchase at least $35 million principal amount of the senior subordinated notes for cash; . We will exchange a combination of (1) redeemable convertible preferred stock with a liquidation preference of $65 million (plus an amount equal to accrued interest on the senior subordinated notes to the date of closing), (2) common stock representing approximately 15% of our total common stock after giving effect to a proposed reverse stock split, and (3) up to $25 million of new senior notes for the remaining senior subordinated notes; and . We will enter into a new credit facility. As a result of the restructuring, holders of senior subordinated notes will receive, for each $1000 of old notes tendered in the cash offer and the exchange offer, at least $280 in cash, 20.8 shares of preferred stock, reflecting a liquidation preference of $25 per share plus a pro rata per share portion of the accrued interest to the date of closing, .034 shares of our common stock, prior to completion of a proposed reverse stock split, and up to $200 principal amount of new senior notes. The terms of this restructuring are the product of negotiations with an unofficial committee of holders of senior subordinated notes owning in excess of 80% of the aggregate principal amount of those notes. The terms of the restructuring are described in much greater detail in the enclosed Prospectus and Consent Solicitation Statement. We urge you to review carefully that document and the other enclosures before deciding whether to accept the Company's proposal. The closing of the cash offer and the exchange offer is subject to a number of conditions, including (1) ICF Kaiser's obtaining a satisfactory revolving credit agreement from a financial institution, (2) shareholder approval of the issuance of some of the securities included in the exchange offer, and (3) acceptance of the exchange offer by holders of at least 95% of the senior subordinated notes not purchased for cash. Thus, it is important that we achieve a very high level of acceptance of the exchange offer from you the holders of our senior subordinated notes. ICF Kaiser considered several alternative means of attempting to stabilize its financial condition. The Company's Board of Directors ultimately determined that the transactions contemplated by the enclosed documents represent the strongest opportunity for significantly improving ICF Kaiser's financial position and prospects. As more fully described in the letter to shareholders included at the front of the proxy statement enclosed in this package, we believe we have taken important steps to turn around ICF Kaiser's performance. However, unless our proposal to exchange the senior subordinated notes is accepted by the requisite percentage of our senior subordinated noteholders, ICF Kaiser will continue to face formidable financial obstacles to stability and growth. Enclosures - ---------- In addition to the Letter of Transmittal and Consent Form that you must complete and return, this package includes: . A Prospectus and Consent Solicitation Statement relating to the proposed restructuring of the Company's senior subordinated notes. This document describes the Company's proposal in detail, and we urge you to read it carefully. . The Proxy Statement which is being sent to our shareholders in connection with our November 4, 1999 annual meeting. The letter to shareholders included at the front of the proxy statement reports on our progress in turning around ICF Kaiser's operating performance. . A Notice of Guaranteed Delivery. . Our 1998 annual report and our quarterly reports for the quarters ended March 31 and June 30, 1999, as filed with the Securities and Exchange Commission. . Other documents filed with the SEC this year that are incorporated by reference into the Prospectus and Consent Solicitation Statement. Thank you for your prompt attention to these matters. Sincerely, James J. Maiwurm Chairman, President and Chief Executive Officer Exhibit 99 ---------- LETTER OF TRANSMITTAL AND CONSENT FORM To Tender For Purchase 12% Senior Subordinated Notes Due 2003 ON A PRO RATA BASIS AND TO TENDER FOR EXCHANGE 12% SENIOR SUBORDINATED NOTES DUE 2003 AND TO CONSENT TO CERTAIN INDENTURE AMENDMENTS WITH RESPECT TO THE 12% SENIOR SUBORDINATED NOTES DUE 2003 OF ICF KAISER INTERNATIONAL, INC. PURSUANT TO PROSPECTUS DATED OCTOBER 1, 1999 - -------------------------------------------------------------------------------- THE ASSET SALE OFFER/EXCHANGE OFFER/CONSENT SOLICITATION WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME ON NOVEMBER 1, 1999, UNLESS EXTENDED. TENDERS OF CONSENTS MAY ONLY BE REVOKED UNDER THE CIRCUMSTANCES DESCRIBED IN THE PROSPECTUS AND HEREIN. TENDERS OF OLD NOTES MAY NOT BE WITHDRAWN ONCE MADE. - -------------------------------------------------------------------------------- The Paying/Exchange/Solicitation Agent for the Asset Sale Offer/Exchange Offer/Consent Solicitation is: THE BANK OF NEW YORK By Registered or Certified By Overnight Courier: By Hand: By Facsimile: Mail: The Bank of New York The Bank of New York The Bank of New York The Bank of New York Reorganization Department Attention: Reorganization Reorganization Department Attention: Jennifer Pedi Attention: Jennifer Pedi Corporate Trust Services Attention: Jennifer Pedi 101 Barclay Street, 7 East 101 Barclay Street, 7 East Window, Ground Level (212) 815-6339 New York, New York 10286 New York, New York 10286 101 Barclay Street, 7 East New York, New York 10286 Confirm by telephone: (212) 815-6331
For information, call: (212) 815-6331
DESCRIPTION OF OLD NOTES AND CONSENTS TENDERED - -------------------------------------------------------------------------------------------------------------------------- Name(s) and Address(es) of Registered Holder(s) Please fill in, if blank, exactly as name(s) appear(s) on Old Note(s) - -------------------------------------------------------------------------------------------------------------------------- (1) - -------------------------------------------------------------------------------------------------------------------------- PRINCIPAL AMOUNT OF PRINCIPAL AMOUNT FOR WHICH OLD NOTES TENDERED CONSENTS TENDERED (Attach additional schedule, if necessary) (Attach additional schedule, if necessary) - -------------------------------------------------------------------------------------------------------------------------- (2) (3) (4) (5) Asset Sale Offer ___ Certificate Number(s) Exchange Offer ___ Proposed Amendments Instruction to Trustee (if enclosing certificates) Both Asset Sale Offer and Exchange Offer ___ to Indenture (Check appropriate box) - -------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------
The undersigned acknowledges receipt of the Prospectus, dated October 1, 1999 (the "Prospectus"), of ICF Kaiser International, Inc., a Delaware corporation ("Kaiser"), relating to: . the offer of Kaiser, upon the terms and subject to the conditions set forth in the Prospectus and in this Letter of Transmittal and Consent Form and the instructions hereto, to purchase for cash on a pro rata basis a total of at least $35 million aggregate principal amount of its 12% senior subordinated notes due 2003 (the "Asset Sale Offer"); . the offer of Kaiser, upon the terms and subject to the conditions set forth in the Prospectus and in this Letter of Transmittal and Consent Form and the instructions hereto, to exchange 2,600,000 shares of Kaiser's redeemable convertible preferred stock (the "Preferred Stock"), common stock representing approximately 15% of Kaiser's total common stock (the "Common Stock"), and up to $25 million principal amount of Kaiser's 15% Senior Notes due 2002 (the "New Notes") (collectively, the "Exchange Offer") for all 12% Senior Subordinated Notes due 2003 (the "Old Notes") outstanding following the purchase of the Old Notes in the Asset Sale Offer; and . the solicitation by Kaiser (the "Consent Solicitation") of consents (the "Consents"), upon the terms and subject to the