ICF KAISER INTERNATIONAL INC, 424B4, 1994-01-05

ICF KAISER INTERNATIONAL INC
424B4, 1994-01-05
HAZARDOUS WASTE MANAGEMENT

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<PAGE>

RULE 424B4
REGISTRATION NO. 33-70986

125,000 UNITS
ICF KAISER INTERNATIONAL, INC.

$125,000,000 12% SENIOR SUBORDINATED NOTES DUE 2003 WITH

WARRANTS TO PURCHASE 600,000 SHARES OF THE COMPANY'S

COMMON STOCK

-----------

Each unit (a "Unit") offered by ICF Kaiser International, Inc. ("ICF Kaiser"
or the "Company") pursuant to this Prospectus consists of $1,000 principal
amount of the Company's 12% Senior Subordinated Notes due 2003 (the "Notes")
and 4.8 warrants (the "Warrants"), each to purchase one share of the Company's
common stock, $0.01 par value per share (the "Common Stock").

Interest on the Notes is payable June 30 and December 31, commencing June 30,
1994. The Notes are not redeemable prior to December 31, 1998. On and after
that date, the Notes are redeemable at any time at the option of the Company,
in whole or in part, at the redemption prices set forth herein.

The Notes will be unsecured obligations of the Company and will be
subordinated in right of payment to all existing and future Senior Indebtedness
of the Company (as defined). The Notes will be effectively subordinated to all
existing and future claims of creditors and preferred stockholders of the
Company's subsidiaries. As of August 31, 1993, after giving effect to the
issuance of the Notes offered hereby and application of the proceeds thereof,
the amount of indebtedness of the Company and its subsidiaries ranking senior
in right of payment to the Notes would have been approximately $3.7 million and
the outstanding amount of preferred stock of the Company's subsidiaries would
have been approximately $1.6 million. See "Capitalization," "Description of
Credit Facility," and "Description of the Notes."

In the event of a Change of Control (as defined), the Company will be
required to offer to purchase all Notes then outstanding at a purchase price
equal to 101% of the aggregate principal amount of such Notes, plus accrued and
unpaid interest, if any, to the date of purchase.

Each Warrant will entitle the holder thereof to acquire one share of Common
Stock at a price equal to $5.00 per share, subject to adjustment under certain
circumstances. Prior to their expiration on December 31, 1998, the Warrants
will be exercisable at any time on or after their date of issuance. Upon
exercise, the holders of Warrants would be entitled to purchase, in the
aggregate, 600,000 shares of Common Stock. On January 3, 1994, the last
reported sales price on the New York Stock Exchange Composite Tape for the
Common Stock was $4.75. See "Market Prices and Dividend Policy."

SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE
CONSIDERED BY PROSPECTIVE PURCHASERS OF THE UNITS.

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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NORHAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATIONTO
THE CONTRARY IS A CRIMINAL OFFENSE.

-----------

<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC* COMMISSIONS+ COMPANY++
<S> <C> <C> <C>
Per Unit............................... 97.190% 2.916% 94.274%
Total.................................. $121,487,500 $3,644,625 $117,842,875
</TABLE>

* Plus accrued interest, if any, from the date of issuance.
+ The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933. See
"Underwriting."
++Before deducting expenses, payable by the Company, estimated at $950,000.

-----------

The Units are being offered by the Underwriters as set forth in
"Underwriting." It is expected that delivery of the Units will be made on or
about January 11, 1994 at the offices of Dillon, Read & Co. Inc., New York, New
York, against payment therefor in New York funds. The Underwriters are:

DILLON, READ & CO. INC. WERTHEIM SCHRODER & CO.
INCORPORATED

The date of this Prospectus is January 4, 1994.
<PAGE>

AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 (herein, together with all
amendments and exhibits, referred to as the "Registration Statement") under
the Securities Act of 1933, as amended (the "Act"), with respect to the Units
offered hereby. As permitted by the rules and regulations of the Commission,
this Prospectus does not contain all the information set forth in the
Registration Statement and in the exhibits and schedules thereto. For further
information about the Company and the Units, reference is made to the
Registration Statement. The Registration Statement may be inspected and copied
at the Commission's Public Reference Room, Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following Regional Offices of the
Commission: New York Regional Office, 7 World Trade Center, New York, New York
10048; and Chicago Regional Office, 500 West Madison Street, Chicago, Illinois
60661. The statements contained in this Prospectus about the contents of any
contract or other document filed as an exhibit to the Registration Statement
are not complete, each such statement being qualified in all respects by such
reference. Copies of each such document may be obtained from the Commission at
its principal office in Washington, D.C. upon payment of the charges
prescribed by the Commission.

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Commission. Reports,
proxy and information statements, and other information filed by the Company
can be inspected and copied at the Commission's Public Reference Room and
Regional Offices set forth above, and copies of such material can be obtained
from the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates.

The Common Stock has been traded on the New York Stock Exchange since
September 14, 1993, and reports, proxy material, and other information
concerning the Company may be inspected at the office of the New York Stock
Exchange, Inc., 20 Broad Street, New York, New York 10005. Prior to September
14, 1993, the Common Stock was traded on the Nasdaq National Market.

----------------

IN CONNECTION WITH THIS OFFERING THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE UNITS, NOTES
OR WARRANTS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

FOR CALIFORNIA RESIDENTS

WITH RESPECT TO SALES OF THE NOTES BEING OFFERED HEREBY TO CALIFORNIA
RESIDENTS, AS OF THE DATE OF THIS PROSPECTUS, SUCH NOTES MAY BE SOLD ONLY TO:
(1) "ACCREDITED INVESTORS" WITHIN THE MEANING OF REGULATION D UNDER THE
SECURITIES ACT OF 1933, (2) BANKS, SAVINGS AND LOAN ASSOCIATIONS, TRUST
COMPANIES, INSURANCE COMPANIES, INVESTMENT COMPANIES REGISTERED UNDER THE
INVESTMENT COMPANY ACT OF 1940, PENSION AND PROFIT-SHARING TRUSTS,
CORPORATIONS OR OTHER ENTITIES WHICH, TOGETHER WITH THE CORPORATION'S OR OTHER
ENTITY'S AFFILIATES WHICH ARE UNDER COMMON CONTROL, HAVE A NET WORTH ON A
CONSOLIDATED BASIS ACCORDING TO THEIR MOST RECENT REGULARLY PREPARED FINANCIAL
STATEMENTS (WHICH SHALL HAVE BEEN REVIEWED, BUT NOT NECESSARILY AUDITED, BY
OUTSIDE ACCOUNTANTS) OF NOT LESS THAN $14,000,000 AND SUBSIDIARIES OF THE
FOREGOING OR (3) ANY PERSON (OTHER THAN A PERSON FORMED FOR THE SOLE PURPOSE
OF PURCHASING THE NOTES BEING OFFERED HEREBY) WHO PURCHASES AT LEAST
$1,000,000 AGGREGATE AMOUNT OF THE NOTES OFFERED HEREBY. EACH CALIFORNIA
RESIDENT PURCHASING NOTES OFFERED HEREBY WILL BE DEEMED TO REPRESENT BY SUCH
PURCHASE THAT IT COMES WITHIN ONE OF THE AFOREMENTIONED CATEGORIES AND THAT IT
WILL NOT SELL OR OTHERWISE TRANSFER ANY OF SUCH NOTES TO A CALIFORNIA RESIDENT
UNLESS THE TRANSFEREE COMES WITHIN ONE OF THE AFOREMENTIONED CATEGORIES AND
THAT IT WILL ADVISE THE TRANSFEREE OF THIS CONDITION WHICH TRANSFEREE, BY
BECOMING SUCH, WILL BE DEEMED TO BE BOUND BY THE SAME RESTRICTIONS ON RESALE.

2
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements (including the notes thereto) appearing
elsewhere in this Prospectus. On June 26, 1993, ICF Kaiser International, Inc.
changed its name from ICF International, Inc. The entire group of ICF Kaiser
International, Inc. companies will be referred to in this Prospectus as "ICF
Kaiser" or the "Company."

THE COMPANY

ICF Kaiser International, Inc., through ICF Kaiser Engineers, Inc. and its
other operating subsidiaries, is one of the nation's largest engineering,
construction and consulting services firms, offering its clients over 20 years
of experience in all aspects of environmental regulation and compliance and
providing access to leading process technologies. The Company provides fully
integrated consulting, engineering and construction services to public and
private sector clients in the related markets of environment, infrastructure
and industry. The Company estimates that of its $385 million of fiscal year
1993 service revenue, approximately 63% was attributable to environmental
services, 17% to infrastructure-related work, 13% to industrial work, and 7% to
other consulting services. As of August 31, 1993, the Company employed
approximately 4,000 people located in more than 80 offices worldwide.

In the environmental market, ICF Kaiser applies its skills and expertise with
sophisticated technologies to help its clients solve complex environmental
problems. The Company is involved in all phases of environmental analysis,
design and construction, and has expertise in hazardous and radioactive waste
cleanup, waste minimization and disposal, risk assessment, permitting,
environmental compliance, global climate change and clean air, alternative
fuels, analysis of ground-water contamination and the clean up of harbors and
waterways. The Company believes that this breadth and depth of knowledge
contributes to its ability to compete successfully when bidding for major
environmental restoration projects.

ICF Kaiser also provides management, engineering and construction services in
the infrastructure and industrial markets. Projects include rapid transit
systems, light and heavy rail systems, bridges, highways, manufacturing
facilities, and hydroelectric, fossil fuel, nuclear and renewable energy
plants. Increasingly, these projects require a substantial level of
environmental problem-solving in both design and construction. The Company
believes that its ability to integrate its environmental disciplines with its
engineering expertise and large-project management skills is a marketing
advantage.

The Company is currently working on several large, highly visible projects
including: (i) a two-and-one-half year, $800 million contract at the U.S.
Department of Energy's Hanford nuclear site in Richland, Washington, the
nation's largest waste clean-up site under the "Superfund" program; (ii) a
five-year, $140 million contract for the construction management of a new, $5.4
billion wastewater treatment facility project in Boston Harbor, the single
largest environmental effort in the United States; and (iii) a two-year
extension of a $33 million contract for the planning, design and construction
services for an $18 billion, 88-kilometer mass transit system in Taipei,
Taiwan, the largest such program underway in the world.

3
<PAGE>

THE OFFERING

Securities offered hereby......... 125,000 Units, each Unit consisting of
$1,000 principal amount of 12% Senior Sub-
ordinated Notes due 2003 and 4.8 Warrants,
each to purchase one share of Common Stock
for $5.00 per share. The Notes and the War-
rants will be separately transferable on or
after the date of the consummation of the
Offering.

DESCRIPTION OF THE NOTES

The Notes......................... $125,000,000 of 12% Senior Subordinated
Notes.

Maturity date..................... December 31, 2003.

Interest Payment Dates............ June 30 and December 31 of each year, com-
mencing June 30, 1994.

Redemption at option of Company... The Notes will be redeemable at the option
of the Company, in whole or in part, at any
time on or after December 31, 1998 at the
redemption prices set forth herein, plus
accrued and unpaid interest thereon.

Change of Control................. Upon the occurrence of a Change of Control
(as defined), the Company will be required
to offer to purchase all of the outstanding
Notes at 101% of the principal amount
thereof, plus accrued and unpaid interest
thereon.

Ranking........................... The Notes will be unsecured obligations of
the Company and will be subordinated to all
existing and future Senior Indebtedness of
the Company.

Restrictive covenants............. The Indenture will contain certain
covenants which, among other things, limit:
the incurrence of additional indebtedness
by the Company and its Restricted
Subsidiaries (as defined); the payment of
dividends; the repurchase of capital stock
or subordinated indebtedness; the making of
certain other distributions, loans and
investments; the sale of assets and the
sale of the stock of Restricted
Subsidiaries; the creation of restrictions
on the ability of Restricted Subsidiaries
to pay dividends or make other payments to
the Company; and the ability to enter into
certain transactions with affiliates or to
merge, consolidate or transfer
substantially all assets. See "Description
of the Notes--Certain Covenants."

Use of proceeds................... The net proceeds to be received by the
Company will be used to retire the
Company's 13.5% Senior Subordinated Notes,
to repurchase warrants issued in connection
with such Senior Subordinated Notes, to
repurchase its Series 1 Junior Convertible
Preferred Stock, to repurchase its Series
2C Senior Preferred Stock and Series 2C
Warrants issued in connection with the
Series 2C Senior Preferred Stock and to
repay certain senior debt.

4
<PAGE>

DESCRIPTION OF WARRANTS

Total number of Warrants.......... The Warrants entitle the holders thereof to
purchase upon exercise an aggregate of
600,000 shares of Common Stock.

Expiration date................... The Warrants will expire on December 31,
1998.

Exercise.......................... Each Warrant will entitle the holder to
acquire one share of Common Stock at a
price equal to $5.00 per share, subject to
adjustment from time to time upon the
occurrence of certain changes in Common
Stock, certain Common Stock distributions,
certain issuances of options or convertible
securities, certain dividends and
distributions and certain other increases
in the number of shares of Common Stock.
The Warrants will be exercisable at any
time on or after their date of issuance. A
Warrant does not entitle the holder thereof
to receive any dividends paid on Common
Stock. See "Description of the Warrants."

RISK FACTORS

Prospective purchasers should consider carefully certain factors relating to
an investment in the Units. See "Risk Factors."

5
<PAGE>

SUMMARY CONSOLIDATED FINANCIAL DATA

The following statement of operations data and balance sheet data, excluding
the data for the six months ended August 31, 1993 and 1992, have been derived
from financial statements audited by Coopers & Lybrand, independent
accountants. This information should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
appearing elsewhere in this Prospectus and with the Company's consolidated
financial statements and notes thereto.

<TABLE>
<CAPTION>
SIX MONTHS
ENDED AUGUST 31, YEAR ENDED FEBRUARY 28,
------------------ ----------------------------
1993 1992 1993 1992 1991
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT RATIOS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Gross revenue(a)............. $274,842 $369,875 $678,882 $710,873 $624,976
Service revenue(a)(b)........ 174,428 198,885 384,985 379,826 363,318
Cost of restructuring and
disposal of
businesses, net............. -- 1,436 1,336 73,354 --
Operating income (loss)...... 4,073 11,987 22,744 (43,963) 33,287
Income (loss) before income
taxes....................... 1,437 8,475 14,894 (54,310) 24,018
Net income (loss)............ 690 4,915 8,639 (40,516) 14,291
Net income (loss) available
for common shareholders..... (1,823) 2,402 3,613 (42,719) 13,434

BALANCE SHEET DATA
(END OF PERIOD):
Working capital.............. $ 86,446 $ 96,760 $ 87,845 $ 66,065 $ 74,754
Total assets................. 285,385 325,024 295,578 318,947 357,457
Total debt(c)................ 81,643 109,624 74,391 86,332 105,362
Redeemable preferred stock... 45,105 45,394 44,824 45,161 26,498
Shareholders' equity......... 55,691 55,528 58,521 51,151 88,839

OTHER DATA:
Capital expenditures......... $ 739 $ 2,786 $ 4,638 $ 3,644 $ 5,629
Depreciation and
amortization................ 4,862 5,661 10,766 9,159 11,438
EBITDA(d).................... 8,935 19,084 34,846 38,550 44,725
Interest expense(e).......... 3,341 4,410 8,629 10,778 11,264
EBITDA/Interest
expense(d)(e)............... 2.67x 4.33x 4.04x 3.58x 3.97x
Total debt/EBITDA(c)(d)...... -- -- 2.13x 2.24x 2.36x
</TABLE>
- --------
(a) Gross revenue and service revenue for the fiscal years ended February 28,
1993 and February 29, 1992, exclude businesses discontinued by the Company
in fiscal year 1992; the financial data for fiscal year 1991 includes
results for the entire Company.
(b) Service revenue is calculated by deducting the costs of subcontracted
services and other direct costs from the gross revenue and adding the
Company's share of the income (loss) of joint ventures and affiliated
companies.
(c) Total debt includes both the current and long-term portions of long-term
debt and subordinated debt.
(d) Represents operating income (loss), excluding the cost of restructuring and
disposal of businesses, plus depreciation and amortization. EBITDA is
presented here not as a measure of operating results, but rather as a
measure of the Company's debt service ability. EBITDA is not required by
generally accepted accounting principles and should not be considered as an
alternative to net income or any other measure of performance required by
generally accepted accounting principles or as an indicator of the
Company's operating performance.
(e) Excludes $1.5 million of interest expense related to discontinued
businesses for fiscal year 1992.

6
<PAGE>

THE COMPANY

In its most recent fiscal year ended February 28, 1993, ICF Kaiser reported
gross and service revenue of $679 million and $385 million, respectively.
Service revenue is derived by deducting subcontract and direct material costs
from gross revenue and adding the Company's share of income (loss) of joint
ventures and affiliated companies. ICF Kaiser believes it is appropriate to
analyze its business in relation to service revenue rather than gross revenue
because service revenue reflects the work directly performed by the Company.
The percentage breakdowns of ICF Kaiser's service revenue (excluding
discontinued businesses) by market for the periods shown below were as follows
(dollars in millions):

<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED FEBRUARY 28,
AUGUST 31, --------------------------------------
1993 1993 1992 1991
------------ ------------ ------------ ------------
AMOUNT % AMOUNT % AMOUNT % AMOUNT %
------ ----- ------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Environment................. $120.4 69.0 $240.2 62.4 $230.2 60.6 $160.6 50.7
Infrastructure.............. 28.5 16.3 66.6 17.3 57.7 15.2 47.5 15.0
Industry.................... 19.2 11.0 51.2 13.3 63.0 16.6 88.3 27.9
Other consulting............ 6.3 3.7 27.0 7.0 28.9 7.6 20.4 6.4
------ ----- ------ ----- ------ ----- ------ -----
Total..................... $174.4 100.0 $385.0 100.0 $379.8 100.0 $316.8 100.0
====== ===== ====== ===== ====== ===== ====== =====
</TABLE>

ICF Kaiser's services in the environmental market include consulting,
engineering and construction involved with the remediation of hazardous and
radioactive waste, waste minimization and disposal, risk assessment, global
warming and acid rain, alternative fuels and clean up of harbors and waterways.
The Company minimizes its participation in the collection, treatment, storage
and disposal of hazardous waste because of the risks and potential liability
involved with such activities.

Demand for environmental services is driven by a number of factors,
including: the need to improve the quality of the environment; federal, state
and municipal regulation and enforcement; and increased liability associated
with pollution-related injury and damage. The Company's strategic plan is to
position itself as a fully integrated environmental services firm that can
provide expertise across all phases of an environmental remediation project. By
leveraging its technological expertise at the front-end analysis and assessment
phases, ICF Kaiser improves its position in participating in the subsequent
phases of engineering and construction, which the Company believes will be a
major area for market growth.

ICF Kaiser also provides consulting, engineering, and construction services
to the infrastructure market. This market historically has been driven by the
need to maintain and expand roads, highways, mass transit systems, and
airports. Increasingly, environmental concerns, such as reducing automotive air
pollutant emissions, are a driving force behind new infrastructure and
transportation initiatives. The Company has capitalized on its specialized
environmental skills to win projects to provide planning, design and
construction services.

7
<PAGE>

ICF Kaiser assists clients in private industry by providing the engineering
and construction skills needed to maintain and retrofit existing plants and
replace aging production capacity with newer, more environmentally responsible
facilities. Through its acquisition of ICF Kaiser Engineers, Inc. in 1988, the
Company acquired the engineering and construction skills, as well as access to
process technologies, needed to establish a leadership position in serving the
basic metals and mining industries, including aluminum, steel, copper, and
coal.

All of ICF Kaiser's markets are global in nature. To capitalize on
international opportunities while minimizing its business development risks,
the Company has established international business relationships through joint
ventures, marketing agreements and direct equity investments. The Company has
projects underway in over 25 countries.

ICF Kaiser International, Inc. was incorporated in Delaware in 1987 as the
parent holding company of ICF Incorporated, a nationwide consulting and
engineering firm that has provided services since 1969. The Company's
headquarters is located at 9300 Lee Highway, Fairfax, Virginia 22031-1207, and
its telephone number is (703) 934-3600.

8
<PAGE>

RISK FACTORS

Prospective purchasers of the Units should carefully consider the following,
as well as other information contained in this Prospectus.

SUBSTANTIAL LEVERAGE; ABILITY TO SERVICE AND INCUR DEBT; PREFERRED STOCK TERMS

On a pro forma basis at August 31, 1993, assuming completion of the Offering
and application of the proceeds as described in "Use of Proceeds," the Company
had total indebtedness of $123.9 million, representing 64% of total
capitalization. This high degree of leverage may have important consequences
to the holders of the Units offered hereby. In particular, at least in the
near term: (i) a substantial portion of the Company's cash flow from
operations will be required for the payment of interest expense; (ii) the
level of the Company's indebtedness may make it difficult to obtain additional
financing in the future for working capital, acquisitions, capital
expenditures, repayment of debt, or other purposes; and (iii) the level of the
Company's leverage may make it more difficult for the Company's subsidiaries
to obtain performance and similar bonds related to certain activities. The
Company will be more leveraged after completion of the Offering than many of
its competitors, which may leave the Company less able to take advantage of
market opportunities or withstand weakness in its markets. The ability of the
Company to meet its debt service and other obligations will depend largely on
the future performance of the Company, which will be subject in part to
prevailing economic and competitive conditions, government spending patterns,
and to other factors beyond its control. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

The Company plans to repay outstanding indebtedness under its current
revolving credit facility with a syndicate of banks with the proceeds of the
Offering. After completion of the Offering, the Company will enter into a new
bank credit facility (the "New Credit Facility") and will continue to have
funded debt and letters of credit that will require the Company to comply with
certain financial and non-financial covenants. See "Use of Proceeds" and
"Description of Credit Facility."

The Indenture and the New Credit Facility will limit the Company's ability
to incur additional indebtedness. See "Description of the Notes--Certain
Covenants--Limitations on Additional Indebtedness" and "Description of Credit
Facility." The Company anticipates that such limitations will prohibit the
Company from incurring a substantial amount of additional indebtedness other
than under the New Credit Facility. As a result, new funding, to the extent
needed, will have to take the form of raising additional equity capital,
refinancing existing debt, or obtaining significant proceeds from the sale of
assets.

In addition to the restrictive covenants under the Indenture and the New
Credit Facility, the agreements governing the Company's Series 2D Senior
Preferred Stock ("Series 2D Preferred Stock"), which will remain outstanding
following the Offering, provide that certain restrictive covenants become
operative while the Company is in arrears with respect to any dividend on such
preferred stock for a period in excess of 100 days or has failed to make a
mandatory redemption. Such covenants would prohibit the Company from, among
other things: disposing of assets for consideration of more than $1 million in
a single transaction; entering into mergers; making acquisitions; guaranteeing
any obligation in excess of $1 million; or incurring indebtedness other than
as permitted pursuant to the terms of the Indenture governing the Notes
without the consent of the holder of the Series 2D Preferred Stock. See
"Description of Capital Stock--Series 2D Preferred Stock." Because of
limitations on the payment of dividends contained in the agreement governing
the Company's 13.5% Senior Subordinated Notes due 1999 (the "13.5% Notes"),
the Company did not pay the dividends on its Series 2C Senior Preferred Stock
and the Series 2D Preferred Stock that were due on August 31 and November 30,
1993. The Company plans to retire the 13.5% Notes in connection with the
completion of the Offering and to pay such dividends with cash on hand at that
time. However, unless the

9
<PAGE>

Offering is completed or other arrangements are agreed upon prior to January
14, 1994, the restrictive covenants described above will be operative from
January 14, 1994 until payment of the dividends.

Because of the restrictions described above, during the next several years
it will be necessary for the Company to issue additional equity securities to
fund any significant acquisitions and invest in joint ventures beyond the
level permitted by the Indenture. See "Description of the Notes--Certain
Covenants--Limitations on Restricted Payments."

PLEDGE OF ASSETS

As collateral under the Company's current revolving credit facility, the
Company and most of its subsidiaries have granted a security interest in
substantially all of their current assets, including accounts receivable and
certain other general intangibles. The stock of certain subsidiaries of the
Company also has been pledged. Although the New Credit Facility will not be
secured by a pledge of subsidiary stock, it will be secured by substantially
all of the current assets of the Company and most of its subsidiaries. The
Notes offered hereby are unsecured obligations of the Company. In the event of
bankruptcy or liquidation of the Company, there can be no assurance that
sufficient assets would be available for payment of the Notes. The Indenture
limits, but does not prohibit, the incurrence of additional secured
indebtedness by the Company and its subsidiaries.

SUBORDINATED STATUS OF NOTES

Payment of principal (and premium, if any) and interest on the Notes is
subordinated and subject to the right of prior payment in full of all Senior
Indebtedness as defined in the Indenture. In the event of a payment default or
other event of default with respect to Senior Indebtedness, no payment may be
made on account of the Notes unless the payment or other default with respect
to Senior Indebtedness has been cured or waived. Senior Indebtedness includes,
without limitation, indebtedness outstanding under the New Credit Facility,
including all amendments, extensions, increases, supplements and replacements
thereof. The Notes will also be subordinated to all other instruments that do
not specifically state that the indebtedness evidenced thereby is subordinated
in right of payment to either the Notes or all subordinated indebtedness of
the Company. See "Description of the Notes--Ranking."

HOLDING COMPANY STRUCTURE

As a holding company, ICF Kaiser International, Inc. derives substantially
all of its operating income and cash flow from its subsidiaries. ICF Kaiser
International, Inc.'s ability to make required principal and interest payments
with respect to its indebtedness, including the Notes, depends on the earnings
of its subsidiaries and on its ability to receive funds from such subsidiaries
through inter-company payments. The ability of the Company's subsidiaries to
make such payments will be subject to, among other things, applicable state
laws and restrictions that may be entered into by such subsidiaries. Because
the Notes are obligations of ICF Kaiser International, Inc. only, and have not
been guaranteed by its subsidiaries, such subsidiaries are not obligated or
required to pay any amounts due pursuant to the Notes or to make funds
available in the form of dividends or advances to ICF Kaiser International,
Inc. The Indenture will require ICF Kaiser International, Inc. to prohibit
Restricted Subsidiaries from agreeing to restrictions on distributions to the
Company. See "Description of the Notes--Certain Covenants--Limitations on
Restrictions on Distributions from Subsidiaries." In addition, subsidiaries
that are organized or do business in countries other than the United States
are subject to the risk of governmental restrictions on repatriation of funds
to the United States.

Since substantially all of ICF Kaiser International, Inc.'s operations are
conducted, and substantially all of its assets are owned, by its subsidiaries,
the Notes will effectively be subordinated to all existing and future
liabilities and preferred stock of the Company's subsidiaries, including the
guarantees by most of the Company's subsidiaries of indebtedness incurred
under the New Credit Facility. Any right of ICF Kaiser International, Inc. to
participate in any distribution of the assets of any of the Company's
subsidiaries upon the subsidiary's liquidation, reorganization or insolvency
(and the consequent right of the holders of the Notes

10
<PAGE>

to participate in the distribution of those assets) will be subject to the
claims of the creditors (including trade creditors) and preferred
stockholders, if any, of such subsidiary, except to the extent ICF Kaiser
International, Inc. has a valid claim against such subsidiary as a creditor of
such subsidiary. In addition, in the event that such claims of ICF Kaiser
International, Inc. as a creditor of a subsidiary are recognized, such claims
would be subordinated to any security interest in the assets of such
subsidiary and any indebtedness of such subsidiary senior to that held by ICF
Kaiser International, Inc. See "Pledge of Assets." The ability of Restricted
Subsidiaries to incur indebtedness; guarantee debt and issue preferred stock
will be limited by certain of the restrictive covenants in the New Credit
Facility and the Indenture. See "Description of Credit Facility" and
"Description of the Notes--Certain Covenants--Limitations on Subsidiary Debt
and Preferred Stock" and "--Limitations on Guarantees."

DEPENDENCE ON KEY CUSTOMERS AND FEDERAL GOVERNMENT CONTRACTS

A substantial portion of ICF Kaiser's revenues are derived from services
performed directly or indirectly under contracts with various agencies and
departments of the Federal government. During fiscal year 1993, approximately
47% of the Company's consolidated gross revenue was derived from contracts
with the U.S. Government. The U.S. Department of Energy ("DOE") accounted for
approximately 29% of consolidated gross revenue, and the U.S. Department of
Defense ("DOD"), the U.S. Environmental Protection Agency ("EPA") and other
Federal agencies collectively accounted for approximately 18% of the Company's
consolidated gross revenue, during fiscal year 1993. These agencies and
departments accounted for approximately the same percentages of service
revenue of the Company during fiscal year 1993.

Contracts made with the U.S. Government generally are subject to annual
approval of funding. Limitations imposed on spending by Federal government
agencies, which might result from efforts to reduce the Federal deficit or for
other reasons, may limit the continued funding of the Company's existing
contracts with the Federal government and may limit the ability of the Company
to obtain additional contracts. These limitations, if significant, could have
a material adverse effect on the Company.

All contracts made with the U.S. Government may be terminated by the U.S.
Government at any time, with or without cause. There can be no assurance that
existing or future contracts with the U.S. Government would not be terminated
or that the government will continue to use the Company's services at levels
comparable to current use. See "Business--Competition and Contract Award
Process."

REGULATION OF FEDERAL GOVERNMENT CONTRACTING ACTIVITIES

The Company is subject to general Federal regulation with respect to its
contracting activities with the Federal government. For example, the Company
is subject to audit with respect to costs incurred and charged to the Federal
government. In one such audit, the government has asserted that certain costs
claimed as reimbursable under government contracts were not allocated in
accordance with government cost accounting standards. Management believes that
the potential effect of disallowed costs, if any, for the periods currently
under audit and for periods not yet audited has been adequately provided for
and will not have a material adverse effect on the Company's financial
condition.

Because certain of the Company's subsidiaries provide the Federal government
with nuclear energy and defense-related services, these subsidiaries and a
substantial number of their employees are required to have and maintain
security clearances from the Federal government. There can be no assurance
that the required security clearances will be obtained and maintained in the
future.

Because of its nuclear energy and defense-related services, the Company is
subject to foreign ownership, control and influence ("FOCI") regulations
imposed by the Federal government and designed to prevent the release of
classified information to contractors subject to FOCI. Under these
regulations, FOCI concerns may arise as a result of a variety of factors,
including foreign ownership of substantial percentages of the Company's equity
securities or debt, the percentage of gross revenue the Company receives from
foreign sources, and whether any directors or officers are not U.S. citizens.
Subsidiaries of the Company with facility security clearances or sensitive DOE
contracts file reports with DOD and DOE which disclose each of the above
factors

11
<PAGE>

as well as disclosing all other events and changes that affect the potential
for FOCI. As required by DOD and DOE, the Company has implemented procedures
designed to insulate such subsidiaries from impermissible FOCI. There can be
no assurance that such measures will prevent FOCI concerns from affecting the
ability of the Company's subsidiaries to secure and maintain certain types of
DOD and DOE contracts.

DEPENDENCE ON ENVIRONMENTAL REGULATION

Much of the Company's business is generated either directly or indirectly as
a result of federal and state laws, regulations and programs related to
environmental issues. Accordingly, a reduction in the number or scope of these
laws and regulations, or changes in government policies regarding the funding,
implementation or enforcement of such laws, regulations and programs, could
have a material adverse effect on the Company's business. See "Business--
Overview of Markets."

In July 1993, the Department of Energy commenced an initiative to achieve
substantial cost reductions and productivity improvements within the Office of
Environmental Restoration and Waste Management ("OERWM"). A study commissioned
by OERWM reported on November 30, 1993 that the DOE is paying private
contractors more than a third more than the private sector pays for comparable
projects and that DOE projects experience cost overruns of approximately 48%
(compared to approximately 6% on private sector projects). The study also
cited extensive delays on DOE projects. The study concluded that a major
reason for the poor performance of the OERWM in managing its projects was its
reliance on private contractors. Any significant effort by the DOE to reduce
the role of private contractors in environmental projects could have a
material adverse effect on the Company.

ENVIRONMENTAL CONTRACTOR RISKS

Although the Company believes that it generally benefits from increased
environmental regulations, and from enforcement of those regulations,
increased regulation and enforcement also create significant risks for the
Company. The assessment, analysis, remediation, handling and management of
hazardous substances necessarily involve significant risks, including the
possibility of damages or personal injuries caused by the escape of hazardous
materials into the environment, and the possibility of fines, penalties or
other regulatory action. These risks include potentially large civil and
criminal liabilities for violations of environmental laws and regulations, and
liabilities to customers and to third parties for damages arising from
performing services for clients. See "Business--Potential Environmental
Liability."

Potential Liabilities Arising Out of Environmental Laws and Regulations

All facets of the Company's business are conducted in the context of a
rapidly developing and changing statutory and regulatory framework. The
Company's operations and services are affected by and subject to regulation by
a number of federal agencies including the EPA and the Occupational Safety and
Health Administration ("OSHA"), as well as applicable state and local
regulatory agencies.

The Comprehensive Environmental Response, Compensation and Liability Act of
1980 ("CERCLA") addresses cleanup of sites at which there has been a release
or threatened release of hazardous substances into the environment.
Increasingly, there are efforts to expand the reach of CERCLA to make
environmental contractors responsible for cleanup costs by claiming that
environmental contractors are owners or operators of hazardous waste
facilities or that they arranged for treatment, transportation or disposal of
hazardous substances. Several recent court decisions have accepted these
claims. Should the Company be held responsible under CERCLA for damages caused
while performing services or otherwise, it may be forced to bear such
liability by itself, notwithstanding the potential availability of
contribution or indemnity from other parties.

The Resource Conservation and Recovery Act of 1976, as amended in 1984
("RCRA"), is the principal federal statute governing hazardous waste
generation, treatment, transportation, storage and disposal. RCRA, or EPA-
approved state programs at least as stringent, govern waste handling
activities involving wastes classified as "hazardous." See "Business--Overview
of Markets." Substantial fees and penalties may be imposed under RCRA and
similar state statutes for any violation of such statutes and the regulations
thereunder.

12
<PAGE>

Potential Liabilities Involving Clients and Third Parties

In performing services for its clients, the Company potentially could be
liable for breach of contract, personal injury, property damage, and
negligence, including claims for lack of timely performance or for failure to
deliver the service promised (including improper or negligent performance or
design, failure to meet specifications, and breaches of express or implied
warranties). The damages available to a client, should it prevail in its
claims, are potentially large and could include consequential damages.

Environmental contractors, in connection with work performed for clients,
also potentially face liabilities to third parties from various claims
including claims for property damage or personal injury stemming from a release
of hazardous substances or otherwise. Claims for damage to third parties could
arise in a number of ways, including: through a sudden and accidental release
or discharge of contaminants or pollutants during the performance of services;
through the inability, despite reasonable care, of a remedial plan to contain
or correct an ongoing seepage or release of pollutants; through the inadvertent
exacerbation of an existing contamination problem; or through reliance on
reports prepared by the Company. Personal injury claims could arise
contemporaneously with performance of the work or long after completion of the
project as a result of alleged exposure to toxic or hazardous substances. In
addition, increasing numbers of claimants assert that companies performing
environmental remediation should be adjudged strictly liable, i.e. liable for
damages even though its services were performed using reasonable care, on the
grounds that such services involved "abnormally dangerous activities."

Clients frequently attempt to shift various of the liabilities arising out of
remediation of their own environmental problems to contractors through
contractual indemnities. Such provisions seek to require the Company to assume
liabilities for damage or personal injury to third parties and property and for
environmental fines and penalties. Moreover, during the past year, the EPA has
constricted significantly the circumstances under which it will indemnify its
contractors against liabilities incurred in connection with CERCLA projects.
There are other proposals both in Congress and at the regulatory agencies to
further restrict indemnification of contractors from third party claims.

Consistent with industry experience and trends, the Company has found it
difficult to obtain pollution insurance coverage, in amounts and on terms which
are economically reasonable, against possible liabilities that may be incurred
in connection with its conduct of its environmental business. An uninsured
claim arising out of the Company's environmental activities, if successful and
of sufficient magnitude, could have a material adverse effect on the Company.
See "Business--Potential Environmental Liability" and "Business--Insurance."

COMPETITION

The market for the Company's services is highly competitive. The Company and
its subsidiaries compete with many other firms ranging from small firms to
large multinational firms having substantially greater financial, management,
and marketing resources than the Company. Other competitive factors include
quality of services, technical qualifications, reputation, geographic presence,
price and the availability of key professional personnel. See "Business--
Competition and Contract Award Process."

FEDERAL GOVERNMENT CONFLICT OF INTEREST POLICIES AND POSSIBLE RESTRUCTURING OF
CONSULTING SUBSIDIARIES

Federal agencies that are the Company's regular customers (including the DOD,
DOE, and EPA) have formal policies against awarding contracts that would
present actual or potential conflicts of interest with other activities of the
contractor. The Company follows practices designed to comply with these
policies. However, in light of the broad range of environmental and related
services provided by various of the Company's subsidiaries to Federal and state
governmental units and private sector customers, the Company is considering
restructuring its subsidiaries that are engaged primarily in providing
consulting services to governmental units ("Government Consulting
Subsidiaries"). The goal of such a restructuring would be to provide further
assurance to the Federal agencies for which the Government Consulting
Subsidiaries perform services that such subsidiaries are insulated from the
interests of the Company's private sector clients. If

13
<PAGE>

implemented, the restructuring would likely involve arrangements pursuant to
which the Government Consulting Subsidiaries, or a single Government Consulting
Subsidiary, would have a Board of Directors independent of the Company. Other
steps would also be taken to segregate the management, operations and
compensation policies of the Government Consulting Subsidiaries from those of
the rest of the Company. Such a restructuring would not affect the flow of
earnings from the Government Consulting Subsidiaries to the Company. It would,
however, eliminate the Company's ability to exercise control over the
Government Consulting Subsidiaries during the term of the arrangements
described above.

FLUCTUATIONS IN QUARTERLY FINANCIAL RESULTS

The Company's quarterly financial results may be affected by, among other
factors, the commencement and completion or termination of major projects.
Accordingly, results for any one quarter are not necessarily indicative of
results for any other quarter or for the year.

ATTRACTION AND RETENTION OF PROFESSIONAL PERSONNEL

The Company's ability to retain and expand its staff of qualified
professionals will be an important factor in determining the Company's future
success. The market for these professionals, especially environmental
professionals, is competitive. There can be no assurance that the Company will
continue to be successful in its efforts to attract and retain such
professionals.

CHANGE OF CONTROL PROVISION WITH RESPECT TO THE NOTES

In the event of a Change of Control, the Company would be required, subject
to certain conditions, to offer to purchase all outstanding Notes at a price
equal to 101% of the principal amount thereof, plus accrued interest thereon.
As of August 31 1993, after giving effect to the Offering and the application
of the proceeds therefrom as described under "Use of Proceeds," the Company
would not have sufficient funds available to purchase all the Notes were they
to be tendered in response to an offer made as a result of such a Change of
Control. There can be no assurance that, at the time of a Change of Control,
the Company will have sufficient cash to repay all amounts due under the Notes.
If a Change of Control should occur, the rights of the Holders of the Notes to
receive payment for their Notes upon a Change of Control Offer would be subject
to the prior payment rights of holders of any Senior Indebtedness. See
"Description of the Notes--Ranking." The terms of the New Credit Facility
prohibit the optional payment or prepayment or any redemption of the Notes. If,
following a Change of Control, the Company has insufficient funds to purchase
all the Notes tendered pursuant to such an offer, or is prohibited from
purchasing the Notes pursuant to the terms of any Senior Indebtedness, an event
of default in respect of the Notes would occur. The Change of Control
provisions of the Indenture may have the effect of discouraging attempts by a
person or group to take control of the Company.

ABILITY TO REALIZE VALUE ON WARRANTS

There can be no assurance that the Common Stock will trade at a price above
the exercise price of the Warrants prior to the expiration of the Warrants.
After completion of the Offering and application of the proceeds therefrom, the
Company will have 2,956,040 shares of Common Stock that may be issued pursuant
to outstanding warrants (other than the Warrants) and, as of November 30, 1993,
2,298,976 shares of Common Stock may be issued pursuant to outstanding stock
options. Future sales of such shares and sales of shares purchased by holders
of options or warrants could have an adverse effect on the market price of the
Common Stock.

ORIGINAL ISSUE DISCOUNT

The Notes will be issued with original issue discount. Consequently, a holder
of a Note will have income for tax purposes arising from such original issue
discount prior to the actual receipt of cash in respect of such income. Because
the U.S. Department of the Treasury Regulations promulgated under the original
issue discount provisions of the Internal Revenue Code of 1986, as amended, are
only in proposed form, it is not

14
<PAGE>

possible to determine with certainty, prior to the issuance of the Notes, the
calculation or accrual of original issue discount on the Notes. See "Certain
Federal Tax Consequences."

ABSENCE OF PUBLIC MARKET FOR THE UNITS, NOTES OR WARRANTS

The Company does not intend to list the Units, Notes or Warrants on any
securities exchange. Prior to the Offering described herein, there has been,
and there currently is, no existing market for the Units, Notes or Warrants.
There can be no assurance that an active trading market will develop or be
sustained upon completion of this Offering of the Units, Notes or Warrants. The
Underwriters have advised the Company that they intend to make a market in the
Units, Notes and Warrants after the consummation of this Offering, although
they are under no obligation to do so, and any market making with respect to
the Units, Notes or Warrants may be discontinued at any time without notice. If
such a market were to develop, the Units, Notes and Warrants could trade at
prices that may be lower than the initial offering price thereof, depending on
many factors, including prevailing interest rates, the Company's operating
results and the market for similar securities. Accordingly, there can be no
assurance as to the liquidity of any market that may develop for the Units,
Notes or Warrants, the ability of holders of the Units, Notes or Warrants to
sell their Units, Notes or Warrants or the price such holders would receive
upon such sale.