conditions set forth in the Prospectus and in this Letter of Transmittal and Consent Form and the instructions hereto, from registered holders of the Old Notes to: . certain amendments to the indenture governing the Old Notes, as more fully described in the Prospectus (the "Proposed Amendments"), and . an instruction to the trustee under the indenture governing the Old Notes not to interfere with the Asset Sale Offer, Exchange Offer and Consent Solicitation (the "Instruction to Trustee"). THE ASSET SALE OFFER/EXCHANGE OFFER/CONSENT SOLICITATION WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON NOVEMBER 1, 1999 (THE "EXPIRATION DATE"), UNLESS EXTENDED. HOLDERS WHO WISH TO BE ELIGIBLE TO RECEIVE CASH PURSUANT TO THE ASSET SALE OFFER OR RECEIVE PREFERRED STOCK, COMMON STOCK AND NEW NOTES PURSUANT TO THE EXCHANGE OFFER MUST VALIDLY TENDER THEIR OLD NOTES TO THE PAYING/EXCHANGE/SOLICITATION AGENT BY 5:00 P.M. ON THE EXPIRATION DATE. This letter of Transmittal and Consent Form is to be used if Old Notes are to be physically delivered to the Paying/Exchange/Solicitation Agent. If delivery of Old Notes is to be made by book-entry transfer to the account maintained by the Paying/Exchange/Solicitation Agent at The Depository Trust Company ("DTC" or the "Book-Entry Transfer Facility") pursuant to the procedures set forth in the Prospectus under the caption "Procedures for Tendering Old Notes in the Exchange Offer, Tendering Old Notes in the Asset Sale Offer and Tendering Consents in the Consent Solicitation," this Letter of Transmittal and Consent Form need not be used. Delivery of documents to the Book-Entry Transfer Facility does not constitute delivery to the Paying/Exchange/Solicitation Agent. Holders whose Old Notes are not available or who cannot deliver their Old Notes and all other documents required hereby to the Paying/Exchange/Solicitation Agent by 5:00 p.m. on the Expiration Date nevertheless may tender their Old Notes in accordance with the guaranteed delivery procedures set forth in Instruction 1 hereto. THE ASSET SALE OFFER/EXCHANGE OFFER/CONSENT SOLICITATION IS NOT BEING MADE TO (NOR WILL THE SURRENDER OF OLD NOTES OR CONSENTS BE ACCEPTED FROM OR ON BEHALF OF) HOLDERS IN ANY JURISDICTION IN WHICH THE MAKING OR ACCEPTING OF THE ASSET SALE OFFER/EXCHANGE OFFER/CONSENT SOLICITATION WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION. All capitalized terms used herein and not defined herein shall have the meanings ascribed to them in the Prospectus. -2- IMPORTANT PROCEDURES TO BE FOLLOWED IN COMPLETING THIS LETTER OF TRANSMITTAL AND CONSENT FORM (A) IN ORDER TO PARTICIPATE IN THE EXCHANGE OFFER AND THE ASSET SALE OFFER, A HOLDER OF OLD NOTES MUST TENDER ALL OF THE OLD NOTES BENEFICIALLY OWNED BY THE HOLDER. NO PARTIAL TENDERS OF OLD NOTES WILL BE ACCEPTED BY KAISER. (B) HOLDERS WHO WISH TO TENDER THEIR OLD NOTES IN THE ASSET SALE OFFER AND/OR THE EXCHANGE OFFER MUST: . complete columns (1) through (3) in the box above entitled "Description of Old Notes and Consents Tendered," Please check the appropriate box in column (3) indicating whether you wish to tender your Old Notes in the Asset Sale Offer, in the Exchange Offer or in both the Asset Sale Offer and the Exchange Offer. Holders who fail to check any of these three choices in column (3), but who otherwise list the amount of Old Notes being tendered in column (3), will be deemed to have tendered their Old Notes in both the Asset Sale Offer and the Exchange Offer. . complete the appropriate box below under "Method of Delivery" and . sign where indicated below. By doing so, the undersigned will have tendered their Old Notes upon and subject to the terms and conditions described in the Prospectus and herein. Old Notes tendered in the Exchange Offer and/or the Asset Sale Offer may not be withdrawn by the holder once tendered. (C) Holders who wish to consent to the Proposed Amendments and/or the Instruction to Trustee must: . complete columns (1), (4) and/or (5) in the box above entitled "Description of Old Notes and Consents Tendered" and . sign where indicated below. By doing so, the undersigned will have consented to the Proposed Amendments and/or the Instruction to Trustee upon and subject to the terms and conditions as described in the Prospectus and herein. Only registered holders of Old Notes are entitled to Consent to the Proposed Amendments and the Instruction to Trustee. (D) Holders who properly tender their Old Notes in the Asset Offer pursuant to the Prospectus and this Letter of Transmittal and Consent Form will be deemed to have executed the "Option of Holder to Elect Purchase" included in the Certificate for the Old Notes. -3- METHOD OF DELIVERY _ CHECK HERE IF CERTIFICATES FOR TENDERED OLD NOTES ARE ENCLOSED HEREWITH. _ CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE PAYING/EXCHANGE/ SOLICITATION AGENT WITH THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING: Name of Tendering Institution:_____________________________________________ DTC 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 PAYING/EXCHANGE/ SOLICITATION AGENT AND COMPLETE THE FOLLOWING (SEE INSTRUCTIONS 1 AND 4): Name(s) of Registered Holder(s):___________________________________________ Window Ticket Number (if any):_____________________________________________ Date of Execution of Notice of Guaranteed Delivery:________________________ Name of Eligible Institution which Guaranteed Delivery:____________________ IF DELIVERED BY THE BOOK-ENTRY TRANSFER FACILITY, PROVIDE THE FOLLOWING INFORMATION: DTC Account Number:________________________________________________________ Transaction Code Number:___________________________________________________ -4- NOTE: SIGNATURE MUST BE PROVIDED BELOW. PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY. Ladies and Gentlemen: Upon the terms and subject to the conditions of the Asset Sale Offer/Exchange Offer/Consent Solicitation, the undersigned hereby tenders to Kaiser the principal amount of Old Notes and/or Consents indicated in the box entitled "Description of Old Notes and Consents Tendered" in respect of the Old Notes and Consents indicated above. Subject to, and effective upon, the acceptance of the Old Notes and Consents tendered hereby, the undersigned hereby irrevocably sells, assigns and transfers to or upon the order of Kaiser all right, title and interest in and to such Old Notes, and hereby irrevocably constitutes and appoints the Paying/Exchange/Solicitation Agent the true and lawful agent and attorney-in-fact of the undersigned (with full knowledge that said Paying/Exchange/Solicitation Agent also acts as the agent of Kaiser and as Trustee under the indenture governing the Old Notes) with respect to Old Notes and Consents, with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest) to (a) deliver certificates representing such Old Notes, deliver the Consents contained herein, and to deliver all accompanying evidences of transfer and authenticity to or upon the order of Kaiser upon receipt by the Paying/Exchange/Solicitation Agent, as the undersigned's agent, of the cash, Preferred Stock, Common Stock and New Notes to which the undersigned is entitled upon the acceptance by Kaiser of such Old Notes and Consents pursuant to the Asset Sale Offer/Exchange Offer/Consent Solicitation, (b) receive all benefits and otherwise to exercise all rights of beneficial ownership of such Old Notes, all in accordance with the terms of the Asset Sale Offer/Exchange Offer/Consent Solicitation, and (c) present such Old Notes for transfer on the register for such Old Notes. THE ASSET SALE OFFER/EXCHANGE OFFER/CONSENT SOLICITATION IS NOT BEING MADE TO, NOR WILL TENDERS OF OLD NOTES AND CONSENTS BE ACCEPTED FROM OR ON BEHALF OF, HOLDERS OF THE OLD NOTES IN ANY JURISDICTION IN WHICH THE MAKING OF THE OFFER OR ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION OR WOULD OTHERWISE NOT BE IN COMPLIANCE WITH ANY PROVISION OF ANY APPLICABLE SECURITIES LAW. The undersigned understands and acknowledges that Kaiser reserves the right, in its sole discretion, to purchase or make offers for any Old Notes that remain outstanding subsequent to the Expiration Date or to terminate the Asset Sale Offer/Exchange Offer/Consent Solicitation and, to the extent permitted by applicable law, purchase Old Notes in the open market, in privately negotiated transactions or otherwise. The terms of any such purchases or offers may differ from the terms of the Asset Sale Offer/Exchange Offer/Consent Solicitation. The undersigned hereby represents and warrants that (a) the undersigned accepts the terms and conditions of the Asset Sale Offer/Exchange Offer/Consent Solicitation, (b) the undersigned has full power and authority to tender, exchange, assign and transfer the Old Notes tendered hereby, and when the same are accepted for exchange by Kaiser, Kaiser will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim or right, and (c) the undersigned has full power and authority to tender the Consents tendered hereby. The undersigned will, upon request, execute and deliver any additional documents deemed by the Paying/Exchange/Solicitation Agent or Kaiser to be necessary or desirable to complete the sale, exchange, assignment and transfer of the Old Notes tendered hereby. The undersigned agrees that all authority conferred or agreed to be conferred by this Letter of Transmittal and Consent Form and every obligation of the undersigned hereunder shall be binding upon the successors, assigns, heirs, executors, administrators, trustees in bankruptcy and legal representatives of the undersigned and shall not be affected by, and shall survive, the death or incapacity of the undersigned. The undersigned understands that tenders of the Old Notes and Consents pursuant to any one of the procedures described in the Prospectus and in the instructions hereto will constitute a binding agreement between the undersigned and Kaiser in accordance with the terms and subject to the conditions of the Asset Sale Offer/Exchange Offer/Consent Solicitation. The undersigned recognizes that, under certain circumstances set forth in the Prospectus, Kaiser may not be required to accept any of the Old Notes or Consents tendered. The undersigned agrees that tenders of Old Notes in the Asset Sale Offer and/or the Exchange Offer may not be withdrawn once made, and also agrees that tenders of Consents may only be revoked under the circumstances described in the Prospectus. Unless otherwise indicated herein under the box entitled "Special Issuance Instructions" below, Preferred Stock, Common Stock and New Notes, and Old Notes not validly tendered or accepted, will be issued in the name of the undersigned. Similarly, unless otherwise indicated under the box entitled "Special Delivery Instructions" below, Preferred Stock, Common Stock and New Notes, and Old Notes not validly tendered or accepted, will be delivered to the -5- undersigned at the address shown in such box below the signature of the undersigned. The undersigned recognizes that Kaiser has no obligation pursuant to the "Special Issuance Instructions" to transfer any Old Notes from the name of the registered holder thereof if Kaiser does not accept any of the principal amount of such Old Notes so tendered. All questions as to the validity, form, eligibility (including time of receipt) and revocation of the Consents will be determined by Kaiser in its sole discretion, which determination will be final and binding. Kaiser reserves the absolute right to reject any and all Old Notes and Consents not properly tendered or any Old Notes and Consents that Kaiser's acceptance of which would, in the opinion of counsel for Kaiser, be unlawful. Kaiser also reserves the right to waive any irregularities or conditions of tender as to particular Old Notes and Consents. Kaiser's interpretation of the terms and conditions of the Asset Sale Offer/Exchange Offer/Consent Solicitation (including the instructions in this Letter of Transmittal and Consent Form) will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Old Notes and Consents must be cured within such time as Kaiser shall determine. Neither Kaiser, the Paying/Exchange/Solicitation Agent nor any other person shall be under any duty to give notification of defects or irregularities with respect to tenders of Old Notes and Consents, nor shall any of them incur any liability for failure to give such notification. Tenders of Old Notes and Consents will not be deemed to have been made until such irregularities have been cured or waived. Any Old Notes and Consents received by the Paying/Exchange/Solicitation Agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned without cost to such holder by the Paying/Exchange/Solicitation Agent to the tendering holders of Old Notes and Consents, unless otherwise provided in this Letter of Transmittal and Consent Form, as soon as practicable following the Expiration Date. [the rest of this page is intentionally left blank] -6- - -------------------------------------------------------------------------------- PLEASE SIGN HERE (To be Completed By All Tendering Holders) X_______________________________________________________________________________ X_______________________________________________________________________________ (Signature(s) of Holder(s) Or Authorized Signatory) Must be signed by the registered holder(s) of Old Notes exactly as their name(s) appear(s) on certificate(s) for or other evidence of the Old Notes or by person(s) authorized to become registered holder(s) by endorsements and documents transmitted with this Letter of Transmittal and Consent Form. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation, agent or other person acting in a fiduciary or representative capacity, please provide the following information. See Instruction 4. Name(s):_______________________________________________________________________ _______________________________________________________________________________ (Please Print) Capacity (full title):_________________________________________________________ Address:_______________________________________________________________________ _______________________________________________________________________________ (Including Zip Code) Area Code and Telephone No.:___________________________________________________ SIGNATURE GUARANTEE (SEE INSTRUCTION 4) _______________________________________________________________________________ (Name of Eligible Institution Guaranteeing Signature(s)) _______________________________________________________________________________ (Address, Including Zip Code, and Telephone No., Including Area Code, of Firm) _______________________________________________________________________________ (Authorized Signature) _______________________________________________________________________________ (Printed Name) _______________________________________________________________________________ (Title) Date: __________________, 1999 - -------------------------------------------------------------------------------- -7- SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS (See Instructions 4, 5 and 8) (See Instructions 4, 5 and 8) To be completed ONLY if certificates for Old Notes To be completed ONLY if certificates for Old Notes in a in a principal amount not exchanged and/or principal amount not exchanged and/or certificates for certificates for New Notes, Preferred Stock and New Notes, Preferred Stock and Common Stock are to be Common Stock are to be issued in the name of sent to someone other than the undersigned at an address someone other than the undersigned, or if Old Notes other than that shown above. are to be returned by credit to an account maintained by the Book-Entry Transfer Facility. Deliver (check appropriate box) _ New Notes, Preferred Stock and Common Stock to: Issue (check appropriate box) _ Old Notes to: _ New Notes, Preferred Stock and Common Stock to: _ Old Notes to: Name:__________________________________________________ (Please Print) Name:______________________________________________ (Please Print) Address:_______________________________________________ _______________________________________________ Address:___________________________________________ Zip Code ___________________________________________________ --------------------------------------------------------- Zip Code Taxpayer Identification Number --------------------------------------------------- Taxpayer Identification Number (You must also complete (You must also complete substitute Form W-9 below.) substitute Form W-9 below.) Credit unaccepted Old Notes tendered by book-entry transfer to: _ The Depository Trust Company account set forth below --------------------------------------------------- (DTC Account Number)