USE OF PROCEEDS

The net proceeds to be received by the Company from the sale of the Units
offered hereby are expected to be approximately $116.9 million (after deducting
the underwriting discount and estimated offering expenses). The net proceeds
will be used: (i) to retire the Company's 13.5% Notes at 114.17% ($34.3 million
in the aggregate); (ii) to repurchase warrants issued in connection with the
1989 issuance of the 13.5% Notes ($1.6 million); (iii) to repurchase the
Company's Series 1 Junior Convertible Preferred Stock having an aggregate
liquidation preference of $6.9 million, which pays a dividend of 9.25% of the
aggregate liquidation preference per annum, plus accrued and unpaid dividends
($5.1 million); (iv) to repurchase the Company's Series 2C Senior Preferred
Stock having an aggregate liquidation preference of $25 million, which pays a
dividend of 9.75% of the aggregate liquidation preference per annum at 106.25%
together with the Company's Series 2C Warrants to purchase 2,976,190 shares of
Common Stock which were issued in connection with the 1992 issuance of the
Series 2C Senior Preferred Stock ($26.6 million in the aggregate); (v) to pay
down $45 million under the Company's current revolving credit facility which
expires on September 30, 1994, at a current interest rate of 7.5%; and (vi) to
repay, on behalf of the Company's Employee Stock Ownership Plan ("ESOP"), the
outstanding balance of $1.7 million under a related ESOP Credit Facility. The
balance of the net proceeds will be used for general corporate purposes.

15
<PAGE>

MARKET PRICES AND DIVIDEND POLICY

Since September 14, 1993, the Common Stock has been traded on the New York
Stock Exchange ("NYSE") under the symbol "ICF." Prior to that date, the Common
Stock was traded on the Nasdaq National Market. At December 17, 1993, there
were 1,233 shareholders of record; the Company believes that there are
approximately 6,150 beneficial owners of Common Stock. On January 3, 1994, the
closing price of the Company Stock as reported by the NYSE was $4.75. The
following table sets forth, for the periods indicated, the high and low sale
prices for the Common Stock as reported on the Nasdaq National Market (through
September 13, 1993) and the NYSE (from September 14, 1993, to the latest date
indicated):

<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
Fiscal Year Ended February 29, 1992
First Quarter................................................. $18.50 $14.25
Second Quarter................................................ 16.75 8.00
Third Quarter................................................. 10.00 6.50
Fourth Quarter................................................ 11.00 6.25
Fiscal Year Ended February 28, 1993
First Quarter................................................. $10.875 $ 7.25
Second Quarter................................................ 7.75 5.00
Third Quarter................................................. 7.50 4.00
Fourth Quarter................................................ 8.50 6.00
Fiscal Year Ending February 28, 1994
First Quarter................................................. $ 6.875 $ 4.75
Second Quarter................................................ 5.50 3.75
Third Quarter (September 1--September 13)..................... 4.875 4.375
Third Quarter (September 14--November 30)..................... 5.375 4.00
Fourth Quarter (through January 3, 1994)...................... 4.875 4.00
</TABLE>

The Company 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 the Company's earnings will be retained for
use in the business. The Board of Directors determines the Company's Common
Stock dividend policy based on the Company's results of operations, payment of
dividends on preferred stock (if any is outstanding), financial condition,
capital requirements, and other circumstances. The Company's credit agreements
allow dividends to be paid on its capital stock provided that the Company
complies with certain limitations imposed by the terms of such agreements. See
"Description of Credit Facility."

16
<PAGE>

CAPITALIZATION

The following table sets forth the capitalization of the Company as of August
31, 1993 and as adjusted as of such date to give effect to the Offering and the
application of the estimated proceeds therefrom from the Units as described in
"Use of Proceeds." This table should be read in conjunction with the
consolidated financial statements and notes thereto appearing elsewhere in this
Prospectus.

<TABLE>
<CAPTION>
AUGUST 31, 1993
--------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Debt:
Revolving credit facility(a)......................... $ 45,000 $ --
ESOP guaranteed notes(a)............................. 3,333 --
Notes payable........................................ 3,310 3,310
12% Senior Subordinated Notes(b)..................... -- 120,588
13.5% Subordinated debt.............................. 30,000 --
-------- --------
Total debt......................................... 81,643 123,898
Redeemable Preferred Stock of Subsidiary............... 1,599 1,599
9.75% Series 2C Senior Preferred Stock................. 24,195 --
9.75% Series 2D Senior Preferred Stock................. 19,311 19,311
9.25% Series 1 Junior Convertible Preferred Stock...... 6,900 --
Common shareholders' equity(c)(d)...................... 48,791 47,147
-------- --------
Total capitalization............................... $182,439 $192,225
======== ========
</TABLE>
- --------
(a) See "Description of Credit Facility."
(b) Excludes $3.5 million original issue discount and $0.9 million assigned to
the Warrants.
(c) Adjusted to take into account the retirement of the 13.5% Notes, the
repurchase of the Warrants issued in connection with the 13.5% Notes, the
repurchase of the Series 1 Junior Convertible Preferred Stock, the
repurchase of the Series 2C Senior Preferred Stock together with the Series
2C Warrants, the repayment of senior debt, the repayment of the ESOP loan
and other costs related to the foregoing items.
(d) Includes $0.9 million assigned to the Warrants.

17
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data of the Company for each year in the
five-year period ending February 28, 1993, excluding "Other Data," have been
derived from the Company's consolidated financial statements, which have been
audited by Coopers & Lybrand, independent accountants. This information should
be read in conjunction with the Consolidated Financial Statements and the
related notes thereto appearing elsewhere in this Prospectus and "Management's
Discussion and Analysis of Financial Condition and Results of Operations." The
"Other Data" and the selected consolidated financial data of the Company as of
August 31, 1992 and 1993 and for the six-month periods then ended have been
prepared on the same basis as the Consolidated Financial Statements appearing
elsewhere herein and, in the opinion of the Company, include all normal and
recurring adjustments (consisting of only normal recurring adjustments)
necessary to present fairly the information set forth therein. Operating
results for the six months ended August 31, 1993 are not necessarily
indicative of the results that may be expected for the fiscal year ending
February 28, 1994.

<TABLE>
<CAPTION>
SIX MONTHS
ENDED AUGUST 31, YEAR ENDED FEBRUARY 28,
------------------ ------------------------------------------------
1993 1992 1993 1992 1991 1990 1989(B)
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Gross revenue (a)....... $274,842 $369,875 $678,882 $710,873 $624,976 $503,904 $297,866
Service revenue (a) (c). 174,428 198,885 384,985 379,826 363,318 278,255 174,328
Cost of restructuring
and disposal of
businesses, net........ -- 1,436 1,336 73,354 -- -- --
Operating income (loss). 4,073 11,987 22,744 (43,963) 33,287 22,563 13,845
Income (loss) before
income taxes........... 1,437 8,475 14,894 (54,310) 24,018 14,906 11,584
Net income (loss)....... 690 4,915 8,639 (40,516) 14,291 8,794 6,524
Net income (loss) avail-
able for common
shareholders........... (1,823) 2,402 3,613 (42,719) 13,434 8,794 6,524
Net income (loss) per
common share
Primary................ (0.09) 0.11 0.16 (2.25) 0.71 0.57 0.46
Fully diluted.......... (0.09) 0.11 0.16 (2.25) 0.68 0.57 0.45

BALANCE SHEET DATA
(END OF PERIOD):
Total assets............ $285,385 $325,024 $295,578 $318,947 $357,457 $237,057 $140,751
Working capital......... 86,446 96,760 87,845 66,065 74,754 43,430 27,253
Long-term liabilities... 76,233 109,744 75,602 85,675 109,820 53,019 40,440
Total debt(d)........... 81,643 109,624 74,391 86,332 105,362 75,619 32,418
Redeemable preferred
stock.................. 45,105 45,394 44,824 45,161 26,498 3,997 3,997
Shareholders' equity.... 55,691 55,528 58,521 51,151 88,839 58,503 19,595

OTHER DATA:
Capital expenditures.... $ 739 $ 2,786 $ 4,638 $ 3,644 $ 5,629 $ 3,646 $ 2,344
Depreciation and
amortization........... 4,862 5,661 10,766 9,159 11,438 6,304 2,969
EBITDA(e)............... 8,935 19,084 34,846 38,550 44,725 28,867 16,814
Interest expense(f)..... 3,341 4,410 8,629 10,778 11,264 8,418 2,574
EBITDA/Interest
expense(e) (f)......... 2.67x 4.33x 4.04x 3.58x 3.97x 3.43x 6.53x
Total debt/EBITDA(d)
(e).................... -- -- 2.13x 2.24x 2.36x 2.62x 1.93x
Ratio of earnings to
fixed charges(g)....... 1.2x -- 1.5x (g) 2.2x 1.6x 2.3x
Ratio of earnings to
fixed charges (pro
forma)(g).............. (g) -- 1.2x -- -- -- --
</TABLE>
- --------
(a) Gross revenue and service revenue for the fiscal years ended February 28,
1993 and February 29, 1992, exclude businesses discontinued by the Company
in fiscal 1992; the financial data for fiscal 1989 through 1991 include
results for the entire Company.
(b) Includes the effect from June 1988 of the acquisition of ICF Kaiser
Engineers, Inc.
(c) Service revenue is calculated by deducting the costs of subcontracted
services and reimbursable direct costs from the gross revenue and adding
the Company's share of the income of joint ventures and affiliated
companies.
(d) Total debt includes both the current and long-term portions of long-term
debt and subordinated debt.
(e) Represents operating income (loss), excluding the cost of restructuring
and disposal of businesses, plus depreciation and amortization. EBITDA is
presented here not as a measure of operating results, but rather as a
measure of the Company's debt service ability. EBITDA is not required by
generally accepted accounting principles and should not be considered as
an alternative to net income or any other measure of performance required
by generally accepted accounting principles or as an indicator of the
Company's operating performance.
(f) Excludes $1.5 million of interest expense related to discontinued
businesses for fiscal 1992.
(g) For the purposes of calculating the ratio of earnings to fixed charges,
earnings consist of income (loss) before income taxes, undistributed
earnings of 50% or less owned persons, and the amount of fixed charges.
Fixed charges consist of redeemable preferred dividends of a subsidiary,
amortization of debt expense, and interest (including interest capitalized
and the portion of rent deemed representative of the interest factor). For
the year ended February 29, 1992, earnings as defined were insufficient to
cover fixed charges by approximately $55.8 million. On a pro forma basis
for the six months ended August 31, 1993, pro forma earnings as defined
were insufficient to cover pro forma fixed charges by approximately $2.5
million.

18
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Overview

For the six months ended August 31, 1993, ICF Kaiser's net income was
$690,000 and net income (loss) available for common shareholders was
($1,823,000) or ($0.09) per share, compared to net income of $4,915,000 and net
income available for common shareholders of $2,402,000 or $0.11 per share for
the six months ended August 31, 1992. The decrease in net income is primarily
the result of a decline in the utilization of professionals due to weakened
demand in the Company's markets, the completion of several large industrial
projects subsequent to August 31, 1992, the sale of two income-producing
businesses (ICF-Lewin, Inc. and a minority interest in Acer Group Limited), and
the delayed impact of the Company's cost reduction efforts which began in the
fourth quarter of the year ended February 28, 1993 (fiscal 1993). These
continuing efforts, which had a more favorable effect on the second quarter of
fiscal 1994 than the first, combined with increased margins in environmental
and certain other businesses and improved performance at the DOE's Hanford
site, resulted in a $2.0 million increase in second quarter net income as
compared to the first quarter.

For fiscal 1993, ICF Kaiser's net income was $8.6 million, or $0.16 per
share, compared to a net loss of $40.5 million, or ($2.25) per share, for the
year ended February 29, 1992 (fiscal 1992). Net income in fiscal 1993 was
adversely impacted by a net $1.3 million pretax addition to the provision for
restructuring and disposal of businesses discussed below, and a $0.9 million
pretax loss on the sale of ICF Kaiser's minority interest in Acer Group
Limited, offset by a $0.1 million net credit for the unusual items discussed in
Note Q to the consolidated financial statements.

In fiscal 1993, the Company successfully completed several large industrial
projects. In the second half of fiscal 1993 and the first half of fiscal 1994,
because of the completion of these projects and the slowdown in government
contracting which the Company experienced following the change in Presidential
Administrations, recovery of the Company's overhead and administrative costs
was lower than anticipated. In the fourth quarter of fiscal 1993, ICF Kaiser
reviewed its indirect cost structure and reduced its administrative and
overhead employment base by 13%, resulting in a one-time $0.6 million charge
for severance in the fourth quarter of fiscal 1993. These cost-cutting efforts
have continued through the first half of fiscal 1994. The benefits of these
ongoing efforts are primarily expected to be realized in future periods.
Additionally, during fiscal 1993, the Company also incurred a heavy periodic
cost for preparing and defending its successful bid for the
engineer/constructor contract at the DOE Hanford site, as well as costs
associated with completing its restructuring program during fiscal 1993. ICF
Kaiser management believes that these overhead cost reductions, as well as
further cost cutting actions taken in fiscal 1994, will allow the Company to
match more closely its costs to its direct labor base while enabling the
Company to respond to further growth.

Outlook

Similar to many companies in its industry, ICF Kaiser continued to experience
weak demand through the first half of fiscal 1994 in its key markets:
environment, infrastructure, industry, and energy. The pace of Federal spending
under the Company's existing environmental contracts, although improved in the
second quarter of fiscal 1994, has slowed considerably compared to the past
year. This slowdown over the prior year period was compounded by several
factors, including the change in Presidential Administrations, a continued
sluggish market for major industrial and environmental expenditures and the
completion of several large industrial projects. These factors resulted in
reduced levels of gross and service revenue. However, the Company's gross and
service revenues increased in the second quarter compared to the first quarter
of the Company's current fiscal year. ICF Kaiser's management continues to
focus on areas for additional cost-cutting, improving the efficiency of
operations, and developing potential marketing opportunities.

19
<PAGE>

Bid and proposal activity remained active during the first half of fiscal
1994. ICF Kaiser has won a number of new environmental, infrastructure,
industrial, and energy contracts.

On October 15, 1993, the Company announced that it had signed a material
amendment to the contract it won in early 1993 to continue to provide services
at the DOE Hanford site. The Company estimates that the architect-engineering
and construction management services to be provided under the amended contract
will be worth more than $800 million in gross revenue over the two-and-one-half
year term of the amended contract which began on October 1, 1993. See
"Business--Backlog." Assuming the Company's historical performance ratings are
maintained over this two-and-one-half year period, the Company estimates that
the fees it will be eligible to earn under this contract would increase
significantly. In addition, the amended contract provides the Company with the
opportunity to earn incentive fees related to technology transfers and
efficiency savings. In connection with the contract amendment and in order to
reduce duplication of work and to improve management control and efficiency of
operation, the Company and DOE agreed to assign management of substantially all
aspects of the amended contract to Westinghouse Hanford Company, the current
management and operations contractor at the DOE's Hanford site.

Gross Revenue

Gross revenue represents services provided to customers with whom the Company
has a primary contractual relationship. Included in gross revenue are costs of
certain services subcontracted to third parties as well as certain other
reimbursable direct project costs, such as materials procured by the Company on
behalf of its customers.

Comparison of Six months ended August 31, 1993 to Six months ended August 31,
1992--Gross revenue for the six months ended August 31, 1993 was $274.8
million, a decrease of $95.1 million or 25.7% from $369.9 million in the
comparable period last year. The decrease is primarily attributable to: the
completion of two large industrial projects in fiscal 1993 ($60.1 million); the
sale of the Company's Lewin-ICF subsidiary at the end of the third quarter of
fiscal 1993 ($9.3 million); a decline in the Company's energy engineering
portion of its environmental business ($6.3 million); and the general impact of
reduced government spending and the sluggish economy discussed above. This
decrease was partially offset by an increase in ICF Kaiser's
engineer/constructor services to the DOE at the Hanford site ($5.6 million).

Comparison of Fiscal 1993 to Fiscal 1992--Gross revenue was $678.9 million in
fiscal 1993, a $32.0 million or 4.5% reduction from $710.9 million in fiscal
1992. This decrease in the Company's gross revenue is primarily attributable to
the Company's Kaiser Engineers Australia Pty Ltd. ("KEA") subsidiary, which was
successfully winding down its natural gas liquefaction project in northwest
Australia ahead of schedule ($37.5 million); the completion of a large
industrial project in the first half of fiscal 1993 ($34.2 million); and the
impact of several other projects nearing completion. This decrease was
partially offset by an increase in ICF Kaiser's project to manage the
construction of a pulverized coal injection facility ($30.0 million) and an
increase in ICF Kaiser's engineer/constructor services to the DOE at its
Hanford site ($21.6 million).

Comparison of Fiscal 1992 to Fiscal 1991--Gross revenue increased to $710.9
million in fiscal 1992 from $625.0 million in fiscal 1991. Excluding the gross
revenues from those businesses discontinued in fiscal 1992 under the
restructuring plan, fiscal 1991 revenues would have been $541.5 million. The
$169.4 million or 31.3% increase in comparable gross revenues is partially
attributable ($35 million) to the Company owning 100% of KEA in all of fiscal
1992, whereas the Company did not acquire the remaining 50% interest in KEA it
did not already own until the third quarter of fiscal year 1991. Prior to this
acquisition, the Company's initial 50% interest in KEA was accounted for under
the equity method through the second quarter of fiscal year 1991. Additional
growth in gross revenue for this period is attributable to the start-up of
several large industrial projects ($116 million) and ICF Kaiser's
engineer/constructor services at the DOE's Hanford site ($29 million).

20
<PAGE>

Service Revenue

Service revenue is derived by deducting the costs of subcontracted services
and other direct costs from gross revenue and adding the Company's share of the
income (loss) of joint ventures and affiliated companies. ICF Kaiser believes
it is appropriate to analyze operating margins and other ratios in relation to
service revenue because such revenue and ratios reflect the work directly
performed by the Company and because the percentage relationship between gross
revenue and operating expenses can vary from period to period.

The following table sets forth the gross revenue and service revenue (both
excluding discontinued businesses) and the percentage relationship between them
for the periods presented (dollars in millions):

<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED FEBRUARY
AUGUST 31, 28,
-------------- ----------------------
1993 1992 1993 1992 1991
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Gross revenue........................... $274.8 $369.9 $678.9 $710.9 $541.5
Service revenue......................... $174.4 $198.9 $385.0 $379.8 $316.8
Percentage relationship................. 63.5% 53.8% 56.7% 53.4% 58.5%
</TABLE>

Comparison of Six months ended August 31, 1993 to Six months ended August 31,
1992--Service revenue for the six months ended August 31, 1993 was $174.4
million, a decrease of $24.5 million or 12.3% from $198.9 million in the
comparable period of the prior year. Service revenue was primarily impacted by
the factors affecting gross revenue discussed above, as well as by a decline at
KEA due to the successful early completion of a natural gas liquefaction
project on Australia's northwest shelf ($3.2 million). For the six months ended
August 31, 1993 equity in income of joint ventures and affiliated companies,
which is a component of service revenue, decreased $2.3 million from the
comparable period last year primarily as a result of the decline at KEA ($0.9
million) and the sale of the Company's investment in Acer Group Limited in the
last quarter of fiscal 1993 ($0.9 million).

Service revenue as a percentage of gross revenue was 63.5% for the six months
ended August 31, 1993 compared to 53.8% in the comparable period last year.
Service revenue decreased proportionately less than gross revenue primarily
because of the changing nature of ICF Kaiser's contract base. As the large
industrial projects have been completed, a greater portion of the Company's
projects are being performed by ICF Kaiser and its personnel as opposed to
subcontractors. These factors were partially offset by the decline in equity in
income from joint ventures and affiliated companies discussed above.

Comparison of Fiscal Year 1993 to Fiscal Year 1992--Fiscal 1993 service
revenue increased to $385.0 million from $379.8 million in fiscal 1992, an
increase of 1.4%. Service revenue as a percentage of gross revenue increased to
56.7% in fiscal 1993 from 53.4% in fiscal 1992, indicating that a greater
portion ofICF Kaiser's gross revenue was being provided by the Company and its
personnel rather than subcontractors. The majority of the projects that were
completed or neared completion in fiscal 1992 had a significant percentage of
their gross revenues being generated from subcontracted work and material
costs. In fiscal 1993, the reduction in service revenue due to the completion
of the projects discussed above was partially offset by increased environment
and infrastructure-related service revenue of $9.8 million and $8.3 million,
respectively.

Comparison of Fiscal Year 1992 to Fiscal Year 1991--Fiscal 1992 service
revenue increased to$379.8 million from $316.8 million in fiscal 1991, an
increase of 19.8%. Services to the DOE at the Hanford nuclear site accounted
for $27.3 million of this increase, while the remaining growth is attributable
to internal work at other DOE facilities and private sector contracts. In
addition, equity in income of joint ventures and affiliated companies, which is
a component of service revenue, decreased to $6.0 million in fiscal year 1992
from $8.2 million in fiscal 1991, primarily due to a $3.3 million decrease in
income from a joint venture caused by a negotiated increase in the cost of
services provided to the joint venture. The decrease in earnings from this
joint venture was offset by income earned on services provided to the joint
venture by ICF Kaiser. Service revenue as a percentage of gross revenue is
lower in fiscal 1992 (53.4%) as compared to fiscal 1991 (58.5%) due to several
large construction projects that were ongoing in fiscal 1992 that carried a
higher percentage of subcontracted work.

21
<PAGE>

Operating Expenses

The Company believes that it is appropriate to analyze operating margins and
other ratios in relation to service revenue because such revenue reflects the
work directly performed by the Company. The following table sets forth the
percentage relationship to service revenue of certain income statement items
for the periods presented (expenses are expressed as a percentage of service
revenue):

<TABLE>
<CAPTION>
SIX MONTHS ENDED
AUGUST 31, YEAR ENDED FEBRUARY 28,
------------------ -------------------------
1993 1992 1993 1992 1991
-------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Service revenues (in millions)--
excluding discontinued
businesses..................... $174.4 $198.9 $385.0 $ 379.8 $316.8
Direct cost of services and
overhead....................... 77.4% 75.6% 75.8% 76.7% 73.4%
Administrative and general...... 17.2 14.8 15.1 14.8 12.6
Depreciation and amortization... 2.8 2.8 2.8 2.4 2.2
Costs of restructuring and dis-
posal of businesses............ -- 0.7 0.3 19.3 --
Unusual items................... 0.3 -- 0.0 (1.7) --
Operating income................ 2.3 6.0 5.9 (11.6) 11.8
</TABLE>

Direct cost of services and overhead includes the cost to the Company of
professional and administrative staff hours, including labor-related overhead
costs, that are directly chargeable to client projects. Direct cost of services
and overhead for the six months ended August 31, 1993, were $135.1 million, a
$15.3 million or 10.2% decrease from the six months ended August 31, 1992. This
decrease is attributable to the decline in volume as well as the Company's
cost-cutting efforts. Direct cost of services and overhead as a percentage of
service revenue were 77.4%, 75.8%, 76.7% and 73.4% (excluding discontinued
businesses) for the first half of fiscal 1994, fiscal 1993, fiscal 1992 and
fiscal 1991, respectively. The first half of fiscal 1994 is relatively
consistent with fiscal 1993. Although volume is down and the Company has
implemented cost-cutting measures, certain indirect costs, such as a large
portion of the Company's rent expense, are fixed in nature. The percentage in
fiscal 1992 was higher than fiscal 1991 as a result of the increase in revenue
realized from the recognition of fees and contingency reductions on two large
projects in fiscal 1991.

Administrative and general expenses as a percentage of service revenue
(excluding discontinued businesses) were 17.2%, 15.1%, 14.8%, and 12.6% for the
first six months of fiscal 1994, fiscal 1993, 1992, and 1991, respectively.
Although the Company has acted to reduce administrative and general expenses,
these expenses have remained relatively flat for the six months ended August
31, 1993 from the comparable period last year, but increased as a percentage of
service revenue. Certain costs have increased as a result of the Company's
increased marketing efforts and absorption of additional fixed expenses upon
completion of ICF Kaiser's restructuring program. However, these increases were
partially offset by reductions resulting from the Company's cost-cutting
program. This program had a more favorable effect on the second quarter than
the first. The full effects of this cost-cutting program, however, will be
realized primarily in future periods. The percentages in fiscal 1993 and 1992
were higher than in fiscal 1991 as a result of the increased expenses during
and after the restructuring program. Additionally, the Company recorded a $0.5
million charge in the six months ended August 31, 1993 for costs related to the
resignation of the Company's President and Chief Operating Officer and
severance costs related to actions taken to reduce indirect costs.

Depreciation and amortization for the six months ended August 31, 1993
decreased over the six months ended August 31, 1992 by $0.8 million or 14.1% to
$4.9 million, primarily as the result of the write-off of certain software
assets in the third quarter of fiscal 1993 and the sale of ICF Kaiser's
investment in Acer Group Limited at the end of fiscal 1993. The $1.6 million
increase in depreciation and amortization expense in fiscal 1993 compared to
fiscal 1992 was the result of a full year of amortization of certain goodwill
and intangible assets acquired in fiscal 1992. At August 31, 1993, the Company
had a net balance of $59.7 million of goodwill and intangible assets that are
amortized over periods ranging from five to 40 years, down from $61.1 million
at the end of fiscal 1993.

22
<PAGE>

Interest Expense

ICF Kaiser's interest expense for the six months ended August 31, 1993
decreased 24.2% from the comparable period last year. This was primarily
because the Company's average long-term debt outstanding was approximately
20.1% lower for the six months ended August 31, 1993.

Net interest expense decreased in fiscal 1993 compared to fiscal 1992 by $3.4
million primarily as the result of lower prevailing interest rates and using
proceeds from the sale of Lewin-ICF and other discontinued businesses to pay
down the Company's credit facility. The sale of Lewin-ICF occurred on November
30, 1992. The Company also sold its minority investment in Acer Group Limited
on February 21, 1993. As a result of the timing of these transactions, the
Company expects interest expense in fiscal 1994 to continue to be lower than
fiscal 1993 if prevailing interest rates remain stable.

Interest expense for core businesses was slightly lower in fiscal 1992 ($10.8
million) as compared to fiscal 1991 ($11.3 million) since the Company had
increased borrowings under the credit facility to make several acquisitions in
fiscal 1991.

Discontinued Businesses

At February 28, 1993, the Company had sold or otherwise disposed of all
businesses discontinued under its restructuring plan. In fiscal 1992, the Board
of Directors approved management's recommendation to discontinue certain non-
core businesses, resulting in a $73.4 million provision for restructuring and
disposal of businesses to provide for: operating losses of discontinued
businesses through disposal; losses on the disposal of those businesses
included in the plan at that time; and one-time restructuring charges for
closing and consolidating certain operations of core businesses. In fiscal
1993, ICF Kaiser increased the provision for restructuring and disposal of
businesses by an additional $1.3 million to provide for the combined impact of
the sale of the Company's Lewin-ICF health consulting subsidiary which had been
determined to be outside of the Company's core businesses and the revisions to
the estimates of remaining liabilities relating to discontinued businesses.

Income Tax Expense

The Company's effective tax rate is 52% for the six months ended August 31,
1993, reflecting an increase in ICF Kaiser's effective tax rate from 42% for
fiscal 1993. The increase reflects the effect of the Company's lower than
anticipated pre-tax income, which increases the impact of the Company's
permanent book-tax differences, primarily goodwill, on the effective tax rate.
This increase was partially offset by the effect of recent changes in U.S. tax
law on ICF Kaiser's deferred tax asset.

The $6.3 million tax provision for fiscal 1993 differs from the statutory
rate primarily as a result of state income taxes and the amortization of
goodwill. In fiscal 1992, ICF Kaiser adopted Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes, effective March 1, 1991. The
impact of adoption was to increase the deferred tax benefit by $6.5 million.
The $13.8 million tax benefit recorded for fiscal 1992 relates to the operating
losses of discontinued businesses and the available benefits from the
disposition of these businesses, net of $8.6 million of taxes applicable to the
core businesses. The overall benefit rate of 25.4% in fiscal 1992 differs from
the statutory rate primarily due to differences between the tax and book basis
of various assets of discontinued businesses.

Impact of New Accounting Standards

The Company adopted Statement of Financial Accounting Standards No. 106,
Employers' Accounting for Postretirement Benefits ("SFAS No. 106"), effective
March 1, 1993. The Company's postemployment obligation extends to only a
limited group of retirees (and their spouses) who joined ICF Kaiser through an
acquisition; and their benefits are limited to a fixed amount per employee or
spouse. SFAS No. 106 requires that companies accrue postemployment benefits
over the period benefits are earned. The Company has elected

23
<PAGE>

the prospective transition method and is amortizing its $14.2 million
transition obligation over 14.5 years, the average remaining life expectancy of
the retirees and their spouses. The Company's ongoing expense under SFAS No.
106 will include the interest component and the amortization of the transition
obligation.

Preliminary Operating Results

Based on preliminary operating results, the Company believes that service
revenue for the quarter ended November 30, 1993 will be higher than the quarter
ended August 31, 1993 ($87.4 million) and the quarter ended November 30, 1992
($94.7 million); that operating income for the quarter ended November 30, 1993
will be approximately the same as for the quarter ended August 31, 1993 ($4.0
million) and therefore lower than the results for the quarter ended November
30, 1992 ($5.5 million); and that net income for the quarter ended November 30,
1993 will be approximately the same as for the quarter ended August 31, 1993
($1.3 million) and therefore lower than the results for the quarter ended
November 30, 1992 ($2.2 million).

LIQUIDITY AND CAPITAL RESOURCES

In the first six months of fiscal 1994, ICF Kaiser's cash position increased
$10.1 million. Operations provided $9.3 million of cash including the
collection of contract receivables partially offset by increased payments of
outstanding accounts payable. Cash was also provided from borrowings under the
Company's credit facility. ICF Kaiser uses bank financing to supplement its
ability to meet ongoing working capital requirements. Working capital decreased
by $1.4 million or 1.6% since February 28, 1993 to $86.4 million as of August
31, 1993. This decrease is attributable to a $4.5 million principal payment
under the Company's 13.5% Notes, due on May 15, 1994, being classified as
current.

The Company's operating activities used $16.6 million in cash in fiscal 1993
and provided $17.7 million of cash in fiscal 1992. The use of cash in fiscal
1993 and the cash provided in 1992 were primarily results of changes in
deferred revenue, which were attributable to two major contracts that had
significant contract advances in fiscal 1992 and were substantially complete in
fiscal 1993. At February 28, 1993, the Company's level of working capital had
increased $21.8 million from February 29, 1992. This increase is primarily the
result of the sale of businesses, offset by the reduction in the Company's
long-term debt, redeemable preferred stock, and payment of preferred stock
dividends. During fiscal 1993, ICF Kaiser also completed the sale of all of its
remaining discontinued operations and its interest in Acer Group Limited,
generating $35.7 million in cash proceeds. These proceeds were used primarily
to repay indebtedness and to increase the Company's working capital position.

On July 14, 1993, ICF Kaiser and the consortium of banks which provides its
credit facility agreed to extend the expiration date for the credit facility
until September 30, 1994, on terms similar to those under the existing
agreement. In conjunction with and conditioned upon this Offering, ICF Kaiser
has obtained commitments to replace its existing facility with a $60 million
credit facility to be provided by the Company's lead bank and a consortium of
other banks on terms similar to those under the existing facility. The proposed
new facility will provide for covenants no less favorable than those under the
existing credit facility. This replacement credit facility would expire on
October 31, 1996. See "Description of Credit Facility."

At August 31, 1993 ICF Kaiser had outstanding $30,000,000 of 13.5% Notes.
Under certain circumstances, which include certain members of senior management
decreasing their ownership of the Company's common stock or becoming less
active in managing the Company, the 13.5% Notes are required to be prepaid with
a substantial premium. ICF Kaiser's President and Chief Operating Officer
resigned on April 26, 1993, which potentially creates such a circumstance. The
holders of the 13.5% Notes have temporarily waived the consideration of a
prepayment event. This waiver expires on December 31, 1993. It is the Company's
intention, and the holders have agreed, to retire the 13.5% Notes using the
proceeds from the issuance of the Units to which this Registration Statement
relates. See "Use of Proceeds."

The proceeds of the Units also will be used to purchase warrants issued in
connection with the 13.5% Notes, to repurchase Series 1 Junior Convertible
Preferred Stock, to repurchase Series 2C Senior Preferred Stock and Series 2C
Warrants and to repay certain senior debt. Following issuance of the Units and

24
<PAGE>

repurchase of the Series 1 Junior Convertible Preferred Stock, the Company's
equity will increase by $2.0 million. However, the Company's earnings per share
will be reduced for the effect of the premium to be paid to the holders of the
13.5% Notes and other costs related to this refinancing, the after-tax effect
of which will be treated as an extraordinary item. A premium also will be paid
to the holders of the Series 2C Senior Preferred Stock and the Series 2C
Warrants in connection with repurchase thereof. This premium will not be a
direct reduction to net income, but will reduce the Company's earnings per
share. The net effect of these payments could be a loss in the quarter the
transaction is recorded.

ICF Kaiser expects that current projected levels of cash flows and operating
revenues and the availability of borrowings under the Company's replacement
credit facility will be adequate to fund operations for the next twelve months.

Effects of Inflation

The majority of the Company's contracts are cost reimbursable and, therefore,
the inflation rate in the United States, as well as in other countries in which
the Company operates, generally has little impact on operating margins;
however, as a professional services firm, the Company is more labor-intensive
than an industrial firm. To attract and maintain the high-caliber professional
staff it needs, the Company must structure its compensation programs
competitively. The wage-demand effects of inflation are felt almost immediately
in the Company's costs.

25
<PAGE>

BUSINESS

ICF Kaiser provides fully integrated consulting, engineering and construction
services to public and private sector clients in the related markets of
environment, infrastructure and industry.

OVERVIEW OF MARKETS

Environmental. Demand for ICF Kaiser's environmental consulting and
engineering services is driven by a number of factors, including: the need to
improve the quality of the environment; environmental regulation and
enforcement; and increased liability associated with pollution-related injury
and damage. Increasingly strict Federal, state, and local government regulation
has forced private industry and government agencies to clean up contaminated
sites, to bring production facilities into compliance with current
environmental regulations, and to minimize waste generation on an ongoing
basis.

Significant environmental laws have been enacted in response to public
concern over the environment. These laws and the implementing regulations
affect nearly every industrial activity. Efforts to comply with the
requirements of these laws creates demand for the Company's services, and the
Company believes that under the stated policies of the Clinton Administration
there will be a trend toward more stringent regulation and government
enforcement. The principal Federal legislation that has created a substantial
market for the Company, and therefore has the most significant effect on the
Company's business, includes the following: The Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA") of 1980, as amended by the
Superfund Amendments and Reauthorization Act ("SARA") of 1986, established the
Superfund program to clean up existing, often abandoned hazardous waste sites
and provides for penalties and punitive damages for noncompliance with EPA
orders. The Resource Conservation and Recovery Act ("RCRA") of 1976, as amended
by the Hazardous and Solid Waste Amendments of 1984 ("HSWA"), provides a
comprehensive scheme for the regulation of hazardous waste from the time of
generation to its ultimate disposal (and sometimes thereafter), as well as the
regulation of persons engaged in the treatment, storage and disposal of
hazardous waste. The Clean Air Act of 1970 empowered the EPA to establish and
enforce National Ambient Air Quality Standards and limits on the emission of
various pollutants. The 1990 amendments to the Clean Air Act substantially
increase the number of sources emitting a regulated air pollutant which will be
required to obtain an operating permit; the amendments also address the issues
of acid rain, ozone protection, and other areas in which the Company can
provide expanded services. The Clean Water Act of 1972, originally the Federal
Water Pollution Control Act of 1948, established a system of standards, permits
and enforcement procedures for the discharge of pollutants to surface water
from industrial, municipal, and other wastewater sources. The Toxic Substance
Control Act, enacted in 1976, established requirements for identifying and
controlling toxic chemical hazards to human health and the environment.

Infrastructure. The global infrastructure market has historically been driven
by the need to maintain and expand roads, highways, mass transit systems, and
airports. In addition, environmental concerns, such as reducing automotive air
pollutant emissions, have become increasingly important factors in new
infrastructure and transportation initiatives. This market is primarily funded
by government dollars, although the private sector is seeking an increased
role, particularly in international projects. ICF Kaiser's services in this
market include design, engineering and construction.

Industrial. ICF Kaiser's industrial work is funded almost exclusively by the
private sector and is driven by businesses' need to maintain and retrofit
existing plants and replace aging production capacity with newer, more
environmentally responsible facilities. Through the acquisition of ICF Kaiser
Engineers, Inc. in 1988, the Company acquired the engineering and construction
skills, as well as access to process technologies, needed to establish a
leadership position in serving the basic metals and mining industries,
including aluminum, steel, copper and coal. These industries have in the past
several years experienced a decline in the prices for the materials they
produce. This decline has resulted in a slower pace at which plants or
production capacity are retrofitted or replaced. As a consequence, the
Company's revenue from this market has declined over the past several years.

26
<PAGE>

The percentage breakdowns of ICF Kaiser's service revenue (excluding
discontinued businesses) by market for the periods shown below were as follows
(dollars in millions):

ICF Kaiser's markets are global in nature. To compete successfully and to
reduce its risks, the Company enters into marketing and project-specific joint
ventures with other companies. The Company has also been able to leverage its
existing international projects to gain a competitive advantage when bidding on
new work.

STRATEGIC CONSIDERATIONS

The following points are important to understanding the Company's business
and strategy:

Full Front-End Capability. Through internal growth and acquisition, the
Company's skills have been expanded to include policy analysis and
consulting, scientific analysis and health/risk assessments, remedial
investigations and feasibility studies and engineering design. By
possessing these front-end skills, the Company can become involved at the
outset of the problem identification phase which, in turn, puts it in a
stronger position to participate in any follow-on engineering and
construction work.

High Value-Added Services. The Company's marketing strategy is to provide
exceptional value to its clients, which often means focusing on the quality
of service offered but not necessarily being the lowest cost provider.
Within those markets that relate to environmental services, the Company
adds high value through specialized environmental knowledge that: (i) helps
clients understand environmental threats and opportunities and alternative
ways in which each can be managed; (ii) allows creation of customized
solutions for the clients' environmental problems; and (iii) combines
problem identification, solution, and implementation in a seamless
approach.

Access to Technology. New technologies play a critical role in both the
cleanup of existing waste sites and in the reduction of waste generated by
ongoing production processes. The Company has access to key technologies
relating to reducing and monitoring stack emissions, bio-remediation, coal
scrubbing and industrial process technologies that can help minimize waste,
reduce costs and improve the quality of a finished product. To better
assist clients and to increase its overall participation in a project, the
Company continues to expand its access to leading environmental and process
technologies through various methods, including licensing and joint
ventures.

Strategic Relationships. To extend its presence and reduce business
development risks, the Company has established international business
relationships through joint ventures, marketing agreements and direct
equity investments. These relationships, which continue to be expanded,
facilitate management of the Company's existing international operations
and help to reduce the cost and risks associated with entering new
geographic regions.

Avoidance of Environmental Liability. To avoid the risks and potential
liability associated with taking possession of hazardous waste, the Company
has made the decision to minimize its participation in that part of the
business associated with collection, treatment, storage or disposal of
waste. When such services are required, the Company will subcontract the
work or assist the client in selecting appropriate contractors.

27
<PAGE>

SERVICES AND PROJECTS

Environmental Market

ICF Kaiser's environmental market includes work for clients in all major
industries, including many large domestic and multi-national corporations, and
public sector work, primarily for the DOE, DOD, and EPA. The Company offers its
clients over 20 years experience in all aspects of environmental regulation,
compliance and access to leading technologies, as well as skills in the
assessment, management and remediation of existing hazardous and solid wastes,
and process redesign to minimize future waste.

Analysis/Assessment. The Company's analytic and scientific abilities allow it
to become involved in environmental issues and problems at their outset. In the
initial phase, ICF Kaiser provides a broad outline of the types of
environmental problems, health risks, and liabilities associated with the
client's business. In subsequent stages, ICF Kaiser conducts field assessments
to evaluate a site's waste, ground water, air, sediment, and soil
characteristics and to determine the extent of contamination, if any.

Remediation. In general, environmental restoration work is progressing beyond
study and analysis to remediation. Having already established a market position
in the consulting and front-end analysis phase, ICF Kaiser has been able to
follow market demand into remediation. After an environmental problem is
characterized, the Company offers alternative remediation approaches which may
involve providing on-site waste containment or management of on-site/off-site
remediation and waste removal. The Company can also redesign the client's
ongoing production processes to minimize or eliminate the generation of
hazardous waste. The Company then develops engineering plans and technical
specifications. To minimize potential liabilities associated with taking title
to hazardous waste during the cleanup process, ICF Kaiser will often assist the
client in selecting cleanup contractors to handle the actual remediation work.

Water Pollution. The major ports of many of the world's cities have serious
water pollution problems, and ICF Kaiser is part of several cities' efforts to
improve the condition of their harbors and waterways. The Company is the
construction manager of the cleanup of Boston Harbor, the largest environmental
project in the country. Under this contract, the Company is managing more than
1,800 construction workers, engineers, architects, and support personnel
working to construct the largest wastewater treatment plant in the United
States on an island in Boston Harbor. Because of the Company's experience with
the Boston Harbor project, it was selected to be one of the companies currently
working on San Diego, California's clean water program.

Industrial Production. Increasingly, it is cost effective for ICF Kaiser
clients to modify ongoing production processes to minimize or eliminate waste
generation. The Company's integration of engineering and environmental skills,
plus its access to innovative technologies, provides a competitive advantage in
redesigning production processes. For example, the Company has designed control
systems to enable steel producers to reduce harmful emissions and rehabilitate
coke ovens while producing a better product.

DOE/DOD Facilities Restoration. Government estimates suggest that more than
$100 billion could be spent by DOD and DOE over the next 20 years cleaning up
closed weapons production facilities and military bases around the world. ICF
Kaiser is already working on 11 of 18 major DOE facilities and at DOD bases
around the world. At a U.S. Army installation in the eastern United States, the
Company is assisting in the clean up of an ordnance disposal site contaminated
with chemical warfare agents, unexploded munitions, radiological materials and
other hazardous waste.

The Company has been the engineer/constructor at the DOE's Hanford site in
Richland, Washington, since 1987. In early 1993, the Company won a renewal of
its contract, which was subsequently amended in October 1993. The Company
estimates that the architect-engineering and construction management services
to be provided under the amended contract will be worth more than $800 million
in gross revenue over the two-and-one-half year term of the amended contract
which began on October 1, 1993. See "Backlog." Assuming the Company's
historical performance ratings are maintained over this two-and-one-half year
period, the Company estimates that the fees it will be eligible to earn under
this contract would be increased

28
<PAGE>

significantly. In addition, the amended contract provides the Company with the
opportunity to earn incentive fees related to technology transfers and
efficiency savings. In connection with the contract amendment and in order to
reduce duplication of work and to improve management control and efficiency of
operation, the Company and DOE agreed to assign management of substantially all
aspects of the amended contract to Westinghouse Hanford Company, the current
management and operations contractor at the DOE's Hanford site.

Clean Air. ICF Kaiser's clients continue to face complicated and costly
regulatory compliance obligations associated with the Clean Air Act Amendments
of 1990. The Company has developed comprehensive computer models that simulate
changes in air quality, visibility and population exposure which are being used
to examine air quality problems. ICF Kaiser assists clients by quantifying
plant emissions, developing strategies for complying with permit requirements,
evaluating and installing advanced control technologies, and redesigning
production processes to reduce pollutant emissions. For clients required to
reduce fugitive emissions resulting from equipment leaks, ICF Kaiser has
developed FUGEMS (TM), a proprietary emissions monitoring system which
identifies and tracks the sources of air pollutant leaks. The Company has been
awarded a three-year contract to examine air quality problems that might result
from oil and gas exploration in the Gulf of Mexico. In the public sector, the
Company has been awarded a number of EPA contracts related to global climate
change, indoor air quality, and acid rain in the past 12 months.

Energy. ICF Kaiser's energy clients include major U.S. electric utilities;
leading oil, natural gas, and coal companies; transportation companies;
pipeline entities; firms practicing energy law; environmental groups; and
government and regulatory agencies involved in energy and related environmental
issues. ICF Kaiser's expertise includes strategic planning and analysis; energy
and environmental policy analysis; supply and demand forecasting; and
technology assessments. The Company also provides services for the design,
construction, modification, operation and maintenance of fossil fuel, nuclear,
and renewable energy power plants. ICF Kaiser uses its broad environmental
skills, access to leading-edge technology and well-established energy practice
in the search for cleaner burning sources of energy and the efforts to minimize
waste generation in power production. For example, a flue gas desulfurization
process that removes emissions that cause acid rain from power plant
smokestacks ("LIFAC") currently is undergoing testing at the LIFAC clean coal
demonstration project conducted by ICF Kaiser for DOE in Richmond, Indiana. ICF
Kaiser developed the project, arranged for the license of the technology,
participated in the project implementation, and is providing engineering
design, project management, and construction services for the installation of
the technology. ICF Kaiser also markets Microcel (TM), a microbubble column-
flotation method for cleaning fine coal, which currently is installed in coal
facilities in five states.

International. ICF Kaiser serves environmental clients in Taiwan, France, the
former Soviet republics, Mexico, the Czech republic and a number of other
countries. During the past year, ICF Kaiser has worked on global climate change
projects in more than 20 countries for clients such as the World Bank, the
United Nations, and foreign government agencies. ICF Kaiser has established an
initial international presence in Eastern Europe through analytical consulting
projects which may enable the Company to compete for larger environmental and
construction projects that may develop as the economies in that region
strengthen.

Infrastructure Market

The Company believes that there is a growing acceptance of the need to
restore and upgrade the public infrastructure of mass transit systems,
airports, highways, bridges and water resource facilities worldwide. ICF Kaiser
also believes that environmental concerns increasingly are a driving force
behind new infrastructure and transportation initiatives. The Company currently
provides planning, feasibility studies, design, and construction management
services to the infrastructure market. At the planning stage, ICF Kaiser
incorporates its specialized environmental skills to design environmentally
responsible projects. Thereafter, the Company's engineers and construction
specialists provide a full range of services such as master planning,
alternative analysis, site development studies, conceptual and preliminary
engineering, detail design, specifications development, quality assurance and
quality control, construction management, construction and inspection.

29
<PAGE>

Transportation. ICF Kaiser has over three decades of experience in
transportation projects, and its current transportation projects show the
breadth of this experience: services related to the conversion the diesel bus
system to electric power as part of Los Angeles (California) County's program
to lower overall mobile source emissions and improve the area's air quality;
engineering services for new rail rapid transit system work in the Los Angeles
area; evaluation of bus and light rail transit alternatives in Sacramento,
California; construction engineering and inspection services for a "people
mover" in Jacksonville, Florida; construction management of several San
Francisco, California, Bay Area Rapid Transit projects; and engineering design
services for development of and seismic retrofitting of bridges in Seattle,
Washington.

More than $150 billion has been authorized through 1997 by the Federal
government for programs mandated by the Intermodal Surface Transportation
Efficiency Act ("ISTEA"), a substantial portion of which will be directed to
upgrade the national highway and interstate systems and to enhance state roads
and bridge safety. ICF Kaiser has recently been awarded two contracts which are
partially funded through ISTEA. The Company will serve as the management
consultant for the preliminary engineering phase of a light rail system planned
for downtown Chicago, Illinois, and also provide preliminary design services
for a Miami, Florida, intermodal center that will offer rapid and convenient
transportation alternatives.

Other Infrastructure Services. ICF Kaiser offers specialized infrastructure
services such as structural and earthquake engineering, seismic evaluation and
the rehabilitation of buildings. The Company currently is performing detail
design and inspection services for the refurbishing of the hydroelectric power
plant at the base of the Pardee Dam in Northern California.

International. ICF Kaiser is a member of a joint venture that provides
planning, design and construction services for the 88-kilometer Taipei, Taiwan,
rapid transit system. The Company also is providing construction engineering
and architectural services for a new Toronto, Canada, subway station and
system-wide electrical and mechanical design engineering and specification
services for a subway line extension in London, England.

Industrial Market

ICF Kaiser's engineering design, project management and construction services
to the industrial market involve work with the steel, aluminum, alumina,
copper, tin and other metals industries. In the coke, coal, and coal chemicals
area, ICF Kaiser's services include inspection of coke plants for environmental
compliance, facility design and construction, and equipment sales and services.
The Company also provides services related to coal cleaning, handling and
environmental controls. ICF Kaiser provides blast furnace design, repair and
construction to the steel industry and is currently assessing and recommending
the installation or upgrading of management information systems and process
control systems at three steel plants in India. Following on the successful
design and construction of a copper concentrator for a Portuguese copper mine,
the Company recently was awarded a contract to provide engineering and
procurement services for the development of a U.S. copper concentrating plant.

Pulverized Coal. Increasingly the Company's industrial clients rely on ICF
Kaiser to help them make more efficient use of traditional energy sources, find
alternative energy sources, and employ new technologies that offer both
environmental compliance and cost competitiveness. At a plant in Gary, Indiana,
ICF Kaiser successfully achieved these goals for U.S. Steel with the Company's
contract to construct, own, and operate a pulverized coal injection (PCI)
facility. Pulverized coal is a cost-effective and environmentally acceptable
substitute for a portion of the coke used in blast furnace operations. For the
PCI project, ICF Kaiser obtained the license for the critical technology,
structured and secured the needed $100 million-plus financing, designed the
facility, and managed its construction. Following the successful test period in
the spring of 1993, ICF Kaiser now operates the PCI facility, which it owns
with other partners.

International. ICF Kaiser currently has projects underway in over 25
countries and has business alliances with companies based around the world. To
strengthen its position in the industrial market and to

30
<PAGE>

gain access to new technologies, ICF Kaiser has a marketing joint venture with
Spie Batignolles S.A. (France) and Davy Corporation PLC (United Kingdom) to
pursue engineering and construction work for alumina refineries and aluminum
smelters.

Other Markets

ICF Kaiser serves numerous clients who need state-of-the-art technology and
consulting services for the management of information and solving information-
related problems, including business process redesign, systems automation,
modernization and movement of systems from mainframes to client/server
platforms. The Company also assists clients in analyzing, designing, and
implementing modern financial systems often utilizing ICF Kaiser's GSA-approved
financial management system--FEDERAL SUCCESS(TM). The Company's contract
dispute management services help contractors, project owners and developers to
resolve disputes without resorting to costly and time-consuming litigation. ICF
Kaiser's housing and community development specialists provide consulting
services to housing professionals in Federal, state and local governments, non-
profit organizations, tenant groups, financial services groups, and private
development firms.

COMPETITION AND CONTRACT AWARD PROCESS

The markets in which the Company operates are very competitive. The Company's
competitors range from small local firms to large multinational firms. The
Company believes that no single firm or small number of firms dominates its
markets.

Competition for private sector work generally is based on several factors,
including quality of work, reputation, price and marketing approach. The
Company's objective is to establish and maintain a strong competitive position
in its areas of operations by adhering to its basic philosophy of delivering
high-quality work in a timely fashion within its clients' budget constraints.

Most of the Company's contracts with public sector clients are awarded
through a competitive bidding process that places no limit on the number or
type of offerors. The process usually begins with a government Request for
Proposal ("RFP") that delineates the size and scope of the proposed contract.
Proposals submitted by ICF Kaiser and others are evaluated by the government on
the basis of technical merit (for example, response to mandatory solicitation
provisions, corporate and personnel qualifications and experience) and cost.
While each RFP sets out specific criteria for the choice of a successful
offeror, RFP selection criteria in the government services market in which ICF
Kaiser competes often tend to weigh the technical merit of the proposal more
heavily than the proposed cost. The Company believes that its experience and
ongoing work strengthen its technical qualifications and thereby enhance its
ability to compete successfully for future government work.

In both the private and public sectors, the Company, acting either as a prime
contractor or as a subcontractor, may join with other firms to form a team that
competes for a single contract or submits a single proposal. Because a team of
firms almost always can offer a stronger set of qualifications than any firm
standing alone, these teaming arrangements often are very important to the
success of a particular competition or proposal. The Company maintains a large
network of business relationships with other companies and has drawn repeatedly
upon these relationships to form winning teams.

ICF Kaiser subsidiaries operate under a number of different types of contract
structures with its private sector and public clients, the most common of which
are Cost Plus and Fixed Price. Under Cost Plus contracts, the Company's costs
are reimbursed with an incentive or award fee offered to provide inducement for
effective project management. A variation of Cost Plus contracts are time and
materials contracts under which the Company is paid at a specified fixed hourly
rate for direct labor hours worked. This structure normally is used in
situations where it may not be possible to estimate the extent and duration of
work to be performed. Cost Plus contracts (including time and materials
contracts) accounted for approximately 71.3%

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<PAGE>

of the Company's total gross revenue for fiscal year 1993. Under Fixed Price
contracts, which accounted for approximately 19.0% of the Company's total gross
revenue for fiscal year 1993, the Company is paid a predetermined amount for
all services provided as detailed in the design and performance specifications
agreed to at the projects' inception.

CUSTOMERS

The Company's clients include: DOE, EPA and DOD; major industrial firms in
the aerospace, energy, transportation, chemical, steel, aluminum, mining,
manufacturing and computer industries; utilities; and a variety of state and
local government agencies throughout the United States. A substantial portion
of the Company's work is repeat business from existing clients. In many cases,
the Company has worked for the same client for many years, providing different
services at different times. DOE accounted for approximately 29%, and DOD, EPA,
and other Federal agencies collectively accounted for approximately 18%, of the
Company's consolidated gross revenue during fiscal year 1993. The Federal
government accounted for approximately 47% of the Company's consolidated gross
revenue in fiscal year 1993, 42% in fiscal year 1992, and 40% in fiscal year
1991.

In fiscal year 1993, revenue from USX Corporation and its affiliates
accounted for approximately 13% of the Company's consolidated gross revenue.
The Company's international clients include both private firms and foreign
government agencies in such countries as Australia, Portugal, and Taiwan. In
fiscal year 1993, foreign operations accounted for approximately 8% of the
Company's consolidated gross revenue. For information concerning gross revenue,
operating income, and identifiable assets of the Company's business by
geographic area, see Note P to the Consolidated Financial Statements.

BACKLOG

Backlog refers to the aggregate amount of gross contract revenues remaining
to be earned pursuant to signed contracts extending beyond one year. At August
31, 1993, the Company's contract backlog was approximately $1.2 billion in
gross revenue, compared to approximately $1.0 billion in gross revenue at
August 31, 1992. The Company expects that approximately 20% of this backlog
will be worked off during the last two quarters of the current fiscal year, and
that approximately 60% will be worked off over the following three complete
fiscal years. Because of the nature of its contracts, the Company is unable to
calculate the amount or timing of service revenue that might be earned pursuant
to these contracts. The Company believes that backlog is not a predictor of
future gross or service revenues.

Differences in contracting practices between the public and private sectors
result in ICF Kaiser's backlog being heavily weighted toward contracts
associated with agencies of the Federal government. Although such contracts
historically have generated less than 50% of the Company's revenues, they
comprised approximately 79.5% of the contract backlog at August 31, 1993.
Backlog under contracts with agencies of the Federal government that extend
beyond the government's current fiscal year includes the full contract amount,
including in many cases amounts anticipated to be earned in option periods and
certain performance fees, although generally annual funding of the amounts
under such contracts must be appropriated by Congress before the agency may
expend funds during any year under such contracts. In addition, the agency must
allocate the appropriated funds to these specific contracts and thereafter
authorize work or task orders to be performed under these specific contracts.
Such authorizations are generally for periods considerably shorter than the
duration of the work the Company expects to perform under a particular contract
and generally cover only a percentage of the contract revenue. Because of these
factors, the amount of Federal government contract backlog for which funds have
been appropriated and allocated, and task orders issued, at any given date is a
substantially smaller amount than the total Federal government contract backlog
as of that date. At August 31, 1993, such amount was approximately $218
million. In the event that option periods under any given contract are not
exercised or funds are not appropriated, allocated, or authorized to be spent
under any given contract, the amount of backlog attributable to that contract
would not result in revenues to the Company. All contracts and subcontracts
with agencies of the Federal government are subject to termination, reduction
or modification at any time in the discretion of the government agency.

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<PAGE>

In October 1993, the Company amended its contract under which it provides
architect-engineering and construction management services to the DOE's Hanford
site. See "Business--Services and Projects--Environmental Market." The amended
contract will add approximately $600 million in gross revenue to backlog.

POTENTIAL ENVIRONMENTAL LIABILITY

The assessment, remediation, analysis, handling and management of hazardous
substances necessarily involve significant risks, including the possibility of
damages or personal injuries caused by the escape of hazardous materials into
the environment, and the possibility of fines, penalties or other regulatory
action. These risks include potentially large civil and criminal liabilities
for violations of environmental laws and regulations, and liabilities to
customers and to third parties for damages arising from performing services for
the Company's clients. A general discussion of potential liabilities arising
out of environmental laws and regulations is contained in the Risk Factors
section of this Prospectus. See "Risk Factors--Environmental Contractor Risks."

ICF Kaiser provides consulting services and performs other work involving or
related to hazardous substances, toxic wastes and other regulated materials,
activities which involve the risks discussed above. The Company has endeavored
to protect itself from potential liabilities resulting from pollution or
environmental damage by obtaining indemnification from its private-sector
clients and intends to continue this practice in the future. Under most of
these contracts, the Company has been successful in obtaining such
indemnification; however, such indemnification generally is not available if
such liabilities arise as a result of breaches by the Company of specified
standards of care.

For EPA contracts involving field services in connection with Superfund
response actions, the Company has obtained indemnification under Section 119 of
CERCLA, as amended by SARA, for pollution and environmental damage liability
resulting from release or threatened release of hazardous substances. Certain
of the Company's clients (including private clients, the DOD and the DOE) are
Potentially Responsible Parties ("PRPs") under CERCLA. Under the Company's
contracts with these PRPs, the Company has the right to seek contribution from
these PRPs for liability imposed on the Company in connection with its work at
these clients' CERCLA sites. In addition, in connection with contracts
involving field services at 11 of the DOE's weapons facilities, including the
DOE's Hanford site, the Company is indemnified under the Price-Anderson Act, as
amended, against liability claims arising out of contractual activities
involving a nuclear incident.

In connection with its services to its environmental, infrastructure, and
industrial clients, the Company works closely with Federal and state government
environmental compliance agencies, and occasionally contests the conclusions
those agencies reach regarding the Company's compliance with permits and
related regulations. The Company currently disagrees with a state agency's
conclusions concerning air pollution permit compliance at an industrial site.
If the state agency prevails, the Company does not believe the fines imposed,
if any, will be material. To date, the Company never has paid a fine in a
material amount or had liability imposed on it for pollution or environmental
damage in connection with its services. However, there can be no assurance that
the Company will not have substantial liability imposed on it for any such
damage in the future.

INSURANCE

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<PAGE>

The Company has a comprehensive risk management and insurance program that
provides a structured approach to protecting the Company. Included in this
program are coverages for general, automobile and professional liability;
workers' compensation; and for employers and property liability. The Company
believes that the insurance it maintains, including self-insurance, is in such
amounts and protects against such risks as is customarily maintained by similar
businesses operating in comparable markets. At this time, the Company expects
to continue to be able to obtain general, automobile, and professional
liability, workers' compensation, and employers and property insurance in
amounts generally available to firms in its industry. There can be no assurance
that this situation will continue, and if insurance of these types is not
available, it could have a material adverse effect on the Company.

PROPERTIES

All of the Company's operations are conducted either in leased facilities or
in facilities provided by the Federal government or other clients. As of August
31, 1993, the Company leased an aggregate of approximately one million square
feet of space. The terms of these leases range from month-to-month to 15 years,
and some may be renewed for additional periods. The Company's headquarters is
located in Fairfax, Virginia. Other offices include Livermore, Los Angeles,
Oakland, and San Rafael, California; Denver, Colorado; Washington, D.C.;
Jacksonville, Florida; Chicago, Illinois; Boston, Massachusetts; Las Vegas,
Nevada; Edison, New Jersey; Albuquerque and Los Alamos, New Mexico; Pittsburgh,
Pennsylvania; Dallas and Houston, Texas; Richland and Seattle, Washington;
Melbourne and Perth, Australia; London, England; Paris, France; Athens, Greece;
Lisbon, Portugal; and Taipei, Taiwan.

Because the Company's operations generally do not require the maintenance of
unique facilities, suitable office space is readily available for lease in most
of the areas served. The Company believes that adequate space to conduct its
operations will be available for the foreseeable future. In 1987, the Company
entered into a 15-year lease agreement for a new headquarters building in
Fairfax, Virginia containing approximately 200,000 square feet of office space.
In 1988, the Company signed a 15-year lease agreement to occupy approximately
100,000 square feet of office space in a new building adjacent to the
headquarters building. In connection with the acquisition of ICF Kaiser
Engineers in 1988, ICF Kaiser acquired the lease for ICF Kaiser Engineers'
headquarters building in Oakland, California. The lease provides for
approximately 142,000 square feet of office space and expires in June 1995.

LEGAL AND REGULATORY PROCEEDINGS

The Company and its subsidiaries are involved in a number of lawsuits and
government regulatory proceedings arising in the ordinary course of its
business or arising in connection with the disposition of certain businesses
and investments. The Company believes that any ultimate liability resulting
therefrom will not have a material adverse effect on its operations and
financial condition.

The Company from time to time, either individually or in conjunction with
other government contractors operating in similar types of businesses, may be
involved in U.S. government investigations for alleged violations of
procurement or other federal laws and regulations. The Company currently is the
subject of a number of U.S. government investigations and is cooperating with
the responsible government agencies involved. No charges are presently known to
have been filed against the Company by these agencies. The Company is unable to
predict the outcome of the investigations in which it is currently involved.
Management does not believe there will be any material adverse effect on the
Company's financial position as a result of these investigations.

In 1989, certain former holders of common stock of Kaiser Engineers Group,
Inc. filed an action in Chancery Court of the State of Delaware, County of New
Castle, entitled Aiken v. Kaiser Engineers Group, Inc. for appraisal of the
shares they held at the time ICF Kaiser International, Inc. acquired their
former company. The Company believes that those common shares had no value at
the time of the acquisition and that this litigation will not have a material
adverse effect on the Company.

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<PAGE>

MANAGEMENT

Set forth below is certain information concerning the directors and executive
officers of the Company.

<TABLE>
<CAPTION>
NAME AGE POSITION(S) WITH COMPANY
---- --- ------------------------
<S> <C> <C>
James O. Edwards............... 50 Chairman of the Board and Chief Executive Officer
Stephen W. Kahane.............. 42 President, Environment and Energy Group
Raymond E. List................ 49 Chairman, Engineering and Construction Group
Douglas W. McMinn.............. 46 President, International Operations Group
Norman A. Perry................ 53 Senior Vice President and Corporate Controller
Alvin S. Rapp.................. 53 President, Engineering and Construction Group
Marcy A. Romm.................. 34 Senior Vice President, Human Resources
Michael J. Rowny............... 43 Director, Executive Vice President and Chief Financial Officer
Kenneth A. Schweers............ 47 Chairman, Consulting Group
Ronald R. Spoehel.............. 36 Senior Vice President and Treasurer
Marc Tipermas.................. 45 Director, Executive Vice President and Director of Corporate
Development
Paul Weeks, II................. 50 Senior Vice President, General Counsel and Secretary
Gian Andrea Botta.............. 40 Director
Tom Bradley.................... 75 Director
Tony Coelho.................... 51 Director
Frederic V. Malek.............. 57 Director
Rebecca P. Mark................ 39 Director
Robert W. Page, Sr............. 66 Director
</TABLE>

OUTSIDE DIRECTORS

Gian Andrea Botta is President of IFINT-USA Inc., a subsidiary of IFINT S.A.
He had been Vice President of Acquisitions of IFINT-USA, Inc. from 1987 to
1993. IFINT S.A. is the international investment holding unit of the
IFI/Agnelli Group, a diversified holding company. Mr. Botta has been a director
of ICF Kaiser International, Inc. since March 1993. Mr. Botta also is a
director of Kendall International, Chartwell Re Corporation and Lear Seating
Corporation. Mr. Botta received a degree in economics and business
administration in 1975 from the University of Torino, Italy.

Tom Bradley is a senior counselor at Brobeck, Phleger & Harrison, a law firm
in Los Angeles, California, advising companies on resolving major public and
private sector issues. Previously he had been Mayor of the City of Los Angeles
for five terms, from 1973 to 1993. Mr. Bradley has been a director of ICF
Kaiser International, Inc. since September 1993. Mr. Bradley graduated from
Southwestern University (J.D.).

Tony Coelho has been a Managing Director of Wertheim Schroder & Co.
Incorporated, a New York-based international investment banking and securities
firm, since 1989. He also serves on the firm's Executive Committee, and serves
as President and C.E.O. of Wertheim Schroder Investment Services, Inc. From
1979 to 1989 Mr. Coelho was a member of the U.S. House of Representatives from
California, and from 1986 to 1989 he served as House Majority Whip. Mr. Coelho
has been a director of ICF Kaiser International, Inc. since 1990. He also is a
director of Circus Circus Enterprises, Inc.; Specialty Retail Group, Inc.;
Service Corporation International; Tanknology Environmental, Inc.; and serves
on Fleishman-Hillard's International Advisory Board. He is also a director of
Condyne Technology Inc. and International Planning and Analysis Center and
serves as Chairman of the board of National Ventures, Inc.

Frederic V. Malek is Chairman, Thayer Capital Partners, a merchant bank. In
1992, he was Campaign Manager, Bush-Quayle '92; he also has been Co-Chairman of
the Board of Directors of CB Commercial Group (formerly Coldwell Banker
Commercial Group) since 1989. He was Vice Chairman of Northwest Airlines from
July 1990 to December 1991. He was President of Northwest Airlines from October
1989 to

35
<PAGE>

July 1990. From August 1978 to December 1988, Mr. Malek served as Executive
Vice President of Marriott Corporation and from January 1981 to May 1988 as
President of Marriott's Hotels and Resorts Division. Mr. Malek has been a
director of ICF Kaiser International, Inc. since September 1989. He also serves
as a director of American Management Systems, Inc., Automatic Data Processing,
Inc., Avis, Inc., CB Commercial Group, FPL Group, Inc., Manor Care, Inc.,
National Education Corp., Northwest Airlines, and PaineWebber Mutual Funds. Mr.
Malek graduated from the United States Military Academy (B.S.) and Harvard
University (M.B.A.).

Rebecca P. Mark is Chairman, President and Chief Executive Officer of Enron
Development Corp. She is responsible for Enron's project development activities
worldwide (excluding the U.S.) in power generation, pipelines, LNG and liquid
fuels. Ms. Mark joined Enron Corp. in 1982 and joined Enron Power Corp.'s
executive management team when the company was established in 1986. Before
joining Enron, Ms. Mark held executive positions with Continental Resources
Company and First City National Bank of Houston. Ms. Mark has been a director
of ICF Kaiser International, Inc. since September 1993. She also serves as
director of the Institute of the Americas. Ms. Mark graduated from Baylor
University (B.S. and M.I.M.) and Harvard University (M.B.A.).

Robert W. Page, Sr. retired as an Executive Vice President at McDermott
International, Inc., a leading energy service company, in 1993. Prior to
joining McDermott in 1990, Mr. Page served as Assistant Secretary of the Army
for Civil Works. He also served as Chairman of the Panama Canal Commission.
From 1981 to 1987, Mr. Page worked for Kellogg Rust, Inc., of Houston, Texas,
where he held the positions of Chairman and Chief Executive Officer. From 1976
to 1981, Mr. Page was President and Chief Executive of Rust Engineering. Mr.
Page has been a director of ICF Kaiser International, Inc. since January 1993.
He holds a B.S. in architectural engineering from Texas A & M University.

EXECUTIVE OFFICERS

James O. Edwards has been Chairman of the Board and Chief Executive Officer
of ICF Kaiser International, Inc. since its establishment in 1987. He also was
President of ICF Kaiser International from 1987 to 1990. In 1974, he joined ICF
Incorporated, the predecessor of ICF Kaiser International, and was its Chairman
and Chief Executive Officer from 1986 until the 1987 establishment of ICF
Kaiser. Mr. Edwards graduated from Northwestern University (B.S.I.E.) and
Harvard University (M.B.A., High Distinction, George F. Baker Scholar).

Stephen W. Kahane is President of the Company's Environment and Energy Group.
He has held senior management positions in several of the Company's operating
subsidiaries since 1985. From 1981 to 1985, Dr. Kahane headed the Environmental
and Hazardous Waste Programs at Jacobs Engineering Group, Inc.; he was a Vice
President when he left that firm. Dr. Kahane graduated from the University of
California (B.A., M.S.P.H., D. Env.).

Raymond E. List is Chairman of the Company's Engineering and Construction
Group. He has held senior management positions in several of the Company's
operating subsidiaries since 1986. From 1983 to 1986, Mr. List was President of
List and Associates, an international engineering and technology consulting
firm. From 1980 to 1983, Mr. List was Vice President and General Manager at
Planning Research Corporation; previously, he was a Vice President of Arthur D.
Little. Mr. List is a Professional Engineer. He graduated from Union College
(B.C.E.); Manhattan College (M.E.) and Harvard University (M.B.A.).

Douglas W. McMinn is the President of the Company's International Operations
Group. He has held senior management positions with the Company since 1987.
From 1985 to 1987 he was Assistant Secretary for Economic and Business Affairs,
U.S. Department of State. Prior to that time he was Director, International
Economic Affairs, National Security Counsel (1982-1985) and Deputy Chief of
Mission, Office of the United States Trade Representative, Geneva, Switzerland
(1979-1981). Mr. McMinn graduated from Gustavus Adolphus College (B.A.), Johns
Hopkins University (M.L.A.), and Johns Hopkins University School of Advanced
International Studies (M.A.).

36
<PAGE>

Norman A. Perry has been Senior Vice President and Corporate Controller of
the Company since November 1992. He was a manager for Rust International Corp.
from 1978 to 1992 and an administrative manager for Comstock International,
Inc. from 1972 to 1978. He holds a National Certificate in Business Studies
from Worthing and Brighton Colleges of Further Education (U.K.).

Alvin S. Rapp has been President and Chief Executive Officer of the Company's
Engineering and Construction Group since November 8, 1993. Prior to joining the
Company, he was a regional group vice president of Jacobs Engineers Group,
Inc., having joined Jacobs in 1981 as manager of engineering in that company's
Baton Rouge, Louisiana, office. Prior to joining Jacobs, Mr. Rapp held a
variety of management positions with Ciba-Geigy Corporation, U.S.S. Agri-
Chemicals, and E.I. du Pont de Nemours & Company, Inc. Mr. Rapp graduated from
Christian Brothers College (B.S.E.E.), Memphis, Tennessee.

Marcy A. Romm has been Senior Vice President, Human Resources of the Company
since June 1993. She has held Human Resources positions at ICF Kaiser since
1984. Ms. Romm graduated from George Washington University (B.A., M.B.A.).

Michael J. Rowny has been Executive Vice President and Chief Financial
Officer of ICF Kaiser International, Inc. since April 1992. He was Chairman and
Chief Executive Officer of Ransohoff Company, a manufacturer of environmental
and industrial equipment, from 1989 to 1992. From 1986 to 1989 he was Chairman
and Chief Executive Officer of Hermitage Holding Company, Inc., a manufacturer
of industrial textiles and disposable medical supplies. From 1983 to 1986, Mr.
Rowny was with MCI Communications Corporation, Inc. as Senior Vice President,
Finance and as Treasurer. From 1981 to 1983 he was Vice President, Strategic
Planning of the Bendix Corporation. Mr. Rowny was Deputy Staff Director of the
White House from 1979 to 1981. Mr. Rowny has been a director of ICF Kaiser
International, Inc. since June 1992. Mr. Rowny graduated from the Massachusetts
Institute of Technology (S.B.) and Georgetown University (J.D.).

Kenneth A. Schweers is Chairman of the Company's Consulting Group. He has
held senior management positions in several of ICF Kaiser's operating
subsidiaries since 1976. Mr. Schweers graduated from Stanford University (B.S.,
M.B.A.).

Ronald R. Spoehel has been Senior Vice President of ICF Kaiser International,
Inc. since 1990 and was elected Treasurer in 1992. He was a Vice President of
Shearson Lehman Hutton Inc. from 1985 to 1990 and a Vice President of Bank of
America NT&SA from 1980 to 1985. Mr. Spoehel graduated magna cum laude from The
Wharton School (B.S.E.), The Moore School of Electrical Engineering (M.S.E.),
and The Wharton School (M.B.A.), all at the University of Pennsylvania.

Marc Tipermas has been Executive Vice President and Director, Corporate
Development for ICF Kaiser International, Inc. since May 1993. He also holds
senior management positions in several of ICF Kaiser's operating subsidiaries,
including Chairman of the Environment and Energy Group of ICF Kaiser Engineers,
Inc. Dr. Tipermas joined the Company in 1981. From 1977 to 1981 he was employed
by the U.S. Environmental Protection Agency where he was the Director of the
Superfund Policy and Program Management Office from 1980 to 1981. Prior to
joining EPA, he was Assistant Professor of Political Science at the State
University of New York at Buffalo from 1975 to 1977. Dr. Tipermas has been a
director of ICF Kaiser International, Inc. since October 1993. Dr. Tipermas
graduated from the Massachusetts Institute of Technology (S.B.) and Harvard
University (A.M., Ph.D.).

Paul Weeks, II has been Senior Vice President, General Counsel, and Secretary
of ICF Kaiser International, Inc. since 1990. He joined ICF Incorporated in May
1987 as its Vice President, General Counsel, and Secretary. From 1973 to 1987
he was employed by Communications Satellite Corporation, where from 1983 to
1987 he was Assistant General Counsel for Corporate Matters. Mr. Weeks
graduated from Princeton University (B.S.E.E.) and The National Law Center of
George Washington University (J.D.).

37
<PAGE>

COMPENSATION OF OUTSIDE DIRECTORS

Directors of the Company who also are employees of the Company are not
compensated separately for their service as directors. Directors who are not
employees of the Company are paid $1,000 for attendance at each meeting of the
Board of Directors and $750 for attendance at each meeting of a committee of
the Board of Directors of which the director is a member. In addition, each
non-employee director receives an annual retainer of $20,000, payable in
quarterly installments.

Under the ICF Kaiser International, Inc. Non-employee Directors Stock Option
Plan, each director of the Company who is not an employee of the Company ("Non-
employee Director") receives a five-year option to purchase 3,000 shares of
Common Stock on the day he or she commences his or her initial term of service
as a director. In addition, each Non-employee Director elected at or continuing
in office following the Company's annual meeting of shareholders receives an
option to purchase 3,000 shares of Common Stock on the date of the annual
meeting in each calendar year after the year in which the Non-employee Director
received his or her initial option grant. The purchase price of each share of
Common Stock subject to an option granted under the plan is the fair market
value of the Common Stock on the date the option is granted. Each option
becomes fully exercisable at the close of business on the next business day
following the date on which the option was granted. Options are not assignable
or transferable other than by will or by the laws of descent and distribution.
Options are exercisable during an optionee's lifetime only by the optionee or
his or her guardian.

CERTAIN TRANSACTIONS WITH CERTAIN DIRECTORS

In December 1990, the Company sold 250 shares of Series 2A Senior Preferred
Stock to IFINT-USA Inc. and Series 2A Warrants to purchase 2,173,913 shares of
Common Stock at $12 per share to an affiliate of IFINT-USA Inc. for an
aggregate purchase price of $24,650,000. As part of the transaction, IFINT-USA
Inc. was given the right to designate one nominee for election to the Board of
Directors of the Company. In January 1992, the Company exchanged all of the
outstanding shares of Series 2A Senior Preferred Stock and the Series 2A
Warrants for an equal number of shares of Series 2C Preferred Stock and Series
2C Warrants to purchase 2,976,190 shares of Common Stock at $8.40 per share. At
the same time, the Company sold 200 shares of Series 2D Preferred Stock to
IFINT-USA Inc., and Series 2D Warrants to purchase 2,680,952 shares of Common
Stock at $8.40 per share to an affiliate of IFINT-USA Inc., for an aggregate
purchase price of $19,900,000. A portion of the proceeds from the issuance of
Units will be used to repurchase the Series 2C Preferred Stock and Series 2C
Warrants. See "Use of Proceeds." At the time of such repurchase, the exercise
price for the Series 2D Warrants will be reduced to $6.90 per share and certain
other modifications will be made to the Series 2D Warrants. See "Description of
Capital Stock--Series 2D Warrants." IFINT-USA's right to designate a nominee
for election to the Board of Directors will be retained following the
repurchase of the Series 2C Preferred Stock and the Series 2C Warrants in this
transaction. From 1991 to March 1, 1993, Mr. Mario Garraffo was IFINT-USA's
nominee to the Board. Mr. Botta currently is that nominee.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The independent directors of the Company who were voting members of the
Compensation Committee of the Board of Directors during fiscal year 1993 were
Frederic V. Malek (Chairman), Tony Coelho, and Mario Garraffo. Mr. Garraffo
resigned as a member of the Board of Directors effective March 1, 1993. Mr.
Garraffo was associated with IFINT-USA Inc., the owner of the Company's Series
2C and 2D Senior Preferred Stock. This preferred stock ownership is described
in the above section entitled "Certain Transactions with Certain Directors."
The full Board of Directors has designated an inside director of the Company,
Mr. James O. Edwards (the CEO of the Company), as a non-voting member of the
Committee with the right to attend Committee meetings. The Company's
outstanding loans to Mr. Edwards are described in the section of this
Prospectus entitled "Agreements and Transactions with Certain Executive
Officers;" the executive and compensation agreements the Company signed with
Mr. Edwards are described in the same section of this Prospectus. Executive
compensation paid to Mr. Edwards during fiscal years 1991, 1992, and 1993 is
described in the immediately following section of this Prospectus.

38
<PAGE>

EXECUTIVE COMPENSATION

The following table sets forth a summary of annual and long-term compensation
received by the Chief Executive Officer and the other four most highly
compensated executive officers of the Company (the "Named Executive Officers")
for the three fiscal years ended February 28, 1993. The table shows the amounts
received by each Named Executive Officer for all three fiscal years or for the
entire period the Named Executive Officer was an executive officer of the
Company.

<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------- --------------------------
(A) (B) (C) (D) (E) (G) (I)
OTHER ANNUAL
NAME AND SALARY BONUS COMPENSATION OPTION/SAR ALL OTHER
PRINCIPAL POSITION YEAR ($) ($) ($)(1) GRANTS (SHARES) COMPENSATION(2)
------------------ ---- -------- ----- ------------ --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
James O. Edwards........ 1993 $275,000 -- -- 0 $109,154(2)(3)
Chairman and Chief 1992 207,884 -- (1) 22,000 shares (2)
Executive Officer(3) 1991 254,808 -- (1) 75,000 shares (2)
Michael K. Goldman...... 1993 $210,000 -- -- 16,000 repriced options $ 59,154(2)(4)
Executive Vice 1992 179,653 -- (1) -- (2)
President(4) 1991 152,885 -- (1) 40,000 options (2)
Michael J. Rowny........ 1993 $180,769 -- -- 100,000 options $ 7,231(2)
Executive Vice
President and Chief
Financial Officer(5)
Ronald R. Spoehel....... 1993 $175,000 -- $7,239(6) 2,000 options and $ 27,000(2)(6)
Senior Vice President 1992 162,115 -- (1) 10,000 repriced options(6) (2)
and Treasurer(6) 1991 25,962 -- (1) 5,000 options (2)
William C. Stitt........ 1993 $250,000 -- -- 0 $109,154(2)(7)
President and Chief 1992 188,942 -- (1) 22,000 options (2)
Operating Officer(7) 1991 254,839 -- (1) 72,000 options (2)
</TABLE>
- --------
(1) Any amounts shown in the "Other Annual Compensation" column for fiscal 1993
do not include any perquisites and other personal benefits because the
aggregate amount of such compensation for each of the Named Executive
Officers did not exceed the lesser of (i) $50,000 or (ii) 10% of the
combined fiscal 1993 salary and bonus for the Named Executive Officer.
There are no disclosures of "Other Annual Compensation" for fiscal 1991 and
1992 because such amounts are not required to be disclosed under the SEC's
transition rules on executive compensation disclosure.
(2) Allocation of the Company's fiscal 1993 contribution to the individual
Named Executive Officers pursuant to the Company's Retirement Plan will not
be made until January 1994. There are no disclosures of "All Other
Compensation" for fiscal 1991 and 1992 because such amounts are not
required to be disclosed under the SEC's transition rules on executive
compensation disclosure.
(3) The amount shown in column (i) of the table for Mr. Edwards is comprised of
a $100,000 special cash payment provided for under Mr. Edwards'
compensation agreement signed in December 1990 in connection with his
services as Chief Executive Officer ("CEO") of the Company and a $9,154
fiscal year 1993 ESOP contribution.
(4) The amount shown in column (i) of the table for Mr. Goldman is comprised of
a $50,000 special cash payment provided for under Mr. Goldman's
compensation agreement signed in December 1990 in connection with his
services as Executive Vice President of the Company and a $9,154 fiscal
year 1993 ESOP contribution. Mr. Goldman was granted 16,000 options in May
1991 for his fiscal 1991 services; in May 1992, these 16,000 options were
repriced from $16.23 to $8.25 in recognition of his fiscal 1992 services.
The May 6, 1996, expiration date for the 16,000 options did not change. Mr.
Goldman is not currently an executive officer of the Company.
(5) Mr. Rowny became an employee of the Company on April 6, 1992. The fiscal
year 1993 information shown on the above table for Mr. Rowny is for the
April 6, 1992, to February 28, 1993, time period only. The amount shown in
column (i) is a fiscal year 1993 ESOP contribution. The employment
arrangement with Mr. Rowny under which he became Executive Vice President
and Chief Financial Officer ("CFO") of the Company is described in the
section of this Prospectus entitled "Agreements and Transactions with
Certain Executive Officers."

39
<PAGE>

(6) Mr. Spoehel became an employee of the Company on December 31, 1990. The
fiscal year 1991 information shown on the above table for Mr. Spoehel is
for the December 31, 1990, to February 28, 1991, period only. The
employment arrangement with Mr. Spoehel under which he became a Senior Vice
President of the Company and his outstanding loan with the Company are
described in the section of this Prospectus entitled "Agreements and
Transactions with Certain Executive Officers." The amount shown in column
(i) is comprised of a $20,000 bonus paid pursuant to his employment
arrangement and a $7,000 fiscal year 1993 ESOP contribution. Mr. Spoehel
was granted 10,000 options in May 1991 for his fiscal 1991 services; in May
1992, these options were repriced from $16.23 to $8.25 in recognition of
his fiscal 1992 services. The August 6, 1994, expiration date for the
10,000 options did not change. Mr. Spoehel also was awarded 2,000 options
in May 1992 in recognition of his fiscal 1992 services.
(7) Mr. Stitt resigned as President, Chief Operating Officer ("COO"), and a
director of the Company, effective April 26, 1993. The amount shown in
column (i) of the table for Mr. Stitt is comprised of a $100,000 special
cash payment provided for under Mr. Stitt's compensation agreement signed
in December 1990 in connection with his services as President and COO of
the Company and a $9,154 fiscal year 1993 ESOP contribution. The salary
amount shown for fiscal 1991 includes $25,000 paid in fiscal 1991 for
services rendered in fiscal 1990.

OPTION/SAR GRANTS IN LAST FISCAL YEAR

The Company's Stock Incentive Plan provides for the grant to key employees of
the Company and its subsidiaries of non-qualified stock options, stock
appreciation rights, incentive stock options that are designed to qualify as
"incentive stock options" under Section 422 of the Internal Revenue Code of
1986, as amended, restricted shares and restricted stock units. The following
table provides certain information with respect to options granted to the Named
Executive Officers in fiscal 1993.