-8- INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE ASSET SALE OFFER/EXCHANGE OFFER/CONSENT SOLICITATION 1. Delivery of this Letter of Transmittal and Consent Form and Certificates; Guaranteed Delivery Procedures. To be effectively tendered pursuant to the Asset Sale Offer/Exchange Offer/Consent solicitation, the Old Notes, together with a properly completed Letter of Transmittal and Consent Form (or facsimile thereof), duly executed by the registered holder thereof, and any other documents required by this Letter of Transmittal and Consent Form, must be received by the Paying/Exchange/Solicitation Agent at one of its addresses set forth on the first page of this Letter of Transmittal and Consent Form. If the beneficial owner of any Old Notes is not the registered holder, then such beneficial owner may validly tender its Old Notes and Consents only by obtaining and submitting to the Paying/Exchange/Solicitation Agent a properly completed Letter of Transmittal and Consent Form from the registered holder. OLD NOTES AND CONSENTS SHOULD BE DELIVERED ONLY TO THE PAYING/EXCHANGE/SOLICITATION AGENT AND NOT TO KAISER OR TO ANY OTHER PERSON. THE METHOD OF DELIVERY OF OLD NOTES AND CONSENTS AND ALL OTHER REQUIRED DOCUMENTS TO THE PAYING/EXCHANGE/SOLICITATION AGENT IS AT THE ELECTION AND RISK OF THE HOLDER. SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY TO THE PAYING/EXCHANGE/SOLICITATION AGENT BY 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE. If a holder desires to tender Old Notes and Consents and such holder's Old Notes are not immediately available, or if time will not permit such holder's Letter of Transmittal and Consent Form, Old Notes, or other required documents to reach the Paying/Exchange/Solicitation Agent on or before the Expiration Date, or if time will not permit the holder to complete the procedure for book- entry transfer, such holder's tender may be effected if: (a) the tender is made through an Eligible Institution (as defined); (b) prior to the Expiration Date, the Paying/Exchange/Solicitation Agent receives from such Eligible Institution a properly completed and duly executed Notice of Guaranteed Delivery (by facsimile transmission, mail or hand delivery) setting forth the name and address of the holder of the Old Notes, the certificate number or numbers of such Old Notes and the principal amount of Old Notes tendered in the Asset Sale Offer and/or Exchange Offer, stating that the tender is being made thereby, and guaranteeing that, within three business days after the Expiration Date, the Letter of Transmittal and Consent Form (or facsimile thereof) together with the certificate(s) representing the Old Notes to be tendered in proper form for transfer or a Book-Entry Confirmation, as the case may be, and any other documents required by the Letter of Transmittal and Consent Form will be deposited by the Eligible Institution with the Paying/Exchange/Solicitation Agent; and (c) such properly completed and executed Letter of Transmittal and Consent Form (or facsimile thereof), together with the certificate(s) representing all tendered Old Notes in proper form for transfer and all other documents required by the Letter of Transmittal and Consent Form, or confirmation of a book-entry transfer of these Old Notes into the Paying/Exchange/Solicitation Agent's account at DTC, are received by the Paying/Exchange/Solicitation Agent within three business days after the Expiration Date. Any holder who wishes to tender Old Notes pursuant to the guaranteed delivery procedures described above must ensure that the Paying/Exchange/Solicitation Agent receives the Notice of Guaranteed Delivery and Letter of Transmittal and Consent Form relating to these Old Notes prior to 5:00 p.m., New York City time, on the Expiration Date. 2. Acceptance of Old Notes for Purchase or Exchange and Acceptance of Consents. Upon satisfaction or waiver of all the conditions to the Exchange Offer, Kaiser will accept any and all Old Notes that are properly tendered in the Exchange Offer, Old Notes properly tendered in the Asset Sale Offer and Consents properly tendered in the Consent Solicitation prior to 5:00 p.m., New York City time, on the Expiration Date. The Preferred Stock, Common Stock and New Notes issued pursuant to the Exchange Offer will be delivered promptly after acceptance of the Old Notes. For purposes of the Exchange Offer, Kaiser will be deemed to have accepted validly tendered Old Notes, when, as, and if Kaiser has given oral or written notice to the Paying/Exchange/Solicitation Agent. 3. Revocation of Consents. Tendered Consents may be revoked at any time prior to 5:00 p.m., New York City time, on the Expiration Date, unless previously accepted. -9- To be effective, a written or facsimile transmission notice of revocation must (a) be received by the Paying/Exchange/Solicitation Agent at one of its addresses set forth on the first page of this Letter of Transmittal and Consent Form prior to 5:00 p.m., New York City time, on the Expiration Date, unless previously accepted, (b) specify the name of the person who tendered the Consents, (c) contain the description of the Consents to be revoked and (d) be signed by the holder of the Old Notes in the same manner as the original signature appears on this Letter of Transmittal and Consent Form (including any required signature guarantees). The signature(s) on the notice of revocation must be guaranteed by an Eligible Institution unless such Consents have been tendered (a) by a registered holder of Old Notes who has not completed either the box entitled "Special Issuance Instructions" or the box entitled "Special Delivery Instructions" on this Letter of Transmittal and Consent Form or (b) for the account of an Eligible Institution. All questions as to the validity, form and eligibility (including time of receipt) of such revocation notices shall be determined by Kaiser, whose determination shall be final and binding on all parties. If the Consents to be revoked have been delivered or otherwise identified to the Paying/Exchange/Solicitation Agent, a signed notice of revocation is effective immediately upon receipt by the Paying/Exchange/Solicitation Agent of a written or facsimile transmission notice of revocation even if physical release is not yet effected. Revocations may not be rescinded, and any Consents revoked will thereafter be deemed not validly tendered for purposes of the Asset Sale Offer/Exchange Offer/Consent Solicitation. However, properly revoked Consents may be retendered at any time on or prior to the applicable Expiration Date. 4. Signatures on this Letter of Transmittal and Consent Form and Endorsements; Guarantee of Signatures. If this Letter of Transmittal and Consent Form is signed by the registered holder(s) of the Old Notes tendered hereby, the signature must correspond exactly with the name(s) as written on the face of the certificates without any change whatsoever. If any Old Notes tendered hereby are owned of record by two or more joint owners, all such owners, must sign this Letter of Transmittal and Consent Form. If any Old Notes tendered hereby are registered in different names on several certificates, it will be necessary to complete, sign and submit as many separate copies of this Letter of Transmittal and Consent Form as there are different registrations of certificates. When this Letter of Transmittal and Consent Form is signed by the registered holder or holders specified herein and tendered hereby, no endorsements of certificates are required unless Preferred Stock, Common Stock and New Notes are to be issued, or certificates for any untendered principal amount of Old Notes are to be reissued, to a person other than the registered holder. If this Letter of Transmittal and Consent Form is signed by a person other than the registered holder(s), then the tendered Old Notes and Consents must be endorsed by the registered holder(s), with the signature guaranteed by an Eligible Institution. If this Letter of Transmittal and Consent Form or a Notice of Guaranteed Delivery or any certificates are 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 unless waived by Kaiser, evidence satisfactory to Kaiser of their authority so to act must be submitted with this Letter of Transmittal and Consent Form. Except as described below, signatures on this Letter of Transmittal and Consent Form or a notice of revocation, as the case may be, must be guaranteed by an Eligible Institution. Signatures on this Letter of Transmittal and Consent Form or a notice of revocation, as the case may be, need not be guaranteed if the Old Notes tendered and Consents pursuant hereto are tendered (a) by a registered holder of Old Notes who has not completed either the box entitled "Special Issuance Instructions" or the box entitled "Special Delivery Instructions" on this Letter of Transmittal and Consent Form or (b) for the account of an Eligible Institution. In the event that signatures on this Letter of Transmittal and Consent Form or a notice of revocation, as the case may be, are required to be guaranteed, such guarantee must be by a firm which is a member of a registered national securities exchange, or a member of the National Association of Securities Dealers, Inc., or by a commercial bank or trust company having an office or correspondent in the United States, or otherwise an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934 (each, an "Eligible Institution"). Endorsements on certificates for Old Notes or signatures on proxies required by this Instruction 4 must be guaranteed by an Eligible Institution. -10- 5. Special Issuance and Delivery Instructions. Tendering holders should indicate in the applicable box the name and address to which certificates for the Preferred Stock, Common Stock and New Notes and/or substitute certificates evidencing Old Notes for the principal amounts not exchanged are to be issued or sent, if different from the name and address of the person signing this Letter of Transmittal and Consent Form. In the case of issuance in a different name, the employer identification or social security number of the person named must also be indicated. If no such instructions are given, any Old Notes not exchanged will be returned to the name and address of the person signing this Letter of Transmittal and Consent Form. 6. Beneficial Owners. Any beneficial owner of Old Notes whose notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wants to tender Old Notes in the Exchange Offer or in the Asset Sale Offer or tender Consents in the Consent Solicitation, should contact the registered holder promptly and instruct the registered holder to tender on the beneficial owner's behalf. If a beneficial owner wishes to tender directly, the beneficial owner must, prior to completing and executing the Letter of Transmittal and Consent Form and tendering Old Notes and Consents, make appropriate arrangements to register ownership of the notes in the beneficial owner's name. Beneficial owners should be aware that the transfer of registered ownership may take considerable time. 7. Tax Identification Number; Withholding. A holder of Old Notes whose Old Notes are accepted must provide Kaiser with the holder's correct taxpayer identification number, which, in the case of a holder who is an individual, is his or her social security number, or otherwise establish an exemption from backup withholding. If Kaiser is not provided with the correct taxpayer identification number, the tendering holder of Old Notes may be subject to a $50 penalty imposed by the Internal Revenue Service (the "IRS"), and the cash received pursuant to the Asset Sale Offer, together with any payments made on account of the Preferred Stock, Common Stock and New Notes acquired pursuant to the Exchange Offer, may be subject to backup withholding in an amount equal to 31% of any such cash or payments. To prevent backup withholding, each tendering holder of Old Notes subject to backup withholding must provide its correct taxpayer identification number by completing the Substitute Form W-9 provided in this Letter of Transmittal and Consent Form, including the certifications contained therein. Certain tendering holders of Old Notes (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding requirements. A foreign individual and other exempt holders (i.e., corporations) should certify to such exempt status on the Substitute Form W-9 provided in this Letter of Transmittal and Consent Form. 8. Transfer Taxes. Holders tendering pursuant to the Asset Sale Offer/Exchange Offer/Consent Solicitation will not be obligated to pay brokerage commissions or fees or to pay transfer taxes with respect to their tender under the Asset Sale Offer/Exchange Offer/Consent Solicitation unless the box entitled "Special Issuance Instructions" in this Letter of Transmittal and Consent Form has been completed, or unless the Preferred Stock, Common Stock and New Notes are to be issued to any person other than the holder of the Old Notes tendered. Kaiser will pay all other charges or expenses in connection with the Asset Sale Offer/Exchange Offer/Consent Solicitation. If holders tender Old Notes and the Asset Sale Offer/Exchange Offer/Consent Solicitation is not consummated, certificates representing the Old Notes will be returned to the holders at Kaiser's expense. Except as provided in this Instruction 8, it will not be necessary for transfer tax stamps to be affixed to the certificate(s) specified in this Letter of Transmittal and Consent Form. 9. Inadequate Space. If the space provided herein is inadequate, the aggregate principal amount of the Old Notes and Consents being tendered and the certificate numbers (if available) should be listed on a separate schedule attached hereto and separately signed by all parties required to sign this Letter of Transmittal and Consent Form. 10. Mutilated, Lost, Stolen or Destroyed Old Notes. Any holder whose Old Notes have been mutilated, lost, stolen or destroyed should contact the Paying/Exchange/Solicitation Agent at the address indicated above for further instructions. 11. Request for Assistance or Additional Copies. Requests for assistance or additional copies of the Prospectus or this Letter of Transmittal and Consent Form may be obtained from the Information Agent as follows: Jefferies & Company, Inc. 212/336-7160 or 800/933-6656 Harborside Financial Center 212/336-7353 (fax) Plaza III, Suite 705 Jersey City, New Jersey 07311 Attn: Victor Polizzotto -11-
PAYOR'S NAME: THE BANK OF NEW YORK - ------------------------------------------------------------------------------------------------- SUBSTITUTE Form W-9 Department of the Treasury Internal Revenue Service Payor's Request for Taxpayer Identification Number (TIN)