<TABLE>
<CAPTION>
GRANT DATE
INDIVIDUAL GRANTS VALUE
------------------------------------------------------------ ----------------
(A) (B) (C) (D) (E) (F)
% OF TOTAL
OPTIONS GRANTED EXERCISE OR
OPTIONS TO EMPLOYEES IN BASE PRICE GRANT DATE
NAME GRANTED(1) FISCAL YEAR(1) ($ PER SHARE)(2) EXPIRATION DATE PRESENT VALUE(3)
---- ---------- --------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
James O. Edwards........ 0 0 -- -- --
Michael K. Goldman(4)... 16,000 1.5% $8.25 5/6/96 $ 29,028
Michael J. Rowny(5)..... 100,000 9.2% $9.59 7/6/97 $224,592
Ronald R. Spoehel(6).... 12,000 1.1% $8.25 10,000 on 8/6/94 $ 13,257
2,000 on 5/8/97
William C. Stitt........ 0 0 -- -- --
</TABLE>
- --------
(1) The total number of options granted to employees in fiscal 1993 was
1,084,000. Included in this total are 570,000 options at $8.25 which
repriced 570,000 options at $14.32 to $16.23 granted in fiscal 1991 and
1992. The expiration dates for these repriced $8.25 options remained the
same as the original expiration dates established for those options.
(2) The exercise price equals the fair market value of the underlying stock on
the date of grant for all options disclosed on this table.
(3) In accordance with SEC rules, the Company used the Black-Scholes option
pricing model to determine grant date present values. The Company's use of
this model is not an endorsement of its accuracy in valuing options, and
the values determined under this model do not necessarily reflect the value
of any given option. The actual value of an option realized will be
measured by the difference between the stock price and the exercise price
on the date the option is exercised.
(4) 16,000 repriced vested options were granted to Mr. Goldman in May 1992 in
exchange for 16,000 vested options at $16.23 previously granted to Mr.
Goldman. The expiration date for these repriced $8.25 options (May 6, 1996)
remained the same as the original expiration date established for the
$16.23 options.
(5) 100,000 options were granted to Mr. Rowny on April 6, 1992, and vest,
subject to change of control acceleration events specified in the option
grant agreement, as follows: 25,000 on April 6, 1994; 25,000 on April 6,
1995; 25,000 on April 6, 1996; and 25,000 on April 6, 1997.

40
<PAGE>

(6) 10,000 repriced options were granted to Mr. Spoehel in May 1992 in exchange
for 10,000 options at $16.23 previously granted to Mr. Spoehel. The
expiration date for these repriced $8.25 options (August 6, 1994) remained
the same as the original expiration date established for the $16.23
options. These 10,000 options vest as follows: 3,334 on May 8, 1992; 3,333
on May 8, 1993; and 3,333 on May 8, 1994. A total of 2,000 new options were
granted to Mr. Spoehel on May 8, 1992, and vest as follows: 667 on May 8,
1993; 666 on May 8, 1994; and 666 on May 8, 1995.

The following table provides certain information with respect to aggregated
option and SAR exercises in fiscal 1993 and options/SAR values at February 28,
1993 for the Named Executive Officers.

<TABLE>
<CAPTION>
(A) (B) (C) (D) (E)
VALUE OF UNEXERCISED
SHARES NUMBER OF UNEXERCISED IN-THE- MONEY
UNDERLYING VALUE OPTIONS/SARS OPTIONS/SARS
OPTIONS REALIZED AT 2/28/93 (#) AT 2/28/93 ($)
NAME EXERCISED (#) ($) (2) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
James O. Edwards........ 0 0 73,000/24,000 (3)
Michael K. Goldman (4).. 30,000 $5,820 44,000/12,000 (3)
Michael J. Rowny........ 0 0 0/100,000 (3)
Ronald R. Spoehel....... 0 0 6,668/10,332 (3)
William C. Stitt........ 0 0 70,000/24,000 (3)
</TABLE>
- --------
(1) All options were granted at 100% of fair market value. The optionees may
satisfy the exercise price (and taxes, if any) by submitting currently
owned shares and/or cash. The Company's Stock Incentive Plan permits the
granting/awarding of SARs, but none have been granted/awarded to date.
(2) Fair market value of the shares underlying the options on the exercise date
minus the exercise price.
(3) Options held by the Named Executive Officers range in price from $8.25 to
$16.23. None of these options is in-the-money, which means that the option
exercise prices for all of the options held by the Named Executive Officers
exceed the current price for the Company's Common Stock on the New York
Stock Exchange.
(4) Mr. Goldman exercised 30,000 options at $8.25 in May 1992. He paid the
exercise price and the associated tax obligation by delivering shares he
previously owned valued at $8.44 per share (the average Nasdaq National
Market trading price for the 20 days preceding the exercise date).

AGREEMENTS AND TRANSACTIONS WITH CERTAIN EXECUTIVE OFFICERS

Mr. Edwards. In December 1990, the Company signed an executive agreement and
a compensation agreement with Mr. Edwards. These agreements were modified in
January 1992. The five-year executive agreement with Mr. Edwards prohibits him
from competing with the Company during that period unless, (i) the Company
files a petition for bankruptcy or reorganization (or a petition is filed
against the Company), (ii) the Company makes a general assignment for the
benefit of creditors, (iii) a trustee or receiver is appointed to take
possession of substantially all of the Company's assets, (iv) the Company's
assets are seized, (v) the Company defaults in the payment of compensation,
(vi) a Change in Control Event (as described in the agreement) occurs, (vii)
Mr. Edwards terminates his employment for good reason, (viii) Mr. Edwards dies
or becomes permanently disabled, (ix) the Company terminates his employment
without cause, or (x) certain investors' voting or investment position in the
Company is substantially reduced. In addition, the executive agreement
prohibits Mr. Edwards from selling, assigning, or disposing of more than a
specified number of shares of Common Stock without the written consent of the
Company. Under the compensation agreement described below, however, Mr. Edwards
may borrow from the Company up to 25% of the "market value" (as defined in the
agreement) of the Common Stock he owned on December 20, 1990. The executive
agreement also prevents him from selling, disposing, or assigning more than a
specified number of shares of Common Stock that he may acquire upon exercise of
options he held on that date without the written consent of the Company. In
order to generate proceeds to reduce indebtedness secured by shares of Common
Stock, Mr. Edwards is allowed to receive cash in lieu of exercising options.

41
<PAGE>

In conjunction with the executive agreement, the Company entered into a five-
year compensation agreement with Mr. Edwards that provides for (i) annual
minimum compensation starting at $250,000 and increasing $25,000 each year,
plus annual $100,000 special cash payments, (ii) immediate vesting of then-
existing options, and (iii) the grant of new options to purchase 40,000 shares
of Common Stock. In addition, Mr. Edwards was granted the right to borrow from
the Company money equal to 25% of the "market value" (as defined in the
agreements) of the shares of Common Stock held by Mr. Edwards on December 20,
1990, to be secured by shares of Common Stock. The compensation agreement may
be terminated for "good reason" (as defined in the agreements), for cause by
the Company, or upon Mr. Edwards' death or permanent disability. In the event
that the Company terminates Mr. Edwards' compensation agreement without cause,
or Mr. Edwards terminates his agreement for "good reason", Mr. Edwards is
entitled to a severance payment equal to 75% of his annual minimum
compensation. Following the execution of the executive and compensation
agreements, similar provisions contained in an existing agreement between the
Company and Mr. Edwards, described below, were modified or suspended.

In November 1989, the Company signed an agreement with Mr. Edwards which
obligated him to provide the Company up to 180 days notice prior to his
voluntarily ceasing full-time employment with the Company, and restricted his
right to transfer more than a certain amount of his Common Stock. In return,
Mr. Edwards was provided severance benefits, and under certain circumstances,
the right to borrow from the Company. This agreement, as modified to account
for the 1990/1992 executive and compensation agreements, suspends the
restrictions on stock sales and the right to borrow money, and modifies the
severance provisions, but only for so long as the 1990/1992 executive and
compensation agreements remain in effect.

In February 1991, the Company loaned Mr. Edwards $622,740, and in August
1991, the Company loaned Mr. Edwards an additional $50,000. These loans bear
interest at 9.0% per annum, and the interest is payable in annual installments
on May 15, 1993, 1994, 1995, and 1996. The entire principal amount is due on
May 15, 1996. In January 1992, the Company loaned Mr. Edwards an additional
$150,000. This loan bears interest at 8.0% per annum, and the interest is
payable in annual installments on May 15, 1993, 1994, 1995, and 1996. The
entire principal amount is due on May 15, 1996. All of these loans were
provided to Mr. Edwards as permitted by his compensation agreement described
above and are non-recourse to Mr. Edwards. The loans are secured by a pledge of
130,665 shares of ICF Kaiser Common Stock. Accrued interest in the amount of
$72,547 on these loans was not paid on May 15, 1993, and, under the terms of
the promissory notes Mr. Edwards executed in 1991 and 1992, the full principal
amount of the loans became due and payable on June 15, 1993. The entire
principal amount of the loans referred to above, together with accrued and
unpaid interest in the aggregate amount of $72,547 at May 15, 1993, plus
accrued interest through the date hereof, was outstanding as of the date
hereof. On November 18, 1993, the Compensation Committee of the Board of
Directors of the Company agreed (a) to extend the May 15, 1993 due date to May
15, 1994 and (b) not to enforce the acceleration provisions with respect to Mr.
Edwards' failure to make the interest payment by June 15, 1993.

Mr. List. In May 1993, the Company entered into a one-year employment
agreement with Mr. List for his services as Chairman of the Company's
Engineering and Construction Group. The agreement delineates Mr. List's areas
of responsibility and reporting line. The agreement provides for base
compensation at the rate of $250,000 a year, plus benefits as are awarded or
accorded to the most senior executives of the Company. The agreement can be
terminated by either Mr. List or the Company upon 30 days written notice. If
the agreement is not terminated prior to March 31, 1994, the Company must
notify Mr. List whether it intends to extend the agreement beyond May 31, 1994.
The Company has no obligation to extend the agreement. Mr. List has held senior
executive positions with the Company or its subsidiaries since 1986. In
September 1989, the Company loaned Mr. List $122,500 which he used to exercise
options to acquire 140,000 shares of Common Stock, 20,000 of which are pledged
to secure repayment of the loan. The loan bears interest at prime plus 1/2% per
annum and was due on June 30, 1993. The unpaid principal balance of $30,625,
together with accrued, but unpaid interest, was outstanding as of August 31,
1993.

42
<PAGE>

Douglas W. McMinn. On November 23, 1993, the Company and Mr. McMinn signed an
employment agreement under which Mr. McMinn will provide his services as the
President of the Company's International Operations Group for a two-year period
ending October 15, 1995. The agreement provides for: an initial annual salary
of $220,000; a guaranteed minimum cash bonus of $30,000; eligibility under the
Company's employee benefit plans; additional bonuses based upon a percentage of
the earnings before interest and taxes of the Company's wholly owned
subsidiary, Global Trade and Investment, Inc., of which Mr. McMinn is
President; and options under the Company's Stock Incentive Plan to purchase
75,000 shares of the Company's Common Stock at $4.76 per share (with a vesting
schedule of 25,000 on October 15, 1994; 25,000 on October 15, 1995; 12,500 on
October 15, 1996; and 12,500 on October 15, 1997). All of the options will
expire no later than October 15, 1998. If both Mr. McMinn and the Company
agree, Mr. McMinn's employment will be extended for one year on terms
comparable to those set forth in the agreement. In lieu of such an extension,
the agreement provides for a one-year consulting arrangement between Mr. McMinn
and the Company beginning at the termination of Mr. McMinn's employment.

Mr. Rapp. In November 1993, the Company entered into an employment agreement
with Mr. Rapp for his services as President and Chief Executive Officer of the
Company's Engineering and Construction Group. The agreement delineates Mr.
Rapp's areas of responsibility and reporting line. The agreement provides for
fiscal 1994 base salary of $250,000; a hiring bonus; bonus compensation for
fiscal 1994; eligibility under the Company's employee benefit plans; the grant
of 100,000 five-year options (vesting over five years) at fair market value on
the date of grant; the issuance of 88,105 Restricted Shares under the Company's
Stock Incentive Plan; and interest-free loans to facilitate the sale of Mr.
Rapp's current residence and the purchase of a new residence.

Mr. Rowny. In April 1992, the Company entered into an employment arrangement
with Mr. Rowny for his services as Chief Financial Officer of the Company. In
addition, Mr. Rowny was offered a position as a member of the Company's Board
of Directors. The letter arrangement delineates Mr. Rowny's areas of
responsibility and reporting line. The arrangement provides for a fiscal year
1993 salary of $200,000; eligibility for a bonus range of $0-$100,000 (the
amount to be set by the Company's Compensation Committee against a list of
objectives); eligibility under the Company's employee benefit plans; and the
grant of 100,000 five-year options at fair market value on the date of grant
(first day of employment). The options vest at 25,000 increments on April 6,
1994, 1995, 1996, and 1997; they expire on July 6, 1997. Vesting accelerates in
the event of the occurrence of certain change of control events specified in
the option agreement.

Mr. Schweers. In December 1990, the Company signed an executive agreement and
a compensation agreement with Mr. Schweers. These agreements were modified in
January 1992. The five-year executive agreement with Mr. Schweers prohibits him
from competing with the Company during that period unless, (i) the Company
files a petition for bankruptcy or reorganization (or a petition is filed
against the Company), (ii) the Company makes a general assignment for the
benefit of creditors, (iii) a trustee or receiver is appointed to take
possession of substantially all of the Company's assets, (iv) the Company's
assets are seized, (v) the Company defaults in the payment of compensation,
(vi) a Change in Control Event (as described in the agreement) occurs, (vii)
Mr. Schweers terminates his employment for good reason, (viii) Mr. Schweers
dies or becomes permanently disabled, (ix) the Company terminates his
employment without cause, or (x) certain investors' voting or investment
position in the Company is substantially reduced. In addition, the executive
agreement prohibits Mr. Schweers from selling, assigning, or disposing of more
than a specified number of shares of Common Stock without the written consent
of the Company. Under the compensation agreement described below, however, Mr.
Schweers may borrow from the Company up to 20% of the "market value" (as
defined in the agreement) of the Common Stock he owned on December 20, 1990.
The executive agreement also prevents him from selling, disposing, or assigning
more than a specified number of shares of Common Stock that he may acquire upon
exercise of options he held on that date without the written consent of the
Company. In order to generate proceeds to reduce indebtedness secured by shares
of Common Stock, Mr. Schweers is allowed to receive cash in lieu of exercising
options.

43
<PAGE>

In conjunction with the executive agreement, the Company entered into a five-
year compensation agreement with Mr. Schweers that provides for (i) annual
minimum compensation starting at $175,000 and increasing $25,000 each year,
plus annual $50,000 special cash payments, (ii) immediate vesting of then-
existing options, and (iii) the grant of new options to purchase 20,000 shares
of Common Stock. In addition, Mr. Schweers was granted the right to borrow from
the Company money equal to 20% of the "market value" (as defined in the
agreements) of the shares of Common Stock held by Mr. Schweers on December 20,
1990, to be secured by shares of Common Stock. The compensation agreement may
be terminated for "good reason" (as defined in the agreements), for cause by
the Company, or upon Mr. Schweers' death or permanent disability. In the event
that the Company terminates Mr. Schweers' compensation agreement without cause,
or Mr. Schweers terminates his agreement for "good reason," Mr. Schweers is
entitled to a severance payment equal to 75% of his annual minimum
compensation.

In October 1991, in lieu of his exercising his contractual right to borrow
cash from the Company pursuant to his compensation agreement described above,
the Company loaned Mr. Schweers $1,031,806 which Mr. Schweers used to purchase
shares of Common Stock. The outstanding balance as of August 31, 1993 is
$686,806. The loan bears interest at 9.5% per annum, and the interest is
payable in annual installments on May 15, 1994, 1995, and 1996. The entire
principal is due on May 15, 1996.

Mr. Spoehel. In December 1990, the Company entered into a letter agreement
with Mr. Spoehel for his services as a Senior Vice President of the Company.
The agreement provides for a starting salary of $150,000 per year (performance
to be reviewed annually on March 1), eligibility for an annual bonus ranging
from $0-$100,000; eligibility under the Company's employee benefit plans; and
the grant of at least 5,000 incentive stock options in May of 1991. In
September 1990, the Company loaned Mr. Spoehel $100,000 for use primarily in
the purchase of Common Stock. The outstanding balance as of November 15, 1993,
was $40,000. The loan currently bears interest at 5.3% per annum and is
adjusted annually on June 1 to the "Applicable Federal Rate" as defined by the
Internal Revenue Service. Accrued interest is payable on May 31, 1996. Under
the promissory note between Mr. Spoehel and the Company, $20,000 annual
principal payments on this loan are forgiven each year; the accrued interest
will be forgiven on May 31, 1996. In November 1990, the Company granted Mr.
Spoehel options to purchase 5,000 shares of Common Stock at an exercise price
of $9.29 per share. These options were granted prior to Mr. Spoehel's becoming
an employee of the Company.

Mr. Stitt. Effective April 26, 1993, Mr. Stitt resigned as President, Chief
Operating Officer, and a director of the Company under the terms of an
agreement which provided for (a) the termination of Mr. Stitt's December 1990
executive and compensation agreements with the Company, (b) a severance payment
of $325,000, (c) continuing compensation at $300,000 for one year, (d) the
immediate vesting of 24,000 previously awarded options to purchase the
Company's stock at $11.12 per share, (e) the termination of an outstanding loan
in return for the conveyance to the Company of 132,900 shares of the Company's
stock purchased with the loan proceeds, and (f) the repurchase by the Company
at $5.9875 per share of 477,568 shares of Company stock owned by Mr. Stitt.

44
<PAGE>

SECURITY OWNERSHIP

<TABLE>
<CAPTION>
AGGREGATE
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF VOTING
5% SHAREHOLDERS, DIRECTORS AND OFFICERS BENEFICIAL OWNERSHIP(A) CLASS OF STOCK POWER
- --------------------------------------- ----------------------- -------------- ---------
<S> <C> <C> <C>
DIRECTORS
Gian Andrea Botta............. 3,000 shares (b) * *
Tom Bradley................... 3,000 shares (c) * *
Tony Coelho................... 10,000 shares (d) * *
James O. Edwards.............. 418,032 shares (e) 2.0% of 1.6%
Common Stock
Frederic V. Malek............. 24,000 shares (f) * *
Rebecca P. Mark............... 3,000 shares (g) * *
Robert W. Page, Sr............ 3,000 shares (h) * *
Michael J. Rowny.............. 14,560 shares (i) * *
Marc Tipermas................. 265,287 shares (j) 1.3% of *
Common Stock
EXECUTIVE OFFICERS NAMED IN THE
SUMMARY COMPENSATION TABLE
James O. Edwards.............. 418,032 shares (e) 2.0% of 1.6%
Chairman and Chief Executive Common Stock
Officer
Michael K. Goldman............ 131,093 shares (k) * *
Executive Vice President
Michael J. Rowny.............. 14,560 shares * *
Executive Vice President and
Chief Financial Officer
Ronald R. Spoehel............. 22,308 shares (l) * *
Senior Vice President and
Treasurer
William C. Stitt.............. 20,000 shares * *
President and Chief Operating
Officer through April 26,
1993
All Directors and Executive
Officers
as a Group (16 persons)........ 2,051,527 shares (m) 9.9% of 7.9%
Common Stock
5% COMMON SHAREHOLDERS
ICF Kaiser International, Inc. 12.2% of
Employee Stock Ownership Common Stock
Trust........................ 2,528,244 shares (n) 9.8%
ICF Kaiser International, Inc. 6.1% of
Retirement Plan.............. 1,257,306 shares (o) Common Stock 4.9%
FIMA Finance Management Inc... 5,657,142 shares (p) 21.4% of
Common Stock 21.0%
Mathers & Company, Inc. 10.2% of
and Mathers Fund, Inc........ 2,125,600 shares (q) Common Stock 8.3%
State of Wisconsin Investment 1,550,200 shares (r) 7.5% of
Board........................ Common Stock 6.0%
SERIES 1 JUNIOR CONVERTIBLE PRE-
FERRED STOCK
Harrowston Securities Corpora- 69 shares (s) 100% of 1.8%
tion......................... Series 1
SERIES 2C SENIOR PREFERRED STOCK
IFINT-USA Inc................. 250 shares (p) 100% of 8.4%
Series 2C
SERIES 2D SENIOR PREFERRED STOCK
IFINT-USA Inc................. 200 shares (p) 100% of 9.2%
Series 2D
</TABLE>
- --------
* = ownership of less than 1%

45
<PAGE>

FOOTNOTES TO SECURITY OWNERSHIP TABLE

(a) Except as noted below, all information in the above table is as of August
31, 1993. A person is deemed to be a beneficial owner of the Company's
stock if that person has voting or investment power (or voting and
investment powers) over any shares of capital stock or has the right to
acquire such shares within 60 days from August 31, 1993. With respect to
ownership of shares which are held by the ESOP but allocated to
individuals' accounts, the unaudited information is current as of January
31, 1993, and does not include shares to be allocated to participants'
accounts as a result of the Company's fiscal year 1993 contribution to the
ESOP. For shares shown in the following footnotes as being held in
directed investment accounts in the ICF Kaiser International, Inc.
Retirement Plan, the beneficial owner shown below has investment but not
voting power over those shares.
(b) Mr. Botta's share ownership includes 3,000 shares that may be acquired
within 60 days of August 31, 1993, upon the exercise of stock options.
(c) Mr. Bradley's share ownership includes 3,000 shares that may be acquired
within 60 days of September 1, 1993, upon the exercise of stock options.
(d) Mr. Coelho's share ownership includes 9,000 shares that may be acquired
within 60 days of August 31, 1993, upon the exercise of stock options.
(e) Mr. Edwards' share ownership includes 1,573 shares allocated to his ESOP
account, 60,426 shares in his directed investment account under the ICF
Kaiser International, Inc. Retirement Plan (the "Retirement Plan") and
73,000 shares that may be acquired within 60 days of August 31, 1993, upon
the exercise of stock options. See footnotes n and o below.
(f) Mr. Malek's share ownership includes 12,000 shares that may be acquired
within 60 days of August 31, 1993, upon the exercise of stock options.
(g) Ms. Mark's share ownership includes 3,000 shares that may be acquired
within 60 days of September 1, 1993, upon the exercise of stock options.
(h) Mr. Page's share ownership includes 3,000 shares that may be acquired
within 60 days of August 31, 1993, upon the exercise of stock options.
(i) Effective October 15, 1993, Mr. Rowny became a Trustee of the ESOP and a
member of the Retirement Plan Committee of the Retirement Plan. See
footnotes n and o below.
(j) Dr. Tipermas became a director of the Company on October 15, 1993. His
share ownership is stated as of October 15, 1993, and includes 6,703
shares allocated to his ESOP account, 7,525 shares in his directed
investment account under the Retirement Plan and 50,537 shares that may be
acquired within 60 days of October 15, 1993.
(k) Mr. Goldman's share ownership includes 6,279 shares allocated to his ESOP
account and 44,000 shares that may be acquired within 60 days of August
31, 1993, upon the exercise of stock options.
(l) Mr. Spoehel's share ownership includes 640 shares allocated to his ESOP
account and 6,668 shares that may be acquired within 60 days of August 31,
1993, upon the exercise of stock options.
(m) This total includes 33,991 shares allocated to ESOP accounts, 91,725
shares in directed investment accounts under the ICF Kaiser International,
Inc. Retirement Plan, and 364,456 shares that may be acquired within 60
days of August 31, 1993, upon the exercise of stock options. The total
number of the group includes Mr. Rapp who joined the Company on November
8, 1993.
(n) ICF Kaiser International, Inc. Employee Stock Ownership Trust, 9300 Lee
Highway, Fairfax, VA 22031. As of October 15, 1993, the ESOP Trustees are
James O. Edwards, Michael J. Rowny and Marcy A. Romm. Of the 2,528,244
shares of Common Stock held by the ESOP, a total of 1,950,940 shares are
allocated to individual ESOP participants' accounts and are voted by those
participants. The ESOP Trustees vote the remaining 577,304 shares of
Common Stock held by the ESOP. The ESOP Trustees have investment power
over all of the 2,528,244 shares of Common Stock held by the ESOP. Each
ESOP Trustee disclaims beneficial ownership of the shares of Common Stock
held by the ESOP. The individual shareholdings of Mr. Edwards and Mr.
Rowny are shown on the Security Ownership table in this Prospectus. Ms.
Romm beneficially owns 10,365 shares of Common Stock, 750 of which are
shares that may be acquired within 60 days of the Record Date upon the
exercise of stock options. Ms. Romm's address is 9300 Lee Highway,
Fairfax, VA 22031.

46
<PAGE>

(o) ICF Kaiser International, Inc. Retirement Plan, c/oU.S. Trust Company of
California, N.A. (Trustee), 555 South Flower St., Suite 2700, Los Angeles,
CA 90071. As of October 15, 1993, the members of the Retirement Plan
Committee are James O. Edwards, Michael J. Rowny and Marcy A. Romm. Of the
1,257,306 shares of Common Stock held by the Retirement Plan, a total of
353,239 shares are held in directed investment accounts in which the
participants have investment power over their allocated shares. The
Retirement Plan Committee members and the Trustee have investment power
over 904,067 shares held by the Retirement Plan but not held in directed
investment accounts. The Retirement Plan Committee members direct the
Trustee as to how to vote the 1,257,306 shares of Common Stock held by the
Retirement Plan. Each Retirement Plan Committee member disclaims beneficial
ownership of the shares of Common Stock held by the Retirement Plan.
(p) FIMA Finance Management, Inc. Citco Building, Wickhams Cay, P.O. Box 662,
Road Town, Tortola, British Virgin Islands. FIMA Finance Management Inc.
("FIMA") owns Series 2C Warrants for the purchase of 2,976,190 shares of
Common Stock and Series 2D Warrants for the purchase of 2,680,952 shares of
Common Stock. IFINT-USA, Inc. ("IFINT-USA"), 375 Park Avenue, New York, New
York 10182, owns 250 shares of Series 2C Preferred Stock and 200 shares of
Series 2D Preferred Stock. The terms of the Series 2C Preferred Stock and
Series 2D Preferred Stock limit the total vote of each series to 2,173,913
and 2,380,952, respectively; both IFINT-USA and FIMA have agreed that the
Common Stock to be owned by FIMA upon exercise of the Series 2C and 2D
Warrants shall have voting limitations of 2,173,913 and 2,380,952 votes,
respectively, while held by FIMA or its affiliates. IFINT-USA and FIMA are
wholly owned subsidiaries of IFINT S.A., 2 Blvd Royal, Luxembourg. Gian
Andrea Botta, a director of the Company, is the President of IFINT-USA. Mr.
Botta disclaims beneficial ownership of the shares of Series 2C Preferred
Stock, the shares of Series 2D Preferred Stock, the Series 2C Warrants, and
the Series 2D Warrants. There will no longer be any voting limitation on
the Common Stock to be owned by FIMA or its affiliates upon exercise of the
Series 2D Warrants after the Company repurchases the Series 2C Preferred
Stock and the Series 2C Warrants with a portion of the proceeds from the
Offering. See "Use of Proceeds."
(q) The information with respect to the shares of Common Stock beneficially
owned by Mathers and Company, Inc. and Mathers Fund, Inc., 100 Corporate
North, Suite 201, Bannockburn, IL 60015 (which firms are controlled by
common officers) is based on a Report on Schedule 13G, Amendment No. 1,
which was filed with the SEC on June 7, 1993, covering the period ended May
31, 1993.
(r) The information with respect to the shares of Common Stock beneficially
owned by the State of Wisconsin Investment Board, P.O. Box 7842, Madison,
WI 53707, is based on a Report on Schedule 13D dated December 2, 1992 and
filed with the SEC.
(s) Harrowston Securities Corporation, 150 York Street, Suite 1300, Toronto,
Ontario M5H 3S5.

47
<PAGE>

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 90,000,000 shares of
Common Stock and 2,000,000 shares of preferred stock, par value $0.01 per
share. As of November 30, 1993, the outstanding capital stock of the Company
consisted of 20,891,052 shares of Common Stock, 69 shares of Series 1 Junior
Convertible Preferred Stock, 250 shares of Series 2C Preferred Stock, and 200
shares of Series 2D Preferred Stock. After giving effect to the issuance of the
Units offered hereby and application of the proceeds thereof, the outstanding
capital stock of the Company will consist of 20,891,052 shares of Common Stock
and 200 shares of Series 2D Preferred Stock.

COMMON STOCK

The following is a summary of the terms of the Common Stock:

Voting. Each share of Common Stock has one vote per share on all matters
submitted to a vote of shareholders. The Company'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.

Dividends. The Company 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 the Company's earnings will
be retained for use in the business. The Board of Directors determines the
Company's Common Stock dividend policy based on the Company's results of
operations, payment of dividends on preferred stock (if any is outstanding),
financial condition, capital requirements, and other circumstances. The
Company's credit agreements allow dividends to be paid on its capital stock
provided that the Company complies with certain limitations imposed by the
terms of such agreements. See "Description of Credit Facility."

Other Terms. Holders of Common Stock have no preemptive or other rights to
subscribe for additional shares of Company stock. Upon liquidation,
dissolution, or winding up of the Company, each share of Common Stock will
share equally in assets legally available for distribution to stockholders.

Transfer Agent. The transfer agent and registrar for the Common Stock is
First Chicago Trust Company of New York, 14 Wall Street, Mail Suite 4680, New
York, New York 10005.

Public Market. Since September 14, 1993, the Common Stock has been traded on
the New York Stock Exchange under the symbol "ICF." Prior to that date, the
Common Stock was traded on the Nasdaq National Market.

PREFERRED STOCK

The preferred stock is available for issuance from time to time at the
discretion of the Board of Directors of the Company, without shareholder
approval. The Board of Directors has authority to prescribe for each series of
preferred stock it establishes the number of shares in that series, the
dividend rate, and 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 the Company without further action by the
shareholders.

48
<PAGE>

SERIES 2D PREFERRED STOCK

The Company has issued 200 shares of Series 2D Preferred Stock, all of which
are currently outstanding. In connection with the issuance of the Series 2D
Preferred Stock, the Company issued the Series 2D Warrants for the purchase of
2,680,952 shares of Common Stock to the purchaser of the Series 2D Preferred
Stock. See "Series 2D Warrants." The following is a summary of the terms of the
Series 2D Preferred Stock, which ranks prior to the Common Stock and Series 4
Junior Preferred Stock (if any is issued) with respect to dividend rights and
rights on liquidation, winding up and dissolution.

Dividends. The Series 2D Preferred Stock pays cumulative dividends of $9,750
per $100,000 of liquidation preference per year, payable quarterly.

Liquidation Preference. Upon any voluntary or involuntary liquidation,
dissolution or winding up of the Company, the holders of Series 2D Preferred
Stock are entitled to receive a liquidation preference equal to $100,000 plus
accrued but unpaid dividends per share of Series 2D Preferred Stock before any
distribution is made to the holders of any capital stock of the Company ranking
junior to the Series 2D Preferred Stock.

Redemption. The Company is obligated to redeem all shares of Series 2D
Preferred Stock outstanding on January 13, 1997, for the full liquidation
preference amount, plus accrued and unpaid dividends thereon to the redemption
date. In addition, upon a proposal for or the occurrence of a Change in Control
Event, as defined in the Certificate of Designations creating the Series 2D
Preferred Stock ("Series 2D Certificate of Designations"), the original
purchaser (and current holder) of the shares of Series 2D Preferred Stock (the
"Initial Holder") has the option to require the Company to redeem all or part
of such Initial Holder's shares at a redemption price of $100,000 per share,
together with accrued and unpaid dividends. This Certificate of Designations is
now included in the Company's Amended and Restated Certificate of
Incorporation.

The Company at any time and at its option may redeem all, but not less than
all, of the shares of Series 2D Preferred Stock at a redemption price of
$106,250 per share, plus accrued and unpaid dividends thereon to the redemption
date.

If, as of the date the Company elects to redeem the shares of Series 2D
Preferred Stock, an Initial Holder owns any Series 2D Warrants, then the holder
of such shares may elect to receive, in lieu of the applicable redemption price
described above, consideration per share equal to (i) cash in the amount of
$106,249.99, and (ii) one share of a new series of preferred stock, par value
$0.01 per share (the "Series XD Preferred Stock"), of the Company to be created
pursuant to a Certificate of Designations in the form attached as an exhibit to
the Series 2D Certificate of Designations (the "Series XD Certificate of
Designations"). No dividends will be payable with respect to shares of Series
XD Preferred Stock. The liquidation preference for such shares will be $0.01
per share. Holders of shares of Series XD Preferred Stock will be entitled to
vote together with holders of the Common Stock on all matters to be voted on by
the Company's shareholders. The number of votes entitled to be cast by holders
of such shares of Series XD Preferred Stock is determined separately with
respect to each holder in accordance with formulae set forth in the Series XD
Certificate of Designations. No holder of shares of Series XD Preferred Stock
may transfer any such shares unless such shares are transferred to a Purchaser
Affiliate, as defined in the Securities Purchase Agreement between the Company
and the Initial Holder (the "Securities Purchase Agreement"). The Company must
redeem all outstanding shares of Series XD Preferred Stock at a redemption
price per share equal to the aggregate liquidation preference of such shares on
the first to occur of (i) January 13, 1997 or (ii) the date upon which an
Initial Holder does not hold any Series 2D Warrants.

The Company also has a one-time right to redeem all outstanding shares of
Series 2D Preferred Stock, each share in exchange for (i) a subordinated debt
security (the "Exchange Note") with an aggregate principal amount of $99,999.99
and a minimum interest rate of 9.75%, in the form attached as an exhibit to the
Series 2D Certificate of Designations, bearing interest at a rate that would
preserve the after-federal income tax return on dividends on the Series 2D
Preferred Stock, (ii) cash in an amount equal to all accrued and unpaid

49
<PAGE>

dividends on the Series 2D Preferred Stock, and (iii) one share of a new series
of preferred stock, par value $0.01 per share (the "Series YD Preferred
Stock"), of the Company to be created pursuant to a Certificate of Designations
in the form attached as an exhibit to the Series 2D Certificate of Designations
(the "Series YD Certificate of Designations"). No dividends will be payable
with respect to shares of Series YD Preferred Stock. The liquidation preference
for such shares will be $0.01 per share. The Company may at any time and at its
option redeem all, but not less than all, the shares of Series YD Preferred
Stock at a redemption price of $0.01 per share. The Company has mandatory
redemption obligations to: (i) redeem all shares of Series YD Preferred Stock
outstanding on January 13, 1997 for the full liquidation preference amount,
(ii) redeem all or part of the Initial Holder's Series YD Preferred Stock for
the liquidation preference amount if the Initial Holder exercises its
redemption opinion upon the proposal or occurrence of a Change in Control
Event, (iii) concurrently redeem all outstanding Exchange Notes when Series YD
Preferred Stock is redeemed, and (iv) redeem and purchase outstanding shares of
Series YD Preferred Stock pursuant to the Securities Purchase Agreement. If the
holder of such redeemed Series YD Preferred Stock is an Initial Holder and also
holds any outstanding Series 2D Warrants, then such holder shall receive, for
each share of Series YD Preferred Stock redeemed, a share of Series XD
Preferred Stock. Shares of Series XD Preferred Stock may not be transferred
separately from their corresponding Exchange Notes.

The Initial Holder of the Series 2D Preferred Stock has the right, subject to
a 180-day cure period, to require the Company to redeem all shares of Series 2D
Preferred Stock (or shares of Series YD Preferred Stock and associated Exchange
Notes, as the case may be) held by it under certain circumstances. This right
is exercisable in the event the Company notifies such affiliates that the DOD,
the DOE or the President of the United States has made a final determination on
the grounds of national security that the Company, by reason of the ownership
of such Company securities by the Initial Holder, should forfeit a security
clearance on a material facility or a material government contract, and, in the
reasonable judgment of the Company's Board of Directors, such forfeiture will
have a material adverse effect on the Company. This right is not exercisable,
however, if the parent organization of the Initial Holder acquires more than
20% of the voting power of the Company.

Voting. The number of votes entitled to be cast by any holder of Series 2D
Preferred Stock is equal to the total number of shares of Series 2D Preferred
Stock owned by such holder divided by the total number of outstanding shares of
Series 2D Preferred Stock times the total number of shares of Common Stock (not
to exceed 2,380,952, subject to certain adjustments) for which Series 2D
Warrants are outstanding and unexercised. After such time as there are
outstanding Series 2D Warrants exercisable for 2,380,952 or fewer shares of
Common Stock, the voting power of the Series 2D Preferred Stock is reduced as
Series 2D Warrants are exercised. Thus, the Series 2D Preferred Stock has
voting power similar to that of the Common Stock.

In general, holders of shares of Series 2D Preferred Stock vote together with
the holders of Common Stock and are not entitled to vote as a separate class.
However, the affirmative vote of the holders of a majority of the shares of
Series 2D Preferred Stock, voting as a class with the holders of other series
of preferred stock or as a separate class, in accordance with Delaware law,
would be required for the approval of any proposed amendment of the Amended and
Restated Certificate of Incorporation that would change the par value of the
Series 2D Preferred Stock or alter or change the powers, preferences, or
special rights of the Series 2D Preferred Stock so as to affect such holders
adversely. Such a class vote is also required with respect to any proposed
merger or similar transaction involving an amendment of the Company's Amended
and Restated Certificate of Incorporation if the amendment would materially and
adversely affect the powers, preferences or special rights of the Series 2D
Preferred Stock. Moreover, without the affirmative vote of at least 66 2/3% of
the aggregate voting power of shares of Series 2D Preferred Stock outstanding,
the Company may not (i) authorize or issue preferred stock senior to the Series
2D Preferred Stock, or (ii) authorize or issue equity securities with a
mandatory redemption date earlier than January 13, 1997.

50
<PAGE>

As discussed below (see "Provisions Affecting Changes of Control and
Extraordinary Transactions"), until January 13, 1997 (when the Series 2D
Preferred Stock is required to be redeemed, see "Redemption" above), the
Initial Holder has the right to designate one nominee for election as a
director of the Company.

Rights Upon Dividend Default. In the event the Company is in arrears with
respect to any dividend payable on the Series 2D Preferred Stock for a period
in excess of 100 days or fails to make a mandatory redemption, the holders of
Series 2D Preferred Stock will have the exclusive right to elect two additional
directors. In addition, until such an arrearage or failure to make a mandatory
redemption is cured, if 33% or more of the then outstanding Series 2D Preferred
Stock (or securities issued in exchange therefor) is held by an Initial Holder,
the Company becomes subject to certain restrictive covenants. Such covenants
would prohibit the Company from, among other things: disposing of assets for
consideration of more than $1 million in a single transaction; entering into
mergers; making acquisitions; guaranteeing any obligation in excess of $1
million; or incurring indebtedness other than as permitted pursuant to the
Indenture governing the Notes without the consent of such Initial Holder.
Further, under such circumstances, the Initial Holder is relieved from the
limitations described below on its right to acquire additional voting
securities of the Company, to subject Series 2D Preferred Stock to a voting
trust, or to solicit proxies in opposition to the Company's Board of Directors
(see "Provisions Affecting Changes of Control and Extraordinary Transactions").

Because of limitations on the payment of dividends contained in the agreement
governing the Company's 13.5% Notes, the Company did not pay the dividends on
its Series 2C Senior Preferred Stock and the Series 2D Preferred Stock that
were due on August 31 and November 30, 1993. The Company plans to retire the
13.5% Notes and purchase all of the outstanding Series 2C Senior Preferred
Stock in connection with the completion of the Offering. See "Use of Proceeds."
At that time the Company will also pay the unpaid dividends on the Series 2C
Senior Preferred Stock and Series 2D Preferred Stock with cash on hand.
However, unless the Offering is completed or other arrangements are agreed upon
prior to January 14, 1994, the rights and covenants described above will be
operative from January 14, 1994 until payment of the dividends.

Transferability. The Series 2D Preferred Stock and Series 2D Warrants were
sold in a private placement exempt from registration under the Securities Act.
Thus, there is no public market for the Series 2D Preferred Stock (or the
Series XD Preferred Stock, Series YD Preferred Stock or Exchange Notes, if any
of such securities are issued) or the Series 2D Warrants. Transfers of any such
securities are further restricted by the Securities Purchase Agreement, which
grants the Company a right of first offer to purchase any such securities prior
to any transfers to any person other than another Initial Holder.

A registration rights agreement provides the holders of Series 2D Warrants
and the holders of any shares of Common Stock issued upon exercise of Series 2D
Warrants with certain rights to register for resale shares of Common Stock
issued upon exercise of the Series 2D Warrants. These registration rights
include customary demand and incidental registration rights.

Other Terms. Except as set forth above, holders of the Series 2D Preferred
Stock have no preemptive or other rights to subscribe for additional shares of
Company stock.

SERIES 2D WARRANTS

In January 1992, the Company sold to an affiliate of IFINT-USA Series 2D
Warrants to purchase 2,680,952 shares of Common Stock (subject to adjustment)
at an exercise price of $8.40 per share. The Series 2D Warrants expire in May
1997. At the time the Company repurchases its Series 2C Senior Preferred Stock
and Series 2C Warrants with a portion of the proceeds from the sale of the
Units (see "Use of Proceeds"), the Company will issue new Series 2D Warrants to
the affiliate of IFINT-USA. The new Series 2D Warrants will be exercisable at
$6.90 per share (subject to adjustment). The holder of the Series 2D Warrants
will be able, in lieu of exercising such warrants, to require the Company to
issue to such holder Common Stock with

51
<PAGE>

an aggregate market value equal to the difference between the then current
market price for the Common Stock and 90% of the exercise price of the Series
2D Warrants then in effect, multiplied by the number of Series 2D Warrants for
which the holder is requiring such issuance. In addition, on the expiration
date of the Series 2D Warrants, the holder of such warrants will be able, in
lieu of exercising the warrants or having Common Stock issued as described in
the preceding sentence, to require the Company to pay it cash in the amount of
the difference between the then current market price for the Common Stock and
the exercise price of the Series 2D Warrants then in effect, multiplied by the
number of Series 2D Warrants for which the holder is requiring such payment. In
the event that the Company cannot make such cash payment without violating a
covenant or covenants contained in the Indenture, the New Credit Agreement or
any similar agreement relating to indebtedness for borrowed money of the
Company, the Company shall make such payment in Common Stock as described
above.

SHAREHOLDER RIGHTS PLAN

On January 13, 1992, the Board of Directors of the Company declared a
dividend distribution to shareholders of record at the close of business on
January 31, 1992 (the "Record Date") of one Right for each outstanding share of
Common Stock and for each share of Common Stock into which each outstanding
share of the then-outstanding Series 1 Preferred Stock and the then-outstanding
Series 3 Junior Convertible Preferred Stock was then convertible. A total of
21,081,651 Rights were issued as of the Record Date.