- ------------------------------------------------------------------------------------------------- Social Security Number Or PART I - PLEASE PROVIDE YOUR TIN IN Taxpayer Identification Number THE BOX AT RIGHT AND CERTIFY BY SIGNING AND DATING BELOW - ------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------- CERTIFICATION - UNDER PENALTIES OF PERJURY, I CERTIFY THAT: (1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me) and (2) I am not subject to backup withholding either because: (a) I am exempt from backup withholding; or (b) I have not been notified by the Internal Revenue Service (the "IRS") that I am subject to backup withholding as a result of failure to report all interest or dividends , or (c) the IRS has notified me that I am no longer subject to backup withholding. - ------------------------------------------------------------------------------------------------- PART II - AWAITING TIN _ PART III - EXEMPT _ - ------------------------------------------------------------------------------------------------- CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have been notified by the IRS that you are subject to backup withholding because of under-reporting interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding you received another notification from the IRS stating that you are no longer subject to backup withholding, do not cross out item (2). If you are exempt from backup withholding, check the box in Part III. Signature ______________________________________ Date________________ - -------------------------------------------------------------------------------------------------
PAYOR'S REQUEST FOR TAXPAYER IDENTIFICATION NUMBER (TIN) Please fill out your name and address below: - -------------------------------------------------------------------------------- Name - -------------------------------------------------------------------------------- Address (Number and street) - -------------------------------------------------------------------------------- City, State and Zip Code - -------------------------------------------------------------------------------- NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE ASSET SALE OFFER/EXCHANGE OFFER/CONSENT SOLICITATION. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART II 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 to the payer at the time of payment, 31% of all reportable payments made to me will be withheld until I provide a number and that, if I do not provide my taxpayer identification number within 60 days, such retained amounts shall be remitted to the IRS as backup withholding. _______________________________________________ ________________________________________________ Signature Date - -------------------------------------------------------------------------------------------------------------------------
-12- NOTICE OF GUARANTEED DELIVERY TO TENDER FOR PURCHASE 12% SENIOR SUBORDINATED NOTES DUE 2003 ON A PRO RATA BASIS AND TO TENDER FOR EXCHANGE 12% SENIOR SUBORDINATED NOTES DUE 2003 AND TO CONSENT TO CERTAIN INDENTURE AMENDMENTS WITH RESPECT TO THE 12% SENIOR SUBORDINATED NOTES DUE 2003 OF ICF KAISER INTERNATIONAL, INC. PURSUANT TO PROSPECTUS DATED OCTOBER 1, 1999 This Notice of Guaranteed Delivery or a form substantially equivalent hereto must be used to accept the offer of ICF Kaiser International, Inc., a Delaware corporation ("Kaiser"), to purchase a pro rata share of its 12% Senior Subordinated Notes due 2003 (the "Asset Sale Offer") and to exchange 2,600,000 shares of redeemable convertible preferred stock (the "Preferred Stock"), common stock representing approximately 15% of Kaiser's total common stock (the "Common Stock"), and up to $25 million principal amount of Kaiser's 15% Senior Notes due 2002 (the "New Notes") (collectively, the "Exchange Offer"), for all 12% Senior Subordinated Notes due 2003 (the "Old Notes") outstanding following the purchase of the Old Notes in the Asset Sale Offer, if (a) certificates representing the Old Notes are not immediately available or (b) time will not permit the Old Notes and all other required documents to reach the Paying/Exchange/Solicitation Agent on or prior to the Expiration Date or (c) time will not permit the holder of Old Notes to complete the procedure for book-entry transfer. This form may be delivered by an Eligible Institution (as defined) by mail or hand delivery or transmitted, via facsimile, telegram or telex to the Paying/Exchange/Solicitation Agent as set forth below. All capitalized terms used herein but not defined herein shall have the meanings ascribed to them in the Prospectus dated October 1, 1999 (the "Prospectus"). THE ASSET SALE OFFER/EXCHANGE OFFER/CONSENT SOLICITATION IS NOT BEING MADE TO (NOR WILL THE SURRENDER OF OLD NOTES OR CONSENTS BE ACCEPTED FROM OR ON BEHALF OF) HOLDERS OF OLD NOTES IN ANY JURISDICTION IN WHICH THE MAKING OR ACCEPTANCE OF THE ASSET SALE OFFER/EXCHANGE OFFER/CONSENT SOLICITATION WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION. THE ASSET SALE OFFER/EXCHANGE OFFER/CONSENT SOLICITATION WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME ON NOVEMBER 1, 1999, UNLESS EXTENDED. TENDERS OF CONSENTS MAY ONLY BE REVOKED UNDER THE CIRCUMSTANCES DESCRIBED IN THE PROSPECTUS AND THE LETTER OF TRANSMITTAL AND CONSENT FORM. TENDERS OF OLD NOTES MAY NOT BE WITHDRAWN ONCE MADE. The Paying/Exchange/Solicitation Agent for the Asset Sale Offer/Exchange Offer/Consent Solicitation THE BANK OF NEW YORK By Registered or Certified By Overnight Courier: By Hand: By Facsimile: Mail: The Bank of New York The Bank of New York The Bank of New York The Bank of New York Reorganization Department Attention: Reorganization Reorganization Department Attention: Jennifer Pedi Attention: Jennifer Pedi Corporate Trust Services Window, Attention: Jennifer Pedi 101 Barclay Street, 7 East 101 Barclay Street, 7 East Ground Level (212) 815-6339 New York, New York 10286 New York, New York 10286 101 Barclay Street, 7 East New York, New York 10286 Confirm by telephone: (212) 815-6331
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS, OR TRANSMISSION VIA FACSIMILE, OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY. This form is not to be used to guarantee signatures. If a signature on the Letter of Transmittal and Consent Form is required to be guaranteed by an "Eligible Institution" under the instructions thereto, such signature guarantee must appear in the applicable space provided in the signature box on the Letter of Transmittal and Consent Form. Ladies and Gentlemen: The undersigned hereby tender(s) to Kaiser, upon the terms and subject to the conditions set forth in the Prospectus, receipt of which is hereby acknowledged, the principal amount of Old Notes set forth below, pursuant to the guaranteed delivery procedures set forth in the Prospectus under the caption "Procedures for Participating in the Exchange Offer, Asset Sale Offer and Consent Solicitation." Subject to and effective upon acceptance for purchase or exchange of the Old Notes tendered herewith, the undersigned hereby sells, assigns and transfers to or upon the order of Kaiser all right, title and interest in and to and any and all claims in respect of or arising or having arisen as a result of the undersigned's status as a holder of, all Old Notes tendered hereby. In the event of a termination of the Asset Sale Offer/Exchange Offer/Consent Solicitation, the Old Notes tendered pursuant thereto will be returned to the tendering Old Note holder promptly. The undersigned hereby represents and warrants that the undersigned accepts the terms and conditions of the Prospectus and the Letter of Transmittal and Consent Form, has full power and authority to tender, exchange, assign and transfer the Old Notes tendered hereby and that, when accepted, Kaiser will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim or right. The undersigned will, upon request, execute and deliver any additional documents deemed by the Paying/Exchange/Solicitation Agent or Kaiser to be necessary or desirable to complete the sale, exchange, assignment and transfer of the Old Notes tendered. 