Each Right entitles the registered holder to purchase from the Company a unit
consisting of one one-hundredth of a share (a "Preferred Stock Unit") of Series
4 Junior Preferred Stock ("Series 4 Preferred Stock"), at a purchase price of
$50.00 per Preferred Stock Unit ("Purchase Price"), subject to adjustment. The
Rights also are subject to certain antidilution adjustments. The description of
the Rights is set forth in a Rights Agreement (the "Rights Agreement") between
the Company and the Rights Agent.

A Distribution Date (the "Distribution Date") for the Rights will occur upon
the earlier of (i) 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 (such person or group
referred to herein as an "Acquiring Person") or (ii) 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. 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 the Company as
described below.

The Rights Agreement provides, among other things, that the Initial Holder on
the date of the Rights Agreement of the Series 2D Preferred Stock cannot be
deemed an Acquiring Person.

Until the Distribution Date (i) the Rights will be evidenced by the Common
Stock certificates and will be transferred with and only with such certificates
and (ii) 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 such 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 thereafter have the right to receive, (x) upon exercise
and payment of the Purchase Price, Common Stock (or, in certain circumstances,
cash, property or other securities of the Company) having a value equal to two
times the Purchase Price of the Right or (y) at the discretion of the Board of
Directors, upon exercise and without payment of the Purchase

52
<PAGE>

Price, Common Stock (or, in certain circumstances, cash, property or other
securities of the Company) having a value equal to the Purchase Price of the
Right. For example, at a Purchase Price of $50.00 per Right, each Right not
owned by an Acquiring Person (or by certain related parties) following the
event set forth above would entitle its holder to purchase $100 worth of Common
Stock (or other consideration, as noted above) for $50.00. Assuming that the
Common Stock has a per share value of $10.00 at such time, the holder of each
Right would be entitled to purchase 10 shares of Common Stock for a total
aggregate purchase price of $50.00. However, Rights are not exercisable
following the occurrence of the event set forth above until such time as the
Rights are no longer redeemable by the Company as set forth below.

In the event that, at any time following the Stock Acquisition Date, (i) the
Company is acquired in a merger or other business combination transaction in
which the Company is not the surviving corporation, (ii) the Company 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 (iii) 50% or
more of the Company'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 thereafter 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 certain 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 (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Series 4
Preferred Stock, (ii) if holders of the Series 4 Preferred Stock are granted
certain 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 (iii) 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 certain 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 the Company does not have sufficient
shares of Common Stock issuable upon exercise of the Rights following the
occurrence of a Triggering Event, the Company may, under certain circumstances,
reduce the Purchase Price. No fractional Preferred Stock Units will be issued
and, in lieu thereof, an adjustment in cash will be made.

In general, the Company 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, the Company'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
the Company 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 such Rights prior to such 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 thereof, as such, will have no rights
as a shareholder of the Company, including, without limitation, the right to
vote or to receive dividends.

53
<PAGE>

Other than those provisions relating to the principal economic terms of the
Rights (except with respect to increasing the Purchase Price under certain
circumstances described in the Rights Agreement), any of the provisions of the
Rights Agreement may be amended by the Board of Directors of the Company 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 the Company for each share
of Common Stock owned of record by them at the close of business on the Record
Date. Until the Distribution Date, the Company 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 certain anti-takeover effects. The Rights
generally may cause substantial dilution to a person or group that attempts to
acquire the Company under circumstances not approved by the Board of Directors
of the Company. The Rights should not interfere with any merger or other
business combination approved by the Board of Directors of the Company since
the Board of Directors may, at its option, at any time prior to the close of
business on the earlier of (i) the tenth business day following the Stock
Acquisition Date or (ii) 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, certain provisions of the
Company's Amended and Restated Certificate of Incorporation and By-laws and
other agreements could have the effect of delaying, deferring, or preventing a
change in control of the Company or other extraordinary corporate transaction.

The Company's Amended and Restated Certificate of Incorporation and By-laws
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 Amended and Restated
Certificate of Incorporation and By-law provisions relating to classification
of the Board of Directors.

In addition, the Amended and Restated Certificate of Incorporation imposes
supermajority voting requirements for certain corporate transactions that apply
if a majority of the Board of Directors has not served in such positions for at
least 12 months. Under those circumstances, the approval of two-thirds of the
voting power of the Company's capital stock would be required in order for the
Company to (i) merge with or consolidate into any other entity, other than a
subsidiary of the Company, (ii) sell, lease or assign all or substantially all
of the assets or properties of the Company, or (iii) amend the voting
provisions of the Amended and Restated Certificate of Incorporation. Other
Amended and Restated Certificate of Incorporation provisions of the type
referred to above include (i) the denial of the right of holders of Common
Stock to take action by written consent in lieu of at a shareholders' meeting
and (ii) the ability of the Board of Directors to determine the rights and
preferences (including voting rights) of the Company's authorized but unissued
preferred stock, and then to issue such stock. Such By-law provisions include
those that (i) require advance nomination of directors, (ii) require advance
notice of business to be conducted at shareholders' meetings, and (iii) 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

54
<PAGE>

voting power of the Company's capital stock is required to amend, alter, or
repeal, or to adopt provisions inconsistent with, the Amended and Restated
Certificate of Incorporation and By-law 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 such action.

The voting and certain other rights of the holders of the Company's Series 2D
Preferred Stock may also have the effect of delaying, deferring or preventing a
change of control of the Company. As described in the preceding sections, the
terms of the Series 2D Preferred Stock permit the holders of such stock to
require redemption of the stock upon a "Change of Control Event" as defined
therein (in general, (x) the acquisition of 40% or more of the voting power of
the Company by an unrelated third party, (y) a change in the composition of a
majority of the Company's directors over a two-year period or (z) shareholder
approval of (A) a transaction or series of transactions consummated within nine
months which results in the shareholders of the Company prior to such
transaction(s) owning less than 55% of the voting power of the Company, (B)
liquidation of the Company, or (C) sale or disposition of all or substantially
all of the Company's assets). See "Series 2D Preferred Stock".

The agreements relating to the Series 2D Preferred Stock provide that, until
December 20, 1995, the Initial Holder will not, without the consent of a
majority of the Company's directors not designated by the purchaser, (i)
acquire any voting securities of the Company if, after such acquisition, it
would directly or indirectly own or control more than 40% of the voting power
of the Company, (ii) subject the Series 2D Preferred Stock to a voting trust,
or (iii) solicit proxies in opposition to any recommendation of the Company's
Board of Directors. Until January 13, 1997, subject to adjustment, so long as
the purchaser of the Series 2D Preferred Stock (and its affiliates) owns 80% of
such stock (including securities issuable in exchange for such stock) or 80% of
the Series 2D Warrants or the Common Stock issued upon exercise of the Series
2D Warrants, such purchaser (and its affiliates) shall be entitled to designate
a nominee for director to serve on the Company's Board of Directors.

In addition, the warrants to purchase 275,088 shares, subject to antidilution
adjustment, of Common Stock (the "Subordinated Debt Warrants") and the Series
2D Warrants (which are exercisable for 2,680,952 shares, subject to
antidilution adjustment, of Common Stock) provide that, if the Company is a
party to a merger or other extraordinary corporate transaction in which the
Company's outstanding Common Stock is exchanged for securities or other
consideration (including cash), the holders thereof shall have the right to
elect, within 60 days after notice, to receive, at the holder's election, (i)
the consideration which the warrantholder would have received had the warrants
been exercised immediately prior to the transaction or (ii) the number of
shares of the acquiring party's voting stock (with the highest voting power per
share in the case of the Series 2D Warrants) determined by reference to a
formula that gives effect to the fair market value of the consideration paid
for the Company's Common Stock in the transaction. If such a transaction
constitutes a Change of Control Event (as described above), each of the holders
of the Subordinated Debt Warrants and Series 2D Warrants also have the right to
exercise the warrants they hold within the 60-day notice period referred to
above and receive cash in an amount equal to the fair market value of the
highest per share consideration paid in connection with the transaction,
computed as if the warrants had been exercised immediately prior to
consummation of the transaction.

The Company has entered into agreements with certain key employees, including
Messrs. Edwards and Schweers, that contain non-compete provisions and
provisions that require such key employees to obtain the written consent of the
Company prior to transferring a specified amount of the Common Stock. In
addition, Mr. Edwards is required to give the Company notice of his intention
to leave the Company. Finally, in the event of a takeover of the Company, the
agreement with Mr. Edwards provides for automatic vesting of the options and
deferred compensation held by him.

DELAWARE TAKEOVER STATUTE

Section 203 of the Delaware General Corporation Law (the "Delaware Takeover
Statute") applies to Delaware corporations with a class of voting stock listed
on a national securities exchange, authorized for

55
<PAGE>

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 stockholders. 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 (an
"Interested Stockholder"), but less than 85% of such 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 (i) prior to such date the corporation's board of directors
approved either the Business Combination or the transaction in which the
stockholder became an Interested Stockholder or (ii) 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, certain asset sales, certain 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 certain other benefits.

DESCRIPTION OF CREDIT FACILITY

Effective on the closing date of the sale of the Units, the Company will pay
in full its existing bank debt (see "Use of Proceeds") and will enter into a
new $60 million revolving credit and letter of credit facility (the "New Credit
Agreement"), with a syndicate of banks (the "Banks"). The agent for the Banks
(the "Agent") will be Chemical Bank.

In addition, and also effective on the closing date of the sale of the Units,
the Company, on behalf of the ESOP, will repay all outstanding amounts under a
related ESOP credit facility with the Banks using cash on hand and, thereupon,
will close that facility. Capitalized terms used in this description of the New
Credit Agreement and not defined herein have the meanings assigned to them in
the New Credit Agreement. It is expected that the terms of the New Credit
Agreement will be substantially as follows:

Borrowing Availability and Termination Date. Under the New Credit Agreement,
loans may be made to the Company and letters of credit may be issued at the
request of the Company for an aggregate amount of the lesser of (i) $60
million, or (ii) the Borrowing Base (the sum of 85% of Eligible Billed Accounts
Receivable plus 30% of Unbilled Accounts Receivable) as reduced by outstanding
additional permitted indebtedness. If the Company sells assets other than in
the ordinary course of business while the New Credit Agreement is in effect,
the borrowing availability will be reduced by one-half of the net proceeds from
each sale; provided, however, that there will be no reduction for the first $10
million in aggregate net proceeds. The New Credit Agreement will terminate on
October 31, 1996.

Interest. The New Credit Agreement contains Eurodollar and Alternate Base
Rate ("ABR") options, with applicable margins depending on the Company's ratio
of (i) Consolidated Net Income plus Consolidated Interest Expense and income
taxes to (ii) Consolidated Interest Expense.

Fees. The Company will pay certain fees and commissions to the Banks,
including a commitment fee of 1/2% per annum on the unused portion of the
facility. Outstanding letters of credit will bear a fee equal to the Eurodollar
applicable margin in effect over the payment period.

Collateral. Advances under the New Credit Agreement will be secured on a
first priority basis by a pledge of all of the billed and unbilled accounts of
the Company and certain of its subsidiaries, as well as certain other tangible
and intangible assets of the Company and certain of its subsidiaries.

56
<PAGE>

Subsidiary Guarantees. Certain subsidiaries of the Company (the "Subsidiary
Guarantors") will enter into a joint and several guarantee of the Company's
payment obligations under the New Credit Agreement. Each of the Subsidiary
Guarantors also will agree to a number of covenants in favor of the Agent,
including covenants (each with specified exceptions) (i) not to create, incur
or permit to exist any lien on its collateral, (ii) not to sell, transfer,
lease or otherwise dispose of any of its collateral, (iii) not to amend,
modify, terminate or waive any provision of any agreement giving rise to an
Account (as defined in the New Credit Agreement) in a manner that could have a
materially adverse effect upon the value of the Account as collateral, and
(iv) not to grant discounts, compromises or extensions of Accounts except in
the ordinary course of business.

Financial Covenants. The New Credit Agreement will contain financial
covenants that require the Company to maintain certain financial ratios above
or below specified limits, including, but not limited, to those described
below. The Company will covenant that it will not allow the ratios of (i)
Adjusted Consolidated Net Income to Consolidated Fixed Charges (the "Fixed
Charge Coverage Ratio") and (ii) (x) Consolidated Net Income plus Consolidated
Interest Expense and income taxes to (y) Consolidated Interest Expense (the
"Interest Coverage Ratio"), computed on a consolidated, rolling four quarters
basis to be less than those set forth below:

<TABLE>
<CAPTION>
FIXED CHARGE INTEREST
COVERAGE COVERAGE
TIME PERIOD RATIO TIME PERIOD RATIO
----------- ------------ ----------- ---------
<S> <C> <C> <C>
Closing - 8/31/94 1.00:1.00 Closing - 2/28/94 1.05:1.00
9/1/94 - 8/31/95 1.05:1.00 3/1/94 - 8/31/94 1.10:1.00
Thereafter 1.10:1.00 9/1/94 - 8/31/95 1.20:1.00
Thereafter 1.30:1.00

</TABLE>

The Company also will covenant that it will not allow the ratio of
Consolidated Funded Indebtedness to Consolidated Capital Funds Ratio, on a
consolidated, quarterly basis to exceed those set forth below:

<TABLE>
<CAPTION>
CONSOLIDATED FUNDED
INDEBTEDNESS TO
CONSOLIDATED
TIME PERIOD CAPITAL FUNDS RATIO
----------- -------------------
<S> <C>
Closing - 5/31/94 0.76:1.00
6/1/94 - 11/30/94 0.75:1.00
12/1/94 - 8/31/95 0.74:1.00
9/1/95 - 2/28/96 0.73:1.00
Thereafter 0.72:1.00
</TABLE>

Under the New Credit Agreement, the Company and its subsidiaries will agree
not to assume, incur or create any debt except for (i) debt incurred in
conjunction with the issuance of the Notes, (ii) debt under the New Credit
Agreement, (iii) up to $10 million in additional debt (to the extent the
Company has unused Borrowing Base), and (iv) certain other debt specified in
the New Credit Agreement.

Restrictive Covenants. The New Credit Agreement will contain certain
negative covenants and restrictions customary for such a facility, including,
without limitation, restrictions on (i) the creation of liens, (ii) mergers
and other extraordinary transactions, (iii) transactions with affiliates and
(iv) sale of assets. Investments in project-related joint ventures will be
limited to $500,000 in any 12-month period, and investments in project-finance
ventures will be limited to an aggregate of $12.5 million. In addition, the
New Credit Facility will limit other acquisitions and investments to an
aggregate of $5 million (plus the net cash proceeds from dispositions of
acquisitions and investments made after the date of the New Credit Facility),
with any individual acquisition or investment not to exceed $2 million.

In addition, with certain exceptions, the Company will not be permitted to
declare or pay any dividend on its capital stock (other than dividends payable
solely in common stock or rights or other equity securities (not including
preferred stock) of the Company), or pay for the purchase, redemption,
retirement or other acquisition

57
<PAGE>

of any shares of any class of the Company's stock, or make any distribution in
respect thereof (such declaration, payments and other above-referenced
transactions hereinafter referred to as "Restricted Payments"). Permitted
Restricted Payments will include (i) dividends on capital stock in amounts
which, together with certain permitted redemptions of common stock, do not
exceed the sum of the aggregate amount received by the Company from the
issuance of capital stock after the date of the New Credit Agreement and 20%
of Consolidated Net Income for the period commencing September 1, 1993 and
(ii) certain preferred stock dividends, provided that, after giving effect to
such Restricted Payments, no Default or Event of Default will be in existence.
The Company's Subsidiaries may make Restricted Payments to the Company at any
time.

Events of Default. The New Credit Agreement will provide for various events
of default customary for such a facility, including, among others: (i) the
failure to make any payment of principal of, interest on, or any other amount
owing in respect of any obligation under the New Credit Agreement when due and
payable; (ii) the breach of certain of the covenants and restrictive covenants
contained in the New Credit Agreement; (iii) the failure by the Company or any
of its subsidiaries to make a required payment of principal of, interest on,
or under a guarantee obligation with respect to, any indebtedness in excess of
$1 million (other than indebtedness incurred pursuant to the New Credit
Agreement); (iv) the failure of the Company to observe or perform any other
condition or agreement relating to indebtedness or guarantee obligation in
excess of $1 million, where such failure gives the holders the right to
accelerate payment thereof; (v) the occurrence of certain events of insolvency
or bankruptcy (voluntary or involuntary); (vi) the entering of one or more
judgments or decrees against the Company or any of its subsidiaries involving
an aggregate liability in excess of $1 million that is not or are not fully
paid, covered by insurance, vacated, discharged or stayed pending appeal
within 60 days of entry; and (vii) the suspension of the Company or any of its
subsidiaries by an agency or branch of the government, but only if aggregate
gross revenues no longer accruing to the Company or a subsidiary as a result
of the suspended contract shall be at least $10 million. In addition, a Change
of Control (as such term is defined in the Indenture governing the Notes, see
"Description of the Notes--Change of Control") will be an event of default (i)
one day before the Indenture requires the Company to purchase the Notes
following a Change of Control, or (ii) 89 days after the Change of Control
occurs, whichever occurs first.

Other Provisions. Affirmative covenants of the Company and its subsidiaries
will include the obligations to pay all their material obligations at or
before maturity. The Company also will be required to continue, and to cause
its subsidiaries to continue, to engage in businesses of the same general type
as now conducted.

DESCRIPTION OF THE UNITS

Each Unit offered hereby consists of $1,000 principal amount of Notes and
4.8 Warrants to purchase one share each of Common Stock at an exercise price
equal to $5.00 per share, subject to adjustment under certain circumstances.
The Notes and Warrants are separately transferable on or after the date of the
consummation of the Offering.

DESCRIPTION OF THE NOTES

The Notes are being issued pursuant to an Indenture dated as of January 11,
1994 (the "Indenture") between the Company and The Bank of New York, as
trustee (the "Trustee"). The following is a summary of the material terms and
provisions of the Notes. The terms of the Notes include those set forth in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (the "Trust Indenture Act"). The Notes are subject to
all such terms, and prospective purchasers of the Notes are referred to the
Indenture and the Trust Indenture Act for a statement thereof. The following
summary does not

58
<PAGE>

purport to be a complete description of the Notes and is subject to the
detailed provisions of, and qualified in its entirety by reference to, the form
of Indenture and the form of Note that have been filed as exhibits to the
Registration Statement of which this Prospectus is a part. Capitalized terms
that are used but not otherwise defined herein have the meanings assigned to
them in the Indenture and such definitions are incorporated herein by
reference. A summary of some, but not all, defined terms used in the Indenture
and referred to in the following description of the Notes is set forth below
under "Certain Definitions."

GENERAL

The Notes will be general unsecured obligations of the Company, subordinated
in right of payment to all Senior Indebtedness of the Company, and will be
limited to an aggregate principal amount of $125 million. The Notes will bear
interest at the rate shown on the cover page of this Prospectus, payable on
June 30 and December 31 of each year, commencing on June 30, 1994, to holders
of record at the close of business on June 15 or December 15, as the case may
be, immediately preceding the relevant interest payment date. The Notes will
mature on December 31, 2003.

The Notes will be issued only in registered form, without coupons, in
denominations of $1,000 and integral multiples thereof. Principal of, premium,
if any, and interest on the Notes will be payable, and the Notes may be
presented for registration of transfer or exchange, at the office of the
Trustee. Payments may be paid by check mailed to the registered addresses of
the holders of record (the "Holders") of the Notes. The Holders must surrender
their Notes to the Paying Agent to collect principal payments. The Company may
require payment of a sum sufficient to cover any transfer tax or other
governmental charge payable in connection with certain transfers or exchanges
of the Notes. Initially, the Trustee will act as the Paying Agent and the
Registrar under the Indenture. The Company or any of its Subsidiaries
subsequently may act as the Paying Agent and the Registrar and the Company may
change any Paying Agent and any Registrar without prior notice to the Holders.

RANKING

The Indebtedness represented by the Notes will be subordinated in right of
payment to all existing and future Senior Indebtedness of the Company,
including without limitation all obligations of the Company under the Bank
Credit Agreement, and will be senior in right of payment to all indebtedness of
the Company that by its terms is expressly subordinated in right of payment to
the Notes. As of August 31, 1993, the Company would have had approximately $3.7
million of Senior Indebtedness outstanding, as adjusted to give effect to the
application of the net proceeds of this Offering. See "Use of Proceeds" and
"Capitalization." Although the Indenture contains limitations on the amount of
additional Indebtedness which the Company may incur, under certain
circumstances the amount of such Indebtedness could be substantial and such
Indebtedness may be Senior Indebtedness. See "Certain Covenants--Limitations on
Additional Indebtedness."

The Company is a holding company which derives substantially all of its
income from its Subsidiaries. The Company 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 of
and interest on the Notes. The ability of its Subsidiaries to pay such
dividends or other intercompany transfers is subject to applicable state laws.
Claims of creditors of its Subsidiaries, including trade creditors, secured
creditors and creditors holding guarantees of its Subsidiaries, and claims of
holders of preferred stock of its Subsidiaries, generally will have priority as
to the assets of its Subsidiaries over the equity interests of the Company and
the holders of Indebtedness of the Company. See "Capitalization" and
"Description of Credit Facility."

The term "Senior Indebtedness" is defined under "Certain Definitions." If any
Senior Indebtedness is disallowed, avoided or subordinated pursuant to the
provisions of Section 548 of the Bankruptcy Law or any

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applicable state fraudulent conveyance law, such Indebtedness nevertheless will
constitute Senior Indebtedness for purposes of the Indenture.

Only Indebtedness of the Company that is Senior Indebtedness will rank senior
to the Notes in accordance with the provisions of the Indenture. The Company
has agreed in the Indenture that it will not issue, assume, guarantee, incur or
otherwise become liable for (collectively, "issue"), directly or indirectly,
any Indebtedness that is subordinate or junior in ranking in any respect to
Senior Indebtedness unless such Indebtedness is expressly subordinated in right
of payment to the Notes. Unsecured Indebtedness is not deemed to be subordinate
or junior to secured Indebtedness merely because it is unsecured.

The Company may not pay the principal of, premium, if any, or interest on,
the Notes or make any deposit pursuant to the provisions described under
"Discharge of Indenture" and may not repurchase, redeem, defease or otherwise
retire any Notes (collectively, "pay the Notes") if (i) any Senior Indebtedness
(other than Non-Recourse Indebtedness) is not paid when due or (ii) any other
default on Senior Indebtedness (other than Non-Recourse Indebtedness) occurs
and the maturity of such Senior Indebtedness is accelerated in accordance with
its terms unless, in either case, (x) the default has been cured or waived and
any such acceleration has been rescinded or (y) such Senior Indebtedness has
been paid in full. During the continuance of any default (other than a default
described in clause (i) or (ii) of the preceding sentence) with respect to any
Senior Indebtedness (other than Non-Recourse Indebtedness) pursuant to which
the maturity thereof may be accelerated immediately without further notice
(except such notice as may be required to effect such acceleration) or the
expiration of any applicable grace periods, the Company may not pay the Notes
for a period (a "Payment Blockage Period") commencing upon the receipt by the
Company and the Trustee of written notice of such default from the holders of
such Senior Indebtedness, the Agent under the Bank Credit Agreement or the
trustee for the holders of any other Senior Indebtedness specifying an election
to effect a Payment Blockage Period (a "Payment Notice") and ending 179 days
thereafter (or earlier if such Payment Blockage Period is terminated (i) by
written notice to the Trustee and the Company from the person or persons who
gave such Payment Notice, (ii) by repayment in full of such Senior Indebtedness
or (iii) because the default giving rise to such Payment Notice is no longer
continuing). Notwithstanding the provisions described in the immediately
preceding sentence (but subject to the first sentence of this paragraph),
unless the holders of such Senior Indebtedness, the Agent under the Bank Credit
Agreement or the trustee for the holders of any other Senior Indebtedness have
accelerated the maturity of such Senior Indebtedness, the Company may resume
payments on the Notes after such Payment Blockage Period expires. Not more than
one Payment Notice may be given in any consecutive 360-day period, irrespective
of the number of defaults with respect to Senior Indebtedness during such
period. No default or event of default which existed or was continuing on the
date of the commencement of any Payment Blockage Period with respect to the
Senior Indebtedness initiating such Payment Blockage Period shall be, or be
made, the basis of the commencement of a subsequent Payment Blockage Period by
the holders of such Senior Indebtedness, the Agent under the Bank Credit
Agreement or the trustee for the holders of any other Senior Indebtedness
whether or not within a period of 360 consecutive days unless such default or
event of default shall have been cured or waived for a period of not less than
90 consecutive days.

Upon any payment or distribution of the assets of the Company to creditors
upon a total or partial liquidation or total or partial dissolution of the
Company or in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to the Company or its property (whether voluntary or
involuntary), or upon an assignment for the benefit of creditors or any other
marshaling of the assets and liabilities of the Company, the holders of Senior
Indebtedness shall be entitled to receive payment in full before the holders of
the Notes are entitled to receive any payment.

If payment of the Notes is accelerated because of an Event of Default, the
Company or the Trustee shall promptly notify the holders of Senior
Indebtedness, the Agent under the Bank Credit Agreement and the trustee for the
holders of any other Senior Indebtedness of the acceleration. If the Trustee
provides such notice, the Trustee also will notify the Company of the
acceleration.

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By reason of such subordination provisions contained in the Indenture, in the
event of insolvency, Holders of the Notes may recover less, ratably, than other
creditors of the Company.

OPTIONAL REDEMPTION OF THE NOTES

The Notes may not be redeemed prior to December 31, 1998, but will be
redeemable at the option of the Company, in whole or in part, at any time on or
after December 31, 1998, at the following redemption prices (expressed as
percentages of principal amount), together with accrued and unpaid interest
thereon to the redemption date, if redeemed during the 12-month period
beginning December 31:

<TABLE>
<CAPTION>
OPTIONAL
YEAR REDEMPTION PRICE
---- ----------------
<S> <C>
1998 108.0%
1999 106.4
2000 104.8
2001 103.2
2002 101.6
</TABLE>

If less than all of the Notes are to be redeemed at any time, selection of
the Notes to be redeemed will be made by the Trustee from among the outstanding
Notes on a pro rata basis, by lot or by any other method permitted in the
Indenture. Notice of redemption will be mailed at least 30 days but not more
than 60 days before the redemption date to each Holder whose Notes are to be
redeemed at the registered address of such Holder. On and after the redemption
date, interest will cease to accrue on the Notes or portions thereof called for
redemption.

SINKING FUND

There will be no mandatory sinking fund for the Notes.

MANDATORY OFFERS TO PURCHASE THE NOTES

The Indenture will require the Company to offer to purchase all of the
outstanding Notes upon the occurrence of a Change of Control and to offer to
purchase a portion of the outstanding Notes under certain other circumstances.
See "Change of Control" and "Certain Covenants--Limitations on Asset Sales."

CHANGE OF CONTROL

Upon the occurrence of a Change of Control, the Company will offer (a "Change
of Control Offer") to purchase all outstanding Notes at a purchase price equal
to 101% of the aggregate principal amount of the Notes, plus accrued and unpaid
interest to the date of purchase.

Within 30 days after any Change of Control, the Company, or the Trustee at
the Company's request, will mail or cause to be mailed to all Holders on the
date of the Change of Control a notice stating: (i) that a Change of Control
has occurred and that the Holders have the right to require the Company to
purchase any or all of the outstanding Notes at a purchase price equal to 101%
of the principal amount thereof plus accrued and unpaid interest, if any, to
the date of purchase; (ii) the circumstances and relevant facts regarding such
Change of Control (including information with respect to pro forma historical
income, cash flow and capitalization after giving effect to such Change of
Control); (iii) the purchase date (which will be no earlier than 30 days nor
later than 60 days from the date such notice is mailed); and (iv) the
instructions, determined by the Company consistent with the Indenture, that
Holders must follow in order to have their Notes

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<PAGE>

purchased. 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 thereunder.

The Change of Control purchase feature of the Notes in certain circumstances
may make it more difficult or may discourage a sale or takeover of the Company.
The Change of Control purchase feature is a result of negotiation between the
Company and the Underwriters and was not included in the Indenture as a part of
a plan to discourage a takeover of the Company.

Clause (i) of the definition of Change of Control includes the sale, lease,
conveyance or other disposition of all or "substantially all" of the Company's
assets. See "Certain Definitions." Although there is a developing body of case
law interpreting the phrase "substantially all," there is no precise
established definition of the phrase under applicable law. Accordingly, the
ability of a holder of Notes to require the Company to repurchase such Notes as
a result of a transfer or lease of the Company's assets to another person may
be uncertain.

There can be no assurance that, at the time of a Change of Control, the
Company will have sufficient cash to repay all amounts due under the Notes. If
a Change of Control should occur, the rights of the Holders of the Notes to
receive payment for their Notes upon a Change of Control Offer would be subject
to the prior rights of holders of any Senior Indebtedness. See "Ranking."

CERTAIN COVENANTS

Limitations on Additional Indebtedness. The Indenture will provide that (i)
the Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, create, incur, assume, guarantee, extend the
maturity of or otherwise become liable with respect to (collectively, "incur"),
any Indebtedness (including without limitation Acquired Indebtedness), other
than (a) Junior Subordinated Indebtedness incurred by the Company in compliance
with the covenant described in the second sentence of this paragraph or (b)
Indebtedness between the Company and its Wholly Owned Restricted Subsidiaries
(provided that such Indebtedness of the Company to any Wholly Owned Restricted
Subsidiary is expressly subordinated in right of payment to the Notes) or among
such Wholly Owned Restricted Subsidiaries (provided, however, that any
subsequent issue or transfer of any Capital Stock that results in any such
Wholly Owned Restricted Subsidiary ceasing to be a Wholly Owned Restricted
Subsidiary or any transfer of such Indebtedness (other than to a Wholly Owned
Restricted Subsidiary) shall be deemed, in each case, to constitute the
incurrence of such Indebtedness by the Company) and (ii) the Company will not
permit any of its Restricted Subsidiaries to issue (except to the Company or
any of its Wholly Owned Restricted Subsidiaries) any Capital Stock having a
preference in liquidation or with respect to the payment of dividends, unless,
after giving effect thereto, the Company's Consolidated Fixed Charge Coverage
Ratio on the date thereof would be at least:

(1) 2.00 to 1, if such date is on or prior to February 29, 1996;

(2) 2.25 to l, if such date is after February 29, 1996 and on or prior to
February 28, 1998; and

(3) 2.50 to 1, if such date is after February 28, 1998,

in each case determined on a pro forma basis as if the incurrence of such
additional Indebtedness or the issuance of such Capital Stock, as the case may
be, and the application of the net proceeds therefrom, had occurred at the
beginning of the four-quarter period used to calculate the Company's
Consolidated Fixed Charge Coverage Ratio. The Indenture also will provide that
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.

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Notwithstanding the immediately preceding paragraph, the Company and its
Restricted Subsidiaries may: (i) incur Indebtedness under the Bank Credit
Agreement in an amount not to exceed $60 million; (ii) incur Indebtedness not
otherwise permitted by any other provision hereof, so long as the aggregate
principal amount of Indebtedness incurred under this clause (ii) does not
exceed 7.5% of the Consolidated Tangible Assets of the Company; and (iii) incur
Refinancing Indebtedness. In addition, notwithstanding the immediately
preceding paragraph: (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 described in clause (iii) of the covenant described under
"Limitations on Subsidiary Debt and Preferred Stock"; and (B) Single Purpose
Subsidiaries of the Company may incur Non-Recourse Indebtedness to the extent
permitted by clause (iv) of the covenant described under "Limitations on
Subsidiary Debt and Preferred Stock."

Notwithstanding the two preceding paragraphs, the Company may not incur any
Indebtedness if such Indebtedness is subordinate or junior in ranking in any
respect to any Senior Indebtedness unless such Indebtedness is Junior
Subordinated Indebtedness. In addition, the Company may not incur any secured
Indebtedness which is not Senior Indebtedness unless contemporaneously
therewith effective provision is made to secure the Notes equally and ratably
with such secured Indebtedness for so long as such secured Indebtedness is
secured by a Lien.

Limitations on Subsidiary Debt and Preferred Stock. The Indenture further
will provide that the Company will not permit any of its Restricted
Subsidiaries, directly or indirectly, to create, incur, assume, guarantee,
extend the maturity of or otherwise become liable with respect to
(collectively, "incur"), any Indebtedness (which, with respect to any
Restricted Subsidiary, includes without limitation preferred stock of such
Restricted Subsidiary) except: (i) guarantees by any Restricted Subsidiary of
the payment of the principal of, premium, if any, and interest on the
Indebtedness incurred pursuant to the Bank Credit Agreement and in compliance
with clause (i) of the second paragraph of the covenant described under
"Limitations on Additional Indebtedness" and with the covenant described under
"Limitations on Guarantees"; (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 clause (E) of the second paragraph of the covenant described
under "Limitations on Restricted Payments") not to exceed 5% of Consolidated
Tangible Assets; and (iv) Non-Recourse Indebtedness incurred by a Single
Purpose Subsidiary.

Limitations on Restricted Payments. The Indenture will provide that the
Company will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, make any Restricted Payment if at the time of such
Restricted Payment:

(i) a Default or Event of Default shall have occurred and be continuing
or shall occur as a consequence thereof;

(ii) the Company would be unable to incur an additional $1.00 of Senior
Indebtedness under the covenant described in the first sentence of the
first paragraph under "Limitations on Additional Indebtedness;" or

(iii) the amount of such Restricted Payment, when added to the aggregate
amount of all Restricted Payments (other than those made pursuant to the
provisions of clauses (A), (C), (D), (E) or (G) of the immediately
following paragraph) made after the date of the Indenture, exceeds the sum
of: (a) 50% of the Company's Consolidated Net Income accrued during the
period since August 31, 1993 (or, if such

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<PAGE>

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 the Indenture; provided, however,
that (1) the Net Reductions in Investments attributable to any Designated
Investment for purposes of this calculation shall not exceed the amount of
such Designated Investment, (2) to the extent that cash or Cash Equivalents
included in any Net Reductions in Investments pursuant to the definition
thereof have been or will be included in the computation of Consolidated
Net Income for purposes of determining the ability of the Company or any of
its Restricted Subsidiaries to make Restricted Payments under clause
(iii)(a) of this paragraph, such cash or Cash Equivalents shall not also be
included in computing Net Reductions in Investments for purposes of this
clause (iii)(b) and (3) the Company will not be permitted to make any
Restricted Payment described in clause (i) or (ii) of the definition of
Restricted Payment from any Net Reductions in Investments.

Notwithstanding the foregoing, the provisions of clauses (ii) and (iii) of
the immediately preceding paragraph will not prevent:

(A) the Company or any Wholly Owned Restricted Subsidiary from making
Investments in Subsidiaries, in an aggregate amount not to exceed $4
million, pursuant to contractual obligations in existence on the date of
the Indenture or directly related to projects in existence on the date of
the Indenture;

(B) the Company from paying any dividend within 60 days after the date of
its declaration if such dividend could have been paid on the date of its
declaration without violation of this covenant;

(C) the Company from purchasing or redeeming and retiring any shares of
Capital Stock of the Company, and paying accrued and unpaid dividends on
such shares at the time of such repurchase or redemption, in exchange for,
or out of the net proceeds of a substantially concurrent sale (other than
to a Subsidiary of the Company or an employee stock ownership plan) of,
shares of Qualified Capital Stock of the Company;

(D) the Company or any Subsidiary from making (1) Investments pursuant to
the provisions of employee benefit plans of the Company or any of its
Subsidiaries in an aggregate amount not to exceed $500,000 in a fiscal
year, or (2) making loans to officers of the Company in connection with any
relocation of residence, approved by a majority of the independent members
of the Board of Directors of the Company, provided that the aggregate
amount of Investments and loans under this clause (D) shall not exceed $1
million in any fiscal year;

(E) the Company or any Wholly Owned Restricted Subsidiary from making
Designated Investments (1) in Subsidiaries that are not Wholly Owned
Restricted Subsidiaries in an aggregate amount (together with Indebtedness
incurred by or on behalf of Subsidiaries that are not Wholly Owned
Restricted Subsidiaries in compliance with the provisions of clause (iii)
of the covenant described under "Limitations on Subsidiary Debt and
Preferred Stock") not to exceed 5% of Consolidated Tangible Assets or (2)
in Joint Ventures in an aggregate amount not to exceed 5% of Consolidated
Tangible Assets, provided that: (1) the Person in whom the Investment is
made is engaged only in Permitted Businesses; (2) 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 (3) after giving effect
to such Investment, the aggregate amount of Indebtedness and Investments
made by the Company and its Subsidiaries in such Person does not exceed $5
million;

(F) the Company or any Wholly Owned Restricted Subsidiary from making
Designated Investments in Subsidiaries that are not Wholly Owned Restricted
Subsidiaries or in Joint Ventures; provided that such Designated
Investments are made solely from (i) the net proceeds of a substantially
concurrent sale (other than to a Subsidiary of the Company or an employee
stock ownership plan) of

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<PAGE>

shares of Qualified Capital Stock of the Company, (ii) 50% of the Company's
Consolidated Net Income accrued during the period since August 31, 1993 or
(iii) the aggregate amount of Net Reductions in Investments (not to exceed
the aggregate amount of such Designated Investments) made by the Company or
any Subsidiary subsequent to the date of the Indenture;

(G) the Company from redeeming for cash all (but not less than all) of
the outstanding shares of the Company's Series 2D Preferred Stock;
provided, however, that such redemption shall not be at a price in excess
of the redemption price set forth in Section 17.01 of the Company's Amended
and Restated Certificate of Incorporation in effect as of the date of the
Indenture; or

(H) the Company from making (1) the final redemption payment, in an
amount not to exceed $799,400, on the 700,000 outstanding shares of ICF
Kaiser Engineers Group, Inc. Series l Redeemable Preferred Stock on
September 30, 1994 or from paying on such date accumulated dividends on
such shares in an amount not to exceed $47,950 or (2) payments of up to
four regularly quarterly dividends, each such quarterly dividend payment
not to exceed $487,500 in the aggregate or $2,437.50 per share on the
outstanding shares of the Company's Series 2D Preferred Stock.

Limitations on Restrictions on Distributions from Subsidiaries. The Indenture
will provide that the Company will not, and will not permit any of its
Restricted Subsidiaries to, create or otherwise cause or suffer to exist or
become effective any consensual Payment Restriction with respect to any of its
Restricted Subsidiaries, except for (i) Payment Restrictions covering not more
than $1 million in the aggregate of retained earnings of ICF Kaiser Servicios
Ambientales, S.A. de C.V., (ii) any such Payment Restriction contained in
Existing Indebtedness or existing contracts to which the Company or any of its
Restricted Subsidiaries are parties, (iii) any such Payment Restriction under
any agreement evidencing any Acquired Indebtedness that was permitted to be
incurred pursuant to the Indenture, provided that such Payment Restriction only
applies to assets that were subject to such restrictions and encumbrances prior
to the acquisition of such assets by the Company or its Restricted Subsidiaries
and (iv) any such Payment Restriction arising in connection with Refinancing
Indebtedness; provided that any such Payment Restrictions that arise under such
Refinancing Indebtedness are not, taken as a whole, more restrictive than those
under the agreement creating or evidencing the Indebtedness being refunded or
refinanced.

Limitations on Transactions with Affiliates. The Indenture will provide that
the Company will not, and will not permit any of its Restricted Subsidiaries
to, make any loan, advance, guarantee or capital contribution to or for the
benefit of, or sell, lease, transfer or otherwise dispose of any of its
properties or assets to or for the benefit of, or make any Investment in, or
purchase or lease any property or assets from, or enter into or amend any
contract, agreement or understanding with or for the benefit of, any Affiliate
of the Company or any of its Subsidiaries (each an "Affiliate Transaction"),
other than Affiliate Transactions in the ordinary course of business and
consistent with past practice that are fair to the Company 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. In addition, the
Company will not, and will not permit any of its Restricted Subsidiaries to,
enter into any Affiliate Transaction or series of Affiliate Transactions
involving or having a value of more than (i) $1 million unless a majority of
the members of the Board of Directors of the Company who are not affiliated
with any other party to such Affiliate Transaction reasonably and in good faith
shall have determined that such Affiliate Transaction or series of Affiliate
Transactions is fair to the Company or such Restricted Subsidiary, as the case
may be, and is on terms at least as favorable as would have been obtainable at
such time from an unaffiliated party and (ii) $5 million unless the Company or
such Restricted Subsidiary, as the case may be, has received an opinion from an
Independent Financial Advisor to the effect that the financial terms of such
Affiliate Transaction are fair to the Company or such Restricted Subsidiary, as
the case may be, from a financial point of view.

The provisions of the foregoing paragraph shall not apply to: (i)
transactions exclusively between or among the Company and any of its Wholly
Owned Restricted Subsidiaries or exclusively between or among

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any of the Company's Wholly Owned Restricted Subsidiaries, provided that such
transactions are not otherwise prohibited by the Indenture; (ii) arms-length
transactions between the Company or any of its Wholly Owned Restricted
Subsidiaries and the other owners of any Subsidiary or Joint Venture described
in the last sentence of the definition of Affiliate; and (iii) reasonable
compensation, indemnification and other benefits paid or made available to
officers, directors and employees of the Company or any Subsidiary for services
rendered in such Person's capacity as an officer, director or employee.

Limitations on Asset Sales. The Indenture will provide that the Company will
not, and will not permit any of its Restricted Subsidiaries to, consummate any
Asset Sale unless: (i) the Company or its Restricted Subsidiaries receive
consideration at the time of such Asset Sale at least equal to the fair market
value of the assets or Capital Stock included in such Asset Sale; (ii) the
aggregate fair market value of the consideration from such Asset Sale (other
than consideration in the form of assumption of Indebtedness of the Company or
one or more of its Restricted Subsidiaries from which the Company or such
Restricted Subsidiaries, as the case may be, are released) that is not in the
form of cash or Cash Equivalents shall not, when aggregated with the fair
market value of all other non-cash or non-Cash Equivalent consideration
received by the Company and its Restricted Subsidiaries from all previous Asset
Sales since the date of the Indenture that have not yet been converted into
cash or Cash Equivalents, exceed 5% of Consolidated Tangible Assets of the
Company at the time of such Asset Sale; and (iii) if the aggregate fair market
value of the assets or Capital Stock to be sold in such Asset Sale exceeds $3
million, such Asset Sale has been approved by the Company's Board of Directors.