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. PLEASE SIGN AND COMPLETE Signature (s) of Registered Holder(s) Address(es): or Authorized Signatory: -------------------------- - -------------------------------------- -------------------------------------- - -------------------------------------- -------------------------------------- Name(s) of Registered Holder(s): Area Code and Telephone No.: - -------------------------------------- -------------------------------------- - -------------------------------------- -------------------------------------- If Old Notes will be delivered by a book-entry transfer, provide the Principal Amount of Old Notes Tendered: following information: - -------------------------------------- Transaction Code No.: ---------------- - -------------------------------------- Depository Account No.: ---------------- Certificate No(s). of Old Note (if available): - -------------------------------------- - -------------------------------------- This Notice of Guaranteed Delivery must be signed by the registered holder(s) of Old Notes exactly as their name (s) appear (s) on the Old Notes or by person (s) authorized to become registered holder (s) by endorsements and documents transmitted with this Notice of Guaranteed Delivery. If signature is by a trustee, guardian, attorney-in-fact, officer of a corporation, executor, administrator, agent or other representative, such person must provide the following information: PLEASE PRINT NAME(S) AND ADDRESS(ES) Name: ------------------------------------------------------------------- ------------------------------------------------------------------- Capacity: ------------------------------------------------------------------- ------------------------------------------------------------------- Address(es): ------------------------------------------------------------------- ------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEE) The undersigned, a member of a registered national securities exchange, or a member of the National Association of Securities Dealers, Inc., or a commercial bank or trust company having an office or correspondent in the United States, or otherwise an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934 (each, an "Eligible Institution") hereby guarantees that, within three business days from the date of this Notice of Guaranteed Delivery, a properly completed and validly executed Letter of Transmittal and Consent Form (or a facsimile thereof), together with Old Notes tendered hereby in proper form for transfer (or confirmation of the book-entry transfer of such Old Notes into the Paying/Exchange/Solicitation Agent's account at a Book-Entry Transfer Facility) and all other required documents will be deposited by the undersigned with the Paying/Exchange/Solicitation Agent at one of its addresses set forth above. Name of Firm: ------------------------ --------------------------------- Authorized Signature Address: ------------------------ Name: ---------------------------- - ------------------------------------- Title: ---------------------------- Area Code and Telephone No.: Date: - ------------------------------------- ---------------------------- DO NOT SEND OLD NOTES WITH THIS FORM. ACTUAL SURRENDER OF OLD NOTES MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, A PROPERLY COMPLETED AND VALIDLY EXECUTED LETTER OF TRANSMITTAL AND CONSENT FORM AND ANY OTHER REQUIRED DOCUMENTS. ICF KAISER INTERNATIONAL, INC. OFFER TO PURCHASE A PRO RATA SHARE OF ITS 12% SENIOR SUBORDINATED NOTES DUE 2003 AND OFFER TO EXCHANGE REDEEMABLE CONVERTIBLE PREFERRED STOCK, COMMON STOCK AND 15% SENIOR NOTES DUE 2002 FOR ANY AND ALL REMAINING OUTSTANDING 12% SENIOR SUBORDINATED NOTES DUE 2003 AND SOLICITATION OF CONSENT TO CERTAIN INDENTURE AMENDMENTS WITH RESPECT TO THE 12% SENIOR SUBORDINATED NOTES DUE 2003 - ------------------------------------------------------------------------------- THE ASSET SALE OFFER/EXCHANGE OFFER/CONSENT SOLICITATION WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME ON NOVEMBER 1, 1999, UNLESS EXTENDED. TENDERS OF CONSENTS MAY ONLY BE REVOKED UNDER THE CIRCUMSTANCES DESCRIBED IN THE PROSPECTUS AND THE LETTER OF TRANSMITTAL AND CONSENT FORM. TENDERS OF OLD NOTES MAY NOT BE WITHDRAWN ONCE MADE. - ------------------------------------------------------------------------------- October 1, 1999 To Our Clients: Enclosed for your consideration is the Prospectus dated October 1, 1999 (the "Prospectus") and the related Letter of Transmittal and Consent Form and instructions thereto (the "Letter of Transmittal and Consent Form") in connection with the offer of ICF Kaiser International, Inc., a Delaware corporation ("Kaiser"), to purchase a pro rata share of its 12% Senior Subordinated Notes due 2003 (the "Asset Sale Offer") and to exchange 2,600,000 shares of redeemable convertible preferred stock (the "Preferred Stock"), common stock representing approximately 15% of Kaiser's total common stock (the "Common Stock"), and up to $25 million principal amount of Kaiser's 15% Senior Notes due 2002 (the "New Notes") (collectively, the "Exchange Offer"), for all 12% Senior Subordinated Notes due 2003 (the "Old Notes") outstanding following the purchase of the Old Notes in the Asset Sale Offer, and in connection with the solicitation (the "Consent Solicitation") of consents (the "Consents") upon the terms and subject to the conditions set forth in the Prospectus and Letter of Transmittal and Consent Form. Consummation of the Asset Sale Offer/Exchange Offer/Consent Solicitation is subject to certain conditions described in the Prospectus. Capitalized terms used herein but not defined shall have the meanings ascribed to them in the Prospectus. WE ARE THE REGISTERED HOLDER OF OLD NOTES HELD BY US FOR YOUR ACCOUNT. A TENDER OF ANY SUCH OLD NOTES CAN BE MADE ONLY BY US AS THE REGISTERED HOLDER AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL AND CONSENT FORM IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER OLD NOTES HELD BY US FOR YOUR ACCOUNT. Accordingly, we request instructions as to whether you wish us to tender any or all such Old Notes held by us for your account or whether you wish us to tender consents pursuant to the terms and conditions set forth in the Prospectus and the Letter of Transmittal and Consent Form. We urge you to read carefully the Prospectus and the Letter of Transmittal and the Consent Form before instructing us to tender your Old Notes or Consents. Your instructions to us should be forwarded as promptly as possible in order to permit us to tender Old Notes or Consents on your behalf in accordance with the provisions of the Asset Sale Offer/Exchange Offer/Consent Solicitation. THE ASSET SALE OFFER/EXCHANGE OFFER/CONSENT SOLICITATION WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME ON NOVEMBER 1, 1999 (THE "EXPIRATION DATE"), UNLESS EXTENDED. Tenders of Old Notes may not be withdrawn once made. Tenders of Consents may only be revoked under the circumstances described in the Prospectus and the Letter of Transmittal and Consent Form. Your attention is directed to the following: 1. The Exchange Offer is for the entire aggregate principal amount of outstanding Old Notes following the Asset Sale Offer. 2. Consummation of the Asset Sale Offer/Exchange Offer/Consent Solicitation is conditioned upon the conditions set forth in the Prospectus under the caption "Conditions of the Exchange Offer." 3. Tendering holders may revoke their Consent at any time until the Expiration Date. 4. Any transfer taxes incident to the transfer of Old Notes from the tendering holder to Kaiser will be paid by Kaiser, except as provided in the Prospectus and the instructions to the Letter of Transmittal and Consent Form. 5. The Asset Sale Offer/Exchange Offer/Consent Solicitation is not being made to (nor will the surrender of Old Notes be accepted from or on behalf of) holders of Old Notes in any jurisdiction in which the making or acceptance of the Asset Sale Offer/Exchange Offer/Consent Solicitation would not be in compliance with the laws of such jurisdiction. 6. The acceptance of Old Notes validly tendered, the acceptance of Consents validly tendered and not revoked and the payment of cash and the issuance of Preferred Stock, Common Stock and New Notes to the tendering Old Note holders will be made as promptly as practicable after the Expiration Date. 7. Kaiser expressly reserves the right, in its sole discretion, . to delay accepting any Old Notes or Consents, . to extend the Asset Sale Offer/Exchange Offer/Consent Solicitation, . to amend the terms of the Asset Sale Offer/Exchange Offer/Consent Solicitation, or . to terminate the Asset Sale Offer/Exchange Offer/Consent Solicitation. Any delay, extension, amendment or termination will be followed as promptly as practicable by oral or written notice to the Paying/Exchange/Solicitation Agent and a public announcement thereof. In the case of an extension, such public announcement shall include disclosure of the approximate number of Old Notes and Consents deposited to date and shall be made prior to 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. Without limiting the manner in which Kaiser may choose to make a public announcement of any extension, amendment or termination of the Asset Sale Offer/Exchange Offer/Consent Solicitation, Kaiser shall have no obligation to publish, advertise, or otherwise communicate any such public announcement, other than by making a timely release to the Dow Jones News Service. Except as otherwise provided in the Prospectus, revocation rights with respect to Consents tendered pursuant to the Consent Solicitation will not be extended or reinstated as a result of an extension or amendment of the Asset Sale Offer/Exchange Offer/Consent Solicitation. 8. Consummation of the Asset Sale Offer/Exchange Offer/Consent Solicitation may have adverse consequences to non-tendering Old Note holders, including that the reduced amount of outstanding Old Notes as a result of the Asset Sale Offer/Exchange Offer/Consent Solicitation may adversely affect the trading market, liquidity and market price of the Old Notes. If you wish to have us tender the Old Notes held by us for your account, please so instruct us by completing, executing and returning to us the instruction form that follows. [the rest of this page is intentionally left blank] ICF KAISER INTERNATIONAL, INC. INSTRUCTIONS REGARDING THE ASSET SALE OFFER/EXCHANGE OFFER/CONSENT SOLICITATION WITH RESPECT TO THE 12% SENIOR SUBORDINATED NOTES DUE 2003 THE UNDERSIGNED ACKNOWLEDGE(S) RECEIPT OF YOUR LETTER AND THE ENCLOSED DOCUMENTS REFERRED TO THEREIN RELATING TO THE ASSET SALE OFFER/EXCHANGE OFFER/CONSENT SOLICITATION OF KAISER. THIS WILL INSTRUCT YOU WHETHER TO TENDER THE PRINCIPAL AMOUNT OF OLD NOTES INDICATED BELOW HELD BY YOU FOR THE ACCOUNT OF THE UNDERSIGNED PURSUANT TO THE TERMS OF AND CONDITIONS SET FORTH IN THE PROSPECTUS AND THE LETTER OF TRANSMITTAL AND CONSENT FORM. BOX 1 [ ] Please tender the Old Notes held by you for my account, as indicated below.* BOX 2 [ ] Please do not tender any Old Notes held by you for my account. Date: _______________________, 1999 ---------------------------------- ---------------------------------- Signature(s) ---------------------------------- ---------------------------------- Please print name(s) here ---------------------------------- ---------------------------------- ---------------------------------- Please type or print address ---------------------------------- Area Code and Telephone Number ---------------------------------- Taxpayer Identification or Social Security Number ---------------------------------- My Account Number with You ________________________ * SIGNATURE(S) HEREON BY BENEFICIAL OWNER(S) SHALL CONSTITUTE AN INSTRUCTION TO THE NOMINEE TO TENDER ALL OLD NOTES HELD BY THE NOMINEE FOR SUCH BENEFICIAL OWNER(S). ICF KAISER INTERNATIONAL, INC. 9300 Lee Highway Fairfax, VA 22031 OFFER TO PURCHASE A PRO RATA SHARE OF ITS 12% SENIOR SUBORDINATED NOTES DUE 2003 AND OFFER TO EXCHANGE REDEEMABLE CONVERTIBLE PREFERRED STOCK, COMMON STOCK AND 15% SENIOR NOTES DUE 2002 FOR ANY AND ALL REMAINING OUTSTANDING 12% SENIOR SUBORDINATED NOTES DUE 2003 AND SOLICITATION OF CONSENT TO CERTAIN INDENTURE AMENDMENTS WITH RESPECT TO THE 12% SENIOR SUBORDINATED NOTES DUE 2003 - ------------------------------------------------------------------------------- THE ASSET SALE OFFER/EXCHANGE OFFER/CONSENT SOLICITATION WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME ON NOVEMBER 1, 1999, UNLESS EXTENDED. TENDERS OF CONSENTS MAY ONLY BE REVOKED UNDER THE CIRCUMSTANCES DESCRIBED IN THE PROSPECTUS AND THE LETTER OF TRANSMITTAL AND CONSENT FORM. TENDERS OF OLD NOTES MAY NOT BE WITHDRAWN ONCE MADE. - ------------------------------------------------------------------------------- To Brokers, Dealers, Commercial Banks, Trust Companies and other Nominees: ICF Kaiser International, Inc. ("Kaiser") is furnishing to you in connection with: . the offer of Kaiser to purchase for cash at par on a pro rata basis at least $35 million principal amount of outstanding 12% Senior Subordinated Notes due 2003 (the "Asset Sale Offer"), . the offer of Kaiser to exchange 2,600,000 shares of redeemable convertible preferred stock (the "Preferred Stock"), common stock representing approximately 15% of Kaiser's total common stock (the "Common Stock"), and up to $25 million principal amount of Kaiser's 15% Senior Notes due 2002 (the "New Notes") (collectively, the "Exchange Offer"), for all 12% Senior Subordinated Notes due 2003 (the "Old Notes") outstanding following the purchase of the Old Notes in the Asset Sale Offer, and . the solicitation of holders of Old Notes to consent to the amendments of the indenture governing the Old Notes and to consent to a non-interference instruction to the trustee for the Old Notes (the "Consent Solicitation"), upon the terms and subject to the conditions set forth in the Prospectus dated October 1, 1999 (the "Prospectus") and in the related Letter of Transmittal and Consent Form and the instructions thereto (the "Letter of Transmittal and Consent Form"). Enclosed herewith are copies of the following documents: 1. The Prospectus; 2. The Letter of Transmittal and Consent Form for your use and for the information of your clients; 3. Notice of Guaranteed Delivery to be used to accept the Asset Sale Offer, Exchange Offer and Consent Solicitation if the Old Notes and all other required documents cannot be delivered to The Bank of New York, as Paying/Exchange/Solicitation Agent, on or prior to the Expiration Date (as defined) or if the holder of Old Notes cannot complete the procedure for book-entry transfer; and 4. A form of letter which may be sent to your clients for whose account you hold the Old Notes in your name or in the name of a nominee, with space provided for obtaining such clients' instructions with regard to the Asset Sale Offer, Exchange Offer and Consent Solicitation. PLEASE NOTE THAT THE ASSET SALE OFFER, EXCHANGE OFFER AND CONSENT SOLICITATION WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME ON NOVEMBER 1, 1999 (THE "EXPIRATION DATE"), UNLESS EXTENDED. WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. Kaiser will not pay any fees or commission to any broker or dealer or other person (other than to the Paying/Exchange/Solicitation Agent) for soliciting tenders of the Old Notes and Consents pursuant to the Asset Sale Offer, Exchange Offer and Consent Solicitation. You will be reimbursed for customary mailing and handling expenses incurred by you in forwarding the enclosed materials to your clients. Additional copies of the enclosed materials may be obtained by contacting the Information Agent as provided in the enclosed Letter of Transmittal and Consent Form. Very truly yours, ICF Kaiser International, Inc. NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY OTHER PERSON AS THE AGENT OF KAISER OR THE PAYING/EXCHANGE/SOLICITATION AGENT OR AUTHORIZE YOU OR ANY OTHER PERSON TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION ON BEHALF OF ANY OF THEM WITH RESPECT TO THE ASSET SALE OFFER, EXCHANGE OFFER OR CONSENT SOLICITATION NOT CONTAINED IN THE PROSPECTUS OR THE LETTER OF TRANSMITTAL AND CONSENT FORM. -----END PRIVACY-ENHANCED MESSAGE-----