Within six months after consummation of any such Asset Sale, the 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) to the purchase
of Notes tendered to the Company at a purchase price equal to 100% of the
principal thereof, plus accrued interest thereon to the date of purchase,
pursuant to an offer to purchase made by the Company as set forth below (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 million.

Notwithstanding the foregoing provisions: (i) to the extent that any or all
of the Net Proceeds of any Foreign Asset Sale are prohibited or delayed by
applicable local law from being repatriated to the United States, the portion
of such Net Proceeds so affected will not be required to be applied in the
manner set forth in this covenant but may be retained by the applicable Foreign
Subsidiary so long, but only so long, as the applicable local law will not
permit repatriation to the United States (the Company hereby agreeing to cause
the applicable Foreign Subsidiary promptly to take all actions required by the
applicable local law to permit such repatriation) and, once such repatriation
of any 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 covenant; and (ii) to
the extent that the Board of Directors has determined in good faith that
repatriation of any or all of the Net Proceeds of any Foreign Asset Sale would
have a material adverse tax consequence, the Net Proceeds so affected may be
retained by the applicable Foreign Subsidiary for so long as such material
adverse tax event would continue.

Each Asset Sale Offer: (i) will be mailed to the record Holders of the Notes
as shown on the register of Holders of Notes, with a copy to the Trustee; (ii)
will specify the purchase date (which shall be no earlier than 30 days nor
later than 60 days from the date such notice is mailed and not later than 240
days after the date of the Asset Sale giving rise to such Asset Sale Offer);
and (iii) otherwise will comply with the procedures set forth in the Indenture.
Upon receiving notice of the Asset Sale Offer, Holders of Notes may elect to
tender

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their Notes in whole or in part in integral multiples of $1,000 in exchange for
cash. To the extent Holders properly tender Notes in an amount exceeding the
amount of Net Proceeds used to make the Asset Sale Offer, Notes of tendering
Holders will be repurchased on a pro rata basis (based on amounts tendered).

The Company will comply with the requirements of Section 14(e) under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to any Asset Sale Offer.

Restrictions on Sale of Stock of Subsidiaries. The Indenture will provide
that the Company may not sell or otherwise dispose of any of the Capital Stock
of any Restricted Subsidiary of the Company unless: (i) (a)(x) the Company
shall retain ownership of more than 50% of the Common Equity of such Restricted
Subsidiary or (y) all of the Capital Stock of such Restricted Subsidiary shall
be sold or otherwise disposed of; and (b) the Net Proceeds from any such sale
or disposition are applied in a manner consistent with the provisions described
under "Limitations on Asset Sales"; or (ii) the Company elects to treat the
amount of its remaining investment in any such Restricted Subsidiary that has
become a Joint Venture as a result of such sale or disposition as an Investment
in such Joint Venture subject to the provisions described under "Limitations on
Restricted Payments."

Limitations on Mergers and Certain Other Transactions. The Indenture will
provide that the Company, in a single transaction or a series of related
transactions, will not (i) consolidate or merge with or into, or sell, lease,
convey or otherwise dispose of all or substantially all of its assets, or
assign any of its obligations under the Notes or the Indenture, to any Person
or (ii) adopt a Plan of Liquidation unless, in either case: (a) the Person
formed by or surviving such consolidation or merger (if other than the Company)
or to which such sale, lease, conveyance or other disposition or assignment
shall be made (or, in the case of a Plan of Liquidation, one Person to which
assets are transferred) (collectively, the "Successor"), is a corporation
organized and existing under the laws of the United States or any State thereof
or the District of Columbia, and the Successor assumes by supplemental
indenture in a form satisfactory to the Trustee all of the obligations of the
Company under the Notes and the Indenture; (b) immediately prior to and
immediately after 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 covenant described under "Limitations
on Additional Indebtedness."

In addition, the Indenture will provide that the Company will not permit any
Single Purpose Subsidiary that has outstanding Indebtedness to consolidate or
merge with any other Person other than a Person the activities of which are
limited to ownership of a portion of the same project in which the referent
Single Purpose Subsidiary owns an interest.

The foregoing provisions of the Indenture will not prohibit a transaction the
sole purpose of which (as determined in good faith by the Board of Directors
and evidenced by a Board Resolution) is to change the state of incorporation of
the Company or a Single Purpose Subsidiary, as the case may be, and such
transaction does not have as one of its purposes the evasion of the limitations
described above.

Limitations on Guarantees. The Indenture will provide that the Company will
not permit any of its Restricted Subsidiaries to guarantee any Indebtedness
(other than (i) guarantees permitted under the provisions of clause (i) of the
covenant described under "Limitations on Subsidiary Debt and Preferred Stock"
and (ii) guarantees delivered pursuant to the Bank Credit Agreement by
Subsidiaries of the Company who have delivered similar guarantees prior to the
date of the Indenture) unless the Company causes each such Subsidiary to
execute and deliver to the Trustee, prior to or concurrently with the issuance
of such guarantee, a supplemental indenture, in form satisfactory to the
Trustee, pursuant to which such Subsidiary

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unconditionally guarantees the payment of principal of, premium, if any, and
interest on the Notes. Any such guarantee shall be subordinated in right of
payment to the guarantee by such Subsidiary pursuant to the Bank Credit
Agreement.

EVENTS OF DEFAULT

An "Event of Default" will be defined in the Indenture as: (i) failure by the
Company to pay interest on any of the Notes when it becomes due and payable and
the continuance of any such failure for 30 days, whether or not such payment is
prohibited by the provisions described under "Ranking"; (ii) failure by the
Company to pay the principal or premium of 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), whether or not such payment is prohibited by the
provisions described under "Ranking"; (iii) failure by the Company to comply
with any covenant in the Indenture and continuance of such failure for 60 days
after notice of such failure has been given to the Company by the Trustee or by
the Holders of at least 25% of the aggregate principal amount of the Notes then
outstanding; (iv) failure by the Company or any of its Subsidiaries to make any
payment when due or during any applicable grace period, and the continuation of
such failure for seven days, in respect of any Indebtedness of the Company or
any of its Subsidiaries, other than Non-Recourse Indebtedness of a Single
Purpose Subsidiary, that has an aggregate outstanding principal amount of $2
million or more; (v) a default under any Indebtedness, other than Non-Recourse
Indebtedness of a Single Purpose Subsidiary, whether such Indebtedness now
exists or hereafter 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 million or more at any one time
outstanding; (vi) one or more final judgments or orders that exceed $2 million
in the aggregate for the payment of money have been entered by a court or
courts of competent jurisdiction against the Company or any of its Subsidiaries
and such judgment or judgments have not been satisfied, stayed, annulled or
rescinded within 60 days of being entered; and (vii) certain events of
bankruptcy, insolvency or reorganization involving the Company or any of its
Subsidiaries.

If an Event of Default (other than an Event of Default resulting from
bankruptcy, insolvency or reorganization involving the Company) shall have
occurred and be continuing under the Indenture, the Trustee by written notice
to the Company, or the Holders of at least 25% in aggregate principal amount of
the Notes then outstanding by written notice to the Company and the Trustee,
may declare all amounts owing under the Notes to be due and payable
immediately. Upon such declaration of acceleration, the aggregate principal of
and interest on the outstanding Notes shall immediately become due and payable.
If an Event of Default results from bankruptcy, insolvency or reorganization
involving the Company, all outstanding Notes shall become due and payable
without any further action or notice. In certain cases, the Holders of a
majority in aggregate principal amount of the Notes then outstanding may waive
an existing Default or Event of Default and its consequences, except a default
in the payment of principal of, premium, if any, and interest on the Notes.

The Holders may not enforce the provisions of the Indenture or the Notes
except as provided in the Indenture. Subject to certain limitations, Holders of
a majority in principal amount of the Notes then outstanding may direct the
Trustee in its exercise of any trust or power; provided however, that such
direction does not conflict with the terms of the Indenture. The Trustee may
withhold from the Holders notice of any continuing Default or Event of Default
(except any Default or Event of Default in payment of principal of, premium, if
any, or interest on the Notes) if the Trustee determines that withholding such
notice is in the Holders' interest.

The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture and, upon any Officer of the Company
becoming aware of any Default or Event of Default, a statement specifying such
Default or Event of Default and what action the Company is taking or proposes
to take with respect thereto.

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DISCHARGE OF INDENTURE

The Indenture will permit the Company to terminate all of its obligations
under the Indenture, other than the obligation to pay the principal of,
premium, if any, and interest on the Notes, and certain other obligations at
any time by (i) depositing in trust with the Trustee, under an irrevocable
trust agreement, money or U.S. government obligations in an amount sufficient
to pay principal of, premium, if any, and interest on the Notes to their
maturity or redemption, as the case may be, and (ii) complying with certain
other conditions, including delivery to the Trustee of an opinion of counsel or
a ruling received from the Internal Revenue Service to the effect that Holders
will not recognize income, gain or loss for Federal income tax purposes as a
result of the Company's exercise of such right and will be subject to Federal
income tax on the same amount and in the same manner and at the same times as
would have been the case otherwise.

TRANSFER AND EXCHANGE

A Holder will be able to register the transfer of or exchange Notes only in
accordance with the provisions of the Indenture. The Registrar 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 the Company, the Registrar is not
required (i) to register the transfer or exchange of any Note selected for
redemption, (ii) to register the transfer or exchange of any Note for a period
of 15 days before a selection of Notes to be redeemed or (iii) to register the
transfer or exchange of a Note between a record date and the next succeeding
interest payment date. The Holder of a Note will be treated as the owner of
such Note for all purposes.

AMENDMENT, SUPPLEMENT AND WAIVER

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 the principal of, premium, if any, or interest on the Notes or that resulted
from the failure to comply with the covenant described under "Change of
Control") with the consent (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
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to Holders in the case
of a merger or acquisition, or to make any change that does not adversely
affect the rights of any Holder.

Without the consent of each Holder affected, the Company may not: (i) extend
the maturity of any Note; (ii) affect the terms of any scheduled payment of
interest on or principal of the Notes (including without limitation any
redemption provisions); (iii) modify or eliminate any of the provisions of the
Indenture relating to a Change of Control; (iv) make any change in the
subordination provisions of the Indenture that adversely affects the rights of
any Holder; or (v) reduce the percentage of Holders necessary to consent to an
amendment, supplement or waiver to the Indenture.

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 in a notice furnished to Holders in accordance with
the terms of the Indenture.

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CONCERNING THE TRUSTEE

The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any
such claim as security or otherwise. The Trustee will be permitted to engage in
other transactions; however, if it acquires any conflicting interest (as
defined in the Indenture), it must eliminate such conflict or resign.

The Holders of a majority in principal amount of the then outstanding 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
certain 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 such 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, unless such Holder shall have offered
to the Trustee security and indemnity satisfactory to the Trustee.

CERTAIN DEFINITIONS

Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms.

"Acquired Indebtedness" means: (i) with respect to any Person that becomes a
direct or indirect Subsidiary of the Company after the date of the Indenture,
Indebtedness of such Person and its Subsidiaries existing at the time such
Person becomes a Subsidiary of the Company that was not incurred in connection
with, or in contemplation of, such Person becoming a Subsidiary of the Company;
and (ii) with respect to the Company or any of its Subsidiaries, any
Indebtedness assumed by the Company or any of its Subsidiaries in connection
with the acquisition of an asset from another Person that was not incurred by
such other Person in connection with, or in contemplation of, such acquisition.

"Affiliate" of any Person means any Person (i) which directly or indirectly
controls or is controlled by, or is under direct or indirect common control
with, the referent Person, (ii) which beneficially owns or holds 10% or more of
any class of the Voting Stock of the referent Person or (iii) of which 10% or
more of the Voting Stock (or, in the case of a Person which is not a
corporation, 10% or more of the equity interest) is beneficially owned or held
by the referent Person. For purposes of this definition, control of a Person
shall mean the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise. Notwithstanding the foregoing, the term "Affiliate"
shall not include, with respect to the Company or any Wholly Owned Subsidiary
of the Company, (a) any Wholly Owned Subsidiary of the Company or (b) any
Subsidiary of the Company that is not a Wholly Owned Subsidiary or any Joint
Venture, provided that such Subsidiary or Joint Venture is not under the
control of, and does not have any Capital Stock (other than directors'
qualifying shares) or Indebtedness owned or held by, any Affiliate of the
Company.

"Asset Sale" for any Person means the sale, lease, transfer or other
disposition or series of sales, leases, transfers or other dispositions
(including without limitation by merger or consolidation, and whether by
operation of law or otherwise) of any of that Person's assets (including
without limitation the sale or other disposition of Capital Stock of any
Subsidiary of such Person, whether by such Person or by such Subsidiary),
whether owned on the date of the 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 covenants
described under "Limitations on Mergers and Certain Other Transactions" and
"Change of Control"; and (iv) any sale, lease, transfer or other disposition,
or series of sales, leases, transfers or other dispositions, of

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assets having a purchase price or transaction value, as the case may be, of $1
million or less, provided that no Default or Event of Default exists at the
time of such sale.

"Attributable Indebtedness", when used with respect to any Sale and Leaseback
Transaction, means, as at the time of determination, the greater of (i) the
fair market value of the property subject to such Sale and Leaseback
Transaction and (ii) the present value (discounted at a rate equivalent to the
Company's then-current weighted average cost of funds for borrowed money as at
the time of determination, compounded on a semi-annual basis) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in any such Sale and Leaseback Transaction.

"Bank Credit Agreement" means the Credit Agreement among the Company, certain
banks and Chemical Bank, as successor to Manufacturers Hanover Trust Company,
as agent for the banks, as such agreement has been and may be amended,
restated, supplemented or otherwise modified from time to time, and includes
any successor bank credit agreement.

"Bankruptcy Law" means Title 11, U.S. Code or any similar Federal, state or
foreign law for the relief of debtors.

"Board Resolution" means a duly adopted resolution of the Board of Directors
of the Company.

"Capital Stock" of any Person means any and all shares, rights to purchase,
warrants or options (whether or not currently exercisable), participations or
other equivalents of or interests in (however designated) the equity (including
without limitation common stock, preferred stock and partnership and joint
venture interests) of such Person.

"Capitalized Lease Obligations" of any Person means the obligations of such
Person to pay rent or other amounts under a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP, and the
amount of such obligation shall be the capitalized amount thereof determined in
accordance with GAAP.

"Cash Equivalents" means: (i) obligations issued or unconditionally
guaranteed by the United States of America or any agency thereof or obligations
issued by any agency or instrumentality thereof and backed by the full faith
and credit of the United States of America; (ii) commercial paper rated the
highest grade by Moody's Investors Service, Inc. and Standard & Poor's
Corporation and maturing not more than one year from the date of creation
thereof; and (iii) readily marketable direct obligations issued by any state of
the United States of America or any political subdivision thereof having one of
the two highest rating categories obtainable from either Moody's Investors
Service, Inc. or Standard & Poor's Corporation.

"Change of Control" means any of the following: (i) the sale, lease,
conveyance or other disposition of all or substantially all of the Company's
assets as an entirety or substantially as an entirety to any Person or "group"
(within the meaning of Section 13(d)(3) of the Exchange Act) in one or a series
of transactions, provided that a transaction where the holders of all classes
of Common Equity of the Company immediately prior to such transaction own,
directly or indirectly, more than 50% of the aggregate voting power of all
classes of Common Equity of such Person or group immediately after such
transactions shall not be a Change of Control; (ii) the acquisition by the
Company and any of its Subsidiaries of 50% or more of all classes of Common
Equity of the Company in one transaction or a series of related transactions;
(iii) the approval by the Company of a Plan of Liquidation of the Company; (iv)
any transaction or series of transactions (as a result of a tender offer,
merger, consolidation or otherwise) that results in, or that is in connection
with, (a) any Person, including a "group" (within the meaning of Section
13(d)(3) of the Exchange Act) that includes such Person, acquiring "beneficial
ownership" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of 50% or more of the aggregate voting power of all classes of
Common Equity of the Company or any Person that possesses "beneficial
ownership" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of 50% or more of the aggregate voting power of all classes of
Common Equity of the

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Company, or (b) less than 50% (measured by the aggregate voting power of all
classes) of the Company's Common Equity being registered under Section 12(b) or
12(g) of the Exchange Act; or (v) a majority of the Board of Directors of the
Company not being comprised of Continuing Directors.

"Common Equity" of any Person means all Capital Stock of such Person that is
generally entitled to (i) vote in the election of directors of such Person or
(ii) if such Person is not a corporation, vote or otherwise participate in the
selection of the governing body, partners, managers or others that will control
the management and policies of such Person.

"Consolidated Amortization Expense" of any Person for any period means the
amortization expense of such Person and its Restricted Subsidiaries for such
period (to the extent included in the computation of Consolidated Net Income of
such Person), determined on a consolidated basis in accordance with GAAP.

"Consolidated Depreciation Expense" of any Person for any period means the
depreciation expense of such Person and its Restricted Subsidiaries for such
period (to the extent included in the computation of Consolidated Net Income of
such Person), determined on a consolidated basis in accordance with GAAP.

"Consolidated Fixed Charge Coverage Ratio" of any Person means, with respect
to any determination date, the ratio of (i) EBITDA for such Person's prior four
full fiscal quarters for which financial results have been reported immediately
preceding the determination date to (ii) the aggregate Fixed Charges of such
Person for such four fiscal quarters; provided, however, that if any
calculation of the Company's Consolidated Fixed Charge Coverage Ratio requires
the use of any quarter beginning prior to the date of the Indenture, such
calculation shall be made on a pro forma basis, giving effect to the issuance
of the Notes and the use of the net proceeds therefrom as if the same had
occurred at the beginning of the four-quarter period used to make such
calculation; and provided, further, that if any such calculation requires the
use of any quarter prior to the date that any Asset Sale was consummated, or
that any Indebtedness was incurred, or that any acquisition was effected, by
the Company or any of its Restricted Subsidiaries, such calculation shall be
made on a pro forma basis, giving effect to each such Asset Sale, incurrence of
Indebtedness or acquisition, as the case may be, and the use of any proceeds
therefrom, as if the same had occurred at the beginning of the four-quarter
period used to make such calculation.

"Consolidated Income Tax Expense" means, for any Person for any period, the
provision for taxes based on income and profits of such Person and its
Restricted Subsidiaries to the extent such income or profits were included in
computing Consolidated Net Income of such Person for such period.

"Consolidated Net Income" of any Person for any period means the net income
(or loss) of such Person and its Restricted Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP; provided that there
shall be excluded from such net income (to the extent otherwise included
therein), without duplication: (i) the net income (or loss) of any Person
(other than a Restricted Subsidiary of the referent Person) in which any Person
other than the referent Person has an ownership interest, except to the extent
that any such income has actually been received by the referent Person or any
of its Wholly Owned Restricted Subsidiaries in the form of cash dividends or
similar cash distributions during such period; (ii) except to the extent
includible in the consolidated net income of the referent Person pursuant to
the foregoing clause (i), the net income (or loss) of any Person that accrued
prior to the date that (a) such Person becomes a Restricted Subsidiary of the
referent Person or is merged into or consolidated with the referent Person or
any of its Restricted Subsidiaries or (b) the assets of such Person are
acquired by the referent Person or any of its Restricted Subsidiaries; (iii)
the net income (or loss) of any Restricted Subsidiary of the referent Person to
the extent that the declaration or payment of dividends or similar
distributions by such Restricted Subsidiary of that income is not permitted by
operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to that
Restricted Subsidiary during such period (provided that the amount of loss
excluded pursuant to this clause (iii) shall not exceed that amount of net
income excluded pursuant to this clause (iii)); (iv) any gain (but not loss,
except pursuant to clause (vii) below), together with any related provisions
for taxes on any such gain, realized during such

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period by the referent Person or any of its Restricted Subsidiaries upon (a)
the acquisition of any securities, or the extinguishment of any Indebtedness,
of the referent Person or any of its Restricted Subsidiaries or (b) any Asset
Sale by the referent Person or any of its Restricted Subsidiaries; (v) any
extraordinary gain (but not extraordinary loss, except pursuant to clause (vii)
below), together with any related provision for taxes on any such extraordinary
gain, realized by the referent Person or any of its Restricted Subsidiaries
during such period; (vi) in the case of a successor to such Person by
consolidation, merger or transfer of its assets, any earnings of the successor
prior to such merger, consolidation or transfer of assets; and (vii) in the
case of the Company, any extraordinary loss directly related to the repurchase
or repayment, substantially concurrently with the sale of the Notes, of (a) the
Company's 13.5% Senior Subordinated Notes due 1999 and warrants issued in
connection with the issuance of such notes, (b) the Bank Credit Agreement and
(c) the Company's Series 2C Senior Preferred Stock and related Series 2C
Warrants.

"Consolidated Net Tangible Assets" of any Person as of any date means the
Consolidated Tangible Assets of such Person and its Restricted Subsidiaries
less the total current liabilities of such Person and its Restricted
Subsidiaries, on a consolidated basis as of such date.

"Consolidated Tangible Assets" of any Person as of any date means the total
assets of such Person and its Restricted Subsidiaries (excluding any assets
that would be classified as "intangible assets" under GAAP) on a consolidated
basis at such date, determined in accordance with GAAP, less all write-ups
subsequent to August 31, 1993 in the book value of any asset owned by such
Person or any of its Restricted Subsidiaries.

"Consolidated Tangible Net Worth" of any Person as of any date means the
stockholders' equity (including any preferred stock that is classified as
equity under GAAP, other than Disqualified Stock) of such Person and its
Restricted Subsidiaries (excluding any equity adjustment for foreign currency
translation for any period subsequent to August 31, 1993 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 August 31, 1993 in the book value of any asset owned by such
Person or any of its Restricted Subsidiaries.

"Continuing Director" of the Company as of any date means a member of the
Board of Directors of the Company who (i) was a member of the Board of
Directors of the Company on the date of the Indenture or (ii) was nominated for
election or elected to the Board of Directors of the Company with the
affirmative vote of at least a majority of the directors who were Continuing
Directors at the time of such nomination or election.

"Default" means any event, act or condition that is, or after notice or the
passage of time or both would be, an Event of Default.

"Designated Investments" means Investments made after the date of the
Indenture in (i) any Subsidiary of the Company that is not a Wholly Owned
Restricted Subsidiary or (ii) any Joint Venture, provided that such Subsidiary
or Joint Venture is engaged in one or more Permitted Businesses.

"Disqualified Stock" means any Capital Stock that, by its terms, by the terms
of any agreement related thereto or by the terms of any security into which it
is convertible, puttable or exchangeable, is, or upon the happening of any
event or the passage of time would be, required to be redeemed or repurchased
by the issuer thereof or any of its Subsidiaries, whether or not at the option
of the holder thereof, or matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, in whole or in part, on or prior to the
final maturity date of the Notes.

"EBITDA" means, with respect to any Person for any period, without
duplication, the sum of the amounts for such period of (i) Consolidated Net
Income, (ii) Consolidated Income Tax Expense, (iii) Consolidated Amortization
Expense (but only to the extent not included in Fixed Charges), (iv)
Consolidated Depreciation Expense, (v) Fixed Charges and (vi) all other non-
cash items reducing the Consolidated Net

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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.

"Existing Indebtedness" means all of the Indebtedness of the Company and its
Restricted Subsidiaries that is outstanding on the date of the Indenture.

"Fixed Charges" means, with respect to any Person for any period, the
aggregate amount of (i) interest, whether expensed or capitalized, paid,
accrued or scheduled to be paid or accrued during such period (except to the
extent accrued in a prior period) in respect of all Indebtedness of such Person
and its Restricted Subsidiaries (including (a) original issue discount on any
Indebtedness and (b) the interest portion of all deferred payment obligations,
calculated in accordance with the effective interest method, in each case to
the extent attributable to such period) and (ii) dividend requirements on
preferred stock of such Person and its Subsidiaries (whether in cash or
otherwise), but not including dividends payable solely in shares of Qualified
Capital Stock, paid, accrued or scheduled to be paid or accrued during such
period (except to the extent accrued in a prior period), and excluding items
eliminated in consolidation. For purposes of this definition, (1) interest on a
Capitalized Lease Obligation shall be deemed to accrue at the rate of interest
implicit in such Capitalized Lease Obligation in accordance with GAAP, (2)
interest on Indebtedness that is determined on a fluctuating basis shall be
deemed to have accrued at a fixed rate per annum equal to the rate of interest
of such Indebtedness in effect on the last day of the period with respect to
which Fixed Charges are being calculated, (3) interest on Indebtedness that may
optionally be determined at an interest rate based upon a factor of a prime or
similar rate, a eurocurrency interbank offered rate or other rates, shall be
deemed to have been based upon the rate actually chosen, or, if none, then
based upon such optional rate chosen as such Person may designate and (4) Fixed
Charges shall be increased or reduced by the net cost (including without
limitation amortization of discount) or benefit associated with Hedging
Obligations attributable to such period. For purposes of clause (ii) above,
dividend requirements (other than dividends payable solely in shares of
Qualified Capital Stock) shall be increased to an amount representing the
pretax earnings that would be required to cover such dividend requirements;
accordingly, the increased amount shall be equal to a fraction, the numerator
of which is such dividend requirements and the denominator of which is 1 minus
the applicable actual combined Federal, state, local and foreign income tax
rate of such Person and its Subsidiaries (expressed as a decimal), on a
consolidated basis, for the fiscal year immediately preceding the date of the
transaction giving rise to the need to calculate Fixed Charges.

"Foreign Asset Sale" means any Asset Sale in respect of the Capital Stock or
assets of a Foreign Subsidiary.

"Foreign Subsidiary" means any Subsidiary of the Company that is organized
under the laws of any jurisdiction other than the United States of America, any
state thereof or the District of Columbia.

"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, as in effect on the date of the Indenture.

"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.

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"Indebtedness" of any Person at any date means, without duplication: (i) all
liabilities, contingent or otherwise, of such Person for borrowed money
(whether or not the recourse of the lender is to the whole of the assets of
such Person or only to a portion thereof); (ii) all obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments; (iii) all
obligations of such Person in respect of letters of credit or other similar
instruments (or reimbursement obligations with respect thereto), other than
standby letters of credit issued for the benefit of, or surety or performance
bonds issued by, such Person in the ordinary course of business to the extent
such letters of credit are not drawn upon; (iv) all obligations of such Person
with respect to Hedging Obligations; (v) all obligations of such Person to pay
the deferred and unpaid purchase price of property or services, except trade
payables and accrued expenses incurred by such Person in the ordinary course of
business in connection with obtaining goods, materials or services, which
payable is not overdue according to industry practice or the original terms of
sale unless such payable is being contested in good faith; (vi) the maximum
fixed repurchase price of all Disqualified Stock of such Person; (vii) all
Capitalized Lease Obligations of such Person; (viii) all Indebtedness of others
secured by a Lien on any asset of such Person, whether or not such Indebtedness
is assumed by such Person, other than a pledge by a Single Purpose Subsidiary
of the Capital Stock of an Unrestricted Subsidiary or Joint Venture of such
Single Purpose Subsidiary to secure Indebtedness of such Unrestricted
Subsidiary or Joint Venture incurred to finance a project constituting one or
more Permitted Businesses; (ix) all Indebtedness of others guaranteed by, or
otherwise the Liability of, such Person to the extent of such guarantee or
Liability; and (x) all Attributable Indebtedness. The amount of Indebtedness of
any Person at any date shall be the outstanding balance at such date of all
unconditional obligations as described above, the maximum liability of such
Person for any such contingent obligations at such date and, in the case of
clause (viii), the fair market value of any asset subject to a Lien securing
the Indebtedness of others on the date that the Lien attaches. For purposes of
the first sentence hereof, the "maximum fixed repurchase price" of any
Disqualified Stock that does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Disqualified Stock as if such
Disqualified Stock were purchased on any date on which Indebtedness shall be
required to be determined pursuant to the Indenture, and if such price is based
upon, or measured by, the fair market value of such Disqualified Stock (or any
equity security for which it may be exchanged or converted), such fair market
value shall be determined in good faith by the Board of Directors of such
Person, which determination shall be evidenced by a Board Resolution.

"Independent Financial Advisor" means an accounting, appraisal or investment
banking firm of nationally recognized standing that is, in the reasonable
judgment of the Company's Board of Directors, qualified to perform the task for
which it has been engaged and disinterested and independent with respect to the
Company and its Affiliates.

"Investments" of any Person means (i) all investments by such Person in any
other Person in the form of loans, advances or capital contributions or similar
credit extensions constituting Indebtedness of such Person, and any guarantee
of Indebtedness of any other Person, (ii) all purchases (or other acquisitions
for consideration) by such Person of Indebtedness, Capital Stock or other
securities of any other Person and (iii) all other items that would be
classified as investments (including without limitation purchases of assets
outside the ordinary course of business) on a balance sheet of such Person
prepared in accordance with GAAP; provided, however, that advances to non-
executive employees and extensions of trade credit and advances to customers
and suppliers and other contractual and trade relationships, requiring
repayment within reasonable commercial periods, to the extent made in the
ordinary course of business consistent with past practice and in accordance
with normal industry practice, shall not be deemed to constitute Investments.

"Joint Venture" means (i) a corporation of which less than a majority of the
aggregate voting power of all classes of the Common Equity is owned by the
Company or its Restricted Subsidiaries and (ii) any entity other than a
corporation in which the Company and its Restricted Subsidiaries own less than
a majority of the Common Equity of such entity.

"Junior Subordinated Indebtedness" of the Company at any date means
Indebtedness of the Company which by its terms, or by the terms of any
agreement or instrument pursuant to which such Indebtedness is

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issued, (i) is expressly subordinated in right of payment to the Notes and (ii)
provides that no payment of principal of such Indebtedness by way of sinking
fund, mandatory redemption, defeasance or otherwise is required to be made by
the Company (including without limitation at the option of the holder thereof)
at any time prior to the maturity of the Notes.

"Lien" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or other similar encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law (including without limitation any conditional sale or other title retention
agreement, and any lease in the nature thereof, any option or other agreement
to sell, and any filing of, or agreement to give, any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).

"Net Proceeds" with respect to any Asset Sale by any Person means the
aggregate net proceeds received by such Person from such Asset Sale (including
without limitation the amount of cash applied to repay Indebtedness secured by
any asset involved in such Asset Sale or otherwise received as consideration
for the assumption or incurrence of liabilities incurred in connection with or
in anticipation of such Asset Sale) after (i) provision for all income or other
taxes measured by or resulting from such Asset Sale or the transfer of the
proceeds of such Asset Sale to such Person and (ii) payment of all brokerage
commissions and the underwriting and other fees and expenses related to such
Asset Sale, whether such proceeds are in cash or property (valued at the fair
market value thereof at the time of receipt as determined in good faith by the
Board of Directors of such Person, which determination shall be evidenced by a
Board Resolution).

"Net Reductions in Investments" means the amount of cash and Cash
Equivalents, less all fees and expenses incurred or accrued in connection with
the realization or collection of such cash and Cash Equivalents, and after
giving effect to all taxes payable with respect thereto, received with respect
to any Designated Investment, whether from the payment of interest on
Indebtedness, dividends, repayments of loans or advances or other transfers of
assets from the Person in which such Designated Investment was made, but only
to the extent that such cash or Cash Equivalents have been paid to the Company
or one or more Wholly Owned Restricted Subsidiaries of the Company in
compliance with all applicable laws, rules and regulations and all relevant
documents, agreements and instruments.

"Non-Recourse Indebtedness" of a Single Purpose Subsidiary means Indebtedness
for which (i) the sole legal recourse for collection of principal, premium, if
any, and interest on such Indebtedness is against (a) the specific property
identified in the instruments evidencing or securing such Indebtedness and such
property was acquired with the proceeds of such Indebtedness or such
Indebtedness was incurred within 90 days of the acquisition of such property or
(b) the Capital Stock of such Single Purpose Subsidiary, provided that such
Single Purpose Subsidiary has no assets other than the specific property
acquired with the proceeds of such Indebtedness plus a reasonable amount of
working capital, (ii) no assets of such Single Purpose Subsidiary, other than
the assets identified in clause (i)(a) of this definition, may be realized upon
in collection of principal, premium, if any, or interest on such Indebtedness
and (iii) neither the Company nor any Restricted Subsidiary of the Company,
other than the referent Single Purpose Subsidiary, is directly or indirectly
liable to make any payment thereon, has made any guarantee of payment or
performance of such Indebtedness or has pledged or granted any lien or
encumbrances on any assets as collateral or security with respect thereto,
other than the Capital Stock of the referent Single Purpose Subsidiary.

"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

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receive or retain any such (a) dividends, distributions or payments, (b) loans
or advances or (c) transfer of properties or assets.

"Permitted Businesses" means the businesses of providing consulting,
engineering or construction services to public and private sector clients in
the environment, energy, infrastructure and industry markets.

"Permitted Investments" means: (i) direct obligations of the United States of
America or any agency thereof, or obligations guaranteed by the United States
of America or any agency thereof, in each case maturing within 180 days of the
date of acquisition thereof; (ii) certificates of deposits 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 million or
more; and (iii) commercial paper given the highest rating by two established
national credit rating agencies and maturing not more than 180 days from the
date of acquisition thereof.

"Person" means any individual, corporation, partnership, joint venture,
incorporated or unincorporated association, joint-stock company, trust,
unincorporated organization or government or other agency or political
subdivision thereof or other entity of any kind.

"Plan of Liquidation", with respect to any Person, means a plan that provides
for, contemplates or the effectuation of which is preceded or accompanied by
(whether or not substantially contemporaneously, in phases or otherwise): (i)
the sale, lease, conveyance or other disposition of all or substantially all of
the assets of such Person otherwise than as an entirety or substantially as an
entirety; and (ii) the distribution of all or substantially all of the proceeds
of such sale, lease, conveyance or other disposition and all or substantially
all of the remaining assets of such Person to Holders of Capital Stock of such
Person.

"Qualified Capital Stock" means Capital Stock that is not Disqualified Stock.

"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 the covenant described under
"Limitations on Additional Indebtedness" in a principal amount not in excess of
the principal amount of the Indebtedness so refinanced; provided that: (i) the
Refinancing Indebtedness is the obligation of the same Person, and is
subordinated to the Notes, if at all, to the same extent, as the Indebtedness
being repaid; (ii) the Refinancing Indebtedness is scheduled to mature either
(a) no earlier than the Indebtedness being repaid or (b) after the maturity
date of the Notes; and (iii) the portion, if any, of the Refinancing
Indebtedness that is scheduled to mature on or prior to the maturity date of
the Notes has a Weighted Average Life to Maturity at the time such Refinancing
Indebtedness is incurred that is equal to or greater than the Weighted Average
Life to Maturity of the portion of the Indebtedness being repaid that is
scheduled to mature on or prior to the maturity date of the Notes.

"Related Business Investment" means any Investment directly by the Company or
one or more of its Wholly Owned Restricted Subsidiaries in any business that is
closely related to or complements the business of the Company and its
Subsidiaries as such business exists on the date thereof.

"Restricted Debt Payment" means any purchase, redemption, defeasance
(including without limitation in substance or legal defeasance) or other
acquisition or retirement for value, directly or indirectly, by the Company or
a Subsidiary of the Company, prior to the scheduled maturity or prior to any
scheduled

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repayment of principal or sinking fund payment, as the case may be, in respect
of Indebtedness of the Company that is subordinate in right of payment to the
Notes other than a Restricted Debt Payment made with the proceeds of a
substantially concurrent sale (other than to a Subsidiary of the Company or an
employee stock ownership plan) of the Company's Qualified Capital Stock,
provided that all Indebtedness so purchased, redeemed, defeased or otherwise
acquired or retired for value promptly is surrendered for cancellation to the
trustee for such Indebtedness.

"Restricted Investment", with respect to any Person, means any Investment by
such Person in any of its Affiliates or in any Person other than a Wholly Owned
Restricted Subsidiary other than (i) a Permitted Investment or (ii) an
Investment made with the proceeds of a substantially concurrent sale (other
than to a Subsidiary of the Company or an employee stock ownership plan) of the
Company's Qualified Capital Stock.

"Restricted Payment" means with respect to any Person: (i) the declaration of
any dividend (other than a dividend declared by a Wholly Owned Restricted
Subsidiary to holders of its Common Equity) or the making of any other payment
or distribution of cash, securities or other property or assets in respect of
such Person's Capital Stock, except that a dividend payable solely in Qualified
Capital Stock of such Person shall not constitute a Restricted Payment (for
purposes of this clause (i), the declaration of any such dividend, or the
making of any other such distribution, by any Restricted Subsidiary shall only
constitute 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.

"Sale and Leaseback Transaction" means with respect to any Person an
arrangement with any bank, insurance company or other lender or investor or to
which such lender or investor is a party, providing for the leasing by such
Person or any of its Subsidiaries of any property or asset of such Person or
any of its Subsidiaries which has been or is being sold or transferred by such
Person or such Subsidiary to such lender or investor or to any Person to whom
funds have been or are to be advanced by such lender or investor on the
security of such property or asset. Notwithstanding the foregoing, no
transaction exclusively between the Company and any Wholly Owned Restricted
Subsidiary shall be deemed to constitute a Sale and Leaseback Transaction.

"Senior Indebtedness" means all Indebtedness of the Company other than
Indebtedness that is specifically designated, by the terms of the instrument
creating or evidencing the same, as not being senior in right of payment to the
Notes.

"Single Purpose Subsidiary" of any Person means a Subsidiary of such Person
which has no Subsidiaries other than Unrestricted Subsidiaries and the
activities of which are limited to (i) ownership of all or a portion of the
interests in a single project constituting one or more Permitted Businesses,
either directly or through the ownership of 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.

"Unrestricted Subsidiary" means: American Venture Holdings, Inc., a Delaware
corporation; American Venture Investments Incorporated, a Delaware corporation;
Excell Development Construction, Inc., a

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Delaware corporation; International Systems, Inc., a Colorado corporation; ICF
Environnement, a French corporation; ICF Kaiser Holdings Unlimited, Inc., a
Delaware corporation; ICF Leasing Corporation, Inc., a Delaware corporation;
Cygna Energy Services, a California corporation; and Cygna Energy Services
Michigan, Inc., a Michigan Corporation, and each of the other Subsidiaries of
the Company so designated by a resolution adopted by the Board of Directors of
the Company and whose creditors have no direct or indirect recourse (including
without limitation recourse with respect to the payment of principal of or
interest on Indebtedness of such Subsidiary) to the Company or a Restricted
Subsidiary other than a Lien on the Capital Stock of such Unrestricted
Subsidiary; provided, however, that (a) no Subsidiary may be an Unrestricted
Subsidiary if it owns any Capital Stock of a Restricted Subsidiary and (b) the
Board of Directors of the Company will be prohibited after the date of the
Indenture from designating as an Unrestricted Subsidiary any Subsidiary
existing on the date of the Indenture. The Board of Directors of the Company
may designate an Unrestricted Subsidiary to be a Restricted Subsidiary,
provided that (i) any such designation shall be deemed to be an incurrence by
the Company and its Restricted Subsidiaries of the Indebtedness (if any) of
such designated Subsidiary for purposes of the Limitations on Additional
Indebtedness covenant in the Indenture 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
Consolidated Fixed Charge Coverage Ratio set forth in the Limitations on
Additional Indebtedness covenant described above. 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 Resolution of the
Company's Board of Directors giving effect to such designation or redesignation
and an officer's certificate certifying that such designation or redesignation
complied with the foregoing conditions and setting forth the underlying
calculations of such certificate and upon which certificate the Trustee shall
conclusively rely without any investigation whatsoever.

"Voting Stock", with respect to any Person, means securities of any class of
Capital Stock of such Person entitling the holders thereof (whether at all
times or only so long as no senior class of stock has voting power by reason of
any contingency) to vote in the election of members of the board of directors
of such Person.

"Weighted Average Life to Maturity", when applied to any Indebtedness at any
date, means the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment by (ii) the then outstanding
principal amount of such Indebtedness.

"Wholly Owned Restricted Subsidiary" of the Company means a Restricted
Subsidiary of the Company, of which 100% of the Common Equity (except for
directors' qualifying shares or certain minority interests owned by other
Persons solely due to local law requirements that there be more than one
stockholder, but which interest is not in excess of what is required for such
purpose) is owned directly by the Company or through one or more Wholly Owned
Restricted Subsidiaries of the Company.

"Wholly Owned Subsidiary" of the Company means a Subsidiary of the Company,
of which 100% of the Common Equity (except for directors' qualifying shares or
certain minority interests owned by other Persons solely due to local law
requirements that there be more than one stockholder, but which interest is not
in excess of what is required for such purpose) is owned directly by the
Company or one or more Wholly Owned Subsidiaries of the Company.

DESCRIPTION OF THE WARRANTS

The Warrants will be issued under a warrant agreement (the "Warrant
Agreement") dated as of January 11, 1994, between the Company and The Bank of
New York, a New York banking corporation, as warrant agent (the "Warrant
Agent"). The Warrants are subject to the terms contained in the Warrant

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Agreement. The Common Stock issuable upon exercise of the warrants has been
registered with the Securities and Exchange Commission pursuant to a
registration statement on Form S-1 (Registration No. 33-51677). The following
summary, which describes certain material provisions of the Warrant Agreement
and Warrants, does not purport to be complete, and is subject to, and is
qualified in its entirety by reference to, the Warrant Agreement and Warrants,
including the definitions therein of capitalized terms not defined herein. A
copy of the proposed form of the Warrant Agreement is filed as an exhibit to
the Registration Statement of which this Prospectus is a part.

GENERAL

Each Warrant will entitle the holder thereof to acquire one share of Common
Stock of the Company, subject to adjustment, upon payment of the exercise
price. The exercise price will be equal to $5.00 (the "Purchase Price"),
subject to adjustment as described below. All outstanding Warrants will
terminate and become void on December 31, 1998 (the "Expiration Date").
Warrants will be exercisable at any time on or prior to the Expiration Date.

NON-SURVIVING COMBINATION

If the Company proposes to enter into a transaction that would constitute a
Non-Surviving Combination if consummated, the Company must give written notice
thereof 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 thereof. As used herein, a "Non-Surviving Combination" means any
merger, consolidation, or other business combination by the Company with one or
more persons (other than a wholly owned subsidiary of the Company) in which the
Company is not the survivor, or a sale of all or substantially all of the
assets of the Company to one or more such other persons, if, in connection with
any of the foregoing, consideration (other than consideration which includes
Common Stock or securities convertible into, or exercisable or exchangeable
for, Common Stock or rights or options to acquire Common Stock or such other
securities) is distributed to holders of Common Stock in exchange for all or
substantially all of their equity interest in the Company.

In a Non-Surviving Combination, the surviving entity (the "Survivor") will be
obligated to distribute or pay to each holder of Warrants, upon payment of the
Purchase Price prior to the Expiration Date, the number of shares of stock or
other securities or other property (including any cash) of the Survivor that
would have been distributable or payable on account of the Common Stock if such
holder's Warrants had been exercised immediately prior to such Non-Surviving
Combination (or, if applicable, the record date therefor). Following the
consummation of a Non-Surviving Combination, the Warrants will represent only
the right to receive such shares of stock or other property from the Survivor
upon payment of the Purchase Price prior to the Expiration Date.

No transaction is presently in progress or under negotiation that would
constitute a Non-Surviving Combination.

METHOD OF EXERCISE OF WARRANTS

Warrants may be exercised by surrendering to the Warrant Agent a Warrant
certificate signed by the registered holder indicating such holder's election
to exercise all or a portion of the Warrants evidenced by such certificate and
payment of the Purchase Price. Upon surrender of the Warrant certificate for
exercise and payment of the Purchase Price, the Warrant Agent will deliver or
cause to be delivered, to or upon the written order of any holder, appropriate
evidence of ownership of any shares of Common Stock or other securities or
property (including any money) to which such holder is entitled, together with
Warrant certificates evidencing any Warrants not exercised.

Certificates for Warrants will be issued in registered form only and no
service charge shall be made for registration of transfer or exchange upon
surrender of any Warrant certificate at the office of the Warrant

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Agent maintained for that purpose. The Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Warrant
certificates.

ADJUSTMENT

The number of shares of Common Stock issuable upon the exercise of each
Warrant and the Purchase Price are subject to adjustment in certain events,
including (a) a dividend or distribution on the Company's Common Stock in
shares of its Common Stock or a combination, subdivision, reorganization, or
reclassification of Common Stock, (b) the issuance of shares of Common Stock
for a consideration per share less than the market price per share at the time
of issuance, (c) 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 such right,
warrant, or option plus any consideration to be received upon the exercise
thereof 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 such security for Common Stock) per share of
Common Stock received or receivable by the Company is less than the market
price per share at the time of issuance of such right, warrant, or option, (d)
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 such convertible or exchangeable
security and the consideration to be received upon the conversion or exchange
thereof) per share of Common Stock received or receivable by the Company is
less than the market price per share of Common Stock on the date of issuance of
such convertible or exchangeable security, and (e) a dividend or distribution
on the Company'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 such cash dividend, does not exceed 10% of the market price per
share of Common Stock on the date of such declaration. If the terms of any of
the Company'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 thereof caused an adjustment in the
terms of the Warrants (including by way of expiration of such securities but
excluding by way of antidilution provisions thereof triggering an adjustment of
the terms thereof upon the occurrence of an event that would cause an
adjustment of the terms of the Warrant), then the Purchase Price and the number
of shares of Common Stock issuable upon the exercise of each Warrant shall be
readjusted to take account of such change. Notwithstanding the foregoing, no
adjustment in the Purchase Price or the number of shares of Common Stock
issuable upon exercise of Warrants will be required (i) until cumulative
adjustments would result in an adjustment of at least one percent in the
Purchase Price, (ii) 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, the Company where such issuances are registered with the
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 (iii) the issuance of Common Stock pursuant to
any dividend reinvestment plan where the purchase price of Common Stock
thereunder is no less than 95% of the market price on the date of issuance.

The Company has authorized and reserved for issuance such number of shares of
Common Stock as shall be issuable upon the exercise of all outstanding
Warrants. Such shares of Common Stock, when issued, will be duly and validly
issued and fully paid and nonassessable.

No fractional shares will be issued upon exercise of Warrants, but the
Company will pay an amount in cash equal to the current market value of any
fractional share otherwise issuable.

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NO RIGHTS AS SHAREHOLDERS

Holders of Warrants are not entitled, by virtue of being such holders, to
receive dividends or subscription rights, vote, consent, exercise any
preemptive right, or receive notice as shareholders of the Company in respect
of any meeting of shareholders for the election of directors of the Company or
any other matter, or exercise any other rights whatsoever as shareholders of
the Company.

CERTAIN FEDERAL INCOME TAX CONSIDERATIONS

In the opinion of Crowell & Moring, counsel for the Company, the following
discussion is an accurate summary of the material United States Federal income
tax consequences of the purchase, ownership and disposition of the Units.
Because the Treasury Regulations interpreting and implementing the original
issue discount ("OID") provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), are only in proposed form, counsel expresses no opinion
as to the calculation and accrual of OID on the Notes. This summary is for
general informational purposes only and does not purport to address specific
tax consequences that may be relevant to certain persons (including, for
example, foreign persons, financial institutions, broker-dealers, insurance
companies or tax-exempt organizations and persons in special situations such as
those who hold Notes and Warrants as part of a straddle).

The discussion is based on the current provisions of the Code, applicable
Treasury Regulations, judicial authority and administrative rulings and
practice. Any of such authorities are subject to change at any time by
legislative, judicial or administrative action. Any such changes may be applied
retroactively in a manner that could adversely affect a holder of the Notes or
the Warrants. Further, there can be no assurance that the Internal Revenue
Service (the "IRS") will not take a contrary view, and no rulings from the IRS
have been or will be sought.

On December 21, 1992, a substantial portion of the proposed original issue
discount regulations which had been issued in April, 1986, as subsequently
amended, were withdrawn, and new proposed original issue discount regulations
(the "Proposed OID Regulations") were issued. The Proposed OID Regulations are
not expected to apply to the Notes because such regulations are proposed to be
applicable only to debt instruments issued 60 days or more after the date on
which the Proposed OID Regulations are published in final form. However, since
the Proposed OID Regulations are an indication of how the IRS may interpret the
original issue discount provisions of the Code, the discussion below in some
cases indicates how the Proposed OID Regulations would apply if they were
applicable to the Notes. Subsequent versions of the Proposed OID Regulations,
or temporary or final regulations, or interpretations of any of the foregoing,
may adopt positions that may be contrary to positions discussed below.

PROSPECTIVE PURCHASERS ARE URGED TO CONSULT THEIR TAX ADVISORS WITH RESPECT
TO FEDERAL INCOME TAX CONSIDERATIONS THAT MAY BE SPECIFIC TO THEM, AS WELL AS
WITH RESPECT TO ANY STATE, LOCAL OR FOREIGN TAX CONSIDERATIONS OF ACQUIRING,
HOLDING OR DISPOSING OF THE NOTES AND THE WARRANTS.

NOTES

Original Issue Discount and Interest. Under the Code, a holder of a debt
instrument with OID must include a portion of the OID in gross income as
interest in each taxable year or portion thereof in which the holder holds the
debt instrument even if the holder has not received a cash payment in respect
of such OID.

The Units will be treated as "investment units." Under the Proposed OID
Regulations, the issue price of an investment unit is equal to the first price
at which a substantial amount of units are sold to the public (not including
bond houses, brokers, or similar persons or organizations acting in the
capacity of an

82
<PAGE>

underwriter, placement agent or wholesaler). The issue price of a unit is then
allocated between the securities comprising each unit based on their relative
fair market values. Under the Proposed OID Regulations, the issuer's allocation
is binding on all holders of the securities, unless a holder explicitly
discloses to the IRS that its allocation differs from that of the issuer.

The Company anticipates that it will allocate approximately $900,000 as the
issue price of the Warrants. This allocation reflects the Company's judgment as
to the value of the Warrants at the time of issuance. This allocation is not
binding on the IRS.

For Federal income tax purposes, a Note will be issued with OID if its
"stated redemption price at maturity" exceeds its "issue price" by more than a
de minimis amount. The stated redemption price at maturity of a Note will be
the sum of its stated principal amount and all other payments that do not
constitute "qualified stated interest" payments. Qualified stated interest is
stated interest that is unconditionally payable at least annually at a single
fixed rate that appropriately takes into account the length of the interval
between payments. The interest payments on the Notes will constitute qualified
stated interest. A Holder of a Note will be required for Federal income tax
purposes to report stated interest on the Notes as interest income in
accordance with the Holder's method of accounting for tax purposes.

Because the Notes will be issued at a discount and a portion of the issue
price of the Units has been allocated to the Warrants, the stated redemption
price at maturity of a Note will exceed its issue price by an amount in excess
of the allowed de minimis amount. As a result, each Note will bear OID in an
amount equal to the excess of (i) its stated redemption price at maturity over
(ii) its issue price.

A Holder will be required to include OID in income periodically over the term
of a Note without regard to when the cash or other payments attributable to
such income are received. In general, a Holder must include in gross income for
Federal income tax purposes the sum of the daily portions of OID with respect
to the Note for each day during the taxable year on which such Holder holds the
Note ("Accrued OID"). The daily portion is determined by allocating to each day
of any accrual period within a taxable year a pro rata portion of the OID
allocable to such accrual period. The amount of such OID is equal to the
adjusted issue price of the Note (the issue price of the Note increased by the
Accrued OID for all prior accrual periods and decreased by any cash payments on
the Note other than qualified stated interest) at the beginning of the accrual
period multiplied by the yield to maturity of the Note, and reduced by the
amount of qualified stated interest allocable to such period. For purposes of
computing OID, the Company will use six-month accrual periods that generally
correspond to the stated interest payment periods of the Notes, with the
exception of an initial short accrual period. Under these rules, Holders will
have to include in gross income increasingly greater amounts of OID in each
successive accrual period. Any payment made under a Note (except for payments
of qualified stated interest) will be treated first as a payment of OID (which
was previously includable in income) to the extent of OID that has accrued as
of the date of payment and has not been allocated to prior payments and second
as a payment of principal (which, generally, is not includible in income).

A subsequent purchaser of a Note issued with OID who purchases the Note at a
cost in excess of the Note's adjusted issue price at the time of such purchase,
but not in excess of the stated redemption price at maturity, will be entitled
to reduce OID includable in income determined by the amount of such excess (the
"acquisition premium"). For such a Holder, each daily portion will be reduced
by an amount equal to (i) the daily portion of OID multiplied by (ii) a
fraction, the numerator of which is equal to the amount of the acquisition
premium and the denominator of which is equal to the sum of the daily portions
of OID for the period beginning on the day after the subsequent Holder's
acquisition of the Note and ending on the maturity date.

83
<PAGE>

A Holder's tax basis in a Note will initially be the portion of the issue
price of the Unit allocable to such Note. This basis will be increased by
amounts of OID previously included in income, reduced by any payments received
by the Holder with respect to the note, other than qualified stated interest
payments, and reduced by the amounts deducted as bond premium amortization. See
"--Bond Premium".

The certificate representing each Note sets forth the original issuance date,
issue price, yield to maturity, and amount of OID, with respect to the Note.
The Company is required to furnish annually to the IRS and to each Holder
information regarding the amount of the OID attributable to that year.

Bond Premium. If a purchaser purchases a Note at a cost that is greater than
its stated redemption price at maturity, the purchaser will be considered to
have purchased the Note at a premium, and will not include any OID in income.
The purchaser may elect to deduct the excess amount as amortizable bond premium
over the remaining term of the debt. The election applies to all taxable debt
instruments held by the Holder at any time during the first taxable year to
which the election applies and to any such debt instruments which are later
acquired by the holder.

Market Discount. A purchaser of a Note should be aware that the purchase or
resale of a Note may be affected by the "market discount" provisions of the
Code. The market discount rules generally provide that if a holder of a debt
instrument purchases the debt instrument at a market discount, any gain
recognized upon the disposition of the debt instrument by the holder will be
taxable as ordinary interest income, rather than as capital gain, to the extent
such gain does not exceed the accrued market discount on such debt instrument
at the time of such disposition. "Market discount" generally, in the case of a
Note, means the excess, if any, of the Note's "issue price" increased by the
original issue discount includable in the income of all prior Holders of the
Note (without regard to any acquisition premium), over the price paid by the
Holder therefor, subject to a de minimis exception. A Holder of a Note who
acquires the debt instrument at a market discount also may be required to defer
the deduction of a portion of the amount of interest that the Holder paid or
accrued during the taxable year on indebtedness incurred or maintained to
purchase or carry such debt instrument.

Any principal payment on a Note acquired by a Holder at a market discount
will be included in gross income as ordinary income (generally, as interest
income) to the extent that it does not exceed the accrued market discount at
the time of such payment. The amount of the accrued market discount for
purposes of determining the tax treatment of subsequent payments on, or
dispositions of, a Note is to be reduced by the amounts so treated as ordinary
income.

A Holder of a Note acquired at a market discount may elect to include market
discount in gross income, for Federal income tax purposes, as such market
discount accrues, either on a straight-line basis or on a constant interest
rate basis. This current inclusion election, once made, applies to all market
discount obligations acquired on or after the first day of the first taxable
year to which the election applies, and may not be revoked without the consent
of the IRS. If a Holder of a Note makes such an election, the foregoing rules
with respect to the recognition of ordinary interest income on sales and other
dispositions of such debt instruments, and with respect to the deferral of
interest deductions on indebtedness incurred or maintained to purchase or carry
such debt instruments, will not apply.

Sale or Retirement of Notes. Upon the sale, exchange, retirement or other
disposition of a Note, a Holder will generally recognize gain or loss equal to
the difference between the amount realized on the disposition and the Holder's
adjusted tax basis in the Note (except to the extent the consideration received
is attributable to qualified stated interest not previously taken into account,
which consideration is treated as interest received). Subject to the market
discount rules discussed above, gain or loss recognized by a Holder on the
disposition of a Note will be long-term capital gain or loss, provided that the
Note was a capital asset in the hands of the Holder, and had been held for more
than one year.

WARRANTS

Exercise of the Warrants. The exercise of a Warrant will not result in a
taxable event to the holder of the Warrant (except with respect to cash, if
any, paid in lieu of the issuance of fractional shares of Common Stock). Upon
exercise of a Warrant with cash, the holder's basis in the shares will be the
sum of (a) its

84
<PAGE>

adjusted tax basis in the Warrant and (b) the cash paid upon exercise of the
Warrant. The holding period for capital gain and loss purposes for the shares
acquired upon exercise of a Warrant will not include the period during which
the Warrant was held. The adjusted tax basis of the Warrants for holders
participating in the offering will be the portion of the issue price of the
Unit allocable to the Warrants (adjusted as described below under "Adjustments
Under the Warrants"). See the discussion above under "Original Issue Discount
and Interest," concerning the allocation of a portion of the issue price of the
Unit to the Warrants on the Issue Date.

Sale of the Warrants. Generally, a holder of the Warrants will recognize gain
or loss upon the sale of the Warrants in an amount equal to the difference
between the amount realized on the sale and the holder's adjusted tax basis for
the Warrants. Under section 1234 of the Code, gain or loss attributable to the
sale of an option to buy or sell property is considered gain or loss from the
sale of property which has the same character as the property to which the
option relates. Because the Warrants relate to stock, gains or losses
attributable to the sale of the Warrants will generally constitute capital
gains and losses and will be long-term if the Warrants have been held for more
than one year and if the stock would be a capital asset in the hands of the
holder.

Adjustments Under the Warrants. Pursuant to the terms of the Warrants, the
number of shares that may be purchased upon exercise of the Warrants is subject
to adjustment from time to time upon the occurrence of certain events. Under
section 305 of the Code, a change in conversion ratio or any transaction having
a similar effect on the interest of a Warrant holder may be treated as a
distribution with respect to any Warrant holder whose proportionate interest in
the earnings and profits of the Company is increased by such change or
transaction. Thus, under certain future circumstances which may or may not
occur, such an adjustment pursuant to the terms of the Warrants may be treated
as a taxable distribution to the Warrant holders to the extent of the Company's
current or accumulated earnings and profits, without regard to whether the
Warrant holders receive any cash or other property. For example, if the Company
distributes cash or property as a dividend to its shareholders and a related
adjustment is made to the number of shares of Common Stock that may be
purchased upon exercise of the Warrants, such an adjustment will generally be
treated as a taxable distribution to the Warrant holders, despite the fact that
the Warrant holders receive no cash or property. If the Warrant holders receive
such a taxable distribution their bases in the Warrants will be increased by an
amount equal to the taxable distribution.

Expiration of the Warrants. Upon the expiration of an unexercised Warrant,
the holder will recognize a loss equal to the adjusted tax basis of the Warrant
in the hands of the holder. Under section 1234 of the Code, the character of
the loss realized upon the failure to exercise an option is determined based on
the character of the property to which the option relates. Since the Warrants
relate to stock, a loss realized upon expiration of the Warrant will generally
be a capital loss and will be long term if the Warrant was held for more than
one year and if the stock would have been a capital asset in the hands of the
Warrant holder.

The rules with respect to adjustments are complex and Warrant holders should
consult their own tax advisors in the event of an adjustment.

BACKUP WITHHOLDING

A holder of a Note or Warrant may be subject to backup withholding at the
rate of 31% with respect to interest paid on a Note and gross proceeds upon the
sale or retirement of a Note or Warrant unless such holder (a) is a corporation
or other exempt recipient and, when required, demonstrates this fact or (b)
provides, when required, a correct taxpayer identification number, certifies
that backup withholding is not in effect and otherwise complies with applicable
requirements of the backup withholding rules. Furthermore, a holder of a Note
or Warrant that does not provide the Company with the holder's correct taxpayer
identification number may be subject to penalties imposed by the IRS. Backup
withholding will be made when cash payments are made with respect to the Notes
or Warrants. Backup withholding is not an additional tax; any amounts so
withheld are creditable against the holder's federal income tax liability.

85
<PAGE>

UNDERWRITING

Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement"), the Company has agreed to sell to Dillon, Read
& Co. Inc. and Wertheim Schroder & Co. Incorporated, and the Underwriters have
severally agreed to purchase, the respective principal amounts of the Units set
forth opposite their names below.

<TABLE>
<CAPTION>
UNDERWRITERS UNITS
------------ -------
<S> <C>
Dillon, Read & Co. Inc............................................ 81,250
Wertheim Schroder & Co. Incorporated.............................. 43,750
-------
Total........................................................... 125,000
=======
</TABLE>

The Underwriting Agreement provides that the Underwriters are obligated to
purchase all of the Units, if any are purchased.

The Underwriters propose to offer the Units directly to the public at the
initial public offering price set forth on the cover page of this Prospectus
and to certain dealers at such price less a concession not in excess of 1.8% of
initial public offering price of the Units. The Underwriters may allow, and
such dealers may reallow, a concession not to exceed 0.25% of the initial
public offering price of the Units on sales to certain other dealers. The
offering of the Units is made for delivery when, as, and if accepted by the
Underwriters and subject to prior sale and to withdrawal, cancellation or
modification of the offer without notice. The Underwriters reserve the right to
reject any order for the purchase of the Units. After the initial public
offering, the public offering price and other selling terms may be changed by
the Underwriters.

The Company has agreed in the Underwriting Agreement to indemnify the
Underwriters against certain civil liabilities, including liabilities under the
Securities Act of 1933, or to contribute to payments that the Underwriters may
be required to make in respect thereof.

Wertheim Schroder & Co. Incorporated has rendered certain financial advisory
and investment banking services to the Company, for which it received customary
fees. Tony Coelho, a director of the Company, is a Managing Director of
Wertheim Schroder & Co. Incorporated.

LEGAL MATTERS

The legality of the securities offered hereby will be passed upon for the
Company by Paul Weeks, II, Esq., Senior Vice President, General Counsel, and
Secretary of ICF Kaiser International, Inc. As of August 31, 1993, Mr. Weeks is
the beneficial owner of 52,937 shares of the Common Stock (including 19,667
shares that may be acquired upon the exercise of stock options). Certain legal
matters will be passed upon for the Company by Crowell & Moring, 1001
Pennsylvania Avenue, N.W., Washington, D.C. 20004.

Certain legal matters will be passed upon for the Underwriters by Gibson,
Dunn & Crutcher, 200 Park Avenue, New York, New York 10166.

EXPERTS

The Consolidated Financial Statements of ICF Kaiser International, Inc. and
subsidiaries as listed herein on page F-1, except for the interim financial
statements, have been included herein in reliance on the reports of Coopers &
Lybrand, independent accountants, given upon their authority as experts in
auditing and accounting.

86
<PAGE>

ICF KAISER INTERNATIONAL, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Consolidated Financial Statements:

Report of Independent Accountants....................................... F-2

Consolidated Balance Sheets--February 28, 1993, February 29, 1992 and
August 31, 1993 (unaudited)............................................ F-3

Consolidated Statements of Operations--For the Years Ended February 28,
1993, February 29, 1992, and February 28, 1991 and the Six Months ended
August 31, 1993 and 1992 (unaudited)................................... F-4

Consolidated Statements of Shareholders' Equity--For the Years Ended
February 28, 1993, February 29, 1992, and February 28, 1991 and the Six
Months ended August 31, 1993 and 1992 (unaudited)...................... F-5

Consolidated Statements of Cash Flows--For the Years Ended February 28,
1993, February 29, 1992, and February 28, 1991 and the Six Months ended
August 31, 1993 and 1992 (unaudited)................................... F-6

Notes to Consolidated Financial Statements.............................. F-7
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders
ICF Kaiser International, Inc.

We have audited the accompanying consolidated balance sheets of ICF Kaiser
International, Inc. and Subsidiaries, formerly ICF International, Inc., as of
February 28, 1993 and February 29, 1992, and the related consolidated
statements of operations, shareholders' equity, and cash flows for each of the
three years in the period ended February 28, 1993. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of ICF Kaiser
International, Inc. and Subsidiaries as of February 28, 1993 and February 29,
1992 and the consolidated results of their operations and their cash flows for
each of the three years in the period ended February 28, 1993 in conformity
with generally accepted accounting principles.

As discussed in Note J to the consolidated financial statements, the Company
changed its method of accounting for income taxes for the year ended February
29, 1992.

Coopers & Lybrand

Washington, D.C.
April 30, 1993

F-2
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
AUGUST 31, FEBRUARY 28, FEBRUARY 29,
1993 1993 1992
----------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents.............. $ 18,539 $ 8,445 $ 8,516
Contract receivables, net.............. 143,929 160,681 152,416
Prepaid expenses and other current
assets................................ 17,721 21,503 21,095
Refundable income taxes................ 1,090 1,294 2,230
Deferred income taxes.................. 13,523 12,553 14,542
Net current assets of business held for
disposition........................... -- -- 4,226
-------- -------- --------
Total Current Assets................. 194,802 204,476 203,025
-------- -------- --------
Fixed Assets
Furniture, equipment and leasehold
improvements.......................... 40,824 40,120 41,381
Less allowances for depreciation and
amortization.......................... 23,065 20,440 17,730
-------- -------- --------
17,759 19,680 23,651
-------- -------- --------
Other Assets
Goodwill, net.......................... 52,884 53,896 55,791
Investments in and advances to
affiliates............................ 4,878 2,207 19,488
Due from officers and employees........ 1,342 1,361 1,108
Other.................................. 13,720 13,958 15,884
-------- -------- --------
72,824 71,422 92,271
-------- -------- --------
$285,385 $295,578 $318,947
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses.. $ 45,260 $ 60,192 $ 66,051
Accrued salaries and employee benefits. 26,033 25,804 24,501
Current portion of long-term
liabilities........................... 9,416 5,276 7,187
Income taxes payable................... 940 1,448 2,361
Deferred revenue....................... 15,379 13,804 23,388
Other.................................. 11,328 10,107 13,472
-------- -------- --------
Total Current Liabilities............ 108,356 116,631 136,960
-------- -------- --------
Long-term Liabilities, less current por-
tion
Long-term debt......................... 46,727 39,115 49,145
Subordinated debt...................... 25,500 30,000 30,000
Other.................................. 4,006 6,487 6,530
-------- -------- --------
76,233 75,602 85,675
-------- -------- --------
Commitments and Contingencies
Redeemable Preferred Stock............... 45,105 44,824 45,161
Preferred Stock.......................... 6,900 6,900 6,900
Common Stock, par value $.01 per share:
Authorized--90,000,000 shares
Issued and outstanding--20,764,984,
21,303,807 and 18,270,652 shares...... 208 213 182
Additional Paid-in Capital............... 61,735 65,040 64,382
Notes Receivable Related to Common Stock. (1,732) (2,725) (3,387)
Retained Earnings (Deficit).............. (6,186) (4,206) (7,552)
Cumulative Translation Adjustment........ (1,901) (1,701) (1,041)
ESOP Guaranteed Bank Loan................ (3,333) (5,000) (8,333)
-------- -------- --------
$285,385 $295,578 $318,947
======== ======== ========
</TABLE>

See notes to consolidated financial statements.

F-3
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
AUGUST 31, YEAR ENDED FEBRUARY 28,
-------------------- -------------------------------
1993 1992 1993 1992 1991
--------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUE
Gross revenue.......... $ 274,842 $ 369,875 $ 678,882 $ 710,873 $ 624,976
Subcontract and direct
material costs........ (101,155) (174,001) (299,606) (337,056) (269,846)
Equity in income of
joint ventures and
affiliated companies.. 741 3,011 5,709 6,009 8,188
--------- --------- --------- --------- ---------
Service revenue....... 174,428 198,885 384,985 379,826 363,318
OPERATING EXPENSES
Direct cost of services
and overhead.......... 135,075 150,365 292,005 291,237 269,020
Administrative and
general expense....... 29,918 29,436 58,184 56,339 49,573
Depreciation and
amortization.......... 4,862 5,661 10,766 9,159 11,438
Costs of restructuring
and disposal of
businesses, net....... -- 1,436 1,336 73,354 --
Unusual item, net...... 500 -- (50) (6,300) --
--------- --------- --------- --------- ---------
Operating income
(loss)............... 4,073 11,987 22,744 (43,963) 33,287
OTHER INCOME (EXPENSE)
Loss on sale of
investment............ -- -- (929) -- --
Interest income........ 705 898 1,708 1,931 1,995
Interest expense--core
businesses............ (3,341) (4,410) (8,629) (10,778) (11,264)
Interest expense--
discontinued
businesses............ -- -- -- (1,500) --
--------- --------- --------- --------- ---------
Income (loss) before
income tax........... 1,437 8,475 14,894 (54,310) 24,018
Income tax provision
(benefit)............. 747 3,560 6,255 (13,794) 9,727
--------- --------- --------- --------- ---------
Net income (loss)..... 690 4,915 8,639 (40,516) 14,291
Preferred stock
dividends............. 2,513 2,513 5,026 2,203 857
--------- --------- --------- --------- ---------
Net income (loss)
available for common
shareholders......... $ (1,823) $ 2,402 $ 3,613 $ (42,719) $ 13,434
========= ========= ========= ========= =========
Net income (loss) per
common share
Primary................ $ (0.09) $ 0.11 $ 0.16 $ (2.25) $ 0.71
Fully diluted.......... $ (0.09) $ 0.11 $ 0.16 $ (2.25) $ 0.68
</TABLE>

See notes to consolidated financial statements.

F-4
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS)

<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED FEBRUARY 28,
AUGUST 31, -------------------------
1993 1993 1992 1991
---------------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C>
SERIES 1 JUNIOR CONVERTIBLE PRE-
FERRED STOCK
Balance at beginning of year...... $ 6,900 $ 6,900 $ 6,900 $ --
Issuance of 69 shares............. -- -- -- 6,900
------- ------- ------- -------
Balance at end of year............ $ 6,900 $ 6,900 $ 6,900 $ 6,900
======= ======= ======= =======
COMMON STOCK
Balance at beginning of year...... $ 213 $ 182 $ 185 $ 174
Issuance of shares (105,740 in
1993, 1,131,620 in 1992 and
281,852 in 1991)................. -- 1 11 3
Issuance of 71,645 shares......... 1 -- -- --
Repurchase of shares (44,434 in
1993, 954,961 in 1992 and
1,342,788 in 1991)............... -- 0 (9) (13)
Repurchase of 610,468 shares...... (6) -- -- --
Issuance of shares to benefit
plans (1,344,123 in 1992 and
666,666 in 1991)................. -- -- 13 6
Issuance of shares in connection
with acquisitions (1,222,826 in
1992 and 1,494,980 in 1991)...... -- -- 12 15
Exchange of 2,975,542 shares of
Class A Common Stock for Series 3
Preferred Stock.................. -- -- (30) --
Conversion of Series 3 Preferred
Stock into 2,971,849 shares...... -- 30 -- --
------- ------- ------- -------
Balance at end of year............ $ 208 $ 213 $ 182 $ 185
======= ======= ======= =======
ADDITIONAL PAID-IN CAPITAL
Balance at beginning of year...... $65,040 $64,382 $55,358 $40,780
Increase in connection with
issuances........................ 346 619 5,541 2,771
Decrease in connection with repur-
chases........................... (3,716) (354) (15,169) (14,950)
Increase in connection with acqui-
sitions.......................... -- -- 6,789 20,337
Increase in connection with issu-
ance to benefit plans............ -- -- 10,376 6,251
Tax effect from the excercise of
non-qualified stock options...... -- 559 983 --
Other............................. 65 (166) 504 169
------- ------- ------- -------
Balance at end of year............ $61,735 $65,040 $64,382 $55,358
======= ======= ======= =======
NOTES RECEIVABLE RELATED TO COMMON
STOCK
Balance at beginning of year...... $(2,725) $(3,387) $ (911) $ (544)
Common stock issued in exchange
for notes receivable............. -- -- (2,476) (367)
Payments received on notes receiv-
able............................. 993 662 -- --
------- ------- ------- -------
Balance at end of year............ $(1,732) $(2,725) $(3,387) $ (911)
======= ======= ======= =======
RETAINED EARNINGS (DEFICIT)
Balance at beginning of year...... (4,206) $(7,552) $35,380 $21,978
Net income (loss)................. 690 8,639 (40,516) 14,291
Preferred stock dividends......... (2,513) (5,026) (2,203) (857)
Preferred stock accretion......... (157) (267) (213) --
Adjustment for pooled companies... -- -- -- (32)
------- ------- ------- -------
Balance at end of year............ $(6,186) $(4,206) $(7,552) $35,380
======= ======= ======= =======
CUMULATIVE TRANSLATION ADJUSTMENT
Balance at beginning of year...... (1,701) $(1,041) $ (260) $ --
Current year adjustment........... (200) (660) (781) (260)
------- ------- ------- -------
Balance at end of year............ $(1,901) $(1,701) $(1,041) $ (260)
======= ======= ======= =======
ESOP GUARANTEED BANK LOAN
Balance at beginning of year...... (5,000) $(8,333) $(7,813) $(4,429)
Increase (decrease) in loan bal-
ance............................. 1,667 3,333 (520) (3,384)
------- ------- ------- -------
Balance at end of year............ $(3,333) $(5,000) $(8,333) $(7,813)
======= ======= ======= =======
</TABLE>

See notes to consolidated financial statements

F-5
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
AUGUST 31, YEAR ENDED FEBRUARY 28,
------------------ ----------------------------
1993 1992 1993 1992 1991
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss).......... $ 690 $ 4,915 $ 8,639 $(40,516) $ 14,291
Adjustments to reconcile
net income (loss) to net
cash provided by (used in)
operating activities:
Depreciation and
amortization.............. 4,862 5,661 10,766 9,159 11,438
Provision for losses on
accounts receivable....... 991 975 2,202 4,359 1,667
Provision for deferred
income taxes.............. (970) 3,560 4,311 (13,925) (4,219)
Earnings less than (in
excess of) cash
distributions from joint
ventures and affiliated
companies................. 109 (2,262) (3,690) (1,539) 876
Loss on sale of investment. -- -- 929 -- --
Increase (decrease) in
provision for
restructuring and disposal
of businesses, net of
cash...................... -- (4,147) (6,426) 52,289 --
Unusual items.............. -- -- (50) (6,300) --
Changes in operating assets
and liabilities related to
operating activities, net
of dispositions:
Contract receivables...... 15,761 (79) (15,263) (23,017) (24,091)
Prepaid expenses and other
current assets........... 2,678 (6,753) 2,655 (1,558) (4,936)
Other assets.............. (316) 263 (257) 1,532 (16,452)
Accounts payable and
accrued expenses......... (14,703) (12,002) (8,622) 31,222 3,496
Income taxes payable...... (180) 326 6 (3,522) 4,400
Deferred revenue.......... 1,575 (3,212) (9,251) 13,898 2,623
Other liabilities......... (1,195) (6,805) (2,505) (4,409) (4,835)
-------- -------- -------- -------- --------
Net Cash Provided by (Used
in) Operating Activities.. 9,302 (19,560) (16,556) 17,673 (15,742)
-------- -------- -------- -------- --------
INVESTING ACTIVITIES
Sales of subsidiaries and
affiliates................ -- -- 35,695 3,965 --
Investments in subsidiaries
and affiliates, net of
cash...................... (2,293) 5,699 (1,146) (2,515) (21,365)
Purchases of fixed assets,
net....................... (739) (2,786) (4,638) (3,644) (5,629)
Other investing activities. -- 437 387 258 (502)
-------- -------- -------- -------- --------
Net Cash Provided by (Used
in) Investing Activities.. (3,032) 3,350 30,298 (1,936) (27,496)
-------- -------- -------- -------- --------
FINANCING ACTIVITIES
Proceeds from borrowings... 10,000 34,338 34,357 35,108 78,137
Principal payments......... (1,081) (9,380) (42,965) (58,925) (57,384)
Proceeds from (used in)
common stock transactions. (2,382) 134 130 (7,425) (5,410)
Proceeds from sales of
redeemable preferred
stocks.................... -- -- -- 19,500 23,470
Proceeds from sales of
Series 1 Junior
Convertible Preferred..... -- -- -- -- 6,900
Redemption of redeemable
Preferred Stock........... -- -- (799) (800) (799)
Preferred stock dividends.. (2,513) (1,363) (3,876) (3,283) (804)
-------- -------- -------- -------- --------
Net Cash Provided by (Used
in) Financing Activities.. 4,024 23,729 (13,153) (15,825) 44,110
-------- -------- -------- -------- --------
Effect of Exchange Rate
Changes on Cash........... (200) 279 (660) (781) (260)
-------- -------- -------- -------- --------
Increase (Decrease) in Cash
and Cash Equivalents...... 10,094 7,798 (71) (869) 612
Cash and Cash Equivalents
at Beginning of Period.... 8,445 8,516 8,516 9,385 8,773
-------- -------- -------- -------- --------
Cash and Cash Equivalents
at End of Period.......... $ 18,539 $ 16,314 $ 8,445 $ 8,516 $ 9,385
======== ======== ======== ======== ========
SUPPLEMENTAL INFORMATION:
Cash payments for interest. $ 6,418 $ 4,187 $ 9,447 $ 12,313 $ 10,805
Cash payments (refunds) for
income taxes.............. (123) (229) (416) 7,219 7,120
Increase (decrease) of ESOP
guaranteed bank loan...... (1,667) (1,667) (3,333) 520 3,384
Common stock issued to
retirement plan........... -- -- -- 5,287 --
</TABLE>

See notes to consolidated financial statements.

F-6
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(INFORMATION RELATING TO THE SIX MONTHS ENDED AUGUST 31, 1993 AND 1992 IS
UNAUDITED)

NOTE A--ORGANIZATION

ICF Kaiser International, Inc., formerly known as ICF International, Inc.
("ICF Kaiser" or the "Company"), was formed on October 19, 1987, as the holding
company for ICF Incorporated and the family of companies developed around ICF
Incorporated since its inception (1969). These companies provide consulting,
engineering, and program and construction management services primarily to the
environmental, infrastructure, industrial, and energy markets both in the
United States and abroad.

NOTE B--SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation: The consolidated financial statements include
all majority-owned subsidiaries of ICF Kaiser. Investments in joint ventures
and affiliated companies are accounted for using the equity method. All
significant intercompany accounts and transactions have been eliminated. As
discussed in Note C, the consolidated financial statements reflect a provision
related to the restructuring and disposal of certain businesses. The disposal
of businesses under the restructuring program was completed in fiscal 1993. At
February 29, 1992, the net current assets of the businesses discontinued under
the restructuring plan are separately reflected as a component of current
assets and the estimated net realizable value of the non-current assets of
these businesses, net of a provision for future operating losses and other
restructuring provisions, is reflected as a component of other long-term
assets. The costs of restructuring and disposal of businesses include the net
of revenue and operating expenses of the discontinued businesses and estimated
future losses of such businesses.

Interim Financial Information: The financial information presented as of
August 31, 1993 and for the six-month periods ended August 31, 1993 and 1992 is
unaudited but has been prepared in accordance with generally accepted
accounting principles for interim financial information. In the opinion of
management, all adjustments considered necessary for a fair presentation have
been included.

Shareholders' Equity: On June 27, 1992, the shareholders adopted amendments
to ICF Kaiser's Certificate of Incorporation which reclassified all of the
Class B Common Stock authorized, issued, and outstanding at that time into
shares of Class A Common Stock, thereby placing all of ICF Kaiser's common
stock into a single class, which was renamed "Common Stock". The accompanying
financial statements reflect the combination of the 7,670,529 shares of Class B
Common Stock issued and outstanding on June 27, 1992 into Class A Common Stock
as if the reclassification and renaming had occurred at the beginning of the
periods presented. There were 9,925,811 shares of Class A and 8,344,841 shares
of Class B issued and outstanding at February 29, 1992. Following
implementation of these amendments, the then-outstanding shares of Series 3
Junior Convertible Preferred Stock automatically converted into 2,799,523
shares of ICF Kaiser Common Stock.

Revenue Recognition: Revenue is recorded on cost-type contracts as costs are
incurred. Revenue on time-and-materials contracts is recognized to the extent
of billable rates times hours delivered plus materials expense incurred. Long-
term fixed-price contracts generally are accounted for under percentage-of-
completion methods, and revenue includes a proportion of the earnings expected
to be realized in the ratio that costs incurred bear to estimated total costs.

Foreign Currency Translation: Results of operations for foreign entities are
translated using the average exchange rates during the period. Assets and
liabilities are translated to U. S. dollars using the exchange rate in effect
at the balance sheet date. Resulting translation adjustments are reflected in
shareholders' equity as cumulative translation adjustment.

F-7
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION RELATING TO THE SIX MONTHS ENDED AUGUST 31, 1993 AND 1992 IS
UNAUDITED)
Cash and Cash Equivalents: ICF Kaiser considers all highly liquid financial
instruments purchased with maturities of three months or less to be cash
equivalents. At August 31, 1993 and February 28, 1993, other current assets
include $3,698,000 and $4,606,000, respectively of restricted cash and short-
term investments which primarily supports a letter of credit for one of ICF
Kaiser's subsidiaries.

Statement of Cash Flows: The consolidated statements of cash flows are
prepared on a basis which separately reflects transactions related to the
discontinued businesses. Included in adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities are non-cash expenses of
the continuing businesses and the non-cash activity related to the provision
for restructuring and disposal of businesses.

Fixed Assets: Furniture and equipment are carried at cost, or assigned value
if acquired through a purchase of a business, and are depreciated using the
straight-line method over their estimated useful lives ranging from three to
ten years. Leasehold improvements are carried at cost and are amortized using
the straight-line method over the remaining lease term.

Goodwill: Goodwill represents the excess of cost over the fair value of the
net assets of acquired businesses and is amortized using the straight-line
method over periods ranging from five to forty years. Accumulated amortization
was $8,159,000, $7,147,000 and $5,584,000 at August 31, 1993, February 28, 1993
and February 29, 1992, respectively.

Income Taxes: ICF Kaiser uses the accrual method for income tax reporting
purposes. Deferred income taxes are provided using the liability method on
temporary differences between financial reporting and income tax reporting,
which primarily relate to reserves for adjustments and allowances. If
necessary, management records a valuation allowance for deferred tax assets
that may not be realizable. ICF Kaiser adopted Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes, ("SFAS No. 109"), at
the beginning of fiscal 1992 (see Note J).

Post-Employment Benefits: Effective March 1, 1993, ICF Kaiser adopted
Statement of Financial Accounting Standards No. 106, Employers' Accounting for
Postretirement Benefits Other Than Pensions ("SFAS No. 106"). Prior to the
adoption of SFAS No. 106, ICF Kaiser had been recognizing the cost of
postretirement benefits when paid. ICF Kaiser provides certain benefits,
primarily health insurance, to a limited group of retirees (and their spouses)
who joined ICF Kaiser through an acquisition. The cost of the postretirement
benefits is funded when paid and limited to a fixed amount per retiree or
spouse per month. All service cost related to these benefits has been included
in the Company's transition obligation.

The Company has elected the prospective transition method of recognizing
these postretirement benefit expenses. Under this method, the Company's $14.2
million accumulated postretirement benefit obligation at March 1, 1993 is being
amortized over 14.5 years, the average remaining life expectancy of the
retirees and their spouses. A discount rate of 7% was used to determine the
accumulated postretirement benefit obligation. The Company's ongoing expense
under SFAS No. 106 includes the interest component and the amortization of the
transition obligation, which was approximately $950,000 for the six months
ended August 31, 1993. Under the previous method of accounting for
postretirement benefits, $1,695,000, $1,418,000 and $1,618,000 were included in
expense in fiscal years 1993, 1992 and 1991, respectively. Approximately
$847,500 was included in expense for the six months ended August 31, 1992.

Net Income (Loss) Per Common Share: Net income (loss) per common share is
computed using net income available to common shareholders, as adjusted under
the modified treasury stock method, and the weighted average number of common
stock and common stock equivalents outstanding during the periods presented.
Common stock equivalents include stock options and warrants and the potential
conversion of convertible preferred stock. For the six months ended August 31,
1993, and fiscal 1993 and 1992, the

F-8
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION RELATING TO THE SIX MONTHS ENDED AUGUST 31, 1993 AND 1992 IS
UNAUDITED)
adjustments that would be required by the modified treasury stock method to net
income (loss) available for common shareholders and to weighted average number
of shares were anti-dilutive and therefore excluded from earnings per share
computations. In computing earnings per share, net income (loss) available to
common shareholders was adjusted for the amortization of discounts on senior
preferred stock. Primary earnings per share was based on 21,272,000,
19,085,000, and 19,289,000 shares in fiscal years 1993, 1992, and 1991,
respectively, and fully diluted earnings per share was based on 21,272,000,
19,085,000, and 20,308,000 shares in fiscal years 1993, 1992, and 1991,
respectively. Primary and fully diluted earnings per share were based on
20,907,000 and 21,251,000 shares for the six months ended August 31, 1993 and
1992, respectively.

Concentrations of Credit Risk: The Company maintains cash balances primarily
in overnight Eurodollar deposits and bank certificates of deposit. Short-term
investments are U.S. Government securities having maturities of less than one
year. ICF Kaiser grants uncollateralized credit to its customers. A large
portion of ICF Kaiser's receivables are from the U.S. government (See Note E).
In order to mitigate its credit risk to commercial customers, when practical,
ICF Kaiser obtains advance funding of costs for industrial construction work.

Reclassification: Certain reclassifications have been made to the fiscal 1993
financial statements to conform to the presentation used in fiscal 1994
financial statements, and to fiscal 1992 and 1991 financial statements to
conform to the presentation used in fiscal 1993.

NOTE C--RESTRUCTURING AND DISPOSAL OF BUSINESSES

In fiscal 1993, ICF Kaiser completed its disposal of non-core businesses
under a restructuring plan which began in the first quarter of fiscal 1992. The
plan provided for the sale, liquidation, or other disposition of certain
businesses outside of the Company's core businesses, and the consolidation of
certain operations within the core businesses. The core businesses primarily
provide a broad range of consulting, engineering, and program and construction
management services in the environmental, infrastructure, industrial, and
energy markets. The Company's non-core businesses disposed of under the plan
included ICF Kaiser subsidiaries providing pharmaceutical industry research,
health communications and consulting services, geophysical/seismic data
processing services, and systems integration services. The original plan was
modified in fiscal 1993 to provide for the sale of a health consulting business
determined to be outside the Company's core businesses and to revise estimates
of potential liabilities related to disposed businesses. The modification to
the restructuring plan resulted in a net $1,336,000 charge in fiscal 1993 since
the gain on the sale of the health consulting business was offset by revisions
to the estimates of remaining potential liabilities relating to discontinued
businesses.

The charge for the cost of restructuring and disposal of businesses recorded
in fiscal 1992 was $73.4 million ($52.4 million after tax), which provided for
operating losses of discontinued businesses and losses on the disposal of those
businesses included in the plan at that time, severance and other restructuring
costs. In fiscal 1992, the Company allocated interest expense related to
discontinued businesses on the accompanying statement of operations based on
the imputed reduction in interest cost from the assumed sale of the
discontinued businesses.

NOTE D--ACQUISITIONS

All of the businesses acquired by the Company during the three year period
ended February 28, 1993 were treated as purchases for financial reporting
purposes. Accordingly, the consolidated statements of

F-9
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION RELATING TO THE SIX MONTHS ENDED AUGUST 31, 1993 AND 1992 IS
UNAUDITED)
operations include the operations of the acquired companies from the date of
acquisition. The excess of the purchase price over the fair value of the assets
and liabilities for these transactions is reflected as goodwill in the
accompanying balance sheet.

In July 1990, ICF Kaiser acquired all of the outstanding stock of Kaiser
Engineers Australia Pty. Ltd. ("KEA") that it did not already own for $10.5
million paid in the form of 617,500 shares of ICF Kaiser Common Stock. Prior to
this purchase, the Company had a 50 percent interest in KEA. In June 1991, in
accordance with the provisions of the agreement, ICF Kaiser repurchased these
shares for $10.5 million. The Company's proportionate share of the fair value
of the assets acquired and liabilities assumed was $12,372,000 and $7,833,000,
respectively.

NOTE E--CONTRACT RECEIVABLES

<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED FEBRUARY 28,
AUGUST 31, -----------------------
1993 1993 1992
---------------- ----------- -----------
(UNAUDITED) (IN THOUSANDS)
<S> <C> <C> <C>
U.S. government agencies:
Currently due.................... $ 27,627 $ 28,563 $ 30,374
Retention........................ 2,277 2,182 2,383
Unbilled......................... 27,930 28,285 26,864
-------- ----------- -----------
57,834 59,030 59,621
-------- ----------- -----------
Commercial clients and state and
municipal governments:
Currently due.................... 65,360 73,539 78,802
Retention........................ 6,899 9,590 6,834
Unbilled......................... 22,932 27,499 16,520
-------- ----------- -----------
95,191 110,628 102,156
-------- ----------- -----------
153,025 169,658 161,777
Less allowances for uncollectible
receivables and other adjustments. 9,096 8,977 9,361
-------- ----------- -----------
$143,929 $ 160,681 $ 152,416
======== =========== ===========
</TABLE>

U.S. government receivables arise from U.S. government prime contracts and
subcontracts. Unbilled receivables result from revenues which have been earned
but were not billed as of the end of the year. The unbilled receivables can be
invoiced at contractually defined intervals upon completion of cost-type
contracts for government agencies, completion of federal government overhead
audits, upon attaining certain milestones under fixed-price contracts, or upon
completion of construction on certain projects. Generally, retention is not
expected to be realized within one year; consistent with industry practice,
these receivables are classified as current. Management anticipates that the
remaining unbilled receivables will be substantially billed and collected in
one year.

F-10
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION RELATING TO THE SIX MONTHS ENDED AUGUST 31, 1993 AND 1992 IS
UNAUDITED)

NOTE F--JOINT VENTURES AND AFFILIATED COMPANIES

ICF Kaiser has ownership interests ranging from 20% to 50% in certain joint
ventures and affiliated companies that are engaged in the same general business
as the Company. ICF Kaiser's investments in and advances to these joint
ventures and affiliated companies is summarized as follows (in thousands):

<TABLE>
<CAPTION>
OWNERSHIP
INTEREST AT
AUGUST 31, AUGUST 31, FEBRUARY 28, FEBRUARY 29,
1993 1993 1993 1992
----------- ----------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Gary PCI Ltd., LP............ 50% $ 2,704 $ -- $ --
LIFAC North America.......... 50% 1,914 1,914 1,212
KJK Joint Venture............ 33% 2,487 1,735 (744)
American Transit Consultants,
Inc......................... 33% (1,915) (883) (291)
Acer Group Limited........... -- -- -- 17,846
Other........................ 20% to 50% 1,058 1,425 1,907
------- ------ -------
6,248 4,191 19,930
Less amounts classified
within current assets....... 1,370 1,984 442
------- ------ -------
$ 4,878 $2,207 $19,488
======= ====== =======
</TABLE>

In February 1993, ICF Kaiser sold its investment in Acer Group Limited for
$17,250,000 resulting in a $929,000 pretax loss.

Combined summarized unaudited financial information of all of ICF Kaiser's
joint ventures and affiliated companies is as follows (in thousands):

<TABLE>
<CAPTION>
FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
1993 1992 1991
------------ ------------ ------------
<S> <C> <C> <C>
Current assets........................... $ 22,466 $128,011 $126,335
Non-current assets....................... 20,761 32,788 45,245
Current liabilities...................... 20,630 105,271 101,415
Non-current liabilities.................. -- 28,323 28,287
Gross revenue............................ 226,944 442,142 336,228
Net income............................... 17,471 16,940 25,183
</TABLE>

F-11
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION RELATING TO THE SIX MONTHS ENDED AUGUST 31, 1993 AND 1992 IS
UNAUDITED)

NOTE G--INDEBTEDNESS

ICF Kaiser's indebtedness is as follows (in thousands):
<TABLE>
<CAPTION>
AUGUST 31, FEBRUARY 28, FEBRUARY 29,
1993 1993 1992
----------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C>
Revolving credit facility, average
interest rate of 6.1% for the six
months ended August 31, 1993, 6.8% in
fiscal 1993 and 8.7% in fiscal 1992.... $45,000 $35,000 $43,099
ESOP guaranteed notes, average interest
rate of 6.9% for the six months ended
August 31, 1993, 7.2% in fiscal 1993
and 8.8% in fiscal 1992................ 3,333 5,000 8,333
Notes payable to current and former
shareholders, principal and interest at
varying rates and installments through
February 1996.......................... 467 748 1,958
Other notes, principal and interest at
varying rates and installments through
February 2010.......................... 2,843 3,643 2,942
------- ------- -------
Total................................. 51,643 44,391 56,332
Less current maturities................. 4,916 5,276 7,187
------- ------- -------
Long-term debt........................ $46,727 $39,115 $49,145
======= ======= =======
</TABLE>

Scheduled maturities of long-term debt outstanding at February 28, 1993, are
as follows: $5,276,000 in fiscal 1994, $37,821,000 in fiscal 1995, $663,000 in
fiscal 1996, $40,000 in fiscal 1997, $32,000 in fiscal 1998 and $559,000
thereafter.

At August 31, 1993, ICF Kaiser's principal working capital financing was a
$107 million total revolving credit line provided by a consortium of banks. The
same group of banks also provide ICF Kaiser with an Employee Stock Ownership
Plan ("ESOP") credit facility (together, the "Credit Facility") of which $3.3
million is outstanding at August 31, 1993 and $5 million is outstanding at
February 28, 1993. The margin on the interest payable under the Credit Facility
decreases in future periods upon the achievement of certain levels of tangible
net worth. The Company and certain of its subsidiaries, which are guarantors of
the Credit Facility, granted the consortium of banks a security interest in
accounts receivable and certain other general intangibles and pledged the
capital stock of certain subsidiaries. The Credit Facility restricts the
payment of cash dividends and requires the maintenance of specified financial
ratios, levels of working capital, and levels of tangible net worth. At August
31, 1993 and February 28, 1993, ICF Kaiser had $6 million and $23 million,
respectively of available credit under the Credit Facility.

On July 14, 1993, ICF Kaiser and the consortium of banks which provides its
credit facility agreed to extend the expiration date for the credit facility
until September 30, 1994, on terms similar to those under the existing
agreement. In conjunction with and conditioned upon the offering of the Senior
Subordinated Notes described below, ICF Kaiser has obtained commitments to
replace its existing facility with a $60 million credit facility to be provided
by the Company's lead bank and a consortium of other banks on terms similar to
those under the existing facility. The proposed new facility will have
covenants no less favorable than those under the existing credit facility. This
replacement credit facility would expire on October 31, 1996.

On October 28, 1993 the Company filed a registration statement with the
Securities and Exchange Commission ("SEC") for the issuance of 125,000 units (a
"Unit"). Each Unit consists of $1,000 principal amount of the Company's 12%
Senior Subordinated Notes due 2003 (the "Notes") and 4.8 warrants (the
"Warrants") each to purchase one share of the Company's Common Stock. A total
of $900,000 of the net proceeds has been allocated to the Warrants. On December
23, 1993, the Company filed a separate registration statement with the SEC
registering 600,000 Shares of ICF Kaiser Common Stock issuable upon

F-12
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION RELATING TO THE SIX MONTHS ENDED AUGUST 31, 1993 AND 1992 IS
UNAUDITED)
exercise of the Warrants. Interest on the Notes will be payable semiannually,
and they will not be redeemable for five years from issuance. After five years,
the Notes will be redeemable at any time at the option of the Company, in whole
or in part. In connection with the issuance of the Units, the Company will
agree to certain business and financial covenants. The proceeds of the Units
will be used to retire the Company's 13.5% Senior Subordinated Notes ("the
"13.5% Notes") described in Note H below, to repurchase warrants issued in
connection with 13.5% Notes, to repurchase the Company's Series 1 Junior
Convertible Preferred Stock, to repurchase the Company's Series 2C Senior
Preferred Stock and the Series 2C Warrants issued in connection therewith, to
repay the funded debt under the existing credit facility, and to repay, on
behalf of the ESOP, the outstanding balance under a related ESOP credit
facility. The balance of the net proceeds will be used for general corporate
purposes. Following issuance of the Units and repurchase of the Series 1 Junior
Convertible Preferred Stock, the Company's equity will increase by $2.0
million. However, the Company's earnings per share will be reduced for the
effect of the premium to be paid to the holders of the 13.5% Notes and other
costs related to this refinancing, the after-tax effect of which will be
treated as an extraordinary item. A premium also will be paid to the holders of
the Series 2C Senior Preferred Stock and Series 2C Warrants in connection with
the repurchase thereof; this premium will not be a direct reduction to net
income, but will reduce the Company's earnings per share. The net effect of
these payments could be a loss in the quarter the transaction is recorded.

At February 28, 1993, the Company's ESOP owned 2,656,084 shares of ICF Kaiser
Common Stock, a percentage of which secure the ESOP portion of the Credit
Facility. These shares were purchased from the proceeds of Company
contributions and the ESOP portion of the Credit Facility. ICF Kaiser has
guaranteed the ESOP portion of the Credit Facility and is obligated to
contribute sufficient cash to the ESOP trust to repay this loan. As such, the
ESOP loan is reflected in the Company's long-term debt with a corresponding
reduction in equity.

NOTE H--SUBORDINATED DEBT

ICF Kaiser has outstanding $30,000,000 of 13.5% senior subordinated notes
("Subordinated Notes") and detachable common stock purchase warrants expiring
May 15, 1999 for the purchase of 1,801,681 shares of ICF Kaiser Common Stock.
The Subordinated Notes require interest payments semi-annually at 13.5% of the
outstanding balance and five annual principal payments of $4.5 million
beginning May 15, 1994, with the remaining $7.5 million principal due May 15,
1999. The initial $4.5 million principal payment is classified as current
portion of long-term liabilities at August 31, 1993. The obligations of ICF
Kaiser are guaranteed by certain subsidiaries of ICF Kaiser ("Guarantors").
These obligations of the Company and the Guarantors are subordinate to their
obligations under the Credit Facility. The warrants sold in connection with the
Subordinated Notes are exercisable at any time for shares of ICF Kaiser Common
Stock at $6.91 per share. Additional warrants may be issued under certain anti-
dilution provisions.

In connection with the issuance of the 13.5% Notes, ICF Kaiser and the
Guarantors agreed to certain business and financial covenants including:
restrictions on indebtedness, leases, dividends, and certain types of
investments and asset sales; and the maintenance of certain financial ratios,
including adjusted net worth at increasing levels over time. The 13.5% Notes
may not be prepaid at the Company's option prior to May 15, 1996. Subsequent to
that date, the Company may prepay the 13.5% Notes at a premium. Under certain
circumstances, which include certain members of senior management decreasing
their ownership of the Company's common stock or becoming less active in
managing the Company, the 13.5% Notes are required to be prepaid with a
substantial premium. ICF Kaiser's President and Chief Operating Officer
resigned on April 26, 1993, which potentially creates such a circumstance. The
holders of the 13.5% Notes have temporarily waived the consideration of a
prepayment event. Such waiver expires on January 14, 1994. It is the Company's
intention, and the holders have agreed, to retire the 13.5% Notes using the
proceeds from the issuance of the Notes discussed in Note G above.

F-13
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION RELATING TO THE SIX MONTHS ENDED AUGUST 31, 1993 AND 1992 IS
UNAUDITED)
NOTE I--CONTINGENCIES

As a normal incident of the nature of business in which the Company is
engaged, various claims or charges are asserted and litigation commenced
against the Company arising from or related to properties, injuries to persons
and breaches of contract, as well as claims related to acquisitions and
dispositions. Claimed amounts may not bear any reasonable relationship to the
merits of the claim or to a final court award. In the opinion of management, an
adequate reserve has been provided for final judgments, if any, in excess of
insurance coverage, which might be rendered against the Company in such
litigation.

The Company may from time to time be, either individually or in conjunction
with other government contractors operating in similar types of businesses,
involved in U.S. government investigations for alleged violations of
procurement or other federal laws and regulations. The Company currently is the
subject of a number of U.S. government investigations and is cooperating with
the responsible government agencies involved. No charges are presently known to
have been filed against the Company by these agencies. The Company is unable to
predict the outcome of the investigations in which it is currently involved.
Management does not believe that there will be any material adverse effect on
the Company's financial position as a result of these investigations.

The Company has a substantial number of U.S. government contracts, the costs
of which are subject to audit by the U.S. government. In one such audit, the
government has asserted that certain costs claimed as reimbursable under
government contracts were not allocated in accordance with government cost
accounting standards. Management believes that the potential effect of
disallowed costs, if any, for the periods currently under audit and for periods
not yet audited has been adequately provided for and will not have a material
adverse effect on the Company's financial position.

ICF Kaiser had outstanding letters of credit in the amount of $26.7 million
and $32.6 million at August 31, 1993, and February 28, 1993, respectively,
principally in support of performance guarantees under certain contracts. ICF
Kaiser is also the guarantor of several leasing arrangements involving U.S.
government agencies and a former ICF Kaiser subsidiary. As of August 31, 1993,
these leases totaled $6.7 million with expiration dates running through April
1997.

F-14
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION RELATING TO THE SIX MONTHS ENDED AUGUST 31, 1993 AND 1992 IS
UNAUDITED)
NOTE J--INCOME TAXES

The components of earnings (loss) before income taxes and the related
provision (benefit) for income taxes is as follows (in thousands):

<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED FEBRUARY 28,
AUGUST 31, -------------------------
1993 1993 1992 1991
---------------- ------- -------- -------
(UNAUDITED)
<S> <C> <C> <C> <C>
Earnings (loss) before income tax-
es:
Domestic......................... $2,049 $13,362 $(60,058) $15,799
Foreign.......................... (612) 1,532 5,748 8,219
------ ------- -------- -------
$1,437 $14,894 $(54,310) $24,018
====== ======= ======== =======
Provision (benefit) for income
taxes:
Federal:
Current......................... $1,501 $ 1,074 $ (2,041) $ 7,952
Deferred........................ (801) 3,517 (11,261) (3,307)
------ ------- -------- -------
700 4,591 (13,302) 4,645
------ ------- -------- -------
State:
Current......................... 316 420 (189) 1,921
Deferred........................ (169) 794 (2,664) (912)
------ ------- -------- -------
147 1,214 (2,853) 1,009
------ ------- -------- -------
Foreign:
Current......................... (100) 450 2,361 4,073
------ ------- -------- -------
$ 747 $ 6,255 $(13,794) $ 9,727
====== ======= ======== =======
</TABLE>

The tax effect of the principal significant temporary differences and
carryforwards that give rise to the Company's deferred tax asset is as follows
(in thousands):

<TABLE>
<CAPTION>
AUGUST 31, FEBRUARY 28, FEBRUARY 29,
1993 1993 1992
----------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C>
Bad debt reserve....................... $ 4,507 $ 4,141 $ 3,149
Vacation accrual....................... 1,993 2,991 2,995
Contract loss reserve.................. 812 863 1,536
Insurance reserves..................... 1,805 1,368 988
Incentive compensation accrual......... 797 1,047 821
Tax operating loss carryforwards....... -- -- 3,185
Tax credit carryforwards............... 1,247 1,247 1,400
Other.................................. 2,362 896 468
------- ------- -------
Total deferred tax benefit............. $13,523 $12,553 $14,542
======= ======= =======
</TABLE>

F-15
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION RELATING TO THE SIX MONTHS ENDED AUGUST 31, 1993 AND 1992 IS
UNAUDITED)
The effective income tax (benefit) rate varied from the federal statutory
income tax rate over the last three years because of the following differences:

<TABLE>
<CAPTION>
YEAR ENDED
SIX MONTHS ENDED FEBRUARY 28,
AUGUST 31, ------------------
1993 1993 1992 1991
---------------- ---- ----- ----
(UNAUDITED)
<S> <C> <C> <C> <C>
Statutory tax rate (benefit).............. 34.0% 34.0% (34.0%) 34.0%
---- ---- ----- ----
Changes in tax rate (benefit) from:
Differences between book and tax basis
of businesses sold..................... -- (3.4) 8.6 --
State income taxes...................... 5.5 5.4 (1.6) 2.8
Goodwill amortization................... 13.2 5.3 2.6 5.0
Foreign taxes........................... (1.2) (1.4) 0.3 (1.5)
Other................................... 0.5 2.1 (1.3) 0.2
---- ---- ----- ----
18.0 8.0 8.6 6.5
---- ---- ----- ----
52.0% 42.0% (25.4%) 40.5%
==== ==== ===== ====
</TABLE>

In fiscal 1993, ICF Kaiser reached a favorable settlement with the Internal
Revenue Service ("IRS") on the examination of ICF Kaiser Engineers Group,
Inc's. ("KEGI") income tax returns for 1977-1986. The IRS had previously
completed its review of KEGI's 1987 and 1988 income tax returns without
adjustment. As such, all years through 1988 are closed. In fiscal 1992, a
foreign tax audit of a KEGI-controlled foreign corporation was resolved
favorably for KEGI. These resolutions allowed the Company to adjust a portion
of the amounts previously provided for in connection with the acquisition of
KEGI and its subsidiaries. The resolution of these pre-acquisition
contingencies has been reflected in unusual items in the accompanying
statements of operations for fiscal 1993 and 1992 (see Note Q). Also, in fiscal
1993 ICF Kaiser reached an agreement with a former subsidiary to retain their
net operating losses, which favorably reduced the effect of differences between
the book and tax basis of the Company.

Carryforwards of net operating losses, business credits, capital losses and
foreign tax credits of acquired companies related to periods prior to their
acquisition are greatly limited under Section 382 of the Internal Revenue Code.
These carryforwards, to the extent utilized in the future, if any, will be
treated as a reduction of goodwill.

As discussed in Note B, ICF Kaiser adopted SFAS No. 109 effective March 1,
1991. The impact to ICF Kaiser of adopting SFAS No. 109 in fiscal 1992 was to
increase the deferred tax benefit by $6.5 million. There was no cumulative
impact resulting from the adoption of SFAS No. 109 as of the beginning of
fiscal 1992, since all of the items giving rise to the additional benefit
occurred in fiscal 1992, namely the costs associated with the restructuring.

F-16
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION RELATING TO THE SIX MONTHS ENDED AUGUST 31, 1993 AND 1992 IS
UNAUDITED)
NOTE K--LEASES

Future minimum payments on noncancelable operating leases for office space,
and on other noncancelable operating leases with initial or remaining terms in
excess of one year, were as follows on February 28, 1993 (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED OPERATING
FEBRUARY 28 LEASES
----------- ---------
<S> <C>
1994............................................................ $ 27,535
1995............................................................ 24,146
1996............................................................ 18,738
1997............................................................ 15,816
1998............................................................ 12,674
Thereafter...................................................... 48,285
--------
$147,194
========
</TABLE>

The total rental expense for all operating leases was $31,567,000,
$32,582,000 and $28,213,000 in fiscal years 1993, 1992 and 1991, respectively,
and $14,322,000, and $15,784,000 for the six months ended August 31, 1993 and
1992, respectively. Sublease rental income was $1,435,000, $1,079,000 and
$1,243,000 in fiscal years 1993, 1992 and 1991, respectively, and $1,087,000
and $361,000 for the six months ended August 31, 1993 and 1992, respectively.
Minimum future sublease rentals to be received under noncancelable subleases
during fiscal 1994 are approximately $2,276,000.

F-17
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION RELATING TO THE SIX MONTHS ENDED AUGUST 31, 1993 AND 1992 IS
UNAUDITED)
NOTE L--PREFERRED STOCK

Preferred Stock of the Company is as follows (in thousands):

<TABLE>
<CAPTION>
AUGUST 31, FEBRUARY 28, FEBRUARY 29,
1993 1993 1992
----------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C>
Redeemable Preferred Stock (of
Subsidiary) par value $0.01 per
share; liquidation value
$21,280,000; authorized 3,500,000
shares; issued and outstanding--
1,400,000, 1,400,000 and 2,100,000
shares............................. $ 1,599 $ 1,599 $ 2,398
------- ------- -------
Series 2C Senior Preferred Stock,
par value $0.01 per share;
liquidation value $25,000,000; 250
shares designated, issued and
outstanding........................ 25,000 25,000 25,000
Less unamortized discount, warrant
value, and
issue costs........................ (805) (984) (1,342)
------- ------- -------
24,195 24,016 23,658
------- ------- -------
Series 2D Senior Preferred Stock,
par value $0.01 per share;
liquidation value $20,000,000; 200
shares designated, issued and
outstanding........................ 20,000 20,000 20,000
Less unamortized discount, warrant
value, and
issue costs........................ (689) (791) (895)
------- ------- -------
19,311 19,209 19,105
------- ------- -------
Redeemable Preferred Stock.......... $45,105 $44,824 $45,161
======= ======= =======
Series 1 Junior Convertible
Preferred Stock, par value $0.01
per share; liquidation value
$20,000,000; designated 200 shares;
issued and outstanding--69 shares.. $ 6,900 $ 6,900 $ 6,900
Series 4 Junior Preferred Stock, par
value $0.01 per share; liquidation
value $500,000; designated 500,000;
no shares outstanding (see Note M). -- -- --
------- ------- -------
Preferred Stock..................... $ 6,900 $ 6,900 $ 6,900
======= ======= =======
</TABLE>

Redeemable Preferred Stock (of Subsidiary): In connection with the
acquisition of KEGI, 3,500,000 shares of KEGI Series 1 Redeemable Preferred
Stock were issued to the KEGI Employee Stock Plan Trust in partial
consideration for ICF Kaiser's purchase of all of the outstanding shares of
Series A and Series P Preferred Stock of KEGI. Dividends on these shares are
$0.0685 per share per annum noncumulative, payable annually. 700,000 shares
were redeemed during each of the fiscal years 1993, 1992 and 1991. Two
additional redemptions are scheduled for September 30, 1993 and 1994. These
shares are callable by ICF Kaiser at any time through September 1994, at a
price of $1.0817 per share as of February 28, 1993, and thereafter at a price
adjusted to maintain a specified net present value.

Senior Preferred Stock: In fiscal 1992, ICF Kaiser issued 250 shares of
Series 2C Senior Preferred Stock (the "Series 2C Preferred Stock") with five-
year detachable warrants expiring in December 1995 (the "Series 2C Warrants")
in exchange for 250 shares of Series 2A Senior Preferred Stock with five-year
detachable warrants. The Series 2C Warrants may be exercised for 2,976,190
shares of ICF Kaiser Common Stock at an exercise price of $8.40 per share.

F-18
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION RELATING TO THE SIX MONTHS ENDED AUGUST 31, 1993 AND 1992 IS
UNAUDITED)
In conjunction with the issuance of the Series 2C Preferred Stock and Series
2C Warrants, ICF Kaiser also issued 200 shares of Series 2D Senior Preferred
Stock (the "Series 2D Preferred Stock") together with five-year detachable
warrants expiring in January 1997 (the "Series 2D Warrants") for a price of
$20,000,000 (less a discount of $100,000). The Series 2D Warrants may be
exercised for 2,680,952 shares of ICF Kaiser Common Stock at an exercise price
of $8.40 per share. Of the net price of $19,900,000, $400,000 was allocated to
the value of the warrants and $19,500,000 was allocated to the stock.

Dividends on both the Series 2C Preferred Stock and the Series 2D Preferred
Stock are $9,750 per share per annum, cumulative. Each of the shares has a
liquidation preference of $100,000 ($45 million in aggregate). The issues carry
voting rights equal to 2,173,913 and 2,380,952 shares of ICF Kaiser Common
Stock, respectively. The Series 2C Preferred Stock and the Series 2D Preferred
Stock may be redeemed at ICF Kaiser's option at 106.25% of the original price
and are subject to mandatory redemption at liquidation value on December 20,
1995, and January 13, 1997, respectively. Additional warrants may be issued
under certain anti-dilution provisions contained in the related agreements. It
is the Company's intention, and the holders have agreed, to repurchase the
Series 2C Preferred Stock and the Series 2C Warrants using a portion of the
proceeds from the issuance of the Notes described in Note G above.

Series 1 Junior Convertible Preferred Stock: In July 1990, the Board
designated 200 shares of preferred stock as Series 1 Junior Convertible
Preferred Stock. Dividends on these shares are $9,250 per share per annum,
cumulative, payable quarterly. Each of the shares has a liquidation preference
of $100,000 ($20,000,000 in the aggregate, assuming all of the shares are
issued); is convertible into 6,667 shares of ICF Kaiser Common Stock; and is
entitled to one vote per share of ICF Kaiser Common Stock into which it is
convertible. In addition, upon their issuance these shares were callable by the
Company at a price of $109,250 per share; thereafter, these shares are callable
at a price declining 1 percent per year to $100,000 per share on and after
August 31, 2001. It is the Company's intention, and the holder has agreed, to
repurchase the Series 1 Junior Convertible Preferred Stock using a portion of
the proceeds from the issuance of the Notes described in Note G above.

NOTE M--COMMON STOCK

Notes Receivable Related to Common Stock: Notes receivable related to ICF
Kaiser Common Stock pertain to the issuance of ICF Kaiser Common Stock in
exchange for promissory notes from certain members of senior management in
accordance with their compensation agreements. The notes are secured by shares
of ICF Kaiser Common Stock.

Shareholder Rights Plan: In fiscal 1992, the Board created a Shareholder
Rights Plan ("Rights Plan"), which is designed to provide the Board with the
ability to negotiate with a person or group that might, in the future, make an
unsolicited attempt to acquire control of ICF Kaiser, whether through the
accumulation of shares in the open market or through a tender offer which does
not offer an adequate price. The Rights Plan provides for one Right ("Right")
for each outstanding share of ICF Kaiser Common Stock and each share of ICF
Kaiser Common Stock into which the Series 1 Preferred Stock is convertible.
Each Right entitles the holder to purchase 1/100 of a share of Series 4 Junior
Preferred Stock at a purchase price of $50. The Rights generally may cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Board. The Rights should not interfere with any
merger or other business combination approved by the Board because the Board
may, at its option, at any time prior to the tenth business day following the
acquisition by any person or group of 20% of the shares of ICF Kaiser Common
Stock, redeem the Rights upon payment of the redemption price of $0.01 per
Right. The Rights are not triggered by the

F-19
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION RELATING TO THE SIX MONTHS ENDED AUGUST 31, 1993 AND 1992 IS
UNAUDITED)
acquisition of beneficial ownership of more than 20% of ICF Kaiser Common Stock
by the initial holder of the Series 2C and 2D Preferred Stock. Unless redeemed
earlier by the Board, unexercised Rights expire on January 13, 2002.

Common Stock Issued in Connection with Acquisitions: In fiscal 1992, ICF
Kaiser issued an additional 500,000 shares of ICF Kaiser Common Stock to the
seller of Primark Capital Group Inc., (renamed Health and Sciences Network,
Inc.) to settle ICF Kaiser's obligation to repurchase ICF Kaiser Common Stock
originally issued in the acquisition. ICF Kaiser also issued 123,022 shares and
202,042 options to purchase shares to the former shareholders of Cygna Group,
Inc. in satisfaction of a provision in the agreement under which ICF Kaiser
acquired this company. These transactions were charged to goodwill.

NOTE N--STOCK OPTIONS

The ICF Kaiser Stock Incentive Plan provides for the issuance of options,
stock appreciation rights, restricted shares, and restricted stock units of up
to an aggregate of 6,000,000 shares of ICF Kaiser Common Stock. Awards are made
to employees of ICF Kaiser at the discretion of the Compensation Committee of
the Board. The Plan provides that the option price is not to be less than the
fair market value on the date of grant. In May 1992, the Company cancelled
570,000 options granted to employees at exercise prices of $14.32-$16.23 and
granted an equal number of options to them at an exercise price of $8.25.

Stock option activity under this Plan and other options granted for the last
three years is as follows:

<TABLE>
<CAPTION>
SHARES OPTION PRICE
--------- ---------------
<S> <C> <C>
Balance, March 1, 1990.............................. 1,296,000 $3.46 to $10.00
Granted............................................. 722,000 $9.29 to $14.46
Cancelled........................................... (20,000) $9.10
Expired............................................. (87,000) $6.07 to $12.83
Exercised........................................... (155,000) $3.46 to $ 9.51
---------
Balance, February 28, 1991.......................... 1,756,000 $3.46 to $14.46
Granted............................................. 950,000 $6.07 to $17.00
Cancelled........................................... (134,000) $6.07 to $16.23
Expired............................................. (95,000) $6.07 to $ 9.51
Exercised........................................... (605,000) $4.00 to $ 8.46
---------
Balance, February 29, 1992.......................... 1,872,000 $3.46 to $17.00
Granted............................................. 1,096,000 $5.99 to $ 9.59
Cancelled........................................... (653,000) $3.46 to $16.23
Expired............................................. (339,000) $6.07 to $16.23
Exercised........................................... (30,000) $8.25
---------
Balance, February 28, 1993.......................... 1,946,000 $5.99 to $17.00
Granted............................................. 126,000 $4.93 to $14.70
Cancelled........................................... (3,000) $8.25
Expired............................................. (14,000) $6.07 to $12.83
Exercised........................................... --
---------
Balance, August 31, 1993............................ 2,055,000 $4.93 to $17.00
=========
Exercisable at August 31, 1993...................... 1,358,000 $5.04 to $17.00
=========
</TABLE>

F-20
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION RELATING TO THE SIX MONTHS ENDED AUGUST 31, 1993 AND 1992 IS
UNAUDITED)
NOTE O--EMPLOYEE BENEFIT PLANS

ICF Kaiser and certain of its subsidiaries sponsor several benefit plans
covering substantially all employees who meet minimum length of service
requirements. These plans include: the ICF Kaiser International, Inc.
Retirement Plan ("Retirement Plan"), a defined contribution profit-sharing plan
that provides for contributions by the Company based on a percentage of covered
compensation; the ICF Kaiser International, Inc. Employee Stock Ownership Plan
under which the Company made contributions in the form of cash; and a cash or
deferred compensation arrangement 401(k) plan (the "401(k) Plan") which allowed
employees to defer portions of their salary, subject to certain limitations,
with no additional or matching contribution by the Company. The Company has
contributed 4% of covered compensation to the ESOP. Effective March 1, 1993,
the Company's contribution to the ESOP was changed to 2% of covered
compensation and the Company will begin to match a percentage of eligible
employee contributions to the 401(k) Plan for eligible employees. Total
contributions to the Retirement Plan and the ESOP totaled $10,220,000,
$10,440,000 and $10,973,000 for fiscal 1993, 1992 and 1991, respectively, and
$4,169,000 and $5,865,000 for the six months ended August 31, 1993 and 1992,
respectively.

NOTE P--BUSINESS SEGMENT, MAJOR CUSTOMERS AND FOREIGN OPERATIONS

Business Segment: ICF Kaiser operates predominantly in one industry segment,
in which it provides consulting, environmental, engineering, and other
professional services.

Major Customers: Gross revenue from major customers was as follows (in
thousands):

<TABLE>
<CAPTION>
SIX MONTHS ENDED
AUGUST 31, YEAR ENDED FEBRUARY 28,
----------------------- --------------------------
1993 1992 1993 1992 1991
----------- ----------- -------- -------- --------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
U.S. Department of Energy... $103,005 $103,344 $201,149 $188,196 $120,972
U.S. Environmental Protec-
tion Agency................ 31,854 35,200 72,382 70,686 61,492
Other U.S. Government agen-
cies....................... 23,319 17,244 47,896 39,792 68,557
-------- -------- -------- -------- --------
Total U.S. Government..... 158,178 155,788 321,427 298,674 251,021
USX Corporation and affili-
ates....................... 3,546 62,496 90,185 97,767 26,004
-------- -------- -------- -------- --------
$161,724 $218,284 $411,612 $396,441 $277,025
======== ======== ======== ======== ========
</TABLE>

F-21
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION RELATING TO THE SIX MONTHS ENDED AUGUST 31, 1993 AND 1992 IS
UNAUDITED)
Foreign Operations: Gross revenue and operating income from foreign sales
(including sales originating in the United States) and foreign assets of all
consolidated subsidiaries and branches were as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED FEBRUARY 28,
------------------------
1993 1992 1991
------- -------- -------
<S> <C> <C> <C>
Foreign gross revenue
Europe............................................... $16,698 $ 35,475 $29,139
Pacific.............................................. 33,709 67,904 55,082
Other................................................ 2,940 2,646 7,012
------- -------- -------
$53,347 $106,025 $91,233
======= ======== =======
Foreign operating income
Europe............................................... $ 682 $ 689 $ 1,085
Pacific.............................................. 2,010 5,224 5,820
Other................................................ 158 160 1,314
------- -------- -------
$ 2,850 $ 6,073 $ 8,219
======= ======== =======
Foreign assets
Europe............................................... $ 4,565 $ 6,505 $ 6,650
Pacific.............................................. 13,880 36,130 44,817
Other................................................ 29 65 95
------- -------- -------
$18,474 $ 42,700 $51,562
======= ======== =======
</TABLE>

NOTE Q--UNUSUAL ITEMS

During the year ended February 28, 1993, the Company recognized the impact of
several unusual items: a $5,000,000 adjustment to pre-acquisition contingencies
(see Note J), offset by a charge to accrue the net settlement cost and legal
expenses related to a shareholder lawsuit ($1,400,000), the write down to net
realizable value of certain software-related assets ($3,000,000), and a charge
for severance and related costs accrued as part of a cost reduction plan
($550,000).

In fiscal 1992, due to the favorable resolution of a foreign tax audit and
management's evaluation of the status of an IRS appeal, the Company adjusted a
portion of the amounts previously provided for in connection with the
acquisition of the related companies.

F-22
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION RELATING TO THE SIX MONTHS ENDED AUGUST 31, 1993 AND 1992 IS
UNAUDITED)
NOTE R--SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

Quarterly financial information for fiscal years 1993 and 1992 and the first
six months of fiscal 1994 is presented in the following tables (in thousands,
except per share amounts):

<TABLE>
<CAPTION>
4TH QTR 3RD QTR 2ND QTR 1ST QTR
-------- -------- -------- --------
<S> <C> <C> <C> <C>
1994
Gross................................... $146,830 $128,012
Service revenue......................... 87,439 86,989
Net income (loss)....................... 1,347 (657)
Net income per common share:
Primary................................ $ (0.00) $ (0.09)
Fully diluted.......................... $ (0.00) $ (0.09)
Market price per share:
High................................... $ 5.38 $ 5.50 $ 6.88
Low.................................... $ 4.00 $ 3.75 $ 4.75
1993
Gross revenue........................... $150,921 $158,086 $172,551 $197,324
Service revenue......................... 91,413 94,687 94,890 103,995
Net income.............................. 1,518 2,206 1,897 3,018
Net income per common share:
Primary................................ $ 0.01 $ 0.04 $ 0.03 $ 0.08
Fully diluted.......................... $ 0.01 $ 0.04 $ 0.03 $ 0.08
Market price per share:
High................................... $ 8.50 $ 7.50 $ 7.75 $ 10.88
Low.................................... $ 5.88 $ 4.00 $ 5.00 $ 7.25
1992
Gross revenue........................... $194,712 $190,124 $172,800 $153,237
Service revenue......................... 86,371 102,199 95,538 95,718
Net income (loss)....................... 1,934 (15,841) 2,500 (29,109)
Net income (loss) per common share:
Primary................................ $ 0.06 $ (0.87) $ 0.10 $ (1.60)
Fully diluted.......................... $ 0.06 $ (0.87) $ 0.10 $ (1.60)
Market price per share:
High................................... $ 11.00 $ 10.00 $ 16.75 $ 18.50
Low.................................... $ 6.25 $ 6.50 $ 8.00 $ 14.25
</TABLE>

F-23
<PAGE>

ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(INFORMATION RELATING TO THE SIX MONTHS ENDED AUGUST 31, 1993 AND 1992 IS
UNAUDITED)
As described in Note C, in fiscal 1992 ICF Kaiser recorded a $73.4 million
pretax charge for the restructuring and disposal of certain businesses. These
costs and the elimination of the revenues and earnings of these businesses make
direct comparisons to the results for fiscal years 1993 and 1991 less
meaningful.

The sum of net income (loss) per common share for the four quarters of fiscal
1992 does not equal the loss per common share for the year due to changes in
the number of shares of common stock and common stock equivalents outstanding
during the year.

ICF Kaiser adopted SFAS No. 109 in the fourth quarter of fiscal 1992,
requiring retroactive application to March 1, 1991, and a restatement of the
third quarter, resulting in a decrease to third quarter net loss available to
common shareholders of $ 1.8 million, or $0.10 per common share. The remainder
of the impact was attributable to the fourth quarter of fiscal 1992.

At April 13, 1993, there were 21,336,585 shares of common stock outstanding
held by 1,221 holders of record. At August 31, 1993, there were 20,764,984
shares of common stock outstanding held by 1,381 holders of record.

F-24
<PAGE>

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NO DEALER, SALESMAN, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMA-
TION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR BY THE UNDERWRITERS. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT
IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AF-
FAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE OTHER INFORMATION CON-
TAINED HEREIN IS CORRECT AT ANY TIME SUBSEQUENT TO THE DATE HEREOF.

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TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 2
Prospectus Summary........................................................ 3
The Company............................................................... 7
Risk Factors.............................................................. 9
Use of Proceeds........................................................... 15
Market Prices and Dividend Policy......................................... 16
Capitalization............................................................ 17
Selected Consolidated Financial Data...................................... 18
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 19
Business.................................................................. 26
Management................................................................ 35
Executive Compensation.................................................... 39
Security Ownership........................................................ 45
Description of Capital Stock.............................................. 48
Description of Credit Facility............................................ 56
Description of the Units.................................................. 58
Description of the Notes.................................................. 58
Description of the Warrants............................................... 79
Certain Federal Income Tax Considerations................................. 82
Underwriting.............................................................. 86
Legal Matters............................................................. 86
Experts................................................................... 86
Consolidated Financial Information........................................ F-1
</TABLE>

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125,000 UNITS

[LOGO OF ICF KAISER APPEARS HERE]

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$125,000,000
12% SENIOR SUBORDINATED NOTES
DUE 2003

WARRANTS TO PURCHASE 600,000
SHARES OF THE COMPANY'S
COMMON STOCK

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PROSPECTUS

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DILLON, READ & CO. INC.

WERTHEIM SCHRODER & CO.
INCORPORATED

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